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Three takeaways from St. Paul’s most recent — and very long — housing spat

Let’s look at the big picture of what the Lexington Parkway development mess tells us about St. Paul’s housing problem.

An architectural rendering of the Lexington Station project proposal at 411 and 417 Lexington Parkway in St. Paul, northeast aerial perspective.
An architectural rendering of the Lexington Station project proposal at 411 and 417 Lexington Parkway in St. Paul, northeast aerial perspective.
Courtesy of DJR Architecture and Alatus LLC

Maybe, just maybe, St. Paul Mayor Melvin Carter might have put an end last week to a long-running development saga that’s played out for years on a vacant lot off St. Paul’s Lexington Parkway. Diligent readers might remember when I wrote about this case back in 2019, after the aborted first attempt at developing the site. If legal hurdles don’t appear, construction by Alatus might begin on the site this summer.

These are the facts of the case, as I see them. It’s a 288-apartment, mixed-use development proposed on a long-vacant lot that’s been for sale for a decade, owned by the philanthropic foundation next door. The project is “market rate,” which means it’s unregulated or unsubsidized with government money, but half of its unit rents are still set to between 50% and 60% of the regional area median income (AMI), the most common measure of housing affordability. The lot sits between a gas station, a TCF Bank branch, an Aldi Grocery, a White Castle drive-thru, and a parking ramp. It also sits across the freeway from Central High School, on the border of the Rondo and Hamline-Midway neighborhoods, in a diverse working-class and historically African American community. Depending on whom you ask — neighborhood anti-displacement activists, a well-established philanthropic foundation, a divided planning commission and City Council, or city staff — the project’s blueprints fit / awkwardly align with / flout existing neighborhood plans like the light rail station area plan or the city’s bike plan. Finally, in a broad legal sense, it meets all the requirements of the city’s zoning code.

The process thus far: Because of the “T4 zoning,” the development is a “by-right” project. Basically, the city site plan committee usually handles these, and their judgment is rarely further questioned. In this case, the city’s Planning Commission requested it after the committee approved it. The commission’s Zoning Committee approved it, before the commission as a whole denied the plan on an 8-7 vote. The case was then appealed by the developer to the City Council, which also denied the appeal on a 4-3 vote, but that decision was subsequently given a rare veto by Carter. Without a veto override vote, the development is automatically approved because of the “60-day rule,” a state law that grants any development proposal automatic approval if the city does not make a determination within a particular time frame.

Got it?

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If you’re confused, forgive yourself. This is the most complicated case I saw during my nine-year term on the St. Paul Planning Commission, which I just completed in February. This was also the most divisive case I remember from my tenure, eclipsing other high-profile votes like the Ford Site redevelopment, the MLS soccer stadium, or the variance for a homeless day shelter on the East Side. (For the record, I was one of the people who heard the public testimony in the Zoning Committee, and voted on the case, both times, in favor of the project.)

Rather than rehash the issues of the case — on your own, feel free to read about how market rate projects affect affordability, my take on the case findings, or the case against the project — let’s look at the big picture of what this housing development mess tells us about St. Paul’s housing problem.

Three takeaways:

1) St. Paul’s zoning code needs work

At almost every step of this process, conversations in communities and committees bore little resemblance to the legal requirements in the site plan, and the fact that the public debate had almost nothing in common with the legal findings poses a big problem for St. Paul planners (and attorneys). Instead, most of the discussion in the commission and in City Council centered on racial inequality and housing affordability.

The problem is that, as of 2021, the St. Paul zoning code does not reference housing affordability. The city lacks policies about how rents should be set, or how real estate developers should deal with affordability. If city officials want to bring up affordability as a measure for new development, without any rules in the code, the worst-case scenario is a morass of justifiable lawsuits.

There are alternatives. For example, about two years ago, city planning staff began working on a potential inclusionary zoning (IZ) ordinance that would require dedicated affordable units in unsubsidized projects like this one. (Minneapolis has had an IZ ordinance on the books for a little over a year now.) That study was sidelined when the COVID-19 pandemic disrupted the housing market, and has not been re-started the city.

Like all housing interventions, IZ is not a silver bullet. But at the very least, if the city had affordability rules in the city code, it might avoid unmoored development disputes.

