Ford vs. Hillcrest: Two big St. Paul projects illustrate east-west inequality

A fascinating real estate experiment has unfolded in St. Paul over the last few years. Two large parcels of land opened up for redevelopment around the same time, on opposite corners of the city. Their different fates tell us a lot about the economic imbalance across St. Paul.

In the southwest corner, coming in at 122 acres, sits the mothballed Ford factory. A century-old truck factory, the land has been in the spotlight for years as debate took place over how to develop the property. Arguments about how dense it should be played out in newspapers and lawn signs. Nestled next to some of St. Paul’s wealthiest neighborhoods, and with the city itself committing over $50 million toward boosting development and adding infrastructure, sale has begun for the first buildings, with a projected goal of around 4,000 homes and many office and commercial spaces.

In the northeast corner, totaling 112 acres, sits the closed Hillcrest Golf Course. Its’ a century-old country club on the border of Maplewood, in a quiet middle-class part of town. Redevelopment plans for the property have flown under the radar, especially as public meetings were curtailed by the COVID-19 crisis. The city is not putting any public funds toward the project, and the plans call for around 1,000 homes alongside a light industrial park, with the precise details being worked out over the next few months.

The contrast between the two properties reveals the stark disparities in attention, funding, and economic opportunity that span the borders of St. Paul.

‘Not a pretty sight anymore’

At first glance, you might think that reusing a golf course would be pretty straightforward. Just turn it into a park, or something like that. Maybe throw in some housing around the edges. That was the idea in some neighbors’ minds a few years ago when the process started.

But it turns out that golf courses are far less “green” than they first appear.

“It’s not a pretty sight anymore, not a safe site,” warned Anne DeJoy, an east side planning commissioner who has been chairing the Community Advisory Committee for the project.

For the record, old golf courses are generally less polluted than old car factories, but the difference is not as large as one would think. Despite having trees, golf courses are very far from “natural,” because keeping the greens green and the fairways fair requires a large amount of chemicals. In the case of Hillcrest, that means decades worth of mercury building up in the soil and water, making the old golf course into an environmental trouble spot.

According to the initial study done by the environmental engineers, the areas around the greens and tees were the most contaminated, with readings of almost 500 times higher than residential standards in some places.

“The place is all fenced in, overgrown with buckthorn and downed branches, thanks to the storms we’ve had,” said DeJoy. “The soil is contaminated with mercury, which was used as a herbicide to keep grass a beautiful green carpet. They used that for years and years.”

The artifice at Hillcrest went beyond the herbicide, as even the landscape — once claimed to be the highest point in St. Paul — was manufactured by the original course designers. According to DeJoy, the initial development proposals oriented the entire project around maintaining that high ground. But as it turned out, once plans were presented to the public, nobody really cared all that much about keeping the “hill” around. Most community members were interested in the future noise and traffic impacts from the development.

“At first, we didn’t have any scenarios that kept it flat,” said DeJoy. “The  committee asked the developers to go back and consider that, and developed the two approaches we are focused on now.”

Tax increment financing and the ‘but-for’ rule

To be sure, there’s a large economic gulf between the tony Highland area and the middle-class Hayden Heights neighborhood, where Hillcrest sits. But another big difference between the two proposals is the amount of city support each project received. That gap can be traced to tax-increment financing (TIF), a notoriously opaque public policy tool.

The way it works: Cities pay up-front costs for a development to help a project move toward. Typically the city will fund via infrastructure or put financing money into a development, and that investment is offset with the property taxes that come from the development. That future money is “captured” for a set number of years. In theory, TIF is only supposed to be used for development that would not happen “but for” the city investment.

On the one hand, TIF is enormously flexible, a rare way for cities to pay for all kinds of things around the city. (See also: streetcars.) On the other hand, TIF “capture” districts often linger for years, well past the point where the initial investment is paid back. The funding can be used in a maddeningly complex number of ways, and at root, represents money taken from the general fund. Keeping track of where all the city’s TIF districts are located, and what the money has been used for, typically requires budgetary detective work, because there’s no one place to see all the TIF money in St. Paul.

“Hillcrest feels like it’s something that’s becoming a missed opportunity to me,” said Ethan Osten, describing his reaction to the current development proposals. Osten, who works as an aide to Ramsey County Commissioner Trista MatasCastillo, has been on the Community Advisory Committee since the beginning.

The lack of TIF funding is a key reason plans for the two projects are so divergent. Compared to the Ford site, with mixed-use development, and four times the amount of housing, the projects offer a night and day contrast.

“The City Council said there could be no city financing for Hillcrest, [that] everything built on this site has to be paid for by the market,” explains Osten. “That’s a very different position to take at the Ford site, than at Hillcrest. And Hillcrest is in an area that has been disinvested for a decade.”

As Osten explains it, attracting development to the city’s eastern border is challenging. Without comparable development properties, banks are reluctant to finance construction.

“If there’s any large site in St. Paul that needs a little public investment as a kickstart, it’s Hillcrest,” Osten said. “Not doing public investment backs ourselves into this corner, where we are looking at enormous parcels for Port Authority light industrial job sites. That’s OK for the city, but not great, and no one’s excited about it.”

To be fair, the folks at the St. Paul Port Authority are excited about it. They predict that it, once they attract clients for the industrial properties, will be “the largest investment in St. Paul’s East Side.”

The Port Authority took on the project in 2019 and committed to clean up the pollution, purchasing the property from the labor union that had owned it. Going into negotiation, the caveat for the agency was that development and cleanup costs would be paid for by light industrial projects on much of the land.

The end result is what’s on the table today.

“You hear some arguments for and against development, the same that [were] heard with the Ford Site,” said DeJoy, describing the community feedback her committee received.  “[People say] we don’t want any change, and there are concerns that if the Port Authority is involved it’s gonna be industrial, not understanding that industrial development is not smokestacks anymore.”

Restoring the grid

The other big sticking point for the community are road connections. The existing golf course was a huge barrier for driving or walking east and west through the neighborhood. While the redevelopment is an opportunity to fix that problem, because of community concerns about traffic, the site will be designed to make driving difficult.

“Both plans are disappointing in that both lack through streets on the site,” said Ethan Osten. “That’s something we heard a lot from the community: They wanted to maintain the feel of these quiet residential streets that dead-ended at Hillcrest. But we could have come up with a better way to do that than not have any through streets.”

As with Hillcrest, the same concerns about traffic flow rose to the foreground in the Ford Site conversation. In both cases, developers gave careful attention to how traffic would connect around the project, though the Ford Site promises to have more used connections.

The next step in the process is an online community meeting on March 16. After a long COVID-caused hiatus, this time the discussion will be virtual, as the old golf course awaits its fate. The most likely outcome is that one of the two plans is adopted.

If that happens, the contrast between the two corners of St. Paul will become stark. While thousands of new homes are planned for Highland, the far East Side will remain a relatively quiet part of town, full of dead-end streets.