Work continues at Highland Bridge on new rowhouses, a new medical office building, new senior housing and supportive housing and the nearly completed Weidner Apartments/Lunds & Byerlys mixed-use development. However, the construction of all other new apartment buildings has been put on hold in the wake of voters’ approval of the new rent control ordinance in Saint Paul. The ordinance does not take effect until May, but it has halted work on four Highland Bridge buildings with a total estimated market value of $250 million.
The ordinance limits rent increases on all residential properties in the city to 3 percent per year. With inflation now running at about twice that rate, investors have become increasingly hesitant to put their money in rental housing in Saint Paul. Developers have urged Mayor Melvin Carter and the City Council to amend the ordinance with an exemption for new construction. Carter has indicated his support for such an exemption, but the City Council appears to be divided over the issue.
Ryan has stopped work on three housing projects near Ford Parkway and Cretin Avenue and another building at the northeast corner of Highland Bridge’s central water feature…. “We won’t be spending resources on those projects until there is more clarity on the rent control ordinance,” Michalski said.
Rent control has made it more challenging to finance new rental housing in all of Saint Paul, according to Maureen Michalski, Ryan Companies’ vice president for real estate development.
Ryan has stopped work on three housing projects near Ford Parkway and Cretin Avenue and another building at the northeast corner of Highland Bridge’s central water feature. The four buildings together include about 400 apartments and 47,000 square feet of commercial space. “We won’t be spending resources on those projects until there is more clarity on the rent control ordinance,” Michalski said.
Ryan says it will not be seeking a rezoning of future rental property
Ryan officials told the Highland District Council (HDC) Community Development Committee on January 18 that they will not be seeking the rezoning of any property at Highland Bridge earmarked for multi-family housing. The rent control restrictions also have nothing to do with Ryan’s interest in possibly developing several new sports facilities for the University of Saint Thomas.
The property on the former Ford site that is being considered for a collegiate hockey arena and baseball and softball fields is in the so-called gateway zones, which allow for sports facilities. However, the great majority of Highland Bridge is zoned for multi-family housing.
When Highland Bridge was being planned, new market-rate housing was intended to help pay for new infrastructure at Highland Bridge and new affordable housing at Highland Bridge and elsewhere in Saint Paul. That was to happen through tax increment financing (TIF). “The new rent control policy has threatened those funding sources,” Michalski said.
Rent control has threatened the future of rental housing throughout the city, Michalski added. She used the mixed-use Harper development at Selby and Snelling avenues as an example. Ryan Companies has about 2 percent equity in that new five-story building, with investors providing the rest. The main investor in the Harper is a pension fund, which needs a certain rate of return to pay employee pensions and now may be looking at projects outside of Saint Paul to get that return, she said.
When HDC committee members asked why the developers at Highland Bridge are not considering building more owner-occupied condominiums or single-family homes in place of rental housing, Michalski said the intent is to stick with the city’s master plan for the site. Condominiums are more expensive and complicated to build than apartments, she said, and single-family homes would affect the development’s overall market value and what can be gained through TIF.
— Jane McClure
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