West St. Paul sought to attract apartments and businesses. Is the city accomplishing that goal?

On paper, the project looked like any modern apartment building in West St. Paul.

Four stories with 65 affordable units on a 1.85-acre lot, supplanting a Tudor-style home with red trim and encircled by tall trees.

But concerns soon crystallized, complicating developer Reuter Walton’s plans for a housing complex at 212 Thompson Ave. E. Neighbors like Chris and Jon Gustafson contended a street mostly lined with single-family homes was no place for a multi-level rental property. Mayor Dave Napier said homeowners in the building’s shadow would “never see a sunset.”

The heated debate over the project exemplifies a challenge facing West St. Paul officials: how to expand the city’s affordable housing inventory amid a statewide shortage while minimizing the impact on nearby neighborhoods. News of proposed rental housing often produces pockets of backlash in the first-ring suburb, with some residents calling for investment in amenities — movie theaters, community centers and other businesses — over apartments.

That tension defined debate over the proposed four-story complex. One council member argued residents wouldn’t have enough places to park. Another said the residential project strayed from the city’s goal to seed certain areas with equal amounts of housing and commercial space.

The discussion concluded Dec. 9, when the City Council capped off a nearly four-hour meeting by voting to deny the developer a permit for the project.

“We don’t deny often,” Council Member John Justen said at the meeting. “So this is uncharted ground.”

Community Development Director Ben Boike said most new multi-family housing has filled up at a record pace, demonstrating a continued need for apartments. Still, some elected officials admit the city has struggled to attract commercial development alongside rental housing in mixed-use areas — an ambition outlined in West St. Paul’s long-term land use plan.

West St. Paul residents aren’t imagining the significant share of affordable and market-rate apartments that has dotted the suburb in recent years.

City Manager Nate Burkett said officials have expanded housing options for renters in their corner of Dakota County, which faces an overall shortage of nearly 7,000 homes for extremely low-income renters.

Metropolitan Council data shows complexes with five or more units made up roughly half of West St. Paul’s housing stock as of 2023, with the city permitting over 600 units in 2021 alone. About 250 of them were considered affordable for residents earning 60% of the area median income.

Compare that to nearby Mendota Heights, whose population is a little over half of West St. Paul’s yet boasts a median household income that’s almost double its eastern neighbor. There, complexes with five or more units made up about 18% of the city’s housing stock in 2023. Mendota Heights, which hasn’t added any affordable units since 2003, still has mostly single-family homes, Met Council data shows.

Burkett attributed West St. Paul’s relatively significant share of apartments to its location.

“I think that we have to recognize that as a first-ring suburb, and being close to transit and being close to a lot of job opportunities, that probably was naturally going to happen,” he said.

Many recent construction projects have demolished existing properties — a vacant church, a shuttered Kmart — to make way for new housing. Another ongoing project will fuse retail and housing: Greco, a developer, is partnering with the city to supplant a since-demolished YMCA at 150 Thompson Ave. E. with over 400 market-rate apartments and nearly 30 townhomes, plus a restaurant, plaza and stage.

Yet some elected officials contend redevelopment that brings new commercial space and amenities lags — despite the city’s long-term land-use plan calling for that construction in mixed-use areas.

Mayor Napier said, “We’re not getting the retail that we really wanted with our housing.”

The reasons for that imbalance vary. Justen said housing is a safer investment for developers amid an unrelenting demand for rental units. Napier echoed the council member: “The more units” for a developer, he said, “the more money.”

Then there’s the issue of geography.

When Paul Tucci, an executive at the development firm Oppidan, was planning a four-story apartment building on part of the old Thompson Oaks golf course, he said there wasn’t a discussion about adding a retail component. The complex’s location is about a mile’s drive from some stores lining Robert Street, West St. Paul’s main thoroughfare.

“It would have been really difficult to try and convince any retailer to come off of Robert Street and go to a side street,” Tucci said.

Justen, who owns a guitar store, has pushed back on the idea that customers won’t frequent businesses outside the main corridor, arguing that independent businesses can thrive even if big-box stores have struggled.

The city, he added, needs to pair apartment projects with commercial growth.

“If you want to have jobs in the vicinity for the people that live in your housing,” Justen said, “you have to have places for them to work in your community.”

He said the city can encourage that by buying properties in “prime locations” and then selling them to, or partnering with, developers amenable to investing in commercial space. That’s how the YMCA redevelopment project came to be. After Hy-Vee abandoned plans to build a grocery store at the site, the city bought the land and teamed up with Greco, the developer, on a mixed-use project.

Burkett, the city manager, described growth in West St. Paul as a balancing act between boosting affordable housing stock, keeping nearby homeowners content and adhering to the city’s vision for long-term growth.

But when it comes to the affordable housing crisis, he said, “West St. Paul can’t solve it by itself.”