Stimulus dollars to fill 3 historic St. Paul buildings, provide 250-300 jobs
by Burl Gilyard Staff Writer, Finance & Commerce
Long vacant and sorely in need of repairs, the Renaissance Box at 509 Sibley St. could be a symbol for the troubles that have long afflicted downtown St. Paul.
The building, which began its life as the O’Donnell Shoe Factory, was purchased in 2006 by Minneapolis-based nonprofit Aeon, which planned on cobbling together enough financing to build affordable apartment units.
So far, that hasn’t happened. Affordable-housing finance is a complex and painstaking process even at the best of times – and in downtown St. Paul, these are definitely not the best of times.
Now, however, there’s new hope that the Renaissance Box could be symbolic of a more hopeful trend in the state’s capital city. A series of votes last week from the St. Paul Housing and Redevelopment Authority (HRA) board will steer federal stimulus dollars to the Renaissance Box deal, and to other affordable-housing projects in St. Paul.
Gina Ciganik, Aeon’s vice president of housing development, says that in the wake of the vote, a groundbreaking is now set for Oct. 8 – the start of the $16.2 million Renaissance Box redevelopment. The project will create 70 new units of affordable housing.
“We’re just thrilled. It’s such a great property. It’s one of those that might be a little tough for a standard developer,” Ciganik said. “It will make a big difference in that community.” She added that Aeon is shooting for LEED Gold certification – a sort of environmental seal of approval – on the project.
Advertisement All told, the newly approved money will help kick-start $71 million in affordable-housing projects, ultimately creating 252 new units of housing and preserving an additional 35 units of housing. The city estimates that the projects will create 250 to 300 construction jobs.
By themselves, the affordable-housing units probably won’t have a major impact on downtown St. Paul, which recently reported a commercial property vacancy rate approaching 30 percent. But taken in conjunction with other good news – the arrival of new retail in Lowertown and the announcement that Microsoft and Cray will set up offices in the urban core – downtown boosters say the creation of new housing could be yet another leading indicator that things are moving their way.
“It’s very good news for St. Paul and we are thrilled the new resources have become available, especially in a down time, so that we can put people to work doing construction and provide affordable housing,” said Nancy Homans, policy director for Mayor Chris Coleman. “It is great to see things move forward.”
In a news release, Coleman noted, “Financing has been the biggest obstacle holding up many shovel-ready projects. Through work with developers, thoughtful planning and prudent use of stimulus dollars, we are able to get these projects under construction.”
Other projects helped by the votes last week include the second phase of apartments in the Commerce Building, at 8 Fourth St. E., and the redevelopment of the Minnesota Building, 318 Cedar St., two other vintage structures downtown. The first phase of 55 units opened in the Commerce Building in 2008; the second phase calls for 45 units. St. Paul-based nonprofit CommonBond Communities has teamed up with developer Sherman Rutzick on the project.
The redevelopment of the long vacant Minnesota Building calls for 137 housing units in two phases. Sand Companies, based in the St. Cloud area, is developing that project. Technically, the project has two components: Minnesota Place and Minnesota Vistas. The new funding is only for the Minnesota Place portion of the project.
The St. Paul HRA also earmarked money for the preservation of 35 affordable units at The Terraces, a multi-building project. (The HRA also voted for money towards a project in the Dayton’s Bluff area called East Side Commons, but that project is not yet fully funded. )
Aeon previously redeveloped the Crane-Ordway warehouse in downtown St. Paul. The building sat vacant more than for 30 years before Aeon converted it to 70 affordable apartment units. The Crane-Ordway project opened in 2006.
The tumult in the capital markets has hit nonprofit developers, too. Tax credits are a standard financing tool for affordable housing.
“It’s the biggest tool out there to get affordable housing done. It typically will fund between 50 and 60 percent of your deal,” Ciganik said.
Lately, prices for tax credits have been fallen, making it tougher for developers to find investors for projects. With the tax credit market eroding, hopes of wrapping up the Renaissance Box project financing fell apart in 2008. But now, the project is back on track.
“We do have a syndicator and an investor,” Ciganik said of the tax credits for the Renaissance Box project. The Chicago-based National Equity Fund is the syndicator for the project.
Cecile Bedor, director of St. Paul’s Planning and Economic Development (PED), credits the tax credit exchange and tax credit assistance provisions of the federal stimulus package with being key components to get stalled projects rolling again.
“Those are three buildings downtown that are all going to be occupied, so it’s great,” Bedor said. “It’s great for downtown. It’s great for the construction jobs that are going to be provided. These have been languishing for a really long time.”
“I think the stimulus gets criticized, but this will have the exact type of impact that I think President Obama hoped for,” Bedor said.
Bedor noted that each project creates large ripple effects by creating work for a number of different people connected to each development ranging from lawyers to suppliers.
”I think we lose sight of how big an impact this has on the economy,” Bedor said.