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2) Emerging factors: George Floyd’s murder and anti-gentrification

St. Paul has had its share of housing fights over the last 10 years, but almost all of those have come from wealthier communities fighting against new apartments, typically over concerns about traffic, parking, and so-called neighborhood character. This case is different, with pushback and resistance coming from communities of color in working-class neighborhoods like Frogtown, Rondo, and Hamline-Midway.

For example, most of the official comments from City Neighborhood groups mirrored language from The Alliance, a local nonprofit aimed at justice and equity. In their comments, they stated that the new apartment project “actively advances displacement and gentrification.”

While nowhere near the divisive contours of the expensive coastal cities, gentrification has long been a contested topic in the Twin Cities. There have been competing reports by university think tanks, concerns about transit projects like the Green Line, and ongoing efforts by neighborhood groups to come up with alternative ways to shape redevelopment.

Yet in St. Paul, for the most part, gentrification concerns have not been at the foreground of City Hall discussions. Instead, city leaders have typically relied on consensus building and back-room compromise to guide development, making heated demonstrations, veto threats, and close votes a rarity.

The lot at Lexington Parkway and University Avenue as it currently stands.
MinnPost photo by Bill Lindeke
The lot at Lexington Parkway and University Avenue as it currently stands.
That dynamic seems to be changing, thanks in part to a renewed focus on longstanding racial injustice and gaps between white and Black residents. Those political conditions intensified after the murder of George Floyd in May 2020, especially following the demonstrations and unrest that swept through the city, leading to (for example) a heated fight over how a grassroots fund would be used to help Midway small businesses. These intensified divisions were one reason the City Council vote united the right and left wings of the City Council against the center (to the extent that City Councils have polarized politics in the first place).

If fighting housing development becomes a central platform for social justice groups in St. Paul, it will create an awkward situation for many of the city’s elected leaders who have been trying to ease the city’s ongoing housing crisis by increasing the pace of development. It remains to be seen whether the fight over this project signifies a trend, or is simply an idiosyncratic outlier in city politics. 

3) City must deal with uneven development

Speaking of the housing crisis, there’s a lot of work to do. One the one hand, compared to previous years, St. Paul is building a lot of market-rate housing. In 2020, the city eclipsed 2,000 new “housing starts,” the construction of new units, a level not seen in over 15 years.

But just because everything is relative doesn’t mean everything is fine. While city housing starts are up, in the big picture, the St. Paul housing market is still not close to meeting demand. When placed side by side with Minneapolis, St. Paul’s rates of housing construction remain a tiny fraction, perpetuating an ongoing shortage driving up rents and home prices across the board.

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Location is the other key factor. Most new construction in St. Paul is concentrated in a few areas: along the Green Line between Fairview Avenue and the Minneapolis border; in the Highland area in southwest of the city; and in and around downtown. Other than that, housing construction is a rather sporadic affair.

Most critically, market developments have all but neglected the city’s working-class neighborhoods, with only a handful of projects on the East Side, West Side, or the central swath of the Green Line. In fact, the two market-rate projects going up at Snelling Avenue (and this one at Lexington, provided it is actually built) will be the first examples of the real estate market investing near the Midway area in a half century.

If St. Paul wants to alleviate housing pressure throughout the city, it needs to approve more developments in wealthier areas. Instead, projects like the one recently pitched at the corner of Cleveland and St. Clair Avenues, or along Grand Avenue, have been blocked by city committees or neighborhood resistance. If city leaders want to reduce the housing pressures in working-class neighborhoods, at a minimum they need to increase supply.

Worry on both sides

There is worry for housing advocates on both sides of this debate. One the one hand, anti-development housing advocates worry that projects like the Lexington proposal will drive up costs everywhere and especially in disinvested neighborhoods. On the other hand, pro-development housing advocates worry that not building housing like the Lexington proposal will drive up costs everywhere, especially in disinvested neighborhoods. It’s hard to see reconciling these deeply divided world views, no matter how many housing studies appear in academic journals or webinars are hosted by city planning staff.

As painful as it may seem, this Lexington case is likely not over. From a legal perspective, the application was always a technical slam dunk, and if it is rejected the city is likely facing a lawsuit. At the same time, opponents of the project also claim that the mayor’s veto was illegal, and might launch a lawsuit of their own.

One thing is for sure: Even as St. Paul’s housing crisis looms larger, lawyers are standing by.