After 24 years, last piece of a 3-mile redevelopment on St. Paul's East Side falls into place

Plans are advancing for the apparent final piece in a 24-year effort to redevelop the Phalen Corridor, which stretches nearly 3 miles through St. Paul's East Side from Interstate 35E to Maryland Avenue.

St. Louis Park-based Paster Properties, which owns and manages nearly 1 million square feet of retail properties in the Twin Cities market, has received city approvals for a site plan to transform a vacant, city-owned block at the corridor's eastern end into a retail center anchored by a 23,000-square-foot grocery store.

Also included in the plan is space for 4,800 square feet of additional shops; a restaurant with a drive-through; a new community plaza; and the city-funded transformation of a stretch of Rose Avenue into St. Paul's first "woonerf" — a public street that can easily be blocked off and converted to pedestrian-only use.

To accommodate users of the woonerf, the retail building will contain a community room open to neighborhood groups to use for planning and staging of events.

Meanwhile, a future second phase calls for the remainder of the lot — located along Phalen Boulevard a block east of Johnson Parkway — to be built out with residential uses such as affordable apartments or townhouses.

The firm this week was seeking approval of a conditional use permit for the retail portion of the project.

John Kohler, Paster's vice president of development and construction, said the retail element is coming together quickly, driven by the desire of a "national grocer" to anchor it. Kohler said he couldn't identify the grocer because a lease has not yet been signed. But, he added, the low- and moderate-income neighborhoods around Lake Phalen remain underserved by grocers despite the presence of Cub Foods store a block away.

The most visible result of the $1 billion Phalen Corridor Initiative, which officially began in 1994, was the construction of a new road, Phalen Boulevard, serving the Williams Hill and Westminster Junction industrial parks as well as a commercial and residential zone known as Phalen Village, after a former shopping center.

Phalen Village underwent significant development activity in the years between the road's completion in 2004 and the recession of 2008. Hundreds of units of new multifamily housing; a retail center anchored by Cub; the new headquarters of the Minnesota Bureau of Criminal Apprehension, and a new Wells Fargo Bank branch were all built.

But nothing has been built since, while a hole has remained at its center, representing the last piece of the redevelopment puzzle for the Phalen Corridor project.

City officials took a big step toward plugging that gap in 2015 when they allocated $337,500 from the sales tax-funded Commercial Vitality Zone program for the Phalen Village project and the construction of the woonerf, which will run from east to west along Rose Avenue between the BCA headquarters and the Cub Foods store.

That amount was added to $700,000 awarded to the project by the Metropolitan Council the previous year to acquire another vacant parcel at 1186 Prosperity Av. for retail development.

"The project builds on millions of dollars that have been invested in the area over the last 20 years, leverages over $20 million in new private money, and enhances the potential of other commercial development in the neighborhood," the report said.