St. Paul City Council will vote today on changes to Highland Bridge property tax agreements

St. Paul’s City Council will vote Wednesday on changes to development agreements for the former Ford plant site, which could mean a lower tax bill for the developers while construction stalls.

Ryan Cos., the Minneapolis-based developer responsible for turning the former factory into St. Paul’s newest neighborhood, says its tax bill is hampering progress. The company wants to restructure its tax payments to St. Paul, and is asking for a lower “minimum assessed value” on about a third of Highland Bridge parcels, which could result in lower tax bills for the as-yet-unbuilt properties.

The properties are assessed at $132 million now, according to the city, and the company is seeking an assessed value of $58 million in 2026.

“Those assessment minimums place a tax burden on the properties, without an offsetting income source,” St. Paul’s Planning and Economic Development Director NicolleNewton told the council last week.

The overall city budget for next year would not be affected, because the property is part of a tax-increment financing district that paid for the city to build streets, sewers and other infrastructure where the factory used to stand.

Ryan will continue paying a “base” property tax that goes into the general funds for the city, St. Paul schools and Ramsey County. The change would only restructure the way the company is paying back the city for spending at the Highland Bridge site.

Some council members said they were frustrated with Ryan’s request, especially after the company sought approval this year for a smaller-than-promised building on a prominent block at Cretin Avenue and Ford Parkway.

“Time and time again, this site comes forward asking for changes and tweaks and exceptions,” said Council Vice President HwaJeong Kim.

A Ryan spokesperson said the company would not comment on the development.

Council President Rebecca Noecker said she is still trying to understand the potential budget impact to St. Paul and the city’s taxpayers. The developer could pay more than the minimum, if Ramsey County assessors decide the value of the unbuilt parcels exceeds the minimum. Or, on the other end of the spectrum, it’s possible developers could walk away from the site and St. Paul would not get any tax revenue.

The city and Ryan had initially agreed that the minimum assessed value of the property would step up over time, as an incentive for Ryan and other developers to get construction moving.

Melanie McMahon, St. Paul’s deputy director of planning and economic development, and other city staff said much has changed since the development agreement was signed in late 2019. The development was planned and approved before the pandemic, before St. Paul’s rent control ordinance, and while interest rates had been low for years.

Noecker said she is still frustrated.

“We’re not just here because of COVID. We’re not just here because of rent stabilization,” she said last week. “We’re here because the partners we contracted with and expected to fill those obligations have not fulfilled those obligations.”

Highland Bridge is made up of 44 parcels, of which only a few have been built on. This proposal would change the minimum assessed value of 15 parcels.

Ramsey County’s assessors will determine the actual assessment values, and determine the tax bills, so it is not yet certain that the developers would pay less property tax in the short term.

But lowering the minimum assessed value does open the door to a lower tax bill.

The city is getting some concessions in the potential new agreement. The most significant, Noecker said, is a binding requirement to build a certain number of affordable apartments, and monetary penalties for failing to live up to that requirement.

Council Member Saura Jost, whose Ward 3 contains the Ford site, said she was disappointed but held out hope that development would take off.

Ward 6 Council Member Nelsie Yang remained skeptical.

“I don’t see any data around justification for any of the things that are happening right now,” Yang said.

The agreement has already been approved by the St. Paul school board, but the Ramsey County Board, which also has to sign off before the agreements can be changed, is waiting to see what the St. Paul City Council does.

“It’s a city issue. They should act first,” said Board Chair Rafael Ortega, whose District 5 includes the Ford site.

Ortega said the board needs to better understand how potential changes to density and building heights at the site will affect overall property values.

Commissioner Mai Chong Xiong, who requested the item be tabled for a week, said she didn’t have enough information. “I’m just curious about why, in a part of our city where we have some of the highest property values, we would need to amend this TIF district,” she said, referring to the tax-increment financing plan that subsidized infrastructure on the site.

Star Tribune staff writer Christopher Magan contributed to this story.