Letter to City Council lays bare the crisis facing downtown St. Paul

Last week, I wrote about the bankruptcy of the Park Square Court building in downtown St. Paul and how it is an omen of looming budget problems in the city. Simply put, as in Minneapolis, empty offices have led to cratering commercial real estate values which will push down property tax assessments and revenues. Either spending will need to be cut or other taxes will have to go up.

St. Paul is attempting the latter. The nonprofit St. Paul Downtown Alliance is attempting to expand its improvement district, which charges property owners fees in exchange for cleaning and safety services. The properties of Madison Equities, the largest private property owner in downtown St. Paul, were originally excluded from this, but would be included under the proposed expansion. The Star Tribune reports:

Under Spencer’s proposal, the district would double its budget and triple its size. The funds would help hire additional safety ambassadors and continue to pay for the Downtown Alliance’s safety communications center, which links private security teams, police and social service agencies.

Spencer has also suggested hiring a city attorney exclusively dedicated to cases involving chronic offenders and quality-of-life issues downtown…

Property assessments would be calculated based on a building’s square footage, street frontage and use. Madison Equities would owe about $300,000, about 15% of the district’s private funding in 2025, according to the Downtown Alliance.

A letter to the city council from Kelly Hadac, a lawyer for Madison Equities, lays bare the scale of the crisis facing downtown. Responding to the proposed expansion of the “special service district” (SSD), Hadac writes:

Downtown St. Paul is in trouble. Crime is up. Bullet holes in the glass on the commercial buildings and elsewhere is no longer uncommon. There is rampant homelessness and drug use. Restaurants have gone out of business. Businesses have gone bankrupt. Large buildings are vacant. Operating businesses are fleeing to the suburbs. Skyways are empty. Public and private employees are working from home. | could go on and on but we trust that you understand the point.

There are many examples that demonstrate the crisis that St. Paul currently faces. First, the U.S. Department of Veterans Affairs recently vacated its space in the US Bank Building due to the volume of crime that existed outside of its leased space near the central station. Second, despite having offices in St. Paul for over 100 years, TKDA Is fleeing St. Paul to go to the suburbs. Third, Lunds & Byerlys has announced reduced hours which is most likely a reflection of the crime that continues in St. Paul and the failure of people returning to work in downtown St. Paul. Again, these examples are just a few of many that could be listed in this letter.

In light of the very evident crisis, this is not a time to increase the financial demands upon the owners of real property in downtown St. Paul. These owners already pay overstated property tax bills because Ramsey County has not reduced the values of the buildings to reflect market value. The owners are also paying increased costs for utilities and the like. Adding another financial mandate will be detrimental. And even more, it is very likely that many property owners will not pay the property taxes or the costs associated with the Proposed SSD. What happens then? How will the shortfall be covered? Suffice it to say that the general tax already imposed upon al the property owners should provide for the services that the Proposed SSD claims it will perform.

To a large degree, it appears that the creation of the SSD is a way of taxing downtown businesses on top of the tax they already pay to provide the core services the taxes they already pay should already be paying for. Hadac notes:

Part of the multi-million dollar budget includes the hiring and paying of an attorney to pursue chronic offenders in downtown St. Paul. The City of St. Paul as well as Ramsey County already have prosecutors who certainly can (and should) prosecute all appropriate crimes committed in St. Paul. Placing the expense of an attorney on a select few property owners to prosecute crimes that the City of St. Paul and/or Ramsey County should already be prosecuting is absurd and illegal. St. Paul needs government accountabilty…not private businesses taking over the prosecution of crimes.

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If we take off the blinders, the real situation is this: If the Proposed SSD is approved, then the City of St. Paul clearly wants to place the financial burden of picking up trash in downtown on a select few business owners. But this is something the City of St. Paul should be doing with the general fund tax dollars it already generates. The Property Owners already pay millions in taxes. To impose a new tax upon the Property Owners to pay for people they do not know or control to wander around St. Paul and pick up trash borders on absurdity. In fact, the Property Owners already pay for their own employees to maintain their properties. There is simply no need for more trash pickers and/or ambassadors that have no authority. Any increased tax dollars would be better spent elsewhere, including the hiring of more real police officers to provide enhanced safety.

Downtown St. Paul is in danger of entering a death spiral. As services decline taxpayers leave and services decline still further. This, indeed, is what happened to downtowns across the United States in the 1960s, 1970s, and 1980s. History repeats.