Dismissing court appeal, neighbors look for more affordability in controversial St. Paul housing project

Opponents of a housing development near St. Paul's Frogtown neighborhood have abandoned their legal fight amid promising talks with the developer over the apartments' affordability.

The Frogtown Neighborhood Association and former Planning Commissioner Tram Hoang on June 10 asked the Minnesota Court of Appeals to review the legality of Mayor Melvin Carter's veto of a City Council decision on the development.

Carter's action effectively gave developer Alatus the go-ahead on the $57 million apartment and retail complex on a vacant lot at University Avenue and Lexington Parkway.

On Wednesday, the neighbors and Hoang asked to dismiss the case after a judge questioned whether the court had jurisdiction over the matter.

"The reason we pulled the appeal is because Frogtown right now is in negotiation with the developer to get more significant and deeper affordability," Hoang said. "We wanted to make sure that this appeal didn't get in the way of accomplishing the things that we want in the community."

The Frogtown Neighborhood Association has for months campaigned against the project, saying that the apartments would not be affordable for many living nearby. According to Minnesota Compass data for 2019, Frogtown's median household income is just under $40,000 — well below the city's median income of almost $60,000.

They also worried the development would drive up taxes and rents on other properties in the area. Leaders of the neighborhood association did not respond to requests for comment Wednesday.

Council members and planning commissioners who voted to reject the proposal said Alatus' plan does not comply with affordability goals laid out in St. Paul's 2040 Comprehensive Plan.

But Carter, as well as council members and planning commissioners who voted in favor of the development, said the city doesn't have the legal grounds to reject a project that needed no variances or public subsidies.

Some City Council members said the mayor overstepped his authority by using his veto to single-handedly settle the land-use debate. But City Attorney Lyndsey Olson gave the council a seven-page opinion supporting Carter's actions. "There is no case law in Minnesota to support a claim that the Mayor's veto is invalid," she wrote.

The mayor has also said St. Paul needs more housing at all income levels, and rejecting the project could deter future development.

"Even as we've engaged with our community over the past several years in responding to our housing crisis through an array of strategies and investments, we still have work to do," Carter said in a statement. "As we've seen time and again, our community is up for the task, and I look forward to the critical work that lies ahead."

Minneapolis-based Alatus has said 124 of its 288 units would be affordable to renters making 60% of the area median income, and another 20 units would be affordable to those making 50% of the area median income. The rest would be rented at market rate.

Chris Osmundson, Alatus' director of development, said the company has been having "pretty productive" conversations with the Frogtown Neighborhood Association and housing advocates. Alatus will apply for project-based vouchers from the Minnesota Housing Finance Agency that could further increase the affordability of the development, he said.

The company is on track to break ground in early fall.

"It's been a little bit rough, but I believe that we've arrived at a really good outcome," Osmundson said. "I just think it's an opportunity to use the product as a catalyst for more of the necessary discussions in that neighborhood."