After a short but contentious debate, the St. Paul City Council left the door cracked to city subsidies for private development near the 20,000-seat pro soccer stadium slated to rise in the Midway neighborhood.
In a 4-3 vote, the council on Wednesday struck down a proposal to prohibit tax increment financing on property nestled near the bustling intersection of Snelling and University avenues, north of Interstate 94. The incentive allows developers to use a portion of a project’s tax upside to cover upfront costs.
Council members were not ready to rule out TIF before the city receives a single pitch for new office, residential or retail – the uses expected to replace an aging Midway Shopping Center and parking lots that hug the stadium site.
“There is not a fleshed-out plan, we haven’t been approached for dollars, there hasn’t been a presentation to the council; the public hasn’t been part of a process or conversation. It’s very, very early,” City Council Member Amy Brendmoen said. “It’s inappropriate and premature to remove any of our financing tools from the table.”
Proponents of the TIF ban said the city should instead rely on promises that the stadium itself, coupled with the Green Line light rail route and new bus-rapid transit service nearby, will spark redevelopment in the long-stagnant area.
St. Paul did not directly invest in the $150 million-plus stadium, to be financed entirely by owners of the Minnesota United FC soccer club. But the city agreed to push state lawmakers for a property tax exemption on the stadium plus a sales tax break on construction materials.
“We need to trust the promises that we’ve already made to the taxpayers that this site will be a magnet for private development,” said Council Member Jane Prince, who along with council members Rebecca Noecker and Dan Bostrom voted for the resolution.
New York-based RK Midway, the owner of 25 or so acres surrounding the stadium site, envisions an “urban village” that in addition to housing and offices has a hotel, movie theater and plenty of green space.
The company’s head, Rick Birdoff, has said Bloomington-based United Properties – which has ties to the owner group bankrolling the stadium – wants to build offices nearby. But there is no set plan, and subsidies haven’t come up publicly. Birdoff declined to comment this week.
St. Paul has leaned on TIF in recent years. As it stands, 9.24 percent of the city’s tax base is captured in TIF development districts, compared with 7.4 percent in Minneapolis, according to the cities.
The incentive has buoyed a series of recent downtown St. Paul projects, drawing blowback from some policymakers and community members who say other neighborhoods – like Midway – should get some attention.
Ruling out TIF around the stadium would continue to sideline Midway as St. Paul presses for more growth, said Council Member Dai Thao, whose ward sits north of University Avenue and several blocks west of the soccer site.
“What we’re seeing here is that at the end of the day, the heart of the matter here is that we’re essentially taking a tool that could create opportunity from a community that needs it the most,” he said. “We should be thinking about how we can reinvest throughout the city and use every available tool.”
His voice rising at Wednesday’s meeting, Thao suggested TIF ban supporters were trying to score political points.
Council President Russ Stark said TIF could help finesse public infrastructure improvements and, potentially, affordable housing. Housing could become an important consideration as redevelopment rejiggers the overall economics of the area.
There’s no set rulebook for how a city can use TIF. About 370 in Minnesota have deployed the incentive to widely varying degrees.
According to the most recent data available from the League of Minnesota Cities, many had 1 percent of their tax base captured in TIF while an outlier on the high end had 42 percent locked in.
Jay Kiedrowski, a senior fellow at the University of Minnesota’s Humphrey School of Public Affairs, said a city like St. Paul should hinge TIF on projects that carry local benefit without hurting other players in the region.
Using the incentive to support a company’s move from a suburb into the city, for example, doesn’t make as much sense as leveraging it to spur a new kind of growth – like what’s predicted for Midway, said Kiedrowski, who served as state finance commissioner and Minneapolis’ budget director.
“We’re not talking about it moving from Minneapolis or moving from Bloomington to the advantage of St. Paul versus the other communities,” he said. “[Major League] Soccer does not exist in Minnesota today, so it’s more justifiable under my thinking to use tax increment financing for something that is new.”
Still, a split vote on blocking TIF hints at a contentious debate if and when a private developer levels a TIF request for a Midway project.
“This TIF, if we’re going to use it, should be targeted to the areas of greatest need,” said Bostrom, who supported the prohibition. “I can’t believe Snelling and University is the area of greatest need for financial help at this moment in time.”
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