The Minneapolis-based developer, which has drawn harsh criticism from Frogtown defenders for the proposed Lexington Parkway apartment building, said the project plan added more affordability as requested by housing advocates, but lost its main financial partner last week.
It is unclear if this means the 304-unit Alatus project will completely fall off the table, but the “for sale” sign remains on the long-vacant Wilder Foundation site on the southwest corner of Lexington Parkway and University Avenue, a major transit corridor. after three years of planning.
Two acres of land have been listed for sale since at least 2012.
“We pause and evaluate,” Alatus director Bob Lux said Monday. “We are by no means claiming that he is dead. … We were ready to close last week. “
Lux and Chris Osmundson, director of development for Alatus, said a new rent control regulation, approved by voters in November, made investors nervous about the $ 70 million six-story project, and the same is true for other apartment buildings. projects all over the city. The major sponsor and two potential sponsors are gone.
“Right now, our previously firmly committed equity capital has suspended funding indefinitely – $ 23 million – and the other two groups have made a decision that previously gave the terms of reference for the project before the rent control order was passed,” Osmundson said. “If we do not make significant changes to the regulation, I would estimate the likelihood of the project moving forward (with this level of accessibility) at less than 10 percent.”
MORE AVAILABILITY ADDED – AND WAITING FORWARD
Last year, Alatus officials pledged that half of the 288 housing units on offer so far will be available to households earning no more than 60 percent of the average neighborhood income for the metro in 13 countries, or about $ 60,000 for a family of four. The rest of the units will be at market price.
Critics were quick to point out that the standard would still cost between $ 1,100 and $ 1,180 for an “affordable” studio or one-bedroom apartment per month. Alatus officials said the $ 57 million project did not require a government grant.
Lux said on Monday that the plan has since expanded to 304 units, half of which are available, with 20 units priced at 50 percent of the borough’s median income, most of which are one and two-bedroom apartments. Additionally, in July, Alatus applied to the Minnesota Housing Finance Agency for federal project-based housing vouchers that would keep rents at 26 of those units below 30 percent of the borough’s median income, for a total of 158 available. apartments. The work went hand in hand with the Frogtown Neighborhood Association, he said.
“We thought the Section 8 vouchers would open it up to even more accessibility,” said Danielle Swift, Frogtown Neighborhood’s Anti-Displacement Community Organizer.
The Minnesota Housing Finance Agency will likely make its decision on project-based housing vouchers on December 16, after which the Saint Paul State Housing Agency will make the final choice.
The Alatus project has sparked controversy.
Raising concerns about gentrification in the historically black area of Summit University and the racially diverse Frogtown neighborhood, a neighborhood and social justice coalition came together last year to block the project before Alatus added plans to create “very affordable” apartments.
The Saint Paul Planning Commission voted 8-7 against the site plan in January, and the city council voted 4-3 in April to reject the appeal filed by Alatus.
St. Paul Mayor Melvin Carter then vetoed the council’s decision, which had expired the statutory 60-day time limit for appeals. Carter’s veto actually supported the project, although the mayor asked Alatus and Wilder to work on finding ways to make the place more accessible.
Negotiations between Alatus and Wilder continued for several months and expanded to the leadership of the Frogtown Neighborhood Association, Lux said.
CHANGE IN RENTAL CONTROL MAY RETAIN THE MARKET – AND INVITE ATTORNEYS
Armando Camacho, president and CEO of the Wilder Foundation, said his board of directors wanted to sell the vacant land and channel those funds back into Wilder’s many public services.
“Wilder has no position when it comes to rent control,” Camacho said. “We met with our board of directors. We are awaiting more information from Alatus to determine how we will move forward as an organization and as a board. We have been trying to sell this property for over 12 years and it is not an easy task for any buyer. Our community is suffering and it is an asset that will help us reinvest more resources in the community. ”
A new regulation to control rents in Saint Paul, approved by voters last month by 53-47 percent, goes into effect in May.
The ordinance limits annual rent increases to 3 percent, with no exemptions for small landlords or new construction. Over the past month, several developers said they had to suspend projects due to investor nervousness.
“Institutional investors don’t like uncertainty,” Lux said.
Lux on Monday called on St. Paul’s City Council to make an exception for new construction, a prospect that St. Paul Mayor Melvin Carter said he supports. Under the city’s charter, the city council cannot cancel a voter-driven vote initiative within a year, but Lux noted that they could pass an amendment so the exemption will take effect in a year to calm market fluctuations.
On Monday, Swift questioned the legality of the move and noted that the ordinance did not set the base rent for new homes.
In other words, “there are no restrictions on the amount of rent in a new building,” Swift said. “It’s just the limit on how much you can raise your rent after that. … I am interested in the fact that the threat of investors leaving development is smoke, mirrors and fear-stirring. I think they are bluffing. “
After negotiations with the city’s attorney’s office, St. Paul City Council also questioned the legality of an immediate amendment to a bylaw that they did not participate in writing or approving.
“It is very likely that no matter what happens, there will be a trial,” Lux said.