Oak Park Heights objects to federal relief funds for Stillwater retail/housing development – Twin Cities

Oak Park Heights officials are crying foul over Washington County’s plan to make the city of Stillwater a sub-recipient of COVID-19 relief funds to bring sewer and water to the southeast corner of Minnesota 36 and Manning Avenue.

The county board is slated to vote on the $750,000 grant on Tuesday. Stillwater would be the first municipality to receive such a grant from the county; the grant would supplement the $2 million Stillwater is contributing to the project, said Jennifer Wagenius, deputy county administrator.

Plans call for a Hy-Vee grocery and about 200 luxury apartments. The $50 million project, called Central Commons, is the largest retail development proposed for Stillwater in the last two decades.

The Stillwater City Council approved in May a tax-incentive plan that includes a 15-year property-tax abatement worth about $3.145 million.

Stillwater had asked Washington County to consider $750,000 in tax abatement for the project, but county officials instead proposed using funds from the American Rescue Plan Act of 2021, Wagenius said. The ARPA provided billions of dollars in emergency funding for state and local governments to respond to the COVID-19 pandemic.

ARPA funds can be used to aid in certain infrastructure issues, including sewer and water, she said. Washington County received $51 million and has allocated about $40 million. Among the projects are: $8 million for heating and cooling improvements at the Washington County Government Center in Stillwater; $6.8 million for a 50- to 75-bed hotel to be converted into a 30-bed shelter; and $700,000 to replace the boat launch at St. Croix Bluffs Regional Park.

But officials in Oak Park Heights are questioning what criteria county officials are using to make Stillwater a sub-recipient of the ARPA funds.

“Is this a proper use of public funds to basically subsidize a private business?” said city council member Mike Runk. “The money should be spent for the common good of the public, not solely for private interests.”

SEEKING AN ‘OPEN PROCESS’

Before the county board votes on sub-recipients for ARPA grants, they should establish an “orderly and open process,” Runk said.

“They should establish a process that is clearly laid out and open to the public,” he said. “How much money is available? How can it be used? How can cities and townships apply? What are the criteria? When the money is awarded, there should be a public discloser of all relevant information.”

Runk said he is particularly concerned about how a new Hy-Vee could affect a Kowalski’s grocery store, which is located in Oak Park Heights.

“This is a subsidy for Hy-Vee,” Runk said. “Washington County should not be in the process of subsidizing a company that is going to come in and compete with current businesses.”

Oak Park Heights City Administrator Eric Johnson said county officials told him Washington County would follow the “guiding principles” of its economic development tax-abatement policy. But the Stillwater project does not demonstrate meeting those criteria because it does not have a regional impact, does not create livable-wage jobs or affordable housing and does not include transit-oriented development, he said.