St. Paul post office rehab clears major hurdle

More details emerged this week of Exeter Realty's project to renovate the former downtown St. Paul post office into a combination of apartments, boutique hotel and storage space as the St. Paul City Council approved the developer's request for city assistance.

St. Paul-based Exeter Realty Co. unveiled its plans for the 17-story, Art Deco-style behemoth at 181 E. Kellogg Blvd. last October, two years after it was vacated by the U.S. Postal Service. The undertaking immediately became one of most ambitious and potentially costly private redevelopment projects ever undertaken in downtown St. Paul, adding 202 ­market-rate apartments, a 150-room hotel and 95,000-square-feet of storage space to the urban core.

Verified numbers on the total cost and scope of the "Custom House" rehab work have been lacking until Exeter's request for $5.8 million in tax-increment financing came before the City Council, along with a report by architects and engineers from LHB Inc. detailing the current substandard conditions of the former post office.

The cost of the rehab project — not including the hotel portion — is a lofty $76 million, documents a show, and Exeter has promised an Aug. 1 start date for con­struction; a Nov. 1, 2015, target for opening, and "stabilized occupancy" by a year after that.

The council unanimously approved the tax-increment financing agreement with no debate late Wednesday, reflecting its popularity among St. Paul leaders.

The St. Paul Post Office and Custom House was constructed between 1931 and 1934 using designs by St. Paul architecture firm Lambert Bassindale and the Chicago firm of Holabird and Root. It was originally 11 stories tall but received a four-story addition with a penthouse atop the building in 1939.

That's how it remained until 1961 when a six-story warehouse annex was built on the southeast side, which is now slated for storage spaces for residents and possibly public users.

LHB found that the building shell remains sound. The interior, however, was chopped up and reconfigured many times by the post office over its 79-year history, reflecting the evolution of the service's needs and technological advances.

Jim Stolpestad, Exeter Realty chairman and principal said the tower portion, which begins at the seventh floor, "lays out very well for housing, but most of those floors were radically changed by the post office — there's very little historic fabric remaining. The original locations of walls and the ­terrazzo flooring remains, and we're retaining that, as well as the stairways and ­elevators."

Meanwhile, the rest of the structure has plenty of substandard conditions: The subbasement was infiltrated by water; office areas have worn carpeting and damaged ceiling tiles; the elevators are in need of updates to meet current building codes, and restrooms — some of which were equipped with original fixtures dating to the 1930s — fail to meet accessibility requirements.

After decades of use by the Postal Service, the building's interior was deemed "very dated and worn" and in need of total renovation, thus justifying the tax-increment financing package.

Stolpestad said the timelines laid out in the documents are realistic. The construction start date of Aug. 1, he said, is dependent on the timely approval of the project by the National Park Service, which must sign off on its eligibility for historic tax credits for ­investors. About $25 million of the $76 million in total costs is to be covered by the tax credits.

Negotiations for the hotel element have also progressed, the developer said, with several original candidates now being narrowed down to one with whom "we're pretty far down the road."

Don Jacobson is a St. Paul-based freelance writer and former editor of the Minnesota Real Estate Journal.