Star Tribune
Developer makes deal with St. Paul for millions in tax breaks if rent control is imposed
A developer who is converting a downtown St. Paul office building into apartments made a deal with the city: If the project is subject to rent control, the city will give millions more in subsidies.
The first-of-its-kind agreement between the city and Sherman Associates was approved late last year by the City Council. The vote was unanimous, receiving support even from the council’s two biggest backers of rent control, Mitra Jalali and Nelsie Yang.
Rent control advocates accused Mayor Melvin Carter of betraying the will of voters when he exempted new construction from the 3% cap on rent hikes approved as a ballot initiative in 2021. But the deal with Sherman Associates is an acknowledgement by city leaders that some developers will walk away from projects if they lose the power to raise rents.
“Other projects are not yet having to explore this type of accommodation, and I think that it is the appropriate way to adjust for whatever amount of risk people are experiencing,” Jalali said at the Oct. 25 Housing and Redevelopment Authority meeting, when the agreement was approved. “There is no such thing as risk-free development.”
The city is already committing $12 million in tax-increment financing to Sherman Associates’ $97 million project to build 187 market rate apartments in the Landmark Towers at 345 St. Peter St. As new construction, those apartments won’t be subject to rent control for 20 years.
If the new council, a progressive majority that has indicated support for rent control, were to repeal the exemption, the tax subsidy for the Landmark project goes up substantially.
“But at the end of the day, whether it’s $1 million or $2 million or $3 million, it’s only going to be a partial offset of the significant loss of value that we would face if rent control became more restrictive,” Sherman President Chris Sherman said.
Rent control scaled back
After voters passed rent control in the fall of 2021, developers halted their projects in St. Paul, saying the policy caused costs to rise and investors and lenders to back out.
Carter convened a task force to recommend changes to the law. The council then voted in fall 2022 to exempt new construction and income-restricted units from rent control. Jalali and Yang voted against the changes, siding with rent control advocates who accused developers of using scare tactics.
Conversations about rent control cooled down until last fall, when all seven St. Paul council seats were on the ballot. As candidates fielded questions about the policy, some developers grew concerned that the new leaders would revert the law to the original, more restrictive version approved by voters.
Carter said in an interview that he does not expect any imminent, significant changes to rent control. With Sherman Associates, the mayor said it became important for the city “to find mechanisms to find a level of assurance for them — and for their backers — that we intend to hold our end of the bargain.”
The city has not received similar risk-mitigation requests, and Carter said any that arise would have to be considered on a case-by-case basis.
By developing Landmark Towers, Sherman Associates is “still taking a big risk,” said Nicolle Goodman, St. Paul’s planning and economic development director.
If the new construction exemption is repealed, the city will assess the impact on the property’s value and give the developer up to an additional 5% of the tax increment generated by the project. There is also a provision that says if the project yields a significantly higher return than expected, the city could receive a payment from Sherman Associates.
“We were able to, frankly, save this deal — even with the perceived threat of the loss of the new construction exemption — because this deal had room,” Goodman said. “But it’s very likely that many deals would just fall apart.”
Jalali, the new council president, said she supported the agreement with Sherman Associates because the project is uniquely complex and aligns with a number of the city’s goals for downtown by removing blight, repurposing vacant office space, adding housing and preserving a historic structure.
“We worked with the project team and got to a better place on it, in a way that I feel honors our commitment and obligation to voters to make policy in a comprehensive way and also honors that we need to look at all resources in helping projects happen,” Jalali said.
Yang declined a request for an interview.
Jalali says more tenant protections needed
While Jalali is not advocating for “wholesale repealing” St. Paul’s new construction exemption, she said the current rent control policy is unfair as long as tenants in exempted buildings lack other protections from displacement, such as advanced notice of sale requirements or guaranteed relocation assistance.
“The answer always, from the other side, tends to be, ‘We need more supply,’ ” Jalali said. “Yes, we do need more supply. We also need more supply at all levels. None of those people are coming forth with a proposal to help people immediately at the bottom of the housing market, who are the most susceptible to sudden spikes in rent that cause displacement.”
Construction on the Landmark Towers started late last year, and Sherman said the developer is aiming to have apartments ready for move-in by summer 2025. The company is also the lead housing developer for more than 1,000 units planned for the Heights, a $550 million redevelopment of the Hillcrest Golf Course on St. Paul’s East Side.
Sherman expects the firm’s equity and financial partners to require similar TIF agreements for that development. Even with the new construction exemption, housing projects require more public subsidies due to rent control, he said.
In the meantime, Sherman said his team looks forward to building relationships with St. Paul’s new council members to discuss the city’s housing policies and goals — and make the case that rent control should be completely rolled back.
“We have tremendous alignment with advocates and policymakers that are looking to deliver long-term affordability and quality housing,” he said. “Rent control is a very ineffective way to deliver affordable housing, deliver quality housing and deliver a healthy tax base.”
