Oak Park Heights officials are crying foul over Washington County’s plan to make the city of Stillwater a sub-recipient of COVID-19 relief funds to bring sewer and water to the southeast corner of Minnesota 36 and Manning Avenues.
The county board will vote on the $750,000 grant Tuesday. Stillwater would be the first municipality to receive such a grant from the county; Deputy County Administrator Jennifer Vegenius said the grant would complement the $2 million Stillwater is contributing to the project.
There are plans for Hi-Vee Grocery and about 200 luxury apartments. The $50 million project, called Central Commons, is the largest retail development proposed for Stillwater in the past two decades.
Stillwater City Council approved a tax-incentive plan in May that includes a 15-year estate-tax exemption of about $3.145 million.
Stillwater asked Washington County to consider $750,000 in tax exemptions for the project, but county officials proposed using funds from the American Rescue Planning Act 2021 instead, Vegenius said. ARPA provided billions of dollars in emergency funding to state and local governments to combat the COVID-19 pandemic.
He said the ARPA funds could be used to assist with some infrastructure issues, including sewer and water. Washington County received $51 million and allocated approximately $40 million. Projects include: $8 million for heating and cooling improvements at the Washington County Government Center in Stillwater; $6.8 million to convert a 50- to 75-bed hotel into a 30-bed shelter; and $700,000 to replace the boat launch at St. Croix Bluffs Regional Park.
But Oak Park Heights officials are questioning what criteria county officials are using to make Stillwater a sub-recipient of ARPA funds.
“Is this a fair use of public money to basically subsidize a private business?” City council member Mike Runk said. “Money should be spent for the general interest of the public and not just for the private interest.”
Looking for an ‘open process’
Before the county board votes on subrecipients for ARPA grants, they must establish a “systematic and open process,” Runk said.
“They should establish a process that is clearly laid out and open to the public,” he said. “How much money is available? How can it be used? How can cities and townships apply? What are the criteria? When money is disbursed, all relevant information must be publicly disclosed.”
Runk said he’s particularly concerned about how a new high-V might affect Kowalski’s grocery store, which is located in Oak Park Heights.
“It’s a subsidy for Hi-Ve,” Runk said. “Washington County should not be in the process of subsidizing a company that is up-and-coming and competing with existing businesses.”
Oak Park Heights City Administrator Eric Johnson said county officials told him that Washington County would follow the “guiding principles” of its economic development tax-exempt policy. But the Stillwater project doesn’t demonstrate meeting those criteria because it doesn’t have regional impact, doesn’t create a livable wage or affordable housing and doesn’t involve transit-oriented development, he said.
In a letter to county officials in June, Johnson explained several of the city’s objections.
“Our area, like most in the metro, is facing an affordable housing shortage, flat wages and service-worker shortages,” Johnson wrote. “The current proposal does not offer a solution to these problems, nor does it support and can move forward … some of these issues.
“The proposal, in developer’s terms, provides “high-end” luxury housing, appears to promote jobs that will not provide a living wage, and there is a clear potential for job displacement in this market,” he wrote. “Businesses competing for workers already in short supply in the region could make it harder for businesses to run and risk more business vacancies in an area already plagued by vacant buildings.”
A new look for the field
Stillwater took over the property from Stillwater Township in 2020; The land was previously in Lake Elmo. Stillwater City Council approved the final plate for the project in November.
It is part of a massive change to the area that includes a new $31.5 million interchange at Minnesota 36 and the partially-cloverleaf-designed Manning Avenue under construction. Plans also call for the northeast corner of the square to be the future site of the Lakeview Hospital complex.
County Commissioner Gary Krisel, representing the area, said it made sense to use ARPA funds for the Stillwater project. The funding, he said, is meant to be spent on infrastructure, which has an immediate impact on economic growth – and bringing sewer and water to the area is well worth the bill.
“We are out to provide economic growth in line with the community’s desire to increase our tax base and create jobs, and this is a mechanism to do so,” he said.
One advantage of using ARPA funds over tax exemptions is that the funds are now available, Vegenius said.
Chrysall said: “If we fund this through the levy, it will be $50,000 annually over 15 years that our local taxpayers will have to pay, but we can use ARPA funds, and that will put pressure on local taxpayers.” Won’t make an impact. It seems like a reasonable approach to me. I haven’t heard shouts from citizens saying, ‘Don’t use federal money, tax me.’ “
Any municipality in the county is welcome to request funding for a project to the county board, and the county will “decide on the best way to support them,” Crisle said. “Who knows? It could be something down there at the King Plant (in Oak Park Heights) when they redevelop it.
The debate over ARPA funds isn’t the only issue with the county of Oak Park Heights. City officials informed the county earlier this year that the city would not pay any costs to build a new frontage road in Oak Park Heights that would lead to Hi-V development. Johnson said the county has asked the city for $1.4 million in cost-sharing.
“We have made it clear to them that we are not going to pay for a road that will damage our businesses and cause traffic problems to transfer to our city,” he said.