Fact Sheet: How Would 5-Story Buildings—and Another --on Grand Avenue Impact the Neighborhood?

There are many factors that make Grand Avenue inappropriate for such an intensive uses. The current proposed development by Lunds Byerlys at Avon and Grand Avenue—and the precedent it would set for the many other vulnerable sites along East Grand such as that at Dixie’s—with its mass and intensity of use would have lasting negative impacts on both Grand Avenue and the surrounding residential neighborhoods.

It Would Violate the City of St. Paul Zoning Code

Anything over 3 stories is prohibited by the East Grand Avenue Overlay District.

This zoning overlay district was approved by the Planning Commission and City Council in 2006 and was incorporated into the City of St. Paul Zoning Code Article VI, 67.600. It was the result of a recommendation that was incorporated in the last Neighborhood Comprehensive Plan, and was a reaction to and repudiation of the Oxford Hill Condominium development at the corner of Oxford and Grand, which many residents felt was too tall, too massive, and contributed significantly to traffic and parking congestion in the area. This needs to be respected and enforced:  Height is limited to 3 stories and 30 feet for commercial buildings; 3 stories and 35 feet for mixed use residential and commercial buildings; and 3 stories and 40 feet for residential and institutional buildings. As a result of what happened with the Oxford Hill building, the code further specifies that there will be no additional heights allowed for setbacks.  The maximum building footprint is to be no more than 25,000 square feet and total building size, above ground, of 75,000 square feet.  Design must follow those for T2N zoning.  The area of Grand Avenue covered runs from Oakland Avenue to the east to Ayd Mill Road to the west.

The only way that this can be overruled is through variances for height, building footprint and size, and rezoning from the current B2. These require a full public process involving the Zoning Committee of the

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Planning Commission, Planning Commission recommendations and approval, and City Council approval; the latter can be appealed to Minnesota District Court.

Criteria for variances, per Sec. 61.601 of the code, require that these findings be met: (a) The variance is in harmony with the general purposes and intent of the zoning code. (b) The variance is consistent with the comprehensive plan. (c) The applicant has established that there are practical difficulties in complying with the provision, that the property owner proposes to use the property in a reasonable manner not permitted by the provision. Economic considerations alone do not constitute practical difficulties. (d) The plight of the landowner is due to circumstances unique to the property not created by the landowner. (e) The variance will not permit any use that is not allowed in the zoning district where the affected land is located. (f) The variance will not alter the essential character of the surrounding area. (g) The application for a historic use variance under title IX, city planning, at section 73.03.1 of this Code, as authorized by Minn. Stats. § 471.193, subd. 3(6), shall be granted only to a property that is a locally designated heritage preservation site and the use variance is the minimum needed to enable the property to be used in a manner that will have the least impact upon its historic character and the character of the surrounding area.

It Would Be Detrimental to the Character of the Neighborhood

Neighborhood character is central to the appeal of Summit Hill. People move to areas like Summit Hill, first and foremost, because of its unique and historic character. They appreciate the neighborhood feel and sense of community that lower density brings. People meet their neighbors by walking the shaded sidewalks and visiting on front porches and lawns. Tall buildings looming over back yards, reducing privacy, blocking light and creating shadows, will destroy what makes this neighborhood appealing and desirable. Multiple floors with closed doors lining long corridors do not promote community.

Other considerations include:  This is a predominantly residential neighborhood which already has ample housing. This site has been a 1-story commercial building with an adjacent parking lot for as long as records exist, limiting the amount of traffic and parking demand it can generate. It is surrounded on three sides by residential uses: o Single family/R2 to the north on Summit, which is also part of a local historic district; o RM2 and RT1 to the west on Avon, with condos and single family; o B2 with two floors of rental apartments above a single floor of retail across the street; o R4 on Lincoln Avenue across the alley to the south of Grand Avenue.

