Convening as the St. Paul Housing and Redevelopment Authority, the St. Paul City Council on Wednesday gave initial approval to three tax increment financing districts at The Heights, the development to be constructed on the 112-acre site of the former Hillcrest Country Club.

The TIF districts are intended to effectively free up property tax dollars that would otherwise flow into the city’s general fund, allowing them to be used instead on site to support affordable housing.

“It’s really been incredible to have so many champions championing the Heights,” said Council Member Nelsie Yang. She noted the sprawling development is being assembled as both a carbon-neutral living community and a hub of future employment for local residents.

“It’s going to take a lot for us to achieve the different goals we have toward affordable housing, especially deeply affordable housing … for all families, across all income levels,” Yang said.

The JO Companies, Sherman, Habitat

As part of The Heights, the JO Companies plans to develop 199 affordable rental units in a five-story building to be constructed on a 2.7-acre site on the southwest corner of Larpenteur Avenue and McKnight Road.

The project will include one-bedroom, two-bedroom and three-bedroom units, with 10 units targeted to families earning no more than 30% of area median income. The rest will be geared toward families earning no more than 60% area median income. By the federal definition, the regional median income for a family of four this year is considered $124,900.

The supporting TIF district will have a budget of $3.8 million, including interest and investment earnings, with increment collected from 2027 through 2052. About $1.93 million will support affordable housing construction, with the rest covering administrative costs and interest expenses.

At a five-story rental housing project to be developed by Sherman Associates at Larpenteur Avenue and Howard Street, 20% of the 230 units would be geared toward residents earning no more than 50% of area median income. The project will include studios, one-bedroom, two-bedroom and three-bedroom units.

The TIF budget for the Sherman site is $17.7 million, including $8.9 million for affordable housing construction, $1.7 million for administrative costs and $7 million for interest expenses.

Another project will be developed by Twin Cities Habitat for Humanity, in part with volunteer labor provided next October by the Jimmy & Rosalynn Carter Work Project. It will include 145 units of affordable owner-occupied housing built across three phases, including single-family homes, twin homes and townhomes.

About a fourth of the residences will be targeted to families earning at or below 60% of area median income, according to a staff report. Half the units will be geared to families earning between 60% and 80% of median income. And a fourth of the units will be geared toward families earning between 80% and 100% of median income.

The Habitat project will be supported by a $4.2 million forgivable TIF loan and a “pay-as-you-go” TIF note of up to $5.5 million.

‘More than warranted in this East Side location’

Council Member Rebecca Noecker noted the affordable units will be roomier than the typical studios built for that income level.

“The size of the units being created at the 30% (area median income) level — particularly at the two-bedroom and three-bedroom level — is just really incredible,” she said.

Overall, The Heights is expected to host 1,000 jobs, 1,000 households and 20 acres of parks, trails and open space. The full council will convene Dec. 20 for further approval of the three TIF districts, with more votes to follow next year to authorize the movement of funds to the specific projects.

Council Member Jane Prince noted that when the council initially approved $10 million in general obligation bonds for the St. Paul Port Authority to pursue the acquisition and redevelopment of the former Hillcrest country club, language precluding TIF funding for public infrastructure and other amenities took her aback, given that TIF would be used at Highland Bridge and elsewhere in the city.

That language, however, did not rule out the possibility of using TIF for future affordable housing at The Heights.

“It is more than warranted in this East Side location,” said Prince, who predicted that the affordable housing efforts would “receive national attention in the coming years.”

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