Despite a bad economy that has dominated his first 18 months in office, Saint Paul Mayor Randy Kelly is within striking distance of fulfilling a campaign promise to build 5,000 new housing units in the city by 2005.
To ensure the goals are met on time for his ambitious plan, called Housing 5000, Kelly is pushing to issue $25 million in bonds to purchase 90 acres of ripe development land and then resell it to private developers to recoup the loan. Ten million dollars in sales tax revenue will be set aside as collateral for the bond issue. Bolstered by a 6-1 vote by the St. Paul Housing and Redevelopment Authority to begin making plans for the bond sale, Kelly is forging ahead.
"I am very pleased that we are moving ahead with this bold, creative financing mechanism," Kelly said. "This unique strategy is another example of stretching scarce public dollars as far as possible."
City officials told the St. Paul Pioneer Press that the plan could generate up to 2,500 new housing units -- half of Kelly's goal.
Under the plan, St. Paul would acquire sites for development, and then the housing authority would prepare the infrastructure for construction. The city would resell the sites to private developers who propose housing plans that fit city development goals -- including ensuring that at least a fifth of all units are affordable housing.
The five sites have already been identified for purchase as part of ongoing plans to build "urban villages" of single-family homes, townhouses or apartments. City planners and community groups are working with developers to arrange financing and reach agreement on building plans.
At Kelly's urging, the city council agreed last year to set aside $20 million over four years for housing from a portion of the city's Neighborhood Sales Tax Revitalization funds. The $10 million set aside in the first two years will provide the collateral to back the bond.
City Planning Director Martha Fuller said the aim would be for the city to sell the properties to developers for at least $25 million, leaving the $10 million in initial collateral untouched. Only if the sale proceeds fell short, or if the housing authority decides to give a potential developer a break on the sale price, would commissioners dip into the collateral, she said.
Fuller said agreements are already in place to build 1,700 new homes in St. Paul. Combined with the 2,500 new units Kelly's plan would create, the total increase in new units is 4,200 -- just 800 shy of the goal for 2005.
"We have a good, solid housing plan that requires refocused resources and the commitment of our partners," Kelly said.
The city council is expected to vote on the final details of Kelly's plan in late August after more research is completed and the sites are all identified. City Council President Dan Bostrom supports the mayor's bold plan. "Nothing ventured, nothing gained," he said. "When you stretch to do something like this, some people get a little nervous."
Kelly's plan won praise from some affordable housing advocates. "Anything that allows the city to take the initiative is a good thing," said Joseph Errigo, president of CommonBond Communities, a St. Paul-based nonprofit housing developer. Julie Gugin, director of programs for Twin Cities Habitat for Humanity, agrees. "We've never experienced a situation of this magnitude," Gugin said. "I think it's a bold move."