The burden of increased traffic, parking demand and overall congestion due to developments of this size with a much higher intensity of use would be felt particularly acutely in a residential neighborhood such as this.  This is a historic neighborhood. Directly to the north is Summit Avenue, a locally-designated historic district created in the 1980s to protect the integrity and preserve this treasure that attracts visitors from all over the world. Similarly, the areas directly to the south of Grand Avenue are national- and state-designated historic districts, with protections in place to preserve the unique character of these homes. And, Grand Avenue, itself, is a state-designated district. Across the entire neighborhood, 2-3 stories is consistent, other than the 6-story condominium at Grotto and Grand

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which was built in 1981 when a gap in the zoning code allowed something like that to be build, and the 4-story Oxford Hill development which also took advantage of gaps in the zoning code that the East Grand Avenue Overlay District closed.

It Would Worsen the Traffic, Parking and Pedestrian Safety Issues Along Grand Avenue and In the Surrounding Residential Areas, as well as create additional infrastructure burdens

Large-scale developments will exacerbate existing parking shortfalls. Back when the proposed Lunds Byerlys site housed Knowlans, this block had other uses which were more service-oriented and less intensive in use. Even then, the last parking study by the City of St. Paul, done in 1992, found there was a parking deficit of over 1500 parking spaces on east Grand Avenue between Dale and Milton streets.

Since then, the block between Grotto and Avon has seen increases in the number of more intensive restaurant/food and beverage businesses (e.g., Red Rabbit, Hyacinth, Caribou, Brasa) reflecting the greater trend of people eating out. However, parking, if anything, has gotten worse, with all off-street lots dedicated/reserved for customers of those businesses and even fewer on-street parking spots due to more curb cuts, bus stops and intersection limitations.

In addition, residential permit parking, which was introduced in 1992, limited the overflow parking from Grand Avenue businesses that was creating a burden for residents in the blocks predominantly south of Grand, resulting in one of the largest permit parking districts in the City of St. Paul. It affects 431 households, with over almost 600 annual resident and guest parking permits issued in 2017. It is in effect along Avon between Summit Avenue and Goodrich, as well as along Lincoln Avenue between Milton and Dale streets, plus parts of Grand Avenue between Milton and Avon streets.

Thus, unless there is sufficient underground parking to accommodate Lunds Byerlys employees, customers, apartment renters and their guests, parking will become even more difficult.

Currently, Lunds Byerlys has said it is looking at:  69 units of rental, ranging from studios to 3-bedrooms, with 1.25 parking spaces allocated per unit for a total of 87 spaces.  80 parking spaces for the store. They said they'd need 25 spaces for employees, but it wasn't clear if that was included in the 80 spaces or separate from or above that number.  A potential 20 "extra" spaces, without being specific or answering direct questions about what those would be for. At one point, when someone at the March 18 listening session brought up the residential permit parking on Avon, they said that those could potentially make up for some of those spaces, suggesting that they'd ask the City to vacate parking to some degree on that block.

It's unlikely that Lunds Byerlys would be able to control non-store or residential usage in that location, especially during peak hours. In addition, even if 1.25 spaces per unit covered the needs of residents, it does not account for their guests, service or tradespeople, and other visitors. It is likely that those people would be parking on surrounding streets.

Making the parking more questionable for this development, look at other underground parking in the area calls into question the developer’s ability to provide adequate parking. The 2-story mixed use building at 700 Grand has 53 spaces under a 21,000 sf building, and Trader Joe's on Lexington has 54 spaces under a 14,000 sf building (although it is unclear if that parking area extends beyond the building

Page 3 of 10 footprint or not). Given that, it seems doubtful that L/B could construct 167-187 underground parking spaces on two levels under a 24,000 sf building.

Also of note is that Kowalski’s, a smaller store at 20,000 sf, has 154 spaces and Mississippi Market, at 7,100 sf has 75 spaces for the store and the small tenants on its second floor. Lunds Byerlys, at three times the size, is proposing just 80 spaces—100 if the “extra” spaces are used for that purpose.

Large-scale development would exacerbate traffic congestion and the associated pedestrian safety issues which are already problematic along east Grand Avenue between Dale and Ayd Mill Road. The City of St. Paul has not done a traffic study of Grand Avenue in decades—nobody at the City has been able to recall nor has a record of such a study, even as it did the parking study referenced above.

The population of Summit Hill has declined since the 1990s, likely driven by declines in the average size of households seen nationwide, and the increased proportion of rental households, which skew smaller.