Carter welcomed that sort of engagement from developers, saying he wants to convene a “citywide conversation” on all housing-related issues, policies and programs in St. Paul.
“I think it’s important for us right now to give the rent stabilization policy that we’ve got in place some space and time,” he said.
Star Tribune
Long Prairie, MN school board dismisses its superintendent, the latest controversy in this small town
LONG PRAIRIE, MINN. — The school district superintendent dressed up as the school mascot, Thor, on football nights. He read the graduation address in both English and Spanish. He even set up office hours in the cafeteria, granting easier approachability to students.
But now, two months into the school year, Daniel Ludvigson is gone. Or, rather, “on special assignment,” according to the terminology of the Long Prairie-Grey Eagle School Board, which voted 4-3 earlier this month to remove him as superintendent. The move came weeks after voting to not renew his contract, which expires at the end of the school year in June.
Four board members — two of whom voted to oust Ludvigson, including Board Chair Kelly Lemke — are up for re-election next week.
The dismissal is the latest blow in this central Minnesota community on the edge of the prairie. Over the last nine months, the town of 3,400 residents and seat of Todd County has lost its mayor, a city manager, two school board members, and now its superintendent.
Students walked out earlier this month in support of Ludvigson. Signs in support of Ludvigson can be seen across town on the lawns of apparent Democrats and Republicans alike. And last week, hundreds packed the American Legion off Hwy. 71 to eat beef sandwiches and sign support letters for Ludvigson, who only swung by to pick up his child for hockey practice.
In a time of great divide in America, this fight has nothing to do with politics.
“You’ve got Harris buttons and Trump hats side-by-side, arm-in-arm,” said Amanda Hinson, a former local newspaper reporter who is concerned the board is not being upfront about why they placed Ludvigson on special assignment. “We want transparency in our government.”
Lawn signs around Long Prairie, Minn., now include people weighing in on the dismissal of Superintendent Daniel Ludvigson by the school board. (Christopher Vondracek)
School board members say Ludvigson has repeatedly shown he is not ready for the prime time of a school district bigger than the one in central North Dakota he arrived from two years ago. They have twice disciplined Ludvigson, but did not state the reason for placing him on “special assignment,” beyond insinuating that staff are fearful to raise official complaints.
Rain and potentially heavy snow are on tap Thursday around the Twin Cities, just before families set out for Halloween trick-or-treating.
Temperatures were expected to drop throughout the day, creating conditions for flurries. A winter weather advisory is in effect from 10 a.m. to 4 p.m. covering the Twin Cities metro area and parts of south-central Minnesota. Steady rain drenched the Twin Cities on Thursday, making for a soggy morning commute.
“As colder air begins to move in this morning, the rain will transition to heavy snow from west to east with snowfall rates of an inch per hour at times into early afternoon,” the National Weather Service in Chanhassen said in a weather advisory.
The Twin Cities and surrounding areas could get between 2 and 4 inches of snow, according to the weather service. The winter weather advisory is expected to affect Anoka, Chisago, Hennepin, Ramsey, Scott, Washington and Le Sueur counties.
It’s unclear how much of the snow will actually stick, with warm surface temperatures likely leading to melting on contact in many areas.
“Exact totals will depend on snowfall rate, surface temperatures, and melting — which increases uncertainty with the snow forecast,” the weather service said in an early Thursday briefing.
“Thundersnow possible!” the weather service emphasized.
The good news for Halloween revelers is that the snow and rain are expected to wrap up in time for trick-or-treating, though temperatures will remain in the 30s with a sharp windchill.
An off-duty Washington County sheriff’s deputy caused a head-on crash while under the influence of alcohol and injured a couple in the other vehicle, officials said.
The crash occurred about 10:40 a.m. Sunday in Afton on Hwy. 95 at Scenic Lane, the Minnesota State Patrol said.
Campbell Johnston Blair, 58, of Hastings, was heading north in his Subaru Crosstrek, crossed into the opposite lane and collided with a southbound Ford Expedition, the patrol said.
Blair and the other vehicle’s occupants, 38-year-old Erik Robert Sward and 36-year-old Heather Lynn Sward, both of Lake Elmo, were taken to Regions Hospital with non-critical injuries, according to the patrol.
The patrol noted the alcohol use by Blair was involved in the crash.
Blair, who was driving a private vehicle at the time of the crash while off-duty, has been a deputy with the Sheriff’s Office since 2020 and is currently assigned to our Court Security Unit.
The Sheriff’s Office has been asked for reaction to the crash involving one of its deputies.
Minnesota may get snow Thursday. Here’s how much more the Halloween Blizzard Of 1991 dropped.
Suspect “led us to the evidence” in Montana camper’s brutal killing, initially thought to have been bear attack
Long Prairie, MN school board dismisses its superintendent, the latest controversy in this small town
Minnesota may get snow Thursday. Here’s how much more the Halloween Blizzard Of 1991 dropped.
Suspect “led us to the evidence” in Montana camper’s brutal killing, initially thought to have been bear attack