Frogtown rental rehab project focuses on foreclosed, vacant properties in St. Paul

The Frogtown Neighborhood in St. Paul is one of the areas hit hardest by the foreclosure crisis, but as the economy begins to pick up, and as the reality of the light rail draws near, a new wave of investors is starting to buy up properties. To prevent a loss of affordable housing in Frogtown, and to combat the continued problem of vacant homes in the neighborhood, the Greater Frogtown Community Development Corporation (GFCDC) and Project for Pride in Living (PPL) plan to substantially rehab vacant and boarded small rental properties and rent them out as affordable housing.

As GFCDC and PPL move forward with their plans, a couple of hang-ups have slowed the project down. From the get-go, some vocal critics from the Frogtown neighborhood opposed the plan, and recently there has been some controversy over the zoning for individual buildings. In addition, a few technical glitches in applying for Neighborhood Stabilization Project funding have slowed progress. 

Getting into the rental game is something the GFCDC has wanted to do for years, according to Jill Henricksen of the GFCDC.  Before the economy crashed, there was a significant amount of renovation in the neighborhood, which made it too expensive to buy properties.  “We couldn’t make the numbers work,” Henricksen said.  With the foreclosure crisis, it is financially feasible for the organization to try the rental project, and the need is great, according to Henricksen. “So many people have been displaced. Our organization believes all housing should be quality housing.”

In February 2010, the city of St. Paul approved the Housing and Redevelopment Authority, which allows the city to make the needed financial transactions and to approve Neighborhood Stabilization Program (NSP) funding, according to Janelle Tummell, from the City.  In May of last year, another resolution designated GFCDC and PPL as tentative developers of five properties, acquired by St. Paul Housing and Redevelopment Authority (HRA) using NSP funds.

Neighbors’ Reactions 

Last year, on the Greater Frogtown Neighbors Forum, some neighbors expressed concern over the increase of rental units in the neighborhood. The District 7 Planning Council (now Frogtown Neighborhood Association) voted not to support GFCDC’s efforts. 

Though GFCDC is a nonprofit organization, its relationship with city-run funding sources align it with grievances some neighbors have about St. Paul’s lack of green space and services, especially for young people in Frogtown. There are also some who question the amount of funding going toward affordable housing in Frogtown.  “Why aren’t these projects happening in Highland or other parts of the city?”

Fernandez, a real estate agent who previously served on the board of the Frogtown Neighborhood Association (FNA) and who is now on the City’s Zoning Committee said there was some “borderline redlining” in regard to policy toward Frogtown. “Adding affordable housing to Frogtown is like taking a cup of sand to the Mojave desert. We need to retain people in Frogtown,” said Fernandez. “We’ve obviously gone through this large foreclosure crisis… How will we retain people this community who have held out and weathered the storm?”  Fernandez said he was concerned that the larger concentration of rental properties lowers property taxes. And while GFCDC and city officials say they are concerned with preserving affordable housing in the wake of the coming light rail, Fernandez said it’s pure speculation that gentrification will happen.  Besides, he said, “Raising property values is not always a bad thing.”

Not all residents of Frogtown are against rental project. Anthony Schmitz, who serves on a citizen’s panel for GFCDC, said the main thing is that “there’s a whole bunch of vacant houses that need something to happen to them.  It would be great if people would buy them, own them, take some stake in the neighborhood, but that’s not going to happen.”  GFCDC’s solution to rehab properties and rent them is a better alternative to shady investors taking “shoddy housing, cramming them full of people.  Given the reality of the situation, I think it’s okay that CDC is doing these projects.”  At least with GFCDC, if there’s a complaint about a tenant, neighbors know who to complain to, he said. 

So far, GFCDC has acquired seven properties, including 749 W University Ave, 750 Sherburne, 826 Sherburne, 941-943 Thomas Ave., 783 Charles Ave., 711 Charles Ave. and 174 Charles Ave.

Zoning Changes

In some cases if properties are left vacant for more than a year, they lose their zoning status. That may mean a duplex reverts to single-family zoning status, for example. Because they have been purchasing vacant properties, this complicates the task for PPL and GFCDC.

