Some in St. Paul's Frogtown worry it's gentrifying

The offer was enticing.

If residents of St. Paul's Wilder Square Co-op voted "yes," each of the 163 units would get spruced-up kitchens and bathrooms, new air conditioning, carpeting, vinyl floors, sliding doors and a fresh coat of paint. Best of all, each household would also receive at least $4,000 in cash, part of a package of $3.3 million in improvements proposed by the would-be buyers, Real Estate Equities.

Then Walter Battle, a Wilder Square resident since 2011, raised his voice and pointed to the fine print. A "yes" vote would disband the co-op, turning owners into renters.

"They did not know what they were voting on," Battle said of the planned vote at the co-op's annual meeting last August. "After that, people were angry."

And afraid that their quiet development with flowering trees on the northern edge of Frogtown would be priced out of their reach. "Gentrification in a nutshell," Battle said.

The vote was shelved. The purchase proposal withdrawn. Terry Troy, chairman of Real Estate Equities, said the intent was not to price anyone out of their homes, but to make improvements to a 44-year-old property. And with 93 of the co-op's 163 units reserved for low-income residents for the next 20 years, he said it's hardly an example of gentrification.

Still, the debate at Wilder Square exposed an anxiety coursing through Frogtown and traditionally poor city neighborhoods throughout the United States: a fear that fast-rising housing costs will force people out. After years of feeling neglected, many residents now believe that investment will lift up their neighborhood for everyone but them.

Until recently, Frogtown might have been one of the last places in St. Paul anyone would worry is gentrifying.

Its name dates back to the 1860s and 1870s, when the area had numerous marshes and swamps. For more than a century since, it has been a gateway for immigrants — first German and Polish workers drawn to the nearby rail yards and later Vietnamese, Hmong and East African refugees escaping strife at home.

Over the decades, the neighborhood has been buffeted by numerous challenges, many linked to poverty. In the 1970s and 1980s, sex-oriented movie theaters, a strip club and peep shows dominated the intersection at University and Dale as the value of the neighborhood housing stock, 60 percent of it built before 1940, plummeted. The last housing crisis left many properties vacant and in disrepair. Crime remains a major concern.

But Frogtown is changing fast.

University and Dale now is home to the Rondo Community Library, the Kings Crossing subsidized senior apartment complex and several restaurants. Green Line trains rumble down University several times an hour. Frogtown Farm, founded in 2013, has transformed 13 acres into a working organic farm and a quiet city park.

A Star Tribune analysis of Ramsey County Assessor's data found that more than half of Frogtown's 2,200-plus single-family homes increased at least 10 percent in value from 2017 to 2018, with 299 home values climbing by 30 percent or more and 134 homes jumping in value by 40 percent or more.

At the same time, in a neighborhood where 62 percent of the residents are tenants, rents also keep rising.

Williams grew up in Frogtown, raised her two daughters there. She climbed out of poverty and started her career there. So she wanted to stay.

But when mice infested her Frogtown duplex last fall, Williams could find nothing else in the area that was both affordable and big enough for her, with her daughter and a grandchild on the way. So she left for the East Side.

Data do not yet show whether many other lower-income families are being squeezed out. In fact, household incomes in Frogtown remain among the lowest in St. Paul, and more than half of all households earn less than $35,000 a year; 27 percent of Frogtowners make less than $15,000 a year.

In an upcoming report, CURA points to three indicators that are a barometer of gentrification — rising property values, climbing rents and increasing levels of education. CURA found evidence of all three in several census tracts in Frogtown.

Brittany Lewis, a researcher with CURA, interviewed dozens of residents who told of struggling to find affordable housing while watching new middle-class families move in. Lewis believes Frogtown is "on the cusp" of gentrification, with many residents barely holding on by renting rooms in houses or an apartment because they can't afford to go it alone.

"The problem is, gentrification is an end game. Once it happens, it's too late," Lewis said. "We want to be proactive."

To Paul and Joy Vliem, a white couple with two incomes, the chance to move their growing family from an apartment in Falcon Heights to a remodeled home just two blocks from the soon-to-open light rail line was too good to pass up.

The house, built in 1910, had been a duplex before sitting vacant for a number of years. In 2011, county records show, the property was worth about $46,000. Then the city completely renovated it, increasing its value threefold, county records show.

"It was just a perfect sequence of events," he said. "We didn't think we'd be able to purchase for a long time."

Paul Vliem has seen the CURA report and agrees that gentrification is happening in Frogtown, in the western half of the neighborhood between Lexington and Dale. But he said he doesn't believe their area — several blocks east of Dale — is gentrifying because families aren't being displaced. The Vliems' house, for example, had been long vacant before they bought it. His other new neighbors? Several Hmong and Laotian families.

Still, "We see [gentrification] encroaching from the west," he said. "While I don't see it where I live, I see it coming."

And that, the Vliems said, would not be a good thing.

Frogtown's diversity is one of the reasons they moved there. According to data compiled by Minnesota Compass, Frogtown's population is 34 percent Asian, 31 percent black, 21 percent white and 7 percent Latino. Creating a wide range of housing options will be critical to preserving Frogtown's racial and economic diversity, the Vliems said.

While in the beginning, Joy Vliem said, there were "lots of calls to the police" about activities at a neighboring house with an absentee landlord, the neighborhood has gotten better. As they see vacant lots fill with new construction and old homes fill with new residents, the Vliems say they hope it will remain affordable for everyone who wants to live here.

St. Paul officials have created a Fair Housing Work Group. In addition, city planners are teaming with a number of other cities, including Minneapolis, to study and prevent displacement.

The Frogtown neighborhood's Small Area Plan, a document St. Paul neighborhoods develop every 10 years to set priorities and provide a blueprint to get there, urges planners, developers and city officials to think outside the box in creating a range of affordable housing options. Ideas include turning Frogtown into a mixed-income urban village, emphasizing artist and entrepreneur live/work spaces and exploring communal living, similar to college dormitories, for those interested.

Less outside-the-box ideas include recruiting community nonprofits to develop several new housing cooperatives similar to Wilder Square and changing Frogtown's zoning to more easily convert single family homes into multifamily housing. City rules now revert longtime duplexes and triplexes back to single family if they're vacant for a year, requiring Byzantine steps for owners wishing to restore them as rental properties.

Moises Romo illegally rented out his home as a triplex for years. But when he wanted to make it right with the city, he had to follow a time-consuming process that included getting the owners of neighboring properties to give written approval. He did that. And he put $60,000 into a home he bought for $64,000. Still, Romo's application was denied. City planner Tony Johnson eventually interceded, helping Romo obtain a special permit. But Johnson said it would be much better and easier if the zoning is changed.

"I haven't made a profit yet," said the 30-year-old. "But it's rewarding to provide housing."

Troy, chairman and co-founder of Real Estate Equities, doubts that Frogtown is gentrifying on its own. His company has managed Wilder Square since 2012, bought the nearby low-income high-rise in 2014 and has been developing and managing affordable housing in St. Paul since 1972. While rents are rising in Frogtown, he said, they're also climbing across St. Paul as developers can't keep up with robust demand.

"All of this is less about gentrification, but the flat-out affordability of any neighborhood," Troy said.

A more likely scenario is that renters and homeowners who cannot find housing in other neighborhoods will start coming to Frogtown and displacing residents, Troy said.

"Unless we can stop other communities from raising their rents and home prices, that natural attraction of affordability will do what economic disparities do: attract buyers to lower prices," he said. "Clearly we can't reverse the economic laws of gravity."

James Walsh • 612-673-7428