Ramsey County leaders say the COVID-19 pandemic and ensuing financial fallout isn't stopping them from moving ahead with RiversEdge, the $788 million riverfront redevelopment proposed for downtown St. Paul that includes apartments, condos, retail, offices and a dramatic urban park.

But precisely what gets built — and when — could change as the pandemic affects demand for office space, hotel rooms and shopping. The first phase of the project now will likely be an apartment tower to meet the strong demand for new housing.

The state's stalled bonding bill is another complication. Ramsey County leaders are seeking $40 million in state funding to help pay for a portion of the massive project, designed to connect downtown with the Mississippi River.

"We are still committed 100 percent," said Commissioner Rafael Ortega, who represents downtown St. Paul. "Nothing has stopped from our side. Hopefully there is bonding this session. But we will continue making assessments and figure out what our next steps are."

The County Board will meet later this month with its developer, Los Angeles-based AECOM, to get an update on the project.

"I am still excited by and support RiversEdge. I am also looking forward to the update," said Commissioner Victoria Reinhardt in an e-mail.

The development plan presented at public meetings in 2018 and 2019 called for four high-rise towers built on the site of the former county jail and West Publishing Co. headquarters. A terraced concrete lid, to be built with taxpayer dollars, would turn the nearly 5-acre site into 10 acres and create outdoor public space connecting downtown to the river.

Original plans called for a 168-room hotel, 56 condos, 350 apartments, 30,000-square feet of retail, 1,600 parking spaces, nearly 1 million square feet of high-end office space and an urban park overlooking the river.

Those plans could now change to meet shifting market demands.

"We have an opportunity right now to pivot," said Kari Collins, the county's economic development director. "Does the range of uses need to change in some way or should we stay with the vision identified?

"We know the demand is there for the residential tower," she added.

Downtown St. Paul hasn't seen any significant condo construction during the past decade. But hundreds of apartments have been added over the past several years, including several historic commercial buildings that have been converted into housing. The apartment market in downtown St. Paul has been softer than in the rest of the metro.

At the end of March, the average vacancy rate in downtown was 6.6%, slightly higher than the year before and nearly double the metro-wide average, according to a quarterly report from Marquette Advisors. Those figures didn't reflect the impact of the COVID-19 pandemic and recession, which is expected to raise vacancy rates in downtown areas where apartment buildings rely heavily on corporate relocations and workers in nearby offices.

Still on the table

B Kyle, president and CEO of the St. Paul Area Chamber of Commerce, said demand for newer and bigger high-quality downtown office space is "undeniable." Even during the pandemic, Kyle said, companies are seeking out and signing leases on high-end offices.

She said she spoke last month with AECOM representatives, who said they were still "all in" and preparing to start construction on the apartment tower as soon as 2021.

"The ebb and flow of the economy aside, this project has put us on the map in a way we haven't seen in the last decade," Kyle said. "Its importance can't be overstated. This is a nationally significant site and arguably the best real estate in the country in terms of its location on the river in a capital city."

Even before the pandemic, the commercial real estate market in downtown St. Paul had softened. At the end of last year the average vacancy rate in St. Paul's central business district was more than 21%, a 2-point increase compared with the previous year, according to an annual report from the Greater St. Paul Building Owners and Managers Association. Vacancies in newer, high-quality office space were lower than for older office space, according to the report.

But Ramsey County's first hurdle is its pending $40 million bonding request, which would help pay for the construction of the concrete lid and urban park that would be a signature piece of the project.

The bonding bill has been held up in the Legislature, as some Republican lawmakers insist that Gov. Tim Walz first lift his emergency declaration from March. At Tuesday's board meeting, commissioners expressed hope that the bill will still be passed this year.

"The state bonding request is still on the table," said Josh Olson, Ramsey County's deputy community and economic development director. "The public realm is a critical piece of this development."

St. Paul city leaders said Tuesday that they know changes in the project may be needed to keep RiversEdge viable.

"We understand the details of the project may shift due to the economic effects of COVID, and are actively engaged with Ramsey County in bringing this project to fruition as we continue building a city that works for all of us," said Nicolle Goodman, St. Paul planning and economic development director, in a written statement.

County officials said that behind-the-scenes work includes completing an environmental worksheet, survey work and relocating utilities. "We certainly have not slowed … on any of the environmental and regulatory pieces," Collins said.

Ortega said he is taking the long view on the project, which is aimed at redefining downtown St. Paul. "This will be here for many generations," he said.