“We have buildings that were operating as duplexes for a very long time,” explained Mary Novak, Senior Project Manager for PPL.  “When that happens, the property has to go back to its original intended use unless you can get a zoning change.” 

When PPL and GFCDC originally conceived the rental project, the most efficient way to go about it was to keep duplexes and/or fourplexes as they were.  “That’s the way we ran the numbers,” Novak said.  “When you have to go back to get a zoning change, you need neighbors to sign onto the zoning change.  If you don’t get enough people to agree, you cannot even go through the process.”  During community meetings, some neighbors have asked that some of these properties go back to being single-family homes.  “That becomes difficult from a development standpoint,” Novak said.  “If you’re doing rental, it’s not an efficient process.” 

This past winter, there was controversy concerning one of the properties, at 941-943 Thomas Avenue, that had been operating as a fourplex before losing its zoning status.  The Frogtown Neighborhood Association denied GFCDC’s application to change the zoning back to a fourplex.  The GFCDC then re-applied for the property to operate as a triplex. 

In another case, last week FNA met to vote on a property on Charles Ave, between Marion and Rice Street.  Because of the property’s proximity to the capitol, they were sending their recommendations to the Capitol Architectural and Planning Board rather than the city, as they had done for other properties, according to Sam Buffington from FNA. 

The property had been operating as a duplex for a while, but had been abandoned for more than a year, so it had lost the duplex status.  Buffington said that some neighbors were concerned about the property remaining a duplex, feeling that it was not a large enough lot.  “They were concerned it was too small,” Buffington said.  “They felt it would better serve as a single family home.” 

FNA made two separate votes, because it was unclear whether they could vote with conditions.  In the first vote, which passed 13-1, the neighbors voted to approve the redevelopment of the building as long as it remained a single family home. In a separate vote, if conditions were not allowed, the neighbors voted not to approve development of the property. Ultimately, the Capitol Area Architectural and Planning Board will make the decision, Buffington said. 

For Anthony Schmitz, his main concern is that homes aren’t “Jerry-Rigged.”  If a property was built as a duplex and served that function well, or was used as a duplex for years, “that doesn’t strike me as a problem,” he said.

Schmitz said that a lot of housing in Frogtown “needs a hard look to ask, ‘Jeez, is it worth putting any more money into this stuff?'” On the one hand you don’t want to rip housing down gratuitously and slam it into a dumpster.  On the other hand, he fears for families putting money into “crummy houses.”

Schmitz has toured a number of the houses that GFCDC has purchased, and believes the organization is “making sensible decisions what can be rehabbed. They have a reputation to defend. I don’t think they’re in the business of slapping paint on a piece of junk. That’s not really what they do.”

Funding Hang-Ups

Finally, there has been some issues in the GFCDC’s applications for NSP funding.  According to Mary Novak from PPL, GFCDC had to redo some of the paperwork for NSP funding.  The city wanted some additional work that wasn’t in the original scope of the project, she said, such as skim coating for the walls, for one of the buildings and other improvements. 

“On some of those old buildings, if they’ve been converted from a singe family home, they may have plaster walls in the next room to dry wall.  If you don’t skim coat it, it won’t look like a clean finish,” she said. 

GFCDC is currently in the process for rebidding contractors, and Novak said she anticipating new budget numbers in the third week of June.  She can’t finalize the budget, she said, until she has the bid numbers. 

Currently, the city of Saint Paul owns all of the properties.  Eventually, the GFCDC and PPL will have joint ownership, with Guardian Property Management managing the property. 

Jill Henricksen, GFCDC’s Executive Director, said the project’s goal is to acquire 20-25 units.  They are currently working with the city to track foreclosed properties, and are working to talk to lenders and to raise additional funds. 

“It’s been a little frustrating,” Henricksen said. “Things have really been in flux… With any kind of project, there’s always bureaucracy. The NSP program is new… For us at the neighborhood level, we’re thrilled that kind of funding is there.  They’ll be able to help us.  At the same time, it’s a slow process.” 

Coverage of issues and events that affect Central Corridor neighborhoods and communities is funded in part by a grant from Central Corridor Collaborative.