The St. Paul City Council will use tax increment finance dollars pooled from TIF districts throughout the city to prop up the redevelopment of downtown Mary Hall into 90 units of supportive housing for the recently homeless. AEON is purchasing the site from Catholic Charities, and the city will use $2.16 million in “pooled TIF” funds to support the $34.7 million redevelopment.

In addition, the longstanding TIF district at the former Koch Refineries and Exxon/Mobil storage site — now the home of Nova Classical Academy and a variety of housing off West Seventh Street — will expire early, terminating at year’s end as half the site will become public parkland, which is not eligible for TIF spending.

The city council, meeting as the city’s Housing and Redevelopment Authority board on Wednesday, also considered a third question related to a longstanding tax increment financing district known as the Shepard Davern Rental Housing TIF district, which has been paid off seven years early. The council likely will make a decision next month on whether to terminate the district and return future tax proceeds to the city, county and school district, or to continue to collect TIF dollars there for seven years and use the $7 million for affordable housing elsewhere.

The new council — most of whom were elected last November — have received a whirlwind education in the finer points of tax increment financing, which can take many forms. Generally, TIF districts act like tax-based loans, allowing private developers to build affordable housing, complete sewer connections and environmental improvements, and add other public amenities to a blighted development site.

To pay for those expenses, the developers receive pay-as-you-go funds from the city, paid for each year through tax money that would otherwise flow to city, St. Paul School District and Ramsey County coffers. In other words, the extra property tax generated by the increased property value is spent on site at the development project, instead of flowing to the public general fund. That makes TIF a controversial tool, but heavily sought by developers building housing and commercial projects at locations that might otherwise remain blighted.

Mary Hall

At Mary Hall, which is located at 438 Dorothy Day Place next to the Higher Ground/Dorothy Day shelter campus, Aeon plans to install 88 one-bedroom and efficiency apartments for single residents and small households who have experienced homelessness.

The council voted Wednesday to approve a $2.16 million “pooled TIF” loan, and to support an application for a $1.16 million “Livable Communities Act” loan from the Metropolitan Council’s Local Housing Incentives Account. The six-story building is currently vacant.

“This is directly related to a conversation we had today at our budget meeting about the need for housing all along our (income) continuum, in this case supportive housing,” said Council Member Rebecca Noecker, who represents downtown and chairs the city’s HRA board.

Koch Mobil site expires early

The HRA board established the Koch Mobil TIF district in February 2004, allowing the city to acquire the site from Koch Refineries and Exxon/Mobil and sell land parcels to Brighton Development for up to 850 units of housing and open space over 26 years. About 37 of the 64 acres were deemed developable.

Today, the district consists of Victoria Park, which is under development, 195 units of senior housing with a variety of care options that include nursing home beds owned and operated by non-profit Sholom Homes, 472 market-rate rental apartments, 13 rental townhomes, the Mississippi Market cooperative and Nova Classical Academy, a K-12 public charter school.

“As a result of more than half of the site comprised as city parkland — (state) TIF statutes do not allow the tax increments to be expended on parks — the qualifying TIF district expenditures were lower than originally anticipated,” reads a city staff report.

The council voted Wednesday that the TIF district should be decertified by the end the of year, once the final $1.07 million in bond obligations are paid in full.

Shepard Davern TIF paid off early — but may continue for housing

On Nov. 13, the city council likely will vote on whether to continue to collect TIF funds from the Shepard Davern Rental Housing TIF District, which has been paid in full seven years early.

The TIF development district supported construction of 325 rental housing units in two buildings dubbed River Crossing, of which 25% are restricted to households earning no more than 30% or 50% of area median income. Most units are market rate, as in unrestricted or limited to 120% of area median income. The district was also combined with a neighboring TIF district supporting Graham Place, a senior rental housing project.

Tax increment payments for the developer’s pay-as-you-go financial note began in 2006 and were recently paid in full, according to a city staff report. The city council has the legal right to continue to collect TIF payments into the year 2031 and use the estimated $7 million in funding for affordable housing projects elsewhere in the city. There is no deadline for spending those housing funds.

Otherwise, the council could cancel the district early, allowing future tax payments to flow into city, school district and Ramsey County tax coffers. After some brief group discussion, council members gave no immediate indication Wednesday of how they planned to vote.

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