Disgruntled apartment property owners have sent a letter protesting the city of St. Paul's intent to develop two downtown housing projects and asking officials to withdraw.
They say the city is creating "grossly unfair" competition with private real estate developers because it has access to cheap financing and doesn't have to pay taxes.
Last month, the city's Housing and Redevelopment Authority (HRA) Board voted to take over the Penfield and another project, the Lofts at Farmers Market, lagging projects expected to cost $67 million to build. A combination of bonds, tax-increment loans and grants are the likely funding sources.
City officials acknowledged it was an unusual step for the city to become a developer, but they also said the projects are "catalytic" and couldn't get done without government financing help. The Penfield project includes a Lunds grocery store, and getting a grocery store downtown has been a high priority for the city.
Stuart Nolan, chairman of Bloomington-based StuartCo, is one of two property owners who signed the letter. In an interview, Nolan said he spearheaded the effort with Norm Bjornnes, principal of Oaks Properties LLC in Minneapolis. The names of 19 other Twin Cities rental property owners also appear on the three-page letter dated Oct. 15.
As of Wednesday, Nolan said he hadn't heard from anybody with the city.
"We think these are great projects," said Cecile Bedor, the city's director of Planning and Economic Development.
The $54 million Penfield will have 250 market-rate rental units and the grocery store. The HRA will own the building, but a private firm, Alatus, will operate it. Alatus also will coordinate plans for the Lofts at Farmers Market, a $13 million, 58-unit building that the HRA will own and operate.
