St. Paul City Council stalls Concordia's purchase of a Midway building

Concordia University's plans to buy the Central Midway building in St. Paul were halted Wednesday when the City Council refused to vote to allow the Port Authority to finance the purchase.

The Port Authority is planning to issue $5.5 million in bonds to help Concordia buy the building at 393 N. Dunlap Street. Concordia already rents about a third of the building, located less than a mile from campus.

The council voted Wednesday to delay voting on the bond issue until its next meeting on Feb. 6. Council members said they're concerned about losing property tax revenue when the tax-exempt university takes over the building, and mentioned that the Port Authority, a city agency, has previously advised the city against developments that would result in a loss of tax revenue.

"This is unusual coming from the Port Authority, because I know you've been staunch advocates in not converting our taxable land, especially so very close to our Green Line investment and the interstate highway," Council President Amy Brendmoen told Peter Klein, the Port Authority's vice president of finance. "I guess I don't understand why it's necessary for the nonprofit entity to own the property."

Klein told council members that the Port Authority is issuing the bonds at the city's request, and that the delay in council approval would create "a hardship."

"The financing is scheduled to be closed by the end of the month, and so the bondholder, the financier, everybody has the expectations of closing before Jan. 31," he said.

Government agencies issue conduit revenue bonds to outside parties, which are then responsible for repaying the debt. According to a Port Authority document outlining the bond deal, neither the authority nor the city would be held liable for the debt. As the issuer, the Port Authority would collect annual fees — calculated as a percentage of the debt balance — until the bonds are paid off.

Port Authority President Lee Krueger said in an interview Thursday that the authority has advocated against rezoning commercial and industrial areas in St. Paul, but in this case is simply serving as a lender. After the council's decision to delay voting, he said, the authority is waiting to see how the university wants to proceed.

"I think the key thing is what Concordia wants to do," he said. "We're not really driving this one."

A statement Thursday from Concordia spokesman Tad Dunham said the university wants to buy the Central Midway building to expand programs including business and health science. Concordia does not plan to occupy the whole building, the statement said.

The council's decision to postpone the vote "could delay the purchase and could hinder the institution in its academic objectives," the statement said.

Ramsey County property records show the 2019 proposed property tax bill for the Central Midway building, which includes city, county, state and school district taxes, is $202,526. According to Brendmoen, the city will lose $46,000 a year in property taxes if Concordia buys the building.

St. Paul already has a large share of tax-exempt properties, including government buildings, higher education institutions and churches. In an interview Thursday, Brendmoen said this year the council plans to re-examine a city policy that allows tax-exempt charter schools to open anywhere in the city, regardless of zoning.

On Wednesday, Council Member Rebecca Noecker said council members have asked city staff for information on the number of properties taken off the tax rolls, but haven't received it.

"I'm really concerned about death by a thousand cuts when it comes to these individual votes that we take on taking property off the tax rolls, even for the best purposes," she said.

Emma Nelson • 612-673-4509