A new tax increment financing (TIF) district has been approved by the Saint Paul City Council in hopes it will spur development at Snelling and University avenues and along the light-rail Green Line.

Support for the TIF district was unanimous, in contrast to the split council votes on Midway TIF-related actions in 2016 and 2017. At the time, some council members questioned whether TIF was needed for redevelopment to happen. The COVID-19 pandemic and the concurrent downturn in the economy have dispelled those reservations.

Establishing the Midway TIF district sends a positive message, according to Ward 1 City Council member Dai Thao. “We want to show the development community that Saint Paul is a great place to do business,” he said. He also praised the efforts to include affordable housing in development plans for the area.

The Saint Paul City Council has renewed its approval of a TIF district to spur redevelopment on the large block surrounding Major League Soccer's Allianz Field.

Ward 4 City Council member Mitra Jalali expressed hope that TIF will be available to spur development along the Green Line. She also spoke for the need to subsidize the kind of community benefits that local residents have been expecting in the wake of the construction of the nearby Allianz Field soccer stadium.

The current value of the tax base in the Midway TIF district is estimated at $28 million. The market value of the site is expected to grow to $485 million by the end of 2032, generating a tax increment of $8.78 million per year.

The new TIF district would support the redevelopment of the “superblock” bounded by Pascal Street, Saint Anthony, Snelling and University avenues. A master plan for that site, approved by the City Council in 2016, calls for 620 new housing units, 1 million square feet of office space, 400 hotel rooms, 421,100 square feet of retail space and 4,720 parking spaces.

Bill McGuire, owner of the Minnesota United FC Major League Soccer team, has cautioned that the master plan will need to be revised due to the changing economy. He and Rick Birdoff of RK Midway are leading the development efforts on the block through a partnership called Snelling-Midway Redevelopment LLC.

A city staff report indicates that the master plan for the superblock has been scaled back to include 800,000 square feet of office space, 399,250 square feet of retail space and 3,350 parking spaces. The goal remains for 400 hotel rooms and 620 new housing units, but 30 percent of the housing units would have income restrictions and be affordable to households earning 60 percent, 50 percent and 30 percent of the Twin Cities area’s median
income, respectively.

Tax increment financing captures a portion of the additional property tax revenue generated by a development project to help pay for that development. The city’s goal is to see construction on the superblock get underway in 2021 with the full buildout complete by the end of 2030.

The current value of the tax base in the Midway TIF district is estimated at $28 million. The market value of the site is expected to grow to $485 million by the end of 2032, generating a tax increment of $8.78 million per year.

 

The city expects to begin collecting tax increments in 2024. Over 16 years the increments are expected to generate $112 million in financing to help cover an estimated $115 million in development costs, including affordable housing and related public improvements.

The city expects to begin collecting tax increments in 2024. Over 16 years the increments are expected to generate $112 million in financing to help cover an estimated $115 million in development costs, including affordable housing and related public improvements.

That leaves a $3 million financing gap, according to the city staff report. However, if more TIF is generated than anticipated or the term of the TIF district is extended, the additional TIF could be used for development along the Green Line and to mitigate any adverse impacts of development on the
superblock.

According to Nicolle Goodman, director of the Saint Paul Department of Planning and Economic Development, the City Council’s approval of the TIF district does not commit the city to providing TIF to any developer or project. Rather, the vote by the City Council was needed “to meet a deadline and preserve TIF as a tool for possible use,” Goodman said.

The City Council had to act by November 13 to meet the state-mandated three-year deadline established in 2017 when initial steps were taken to set up the Midway TIF district.

—Jane McClure

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