The Empty Nest

With affordable apartments a rare find these days, why is a low-cost, city-owned building in downtown St. Paul 37 percent vacant?

The Seventh Place Residence looks a little shabby next to some of its neighbors. Unveiled in 1916 as the St. Francis Hotel, it's now surrounded by a host of newer projects: the Children's Museum, the World Trade Center, and the world headquarters of the St. Paul Companies insurance firm. At the four-story Seventh Place, rusty air conditioners are bolted onto window ledges, and the brown bricks look like they could use a good powerwashing. But the building is sturdy, it's conveniently located in downtown St. Paul, and the rents range from $340 to $530 a month.

With the vacancy rate for all Twin Cities apartments at about 1.3 percent--to say nothing of affordable units--you might expect that Seventh Place would mirror the market. You'd be wrong. Seventh Place has 130 apartments in all, but 48 of them are sitting vacant. Why?

The St. Paul Port Authority, the city's development arm, owns the property. According to statistics supplied by Welsh Companies, who manages it, there were only two empty units in the building in March 1998--meaning a mere 1.5 percent vacancy rate. But Welsh says they were told by the Port Authority to stop entering into new leases last May, at the same time the Port Authority began negotiating a $1.6 million purchase agreement with the St. Paul Companies for the building and the adjacent, deserted Orpheum Theater. The insurance giant aimed to raze both properties to make way for the expansion of its headquarters.

The move to empty out St. Paul's Seventh Place Residence has ticked off local low-income housing advocates, including Caty Royce and Mari Lecours, of the Community Stabilization Project
Craig Lassig
The move to empty out St. Paul's Seventh Place Residence has ticked off local low-income housing advocates, including Caty Royce and Mari Lecours, of the Community Stabilization Project

With demolition looming, ceasing to lease was a logical enough real estate decision. By the time that deal was inked in August, vacancy had risen to 19 units. The building's tenants were then switched onto month-to-month leases, ostensibly so that they could be served notice and cleared out quickly once the wrecking ball got set to swing.

Then the deal began unraveling: In January the city's Heritage Preservation Commission voted 8-0 to recommend that Seventh Place, the Orpheum, and the nearby Coney Island deserved historic designation, a move that would subject any architectural changes--including the ultimate one: demolition--to review by the commission. The vote prompted an angry Mayor Norm Coleman, who has long backed the expansion as a means to help revitalize downtown St. Paul, to ax three of the commission's 13 volunteer members.

In the wake of the HPC vote, the St. Paul Companies backed away from the deal and withdrew its offer, reasoning that the fight for turf has turned into a public-relations boondoggle. But the Seventh Place apartments are still not being leased to new tenants, and the vacancy rate has skyrocketed to 37 percent.

The Port Authority's no-room-at-the-inn policy has angered local low-income housing advocates, who charge that perfectly good apartments--all of them handicapped accessible--are being kept empty for no good reason. Caty Royce, director of the nonprofit Community Stabilization Project, wants the Port Authority to get busy: "The Port Authority is a public entity, and there is absolutely no reason on God's green earth they should be holding units off the market."

 

Over at the St. Paul Companies, spokesman David Monfried has little to offer by way of certainty about the insurance company's intentions, now that Plan A has hit the skids. "We are reassessing all of our options: We've ruled nothing in and nothing out." He declines to say whether that means the company remains interested in the Seventh Place property now or if it might be again, and adds bluntly that "There's just nothing going on right now."

Even so, the Port Authority refuses to start re-leasing units. "We're obviously in a demolition mode here," says spokesman Tom Collins. "We're trying to interest the St. Paul Companies into coming back into this deal--that's what we've always wanted." Yet he concedes, "There is no offer on the table, so it's kind of hard to consider it." He adds that the Port Authority won't contemplate leasing any of the empty units until it gets a definite thumbs-down from the St. Paul Companies.

Meanwhile, the department has received three other inquiries about the property, Collins says. Nonprofit consultant Don Ludemann and Doug Lamb, owner of the Candyland store that has been anchored in Seventh Place for 20 years, have both expressed interest in purchasing and preserving it as a residential and retail building. But for now, the Port Authority isn't keen on entertaining offers from anyone but their original dance partner. "We obviously prefer the St. Paul Companies offer because of what it does for downtown St. Paul," says Collins, who points to the economic kick the proposed expansion is predicted, at least by civic boosters, to bring. As the state's oldest incorporated business, St. Paul Companies saw sales last year top nine billion dollars; the firm employs some 3,350 workers at its headquarters and has an enviable reputation as a solid corporate citizen (the company budgeted $15.7 million for charitable giving last year). In his March 23 State of the City address, Coleman reiterated his administration's goal of moving an additional "3,000 St. Paul Companies jobs to Seventh Place," though the firm has never specified how many employees might be assigned to a new building.

Earlier this month the St. Paul Planning Commission voted that the properties in question on the block were not worthy of historic designation, and on March 25 the Heritage Preservation Commission affirmed its earlier opinion that they were. The City Council will ultimately settle the tug-of war by ruling on historic designation soon. A yes vote might keep the St. Paul Companies from pursing the matter further, much to the dismay of city officials. A no vote, the Port Authority hopes, could get negotiations with the company back on track, and set in motion complete leveling of the block, Seventh Place and all. As for housing concerns, Coleman spokesman Mike Zipko says that should Seventh Place be demolished, residents would be assisted in finding new places to live: "We are extremely confident that we can find housing to replace those units."

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