Piles of dirt where apartments should be: Private development stalls at St. Paul's Highland Bridge

An artificial stream in a park-like setting attracts joggers and dog walkers to St. Paul's Highland Bridge development. Children flock to the playground at Assembly Union Park, named in honor of the Ford Motor Co. plant that for decades operated on more than 100 acres in city's southwestern corner.

In every direction, however, metal construction fences surround large piles of dirt — and it's unclear when that will change.

Parks, roads, utilities and other public infrastructure at the Highland Bridge site are on track to be completed by the end of 2025, on budget and on schedule.

Meanwhile, plans for thousands of new privately developed apartment units remain on pause. They're the victim of rising construction costs, soaring interest rates and the rent stabilization law approved by St. Paul voters that brought much residential construction to a halt.

The Highland Bridge redevelopment agreement, approved after extensive public debate in 2019, included plans for 3,800 new housing units, as well as ample space for offices, retail and recreation.

"The vision for the site was established pre-pandemic and with very different market conditions," said Melanie McMahon, the city's executive project lead for redevelopment. "It's just a different world that we're in right now."

As a result, developers and city officials are talking about reducing the density of housing and other changes that could get dirt moving on those vacant parcels.

"Given the circumstances of the market, we should be willing to consider changes that may result in either some degree of lesser density or some degree of lesser housing units," said Nicolle Goodman, the city's planning and economic development director. "We have to do the math and do the analysis of what's feasible at this point."

Starting and stalling

A decade ago, Highland Bridge was a sea of concrete, containing remnants of the auto factory that shut down in 2011.

Since then, a new Lunds & Byerlys opened alongside high-end apartments. The Marvella senior living facility was so successful that its developer is building another one. Three income-restricted apartment complexes are filling up, and a medical office building is almost fully leased.

"It's a wonderful place," said Linda Ivey, who lives in Marvella with her husband, Jerry. "We didn't want to be in assisted living where you couldn't walk to see things."

The site is attracting neighbors, too, with its new amenities — a skate park, a dog park, sport courts and walking paths.

"I'd say people are very happy with the Highland Bridge development as it exists today," said Kevin Vargas, president of the Highland District Council. "I also think people that I've talked to are hopeful to see more development come sooner rather than later because there's so much opportunity and potential that we want to see fully realized."

In an April presentation to the district council, representatives from master developer Ryan Cos. said if their 2019 agreement was being executed as planned, the site would have an additional 813 housing units, with 766 more under construction.

To date, about a quarter of the 3,800 planned units are built or underway.

Tony Barranco, president of the north region for Ryan, acknowledged that the row homes and custom single-family homes on the site are going up slower than developers would like. But it's the planned multifamily buildings that are most behind schedule.

Market-rate projects from Ryan and partner developer Weidner, which owns 16 acres slated for apartments, have been stalled for more than two years.

That has ripple effects for future affordable housing projects, which are intended to comprise 20% of the site's total units. They are supposed to receive millions of dollars in funding from increased property tax revenue generated by the market-rate development.

Office and retail development at Highland Bridge is also lagging behind as site planners grapple with lifestyle changes sparked by the pandemic. Roughly a third of the total commercial space planned for the site has been brought to fruition.

"This is a public and private partnership," said City Council Member Saura Jost, who represents the area. "So we really need to get creative together on what we can do to kind of move these things forward."

Next steps

Developers and city planners are now putting everything on the table, questioning whether to change the rules on building heights, zoning restrictions, the financing structure.

Goodman said the master plan for Highland Bridge is "extremely prescriptive," meaning that if any major deviations are proposed, they will likely require more community engagement. From the beginning, the site's density has been a point of tension among neighbors, pitting those advocating for more housing against those concerned about overcrowding and traffic.

"We are looking at whether or not the densities and the project types within the master plan are achievable within the near-term and the long-term," Barranco said. "We are looking at whether or not the financial model that was in place is a financial model that can work in light of the regulatory changes."

After the voter-approved rent stabilization measure stalled housing projects across the city, the City Council amended the law to exempt new construction for 20 years. Even though Ryan at the time requested a 30-year exemption, the company is not currently lobbying for additional amendments, Barranco said.

"The existence of the policy is problematic," he said. "We're now having to try to work on solutions around the regulatory framework that exists."

Other multifamily projects developed in St. Paul over the last two years "have required significant assistance and support from the city," Barranco added.

One example, the Landmark Towers project downtown received tax-increment financing from the city to convert offices into market-rate apartments. Goodman, however, said the city generally does not use TIF to support housing development that does not include income-restricted units.

A representative for Weidner, which tried and failed to overturn St. Paul's rent control law in federal district court, did not respond to requests for comments.

Right now, Ryan and the city are primarily focused on figuring out a plan for the undeveloped block along Ford Parkway to round out the site's northern gateway, Barranco said.

"There's a lot of positive stuff that's happened to date," he said. "And overall, I think we're starting to see what the space could be."