However, there is a consensus among those living to the north and south of Grand Avenue that traffic has been increasing over the years, especially as Grand became more of a destination for visitors from all over the metro area, creating a) congestion which has resulted in more vehicles using neighborhood residential streets to avoid traffic backups at lights and popular intersections and b) pedestrian safety problems due to a combination of more jay-walking and the failure by drivers to respect the crosswalks for those pedestrians obeying the law. More traffic will only make this situation worse.

And, the traffic generated by this development alone could be considerable.  There are currently 59 living units with Grand Avenue addresses between Grotto and Avon. The 69 additional units will more than double the traffic caused by residents, alone.  Grocery store industry statistics from 2016 showed average weekly sales of $11.88/sf and $30.02 spent in an average transaction. Applying that to the proposed Lunds Byerlys with 24,000 sf, the store could be expected to generate $285k/week, resulting in 9500 transactions/week or close to 1,400/day. Even taking into account some very local people who would walk or bike in good weather, and likely make some small/less bulky purchases, that is still a lot of cars coming and going, on top of those driven by residents and their guests.  This is consistent with data obtained from a 2011 parking and trip generation study done at the Lunds Byerlys at Central and University avenues in NE Minneapolis also speaks to the potential impact. The study was conducted over a 2-hour period from 4 to 6 pm on a Tuesday. Per grocery industry statistics, this is a peak time period, but also, with Monday, the least-busiest day of the week; Saturdays typically generate about 50% more traffic. The peak hour in this study generated 150 trips into the store.  Unaccounted for is traffic generated by delivery trucks, garbage/recycling trucks, and other operations-related traffic, which would presumably involve the alley behind the store as well as the surrounding streets.

The infrastructure on Grand Avenue and areas to the north and south is already past its breaking point. Grand Avenue is the same width that it was prior to the US becoming an automobile-centric society, designed for horse and buggy and street cars. These have been replaced by increasing numbers of vehicles, including buses, trucks of all sizes (including delivery trucks for Grand Avenue businesses), SUVs and passenger vehicles, and with parking on both sides of the streets, streets deteriorate more rapidly and, in winter weather conditions, it is difficult to maintain two lanes of traffic without using turn lanes. The north-south side streets are even more problematic, as two lanes of traffic on Avon and Grotto, and

Page 4 of 10 one lane on St. Albans, which is one-way, are tight in the best conditions and almost impassable in the weather conditions of this winter. Alleys are narrow and crumbling, and almost impassable in winter months.

The underlying sewer, water and electric substructures has not been upgraded for decade, if at all. As more population density is added, the burden on this infrastructure has resulted in lower water pressure, pipe breakages, power surges and outages, and more. This has numerous implications for any added density, much less a development of this size.

It is unlikely that the use of other transit modes will ameliorate the impact, as existing mass transit is inadequate and underutilized. Pro-development forces tout the use of mass transit and other transit modalities to justify increased, denser development. This site—and others along the east end of Grand Avenue—has just one bus route (63), which has below-average utilization in a bus system that saw a 4.5% reduction in ridership and a 1.4% reduction in total transit usage in 2018. Between 2013 and 2017, looking at the east and west trips on Grand at the Dale, Avon and Victoria stops combined, the total number of scheduled trips increased by 24%, but the average daily boardings was only up 2% and alightings were up 11%. On other words, average usage per trips was actually down; the added scheduled trips were at best under-utilized.

Bike lanes along Grand Avenue and the north-south streets are a near-impossibility given issues cited above. Most area bikers use Summit Avenue, but as this winter demonstrated—even as a snow emergency route—bike lanes were covered with ice and snow, or rendered useless by cars parking on them as snow builds up on the side of the road.

It is Not Clear That This Neighborhood Needs or Could Support Another Grocery Store on Grand Avenue

When Knowlans was on Grand (1971 until 1997), there was only one other nearby grocery store (within 1 mile), which was the Kowalski’s in the former Red Owl location, purchased by the family in 1983. It was much smaller than the existing Kowalski’s.

