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The Cities Blog
Laura Yuen

Downtown St. Paul Lunds project still breathing

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Just when my colleague Bob Collins declared St. Paul's Penfield development all but dead, the grocery-and-housing project spurts back to life.

The heartbeat we heard comes in the form of a new financing plan that on Wednesday will go before the city's Housing and Redevelopment Authority. The city, which last year became the official developer, envisions a $62 million project including a Lunds grocery topped by 253 market-rate apartments.

You can't blame folks for being skeptical about the Penfield. Initially proposed as a luxury skyscraper during the condo craze of the mid-2000s, the concept has been sliced, diced, and diminished into a box-like apartment building. But Lunds has signed a 10-year lease, bringing hope to downtown denizens and the workaday crowd yearning for fresh produce and gourmet-to-go.

And city planners believe its focus on market-rate rentals (averages ranging from $1,055 to $1,890) will fill a growing demand for "moderate-income" people who want to live downtown. Still, one wonders if a city-led development should include at least some affordable housing.

It's clear St. Paul has a lot riding on this project, situated at 10th and Minnesota streets. According to a staff report:

"This project has the potential to be both transformative and catalytic for downtown. It is transformative in that it will put downtown 'on the map' in a way it has never been before. In particular, a Lunds grocery store puts downtown in a 'tier of livability' that says downtown is a 'real neighborhood' with a broad range of retail and services. The project is catalytic in that having a Lunds store with housing above sends a signal to other developers, future residents, and prospective businesses that downtown Saint Paul is a vibrant place and a solid investment opportunity -- downtown has 'arrived.'"

According to the report, the financing package includes a sizable loan insured by the Department of Housing and Urban Development, and calls for the creation of a Penfield tax-increment financing district. Lunds would finance most of its own improvements for the grocery store.

The city received multiple bids on the project. All came back substantially over budget.