In St. Paul's Rondo, a push to redevelop but not let values rise too much

The redevelopment of blighted urban areas yields many benefits, such as raising the tax base, improving safety and providing jobs.

But there's a down side, too. Success can price small businesses and residents out of the very neighborhoods they helped make popular.

A new push to construct a pair of mixed-use housing/retail buildings in St. Paul's historically African-American Rondo neighborhood is seeking to upend the gentrification conundrum through the use of a community land trust, something relatively new in the world of commercial structures.

The idea is to limit market appreciation of the buildings should property values in the neighborhood one day take off, thus keeping their spaces affordable for small businesses.

The Rondo Community Land Trust of St. Paul and the Minneapolis-based nonprofit Community Housing Development Corp. last month were designated "tentative developers" for a pair of city-owned vacant lots along Selby Avenue, one at a key intersection with Victoria Street, and another across the street from the Golden Thyme coffee shop near Milton Street, at 940 Selby Av.

The long-empty lots are a visual reminder that not every stretch of Selby has shared in the redevelopment largesse.

Selby's historic district between Summit Avenue and Dale Street has become one of St. Paul's most desirable neighborhoods after decades of neglect. But the stretch of Selby from Dale to Lexington Parkway remains a work in progress. Substandard and decaying commercial storefronts as well as empty lots dot the Rondo neighborhood.

Golden Thyme, owned and operated by Michael Wright, is a pioneer in the neighborhood and bills itself as St. Paul's only black-owned coffee shop. Wright helped lead a communitywide effort to fill the lots with the kind of development the neighborhood wants to see: Locally owned businesses on the ground floor topped by affordable senior housing.

After a series of community meetings, it was agreed the project should consist of a total of 30 to 33 units of income-restricted senior housing above 4,860 to 8,100 square feet of ground-floor commercial space spread across the two buildings. With developer status in hand for an 18-month exclusive window, now the challenge is to go out and raise $10.6 million to construct them, according to Greg Finzell, the land trust's executive director, and board President Charles Bradley.

The pair say they're confident the capital can be raised through the use of investor tax credits and calls the effort a transformative one for the community.

"This is just one piece in a much larger puzzle through we're looking to revitalize the Dale-to-Lexington stretch of Selby and bring minority-owned businesses back to the street," Finzell said. "Specifically, the project will help achieve the community's long-term goals to reduce the number of persistently underutilized, blighted and vacant properties, to increase pedestrian traffic and to grow black-owned enterprise."

Just as important to Bradley is what he sees as a chance for the community to assert itself in the realm of development at an early stage of what he predicts will be the renaissance of the Rondo neighborhood. "It's really a case of seizing the opportunity we have with these two lots and setting the tone for what it is to follow," he said. "It's giving the neighborhood a chance to decide what they want to happen here, rather than having it decided for us."

The Rondo group has long used the land trust model with residential homes as parts of Selby gentrified. Under the process, it retains ownership of the underlying land and leases it long-term to the homeowner. Deed restrictions state that when homeowners sell the houses, they must sell to another low- or moderate-income buyer and limit themselves to 25 percent of the home's appreciation, thus keeping it affordable in perpetuity.

A modified version of the land trust model would be used for the new Selby commercial properties — a move that is "cutting edge," according to one supporter, Edward Goetz, director of the University of Minnesota's Center of Urban and Regional Affairs.

Don Jacobson is a freelance writer in St. Paul and former editor of the Minneapolis/St. Paul Real Estate Journal.