There are now 2 grocery stores within 1 mile of this site, 5 grocery stores within 2 miles, and 9 stores within 2.5 miles. All but two of these stores opened after Knowlans closed. Arguably, there are already more grocery options than can be absorbed by the current and future population of the area, especially given the trends in demographics and the grocery industry (see section below). Grocery stores, themselves, have adapted to changing eating habits with expanded prepared food options which comprise a rapidly-growing share of their total sales, as well as online ordering and delivery.

The chart below details the current grocery landscape within just 2.5 miles of the proposed site. Note that this does not even include other grocery-selling venues, such as drug stores (Walgreens is now the 8th-largest food seller by revenue in the US), gas station/convenience stores (such as Super America, Holiday, etc.), nor the prevalence of warehouse stores and clubs such as and Sam’s Club which did not exist back in the days of Knowlans and ccomprise almost 30% of grocery sales in the US.

Also, unlike in the 1990s, there are many specialty food retailers such as Grand Avenue’s popular Golden Fig and West 7th Street’s Cossetta’s, plus the explosion of food delivery and take-out locations including most local restaurants, Grand Old Creamery, Jimmy John’s, Chipotle, Caribou and Starbucks, My Burger, and many more within the same 2.5-mile radius of this proposed location.

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Store Name and Location Distance from Transit & Proximity to Major Lot and Store Size Parking Online Ordering Avon & Grand Travel Arteries & Delivery Proposed Lunds Byerlys N/A Bus: 2 lines (63B and 63K) Lot: .93 acre Two levels underground, TBD 799 Grand Avenue (Avon Travel: 1.1 miles to I94 Dale Store: 24000 sf for store estimated 167-187 spaces and Grand) Street exit, 1.1 miles to 35E incl. apts.; minimal street Note: Highest volume South, 1.0 miles to 35E North parking due to bus stop, Kowalski’s in metro area residential permit parking Mississippi Market Natural 9 blocks/.8 Bus: 3 lines (65, 21 and 21A) Lot: 1.16 acres Surface lot adjacent to No Foods Coop mile Travel: Corner of traffic/transit Store: 7,100 sf; second floor store 35 spaces plus 622 Selby Aveue (Selby and node at Selby and Dale; five with coop administrative overflow lot across Hague Dale) blocks from I94 Dale Street offices, offices for other 40 spaces, some street Opened 1999 nonprofit organizations parking on Dale and Hague (75 total) Kowalski’s Market 8 blocks/1.0 Bus: 2 lines (63B and 63K) Lot: 1.31 acres, shared Surface lot adjacent to Yes 1261 Grand Avenue (Grand mile Travel: Corner of traffic node parking with Mt. Zion lot .92 store 50 spaces; Mt. Zion and Ayd Mill Road) Ayd Mill Road 4-lane highway acres overflow 104 spaces; Opened as Kowalski’s in and Grand; 1.1 miles to I94 Store: 20000 sf including some street parking on 1983 (previously Red Owl), Lexington wine store; partial second Grand and Syndicate (154 expanded 2016 floor offices and restrooms total) Trader Joe’s 17 blocks/1.6 Bus: 4 lines (74A, 74C, 74K, 83) Lot: .66 acres for Trader One level with 54 spaces No 484 Lexington Pkwy S miles Travel: 35E Randolph exit; Joe’s half of property, .61 underground, plus (Raymond and 35E) corner of Lexington and acres for strip mall half adjacent surface lot in Opened 2009 Raymond traffic/transit node Store: 14000 sf including front of store 21 spaces, Note: Highest volume TJ in wine store plus 24 spaces shared with MN, second in Midwest strip mall (99 total) region after Chicago 20 blocks/1.8 Light rail: Green line Lot: 1.24 acres for Aldi Surface lot adjacent to Yes, through 1134 University Ave. W miles Bus: 2 lines (16 and 83) parcel store 48 spaces, plus 47 Instacart (Lexington and University) Travel: 3 blocks from I94 Store: 15000 sf originally, spaces in adjacent White Opened 2005, expansion Lexington; corner of major more with expansion in Castle linked lot (95 total) begun late 2018 traffic/transit node Lexington progress and University Oxendale 21 blocks/2.0 Bus: 3 lines (74A, 74G, 74S) Lot: .57 acres Surface lot 36 spaces, No 1326 Randolph Avenue miles Travel: 5 blocks from 35E Store: 11200 sf some street parking on (Randolph and Hamline) Randolph, corner of Randolph Randolph and Hamline Opened 2018; previously and Hamline traffic/transit node Korte’s 2000, Knowlan’s 1971, Rooney’s 1960s

