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St. Paul's 'balancing act' can help some businesses, hurt others

Lowertown
Creative Commons/Teresa Boardman
The city says nearby businesses in the newly "hot" Lowertown district will benefit when the St. Paul Saints ballpark opens in 2015.

St. Paul city government sure has been good for at least one business.

City officials unleashed all their legislative clout this year to get state money for a regional ballp0ark that will house a minor-league team. It worked, and it's a great deal for the St. Paul Saints, who get a new home field, thanks to $42 million in state and city funding. The team will contribute $1.5 million up front and promises to repay $8.5 million in bonds from naming rights and other new revenue.

The city says nearby businesses in the newly “hot” Lowertown district — bars and restaurants, mainly — also will benefit when baseball fans head to that part of downtown for dozens of summer games when the field opens in 2015.

Other city businesses, though — even some near the new ballpark site — aren't feeling the city love.

Like the owners of Eisenberg's Market.

The store, which sells discount fruit and a limited selection of grocery items, will close this fall. Matt Eisenberg says city policies have hurt the store for some time, but the final straw has been light rail construction a few blocks away, which has been keeping customers away.

And the nearby Twin Cities Magic and Costume Co. is shutting its East Seventh Street location, too. Thanks goodness for the longtime Gopher Bar, or that section of downtown would look like the inside of a magician's hat at the beginning of the trick — empty.

It's not hard to find other examples of conflict between businesses and city (or neighborhood) policies in St. Paul:

• Cupcake's parking problems took so long to resolve that the company bailed on a Grand Avenue site.

• Cossetta's restaurant and the City Council tangled over plans for a storm-water dispersal basin on West Seventh.

• And several University Avenue restaurants and shops have been hampered by light rail construction.

Or in Minneapolis:

• Businesses there have been questioning a proposed city “health impact fee” to help pay for more health inspectors.

• There's a council-imposed building moratorium in the Linden Hills area.

• And a neighborhood association has blocked development on an empty lot across from Lake Calhoun.

And there'll be another uproar later this month when property tax statements go out: Residential rates for many in both St. Paul and Minneapolis will fall, thanks to lower assessments, but business taxes will rise.

Meanwhile, street assessments in St. Paul — where the business rate is considerably higher than residential rates for snow plowing, street lights and street cleaning services — also are going up again next year.

Downtown properties (except condos) will pay more than $18 per foot, while homes on residential streets will pay about $3.50 per foot of street and alley frontage. Commercial properties in residential areas may rise to $6.79 a foot.

(The city devised the street assessment plan to get those street service costs off the ever-rising property tax bills. this approach brings payment from the many tax-exempt colleges and churches in the city, which don't pay property taxes.)

Business/city tensions

Some conflicts are inevitable, pitting the cities' need for enforcement and regulation and taxing power against businesses that want to open and grow quickly, at a low cost.

“Our decisions ultimately come down to: ‘How do we balance moving the city forward, while support and honor those who've already invested in the community?” St. Paul Mayor Chris Coleman said in an interview.

“We're always sensitive to how the things we do will impact business,” he said.

He said all of the efforts expended to get the Saints funding was well worth the effort.

“I have yet to talk to a business owner who thinks bringing 7,000 customers past their doors is a bad idea,” he said. “Big and small businesses are for it. The small restaurant owner sees a new opportunity in Lowertown; large business understands that amenities like light rail and the ballpark attract top-level employees.”

This time around, too, the city had the full support of the St, Paul Area Chamber of Commerce in its lobby efforts for the downtown ballpark.

As for working with existing businesses, some of which feel forgotten and overtaxed, Coleman said:

“When we're working with businesses, we do ask, 'How can we make it easier for you?' But they can't have an unfettered ability. It has to be balanced with neighborhood interests and quality of life.”

John Vaughn, executive director of St. Paul's nonprofit East Side Neighborhood Development Co. says there's often a disconnect between what city hall says and business owners believe.

So he hopes to study the effect of parking and zoning policies on city businesses.

He's calling it the "Cupcake Study."

Vaughn said: "As always, in these perceptual economic development issues where the mayor may say: 'St. Paul is the best city for business in the galaxy,' and a number of small businesses then counter by saying how the city did them dirt, there is a lot of room for objective study."

"We want to take a bunch of commercial corridors [Payne, Rice, Selby, Grand, University, etc.] and do case studies of commercial locations that changed ownership or uses [like Cupcake] and ones that can be anticipated to change and see what the effect of city parking and zoning policies and process have had and can be anticipated to have. We will also scan nationally for comparable studies," he said.

Bye-bye, Eisenberg's

Matt Eisenberg, the fourth generation to work in the family grocery store, is one of those business owners unhappy with city efforts. He says the city has treated his business like a cash cow.

