St. Paul got back into the rental game Thursday after a brief hiatus because of a spat between Mayor Chris Coleman and City Council members.

The council, sitting as the Housing and Redevelopment Authority (HRA), approved a $9 million bonding package for an apartment project across from the St. Paul Farmers Market in Lowertown.

That approval lifted a stopper Coleman had put on other big projects in his multimillion-dollar Rebuild St. Paul initiative after some on the council refused to support the financing two weeks ago. Taxpayer money will be used to guarantee the bonds.

It was a rare dispute between the mayor and council, but Coleman won out and other projects now will be allowed to proceed.

The lofts project, which has languished as a hole at the corner of 5th and Wall Streets for several years, is seen by Coleman and others in the city as "catalytic."

"We've always known that the Lofts at Farmers Market project is our best chance to get shovels in the ground, people back to work and to continue years of building momentum and vitality in Lowertown," Coleman said.

The $13 million complex will have 58 units with rents ranging from $890 for an efficiency to $1,490 for a two-bedroom. There will be 2,000 square feet on the ground floor to be used for retail, but there's no tenant yet.

The project is expected to create about 40 construction jobs. "I'm thankful the council came on board," said Harry Melander, president of the Minnesota Building and Construction Trades Council.

Shaw-Lundquist Associates is the apparent low bidder, and a contract is likely to be awarded in the next week or so.

Council Member Russ Stark had explained his support simply: "We've already sunk a lot of resources into this."

That's true. At least $3 million in city funding has gone into the project.

City Council President Kathy Lantry was the lone no vote. She said she thinks the project is a risk to taxpayers.

The bonds that the HRA plans to issue are part of the federal stimulus program and come with a discount, but to get them the city has to own the project.

Some have objected to the city getting into the development game.

A group of 20 disgruntled apartment property owners sent a letter to city officials in October stating their objections to the use of public funds for market-rate projects.

Stuart Nolan, chairman of Bloomington-based StuartCo, is one of two property owners who signed that letter and said the city was creating grossly unfair competition with private real estate developers because the city can borrow money at much lower rates and doesn't have to pay taxes.

Nolan, who has developed more than 1,700 units in the city, sent a second letter Nov. 30 saying he wouldn't build another project in St. Paul if the city proceeded.

Chris Havens • 612-673-4148