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Store Name and Location Distance from Transit & Proximity to Major Lot and Store Size Parking Online Ordering Avon & Grand Travel Arteries & Delivery Super Target Midway 17 blocks/2.1 Light rail: Green line Lot: 15.0 acres Surface lot adjacent to Yes, through 1300 University Avenue W miles Bus: 2 lines (16 and 21) Store: 184000 sf store with 9.0 acres; Shipt (Hamline and University) Travel: right at I94 Hamline; approx. 600 spaces Opened as Super format in corner of major traffic/transit 2006 (store originally built in node Hamline and University 1982); wine/liquor added 2015, remodeled/expanded grocery dept. in 2017 Whole Foods 18 blocks/2.1 Light rail: Green line 9 blocks Lot: 2.7 acres Covered parking on first Yes, through 1575 Selby Avenue (Selby miles north Store: 39506 sf on first floor floor adjacent to store 134 and Snelling) Bus: 2 bus lines (84 and A line below 210 rental units on 3 spaces; apartments have Opened in current location rapid bus) floors above 495 dedicated exclusive in 2016; previously at Grand Travel: 5 blocks from I94 underground spaces and Fairview since 1995 Snelling exit; 1 block to Ayd Mill Road south; corner of major traffic/transit node Snelling and Selby

Cub Midway 21 blocks/2.3 Light rail: Green line Lot: 6.38 acres Shares 2380 parking Yes 1440 University Avenue W. miles Bus: 2 lines (16 and 21) Store: 75500 sf spaces in Midway (St. Anthony Avenue and Travel: in Midway Market Marketplace shopping Pascal) shopping center right at I94 center Reopened in 2018, originally Hamline; corner of major opened in 1995. traffic/transit node Hamline and University Midway 22 blocks/2.4 Light rail: Green line Lot: 7.82 acres Shares 2380 parking Only online 1440 University Avenue W. miles Bus: 2 lines (16 and 21) Store: 100000 sf spaces in Midway ordering and (University and Pascal) Travel: in Midway Market Marketplace shopping pickup at store; Former Kmart bought out in shopping center right at I94 center no delivery 2003 Hamline; corner of major Note: Small grocery area traffic/transit node Hamline and inside store University

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Kowalski’s and Mississippi Market Have Strong Local Community and Civic Roots

Through donations and giving programs to local organizations, sponsorships of events benefiting local schools and community organizations, plus enlightened hiring practices that further strengthen ties with their communities, the two established grocery stores in the immediate area have invested deeply in their communities for years. This is not something that Lunds Byerlys is known for, although they do have a charitable giving program.

If we as neighbors and community members are going to pay more than lip-service to the concept of supporting our local businesses and the many ways they benefit from and consequently give back to their communities, we need to support them first and foremost.

Trends in the Grocery Business Argue Against the Potential Success of a Grocery Store in This Location

Grocery is arguably the lowest-margin business under the retailing umbrella, averaging just 1% to 3% net profit margins, overall, and 1.1% average across retail grocery stores. As a result, they are dependent on frequent, large purchases by a loyal customer base for a healthy business. However, 83% of consumers say they regularly visit 4-9 different grocery chain stores over the course of a year, with only 1% saying that they were loyal to just one store. (FMI) This is reflected in the growth of the size and number of food-selling outlets over the past 20 years in the Summit Hill neighborhood, as noted earlier.

