The St. Paul City Council voted Wednesday to change development agreements for the former Ford plant site, which could mean a lower tax bill for the developers after years of delayed construction.

Ryan Cos., the Minneapolis-based developer responsible for turning the former assembly line into St. Paul's newest neighborhood, said its tax bill is hampering progress and wanted to restructure its tax payments to the city.

So the City Council voted 5-2 to grant a lower "minimum assessed value" on about a third of the Highland Bridge development's parcels, which could result in lower tax bills for the as-yet-unbuilt properties.

With council members expressing both their hopes for the site and mounting frustration more than five years after development agreements were signed, Maureen Michalski, Ryan's senior vice president of development, said the council vote would mean "immediate" development at the site and said work could start there again in the next month.

The properties are currently assessed at $132 million, according to the city. The council voted to approve an assessed value of $58 million in 2026, with the minimum values increasing as development happens.

"Those assessment minimums place a tax burden on the properties, without an offsetting income source," Planning and Economic Development Director Nicolle Newton told the council last week.

The agreement has already been approved by the St. Paul school board. But the Ramsey County Board, which also must sign off on the agreement, tabled its vote for a week. "It's a city issue. They should act first," said Board Chair Rafael Ortega, whose District 5 includes the Ford site.

The overall city budget for next year would not be affected, because the property is part of a tax-increment financing (TIF) district that paid for the city to build streets, sewers and other infrastructure where the Ford plant used to stand.

Ryan will continue paying a base property tax that goes into general funds for the city, St. Paul schools and Ramsey County. The change would only restructure the way the company is paying back the city for spending at the Highland Bridge site.

Some council members said they were frustrated with Ryan's request, especially after the company sought approval this year for a smaller building than promised at the prominent intersection of Cretin Avenue and Ford Parkway.

"Time and time again, this site comes forward asking for changes and tweaks and exceptions," said Council Vice President HwaJeong Kim.

Times have changed

The city and Ryan signed a development agreement in 2019 that said the minimum assessed values of the property would step up over time, as an incentive for Ryan and other developers to get construction moving.

Melanie McMahon, the city's Planning and Economic Development deputy director, and other city staffers said much has changed since 2019. The development was planned and approved before the COVID-19 pandemic and St. Paul's rent control ordinance, and at a time when interest rates had been low for years.

During a Housing and Redevelopment Authority meeting last week, Council President Rebecca Noecker said the problems at Highland Bridge went beyond the pandemic and the economy.

"We're not just here because of COVID. We're not just here because of rent stabilization," she said. "We're here because the partners we contracted with and expected to fill those obligations have not fulfilled those obligations."

Despite her frustration, Noecker voted to amend the minimum assessed values because the new agreement also requires the developers to build affordable apartments, and the developers have agreed not to seek any more subsidies from the city.

Highland Bridge is made up of 44 parcels, of which only a few have been built on. The new agreement would lower the minimum assessed value of 15 parcels in the immediate future, with an assessed value that's $74 million lower next year.

Ramsey County assessors will determine the actual assessment values and tax bills, so it's not yet certain that the developers will pay less property tax in the short term. But lowering the minimum assessed value does open the door to a lower tax bill.

Over time, those assessed values will ratchet up until the end of the tax-increment financing district in 2045, with the additional tax revenue going to pay back the money the city borrowed to build infrastructure at Highland Bridge.

Ortega said the Ramsey County Board needs to better understand how potential changes to density and building heights at the site will affect overall property values. Commissioner Mai Chong Xiong, who requested the item be tabled for a week, said she didn't have enough information.

"I'm just curious about why, in a part of our city where we have some of the highest property values, we would need to amend this TIF district," she said, referring to the tax-increment financing plan that subsidized infrastructure on the site.

Christopher Magan of the Minnesota Star Tribune contributed to this story.