“The big thing was when they separated the street maintenance fees from the property tax,” he said. “When it started, we paid $3 or $4 a foot — now it's over $18. And the services have shrunk. The number of times they sweep and flush the streets has dropped.”

He says enforcement of the city’s sign rules hurts his store: no signs on sidewalks and a crackdown on signs in the store windows.

“I understand the window rule in theory: The police should be able to see inside to make sure we're not being robbed. But that's how we tell people about our sales,” he said.

The Eisenbergs, too, figure the addition of a Lund's grocery store as part of the city-owned luxury Penfield apartment project at the old police station was going to hurt them, too, when it opens at the end of 2013.

Courting trouble

When all else fails, businesses take the city to court.

A developer trying to put a large office and warehouse building in an industrial area near I-94 and Hwy. 280 was stymied by a clause in the city's Comprehensive Plan that called for pedestrian-friendly development in the area near the new light rail line that's being built. That means putting buildings right along the street.

The developer of the Meridian site, though, wanted to set the building back a ways, with a parking lot in front. When the city didn't budge, the case went to court, and a judge ruled in the developer's favor, calling the city's plan “the epitome of vague.”

Neil Polstein, an attorney for the developer, told the Pioneer Press: “You can fight City Hall.”

City officials haven't decided whether to appeal.

Parking limits

Downtown parking is a factor for many downtown stores (not Eisenberg's so much, because it has a small lot of its own), but after closing its downtown store after Halloween, Twin Cities Magic will consolidate in its new spot in West St. Paul, where there's ample free parking.

Cities obviously must limit street parking with meters to keep spaces available for those wanting to stop for a short time at downtown businesses.

But Bill Hosko, whose art gallery is one of downtown's longer-running businesses, says the city hurts downtown business with its parking policies, such as meters that say free parking after 4 p.m. but signs on some corners saying “No Parking 4-6 p.m.”

“This is terribly misleading and resulted in countless people being wrongly ticketed. And we all know our rush hour is not two hours long, let alone even one,” Hosko said.

He also said metered parking spots are often taken up all day by those with handicap tags or by public workers with permits. 

“The abuse of free parking at meters has become widespread, yet nothing is being done. This is bad for business,” he said.

Many other business-related challenges exist in the city. As the downtown emphasis moves eastward, toward Lowertown, many are concerned that the downsized Macy's store may close in coming years, putting a huge empty retail hole in the heart of downtown.

And while the NHL lockout continues, restaurants and shops on the Xcel Energy Center end of downtown suffer, but you can't blame city policies for that one.

If they build it, will they come?

As for the Saints new ballpark, Hosko — who has run in the past for mayor and city council, most recently finishing second in the Ward 2 race in 2011 — has criticized the design for months as a lost opportunity for businesses in the area.

Hosko has promoted a plan to retain the old Gillette building as an amphitheater, which would make the ballpark site more useful for year-round activities and give more of a boost to downtown businesses.

Coleman, however, says there's been plenty of public input over the past few years and that the design is ready to go, as is.

“Everyone's entitled to his own vision and opinion, but we've had dozens of community meetings, and after years of progress we have preliminary drawings which the overwhelming majority feel are great and fit in well with Lowertown,” Coleman said.

Still, Hosko argues, there's still time for residents and business people to have more say in a debate between “an all-new construction ballpark that will be largely seasonal versus creating a year-round facility out of the existing Gillette building.”

He also thinks city officials can better control troublemakers who harass or intimidate some bus riders at “long-term troublesome core area bus stops which have been so bad for business and downtown’s image for so long.”

Tough economic climate

As the core cities struggle mightily with the loss of manufacturing jobs and big cuts in state aid,  Coleman and Minneapolis Mayor R.T. Rybak and their city councils have worked to limit property tax increases for homeowners, which puts pressure on the business community.

The problems for the core cities will only continue, said Fred Zimmerman, professor emeritus at the University of St. Thomas in engineering and management, who has worked with businesses throughout the Twin Cities and studied the economies of big cities.

High taxes are one problem with efforts to promote growth; as are unfunded pension liabilities, he said.

“Manufacturers and other businesses know that it's unwise to choose a location in any of the major core cities,” he said. The exceptions: higher education and medical care, or “heads and meds,” as he calls them.

And St. Paul and Minneapolis do sport a healthy array of colleges and medical institutions. One reason they can thrive in the core cites, said Zimmerman, is their inelastic demand curve: “Pricing at colleges and hospitals doesn't get the same scrutiny as other industries. But that ball may drop some day, too.”

Coleman isn't as pessimistic. “Cities that don't grow, contract,” he said. “St. Paul is in a growth mode.”

He said he recently returned from Denver and found it “moving forward in leaps and bounds.” Officials there have pursued a strategy of building amenities and improving the transit system, and it's paying off with steady growth, he said.

And that sounds a lot like the St. Paul plan, with the ballpark and Central Corridor ready to come online in the coming years.

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