Minneapolis and St. Paul forced to table big projects

Leaders in Minneapolis and St. Paul are focusing on the basics of city governance — repairing streets, responding to 911 calls and supporting residents through the pandemic — while putting off their big projects and major policy changes.

In Minneapolis, meetings to discuss the hotly debated Upper Harbor Terminal redevelopment have been postponed. Discussions about millions in funding for neighborhood organizations and reimagining the city's transportation networks have been pushed to the summer.

In St. Paul, the pandemic prompted the city to postpone public hearings on a tenant protection ordinance and a ban on conversion therapy. A community meeting on the future of Ayd Mill Road was canceled and replaced with an online video.

The coronavirus is causing a major slowdown for the two cities, which have in recent years raised the minimum wage, overhauled zoning and made other changes consistent with a progressive policy agenda for workers and the environment. Now, they're scrambling to find ways to meet the immediate needs of struggling residents while protecting their own workers.

"It's nice to want to change the way things happen, but we don't have the luxury of promoting change at this point," said Minneapolis City Council Member Lisa Goodman. "We have the responsibility to make sure we provide the basic services of the city."

And, when conversations on those more ambitious goals resume, they won't look the same.

Both cities expect to lose significant tax revenue as the pandemic and its response shuts down businesses and banks foreclose on houses. Nearly 200,000 people have filed for unemployment in the Twin Cities and surrounding counties, according to state statistics.

In Minneapolis, the city is predicting revenue will drop up to $200 million, or nearly 12%, though city officials acknowledge that number could change depending on the duration of the pandemic.

St. Paul hasn't released its estimates, but Interim Finance Director John McCarthy told council members Wednesday that his department is forecasting potential losses of up to 70% for revenue directly affected by the pandemic, such as hotel and sales taxes.

Both cities are cutting down on nonessential spending and hiring. In Minneapolis, elected officials and politically appointed employees will likely have wage freezes. The city plans to meet with its unions to discuss changes for those workers.

At the same time that revenue is disappearing, demand for services such as rental assistance and small-business loans is growing.

The St. Paul City Council on April 1 approved allocating $3.3 million to the St. Paul Bridge Fund, which will provide grants to 1,000 low-income families and about 300 small businesses. With a week left in the application period, demand has already outpaced supply. As of Thursday afternoon, the city had received 1,801 applications from families and 833 from small businesses.

Minneapolis Mayor Jacob Frey unveiled a plan earlier this month to provide $5 million in rental assistance and small-business loans. Applications for the small-business aid opened Friday, and a new program to help renters is expected to open applications later this month. In Minneapolis, too, city officials expect to receive applications from more people than they can serve.

Council members say they're on board with the refocusing of city government, even if it means delays to important projects.

St. Paul Council Member Rebecca Noecker said some of her initiatives, including overhauling business licensing and reinstating downtown fireworks, have been put on the back burner.

She said she's pushing for the city to "use the power that we have as a stable, public entity to be as generous as possible."

"I think we should take the hit so people don't have to, if we can," Noecker said. "I would hate to see us calling in whatever is due to us and as a result, inflicting additional damage on our residents or our economy."

In Minneapolis, Council President Lisa Bender said in an interview late last month that officials postponed some high-profile projects because they wanted to find ways to hold public hearings while observing social distancing. The council's meetings are being held remotely, and some council members have said they want to make sure residents have opportunities to weigh in through other avenues as well.

In the meantime, Bender said, they are deciding whether to move other projects forward based in part on whether they have urgent deadlines and on their cost.

"We're also very conscious of the fact that our budget will fall dramatically this year and potentially longer," she said. "So, I think we're working to be planful and strategic about how we might spend any city dollars."

Frey has warned city workers that they need to make major spending cuts. "These cost-containment measures will help keep hundreds of our staff employed for as long as possible," he wrote in an e-mail to city employees. "I can commit to all of you that I will do everything I can to preserve our workforce through this crisis — and I'm going to need your help."

For many of the elected officials, it's the first time they're experiencing a major financial downturn while in office.

During the St. Paul City Council's first remote meeting March 25, member Chris Tolbert, who also serves on county and regional workforce boards, nodded to the seemingly overnight change that leaders face. .

"From three weeks ago, we've had a drastic change in our world, and in our reality," he said. "Three weeks ago, we were talking about the problem of worker shortage."

Staff Writers Miguel Otárola and Andy Mannix contributed to this report.

Liz Navratil • 612-673-4994 Emma Nelson • 612-673-4509