St. Paul officials finally cut ribbon for the Penfield

  • Article by: KEVIN DUCHSCHERE , Star Tribune
  • Updated: February 6, 2014 - 9:35 PM

The Penfield apartment complex, developed by the city, opened after many stops and starts. A Lunds store will follow.

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After 10 years of planning, downsizing and finally a takeover by the city -- which served as its developer -- the Penfield, a building of market-rate apartments in downtown St. Paul, marked its grand opening Feb. 6, 2014.

Photo: Bruce Bispng, Star Tribune

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The Penfield, a city-developed downtown St. Paul luxury apartment project that nearly bowed several times to market and recessionary pressures, formally opened Thursday with smiles and undisguised relief all around.

No one wore bigger grins than Mayor Chris Coleman, City Council Member Dave Thune and Cecile Bedor, the city’s planning and economic development director, who decided to have the city take over the troubled project despite grumbling from private developers and concerns that St. Paul was putting too many development eggs in one basket.

They cut the ribbon Thursday on the $62 million project, which includes 254 market-rate apartment units and an urban style Lunds grocery store that will open May 15.

The project is one of three opening in the next year that Coleman is counting on — the others are the light-rail Green Line and the St. Paul Saints ballpark — to recharge St. Paul’s downtown core.

“St. Paul is back, folks,” Coleman told a crowd gathered in the building’s lobby. “Today we celebrate a huge milestone in the movement back to a thriving, exciting downtown.”

Along with other market-rate apartment projects such as the Pioneer Endicott and Custom House redevelopments, the Penfield is expected to boost downtown’s residential population of 8,100 and add an amenity — an extensive full-service grocery — that urban planners say is vital to a growing downtown.

Lunds manager Mike MacRae said the store, to front E. 10th and Robert Streets, will employ 75 people. “We’re excited to be part of the renewed vitality in downtown St. Paul,” he said.

Tours of the seven-story building, a contemporary structure wrapped on one side with the classic facade of the city’s old police headquarters, showcased a clubroom, a fitness center and an outdoor courtyard that includes a pool and dog walk. Rents for two expensively-finished model apartments range from $1,390 to $2,095 per month.

Some private developers and rental property owners weren’t thrilled about competing with a market-rate project receiving tax dollars. But Clint Blaiser, a property management executive who partnered with Rich Pakonen on the Pioneer Endicott project, said that the Penfield and Lunds will help downtown flourish.

“People have been asking for a grocery store for years,” Blaiser said. “The more people we get downtown, the more retail, it’s a win-win for everybody.”

It wasn’t easy. Bedor said the Penfield was marked with “lots of fits and starts … It was a really tough project.”

When planning for the Penfield began in 2005, it was to be a 40-story condo tower developed privately with city subsidies. The cost: $131 million.

But then the condo market crashed, and the project was scaled back to an $88 million, 33-story hotel and apartment development. Eventually the city’s Housing and Redevelopment Authority (HRA), convinced that the project could spur other downtown housing as light-rail transit arrived, decided to use federal financing to turn it into a project with market-rate apartments and a Lunds store.

Most of the funding came from a $41 million federally insured loan from the U.S. Department of Housing and Urban Development, and $19 million from tax-increment financing and the city’s HRA.

The city has hired Village Green, a Michigan-based developer, to manage the property. The two-year contract will pay Village Green up to 3.25 percent of total gross monthly receipts, including incentives.

Bedor said that city officials aren’t looking to sell the building to a private company. But neither do they see the Penfield as a template for future city activity in the development realm, she said.

“We are not housing developers. That is not our business. We did this for a specific reason,” she said.

Renters began moving into the Penfield a couple of months ago. As of Thursday, 51 units had been leased, or one-fifth of the building’s apartments.

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