St. Paul kick-starts its future

The big hole at the corner of 5th and Wall Streets in downtown St. Paul pretty much sums up the state of development in the city in recent years: grand plans, little progress.

It's a common story in many U.S. cities, given the lethargic economy. But Mayor Chris Coleman has had enough.

On Wednesday, Coleman stood across the street from that dusty dent and announced an initiative to jump-start the Lofts at Farmer's Market and other stalled projects across the city. The spark will be $15 million in new local spending, which is expected to unlock more than $100 million in state, federal and private investments and create hundreds of jobs for seven projects.

"We are rebuilding our community, we are rebuilding our city," he said. "But we are doing it at a time where we desperately need to get people back to work."

Coleman's announcement comes at a pivotal time for St. Paul, which has been battling high downtown commercial vacancies, mounting foreclosures and vacant houses in neighborhoods, and job losses.

At the same time, the Central Corridor light-rail line promises to bring much-needed development along its 11 miles, and the Lowertown neighborhood is already benefiting from new bars, restaurants and employers.

During the mayor's first term, project plans were detailed and money was sought, but very little got built. Coleman said the city is in a position now that it wasn't before, where several projects are ready to go.

A downtown supermarket

The highlight of Coleman's announcement Wednesday was that Lunds officially made a deal to go into the high-profile but long-delayed Penfield project in downtown, which has been without a full-service grocery for years.

The city will act as the developer for the Penfield as well as the Lofts at Farmer's Market because it's seeking to use federally backed bonds that are part of the stimulus program. Deputy Mayor Ann Mulholland said the city isn't planning on becoming a regular developer, but that those two projects are "catalytic" and need to get done because of the coming light-rail line.

"By putting a grocery store in downtown, you're really setting the stage for residential development over the next generation," said Bob Lux, a private developer working with the city on the Penfield and Farmer's Market projects.

Help from the state

Still, all of the projects are using a mix of taxpayer money, whether it's considered local or federal, in the form of loans, bonds and grants.

What helped free the $15 million is a provision in the jobs bill passed during the recent legislative session that loosened restrictions on how the city can use excess tax increment financing (TIF) money from special taxing districts. It can now pool the money from various parts of the city and redistribute it to other areas. The requirements are that the projects be new construction or significant renovation; start construction by July 2011; couldn't be done without the money, and create or preserve jobs.

The projects receiving the TIF money range from downtown housing to a health clinic to the expansion of a North End produce company.

Construction on all of the projects has either started or is expected to begin this year or early next year.

City officials said $62.6 million of local money will net $1.6 billion in state, federal and private money to complete all 15 projects. About 3,200 jobs would be created.