Downtown St. Paul’s largest property owner says the city’s core is in ‘crisis’

A lawyer for the largest private property owner in downtown St. Paul has lambasted the state of the urban center in a letter to the City Council, painting a dismal picture of downtown’s “very evident crisis.”

The letter, sent July 10, objects to the nonprofit St. Paul Downtown Alliance’s efforts to expand its improvement district, which charges property owners fees in exchange for cleaning and safety services.

“Downtown St. Paul is in trouble,” attorney Kelly Hadac wrote. “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. Skyways are empty. Public and private employees are working from home. I could go on and on but we trust that you understand the point.”

The council will likely vote on expansion this week, at which point the fate of the district would lie in the hands of property owners. If those subject to 35% of the proposed service charges file objections with the city, the proposal would be dropped.

Hadac has long represented Madison Equities, downtown’s largest property owner. Madison Equities is marketing its entire office portfolio following the death of company owner, Jim Crockarell, a staunch opponent of the existing downtown improvement district, which was set up to exclude his properties. The district’s proposed expansion would encompass the Madison Equities properties.

The tone of Hadac’s letter diverges from brokers’ messaging, which presents the Madison Equities portfolio as an opportunity for a buyer to invest in a prime location with iconic landmarks such as the First National Bank building.

Hadac did not respond to a request for comment. He filed objections on behalf of eight Madison Equities buildings, as well as the owners of properties at 249 and 266 E. 7th St.

In his letter, Hadac urges the council to refrain from increasing costs for financially stressed buildings and questions why property taxes would not cover cleaning and safety services. Many owners already pay for private security and maintenance crews, he wrote.

“Any increased tax dollars would be better spent elsewhere, including the hiring of more real police officers to provide enhanced safety,” he wrote.

More than a dozen people testified at the council meeting last week, mostly in support of the expanded district. Dozens more — a mix of developers, condo owners, business representatives and others — sent letters on both sides of the issue.

Joe Spencer, president of the Downtown Alliance, said the improvement district is designed to provide services that go beyond the city’s capabilities. Since 2021, a team of uniformed ambassadors has patrolled the district daily to pick up trash, clean graffiti and offer help to those who need it.

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 — an idea that Hadac called “absurd and illegal.”

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.

“I can acknowledge, and I’m not surprised, by them pointing out some of the challenges that they’re experiencing in their buildings,” Spencer said. “But there’s a very different experience across the street or in adjacent places — and there’s certainly a very different experience when you’re in the downtown improvement district.”