An Indianapolis-based developer wants to transform downtown St. Paul's Central Station, with ambitions to build 300 apartments, 10,000 square feet of retail space and public plazas on the site of the notorious light rail stop.

The St. Paul City Council, acting as the Housing and Redevelopment Authority (HRA), and the Metropolitan Council are poised to grant Flaherty & Collins tentative developer status for the 1.66-acre site, bisected by the Green Line.

City boosters have pegged redeveloping the property — which spans most of a block between E. Fourth and Fifth streets and Cedar and Minnesota streets — as key to the success of downtown revitalization efforts. Both public- and private-sector leaders have in recent years condemned the site for creating a negative atmosphere in the heart of St. Paul's central business district, serving as a hub for crime and people in need of social services.

"This site, I really believe, is the linchpin of downtown St. Paul," Council President Rebecca Noecker, who represents downtown, said during an HRA presentation Wednesday. "There is so much potential for this to be so much more than it is today. In all of our goals of bringing vibrancy and residents and commercial activity and street life to downtown, this site is pivotal."

Both the HRA and the Met Council, which jointly own the site, will have to vote to move forward with Flaherty & Collins in the coming weeks. City officials emphasized that approval would be a first step, allowing the parties to determine how to design and finance the project, which will likely require substantial government assistance.

Flaherty & Collins' conceptual plan for the site shows a 20-story tower and a six-story tower connected by a skyway over the light rail, with a cost estimate of $130 million. The group's preliminary vision also includes ground-floor retail space and public plazas.

"This is really where the hard work begins," said Nicolle Newton, St. Paul's director of planning and economic development. "Financing a project of this magnitude is challenging, and we'll be trying to figure out what the numbers look like and what impacts those numbers."

Flaherty & Collins was the only developer to respond to the call for proposals for Central Station. Ryan Cronk, vice president of development for the firm, said the company first expressed interest in the site 10 years ago, shortly after the Green Line opened. Flaherty & Collins also built and manages the 2700 University luxury apartments along the Green Line's Westgate station in St. Paul.

"We still view St. Paul as having great potential," Cronk said. "This entire market has lots of employers, lots of good jobs. There's great buildings with great bones. There's great green space. It's close to the riverfront. Long term, we view it as a great city."

Developing in the city won't be without its challenges, Cronk said, noting Flaherty & Collins' lenders and equity partners have already expressed concerns about St. Paul's rent stabilization ordinance.

The average multifamily vacancy rate in downtown St. Paul at the end of last year was 4.1%, according to a quarterly report from Marquette Advisors, which tracks rentals in larger, market-rate apartment buildings. That was almost two percentage points lower than the previous year and on par with the metro as a whole.

Though downtown rents have remained flat, vacancy rates have declined steadily after their 2020 peak of more than 11% — and they are likely to continue doing so because little construction is underway.

"The market can support more housing," Cronk said, adding that while downtown St. Paul is grappling with a glut of vacant office buildings, conversion projects are more difficult than new construction.

Flaherty & Collins toured the St. Paul Athletic Club, the only other building on the Central Station block, but Cronk said the property is not currently a part of its development plans. The historic building has been on the market for several years, facing increasing financial troubles since the COVID-19 pandemic.

Ned Rupp of SVN Northco, the commercial real estate broker for the Athletic Club, said the property is under contract. The prospective buyer is planning to preserve the building, said Rupp, who declined to provide additional details.

The city and Met Council would aim to negotiate final development terms and purchase agreements with Flaherty & Collins by the end of 2026.

In the meantime, there are other efforts to improve the atmosphere at Central Station. The skyway over the stop received physical upgrades, including new, bright, floral wallpaper. The nonprofit St. Paul Downtown Alliance is starting to regularly station its safety ambassadors at light-rail stations and bus stops in the urban core.

"I'm super happy there's a strong, reputable developer that has come to the table," said Joe Spencer, president of the Downtown Alliance. "I really applaud their level of ambition with this block that is so key to downtown."