Given all the competition nearby, it will be difficult for any grocery store in this location to gain appreciable market share, for both competitive and market trend reasons: o The local retail grocery market is getting more crowded, with the aggressive expansion of Aldi’s (adding 12 stores between 2018 and 2019, expanding/remodeling 35 more), Hy-Vee (targeting 12 stores by the end of 2019), Fresh Thyme (7 stores and growing). Growth is taking place in the low- and mid-end range, not the high end. (Star Tribune, Progressive Grocer) o Also recognizing these trends, Amazon is expanding into the retail grocery market beyond its ownership of upscale Whole Foods, with the opening of “dozens” of stores in major cities selling a broader, different assortment of goods at lower price points. In addition, they are expanding their cashierless concept. (WSJ) o Online sales and delivery are growing at a rapid pace, with online sales growth of 35% in 2018 (IRI/Progressive Grocer) and projected compounded average annual growth of 17% between 2017 and 2022 (Forrester). However, online sales are still loss-leaders for grocers, further depressing profit margins (WSJ). o Millennials and Gen Xers, the two generations most likely to find value in shopping online, are also the generations that report having the most difficulty affording needed groceries (34 percent of Millennials, 36 percent of Gen Xers). Some 54 percent of Millennials and Gen Xers said that they're less likely to make impulse purchases when buying online. (IRI/Progressive Grocer) o Grocery sales are suffering at the expense of consumers eating out or getting prepared food delivered at home, with .5% vs. 2.6% growth, respectively, in 2018. The average household spent $4000 for food prepared at home vs. $3100 for food not prepared at home (eaten out or delivered from a restaurant). (Bureau of Labor Statistics) This is reflected in the growth of the number of restaurants from take-out (Jimmy Johns, Chipotle) to table service (Red Rabbit, Emmett’s, Hyacinth) and casual concepts in between. While grocery stores have tried to respond with more prepared food offerings, this still has not balanced out the convenience of restaurants, especially as home delivery options have boomed, projected to more than double by 2022, with nearly a third of restaurant meals consumed at home (NPD Group/WSJ).

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We Also Need Other Housing Options Than Market-rate Rentals

Summit Hill is already almost 50% rental, and local market data shows that demand for market-rate (vs. affordable) housing is slowing down. Some developers have indicated that they are not pursuing or are postponing further market rate developments.

However, there is continued demand for condos, as evidenced by the successful development at 700 Grand Avenue, on two levels with retail on the first level and condos on the second level, and underground parking— density and a building profile much more in keeping with the neighborhood. Sales data from condos at that location and at 745 Grand show that when units come on , they sell quickly and often for more than their asking prices, speaking to the demand for this kind of housing.

In fact, at the meeting about the proposed development on the Dixie’s site in January 2018, neighbors were clear about their desire for more condos vs. rentals, due to the greater stability and community investment associated with ownership.  This also fills a growing need for empty nesters who want to age-in-place in the neighborhood they’ve lived in for decades, but no longer need the large houses they wanted while their children were growing up. The added benefit is that it frees up single-family houses for the next generation of families.  Given the sales prices for condos currently, condo development supports providing the amenities residents want—such as underground parking—with much less density and its associated negative impact on the neighborhood.

Market-rate Rentals Not Only Do Not Address the Real Need and Demand for Affordable Housing, But Can Also Eliminate Existing Afforable Housing

The City of St. Paul and the Minnesota Housing Task Force’s2018 report all emphasize the need for more affordable housing. There is a widely-held belief that building market-rate rentals “frees up” more affordable housing as those renters who can afford it move up to more luxury housing.

The research does not back this up—and there are some notable downsides to new-build market-rate rentals that could have a negative impact on affordable housing in Summit Hill:  A Federal Reserve study published last year (Anenberg and Kung, 2018) found no "direct estimates of the rent elasticity with respect to new housing supply in the literature." After creating a simulation model based on direct longitudinal data, they concluded, “The implication of this finding is that even if a city were able to ease some supply constraints to achieve a marginal increase in its housing stock, the city will not experience a meaningful reduction in rental burdens. Add 5% more housing to the most expensive neighborhoods and the rents would drop only by 0.5%.”  In fact, other studies have shown that the addition of new-build market-rate housing can cause a ripple effect, driving up rents of more affordable nearby housing and displacing lower-income residents in the process, even if no existing buildings are torn down (Davidson and Lees, 2009; Zuk and Chapple, 2016).

Summit Hill is particularly vulnerable to loss of affordable rentals. Census data shows that Summit Hill’s median rental rate is just slightly above that of St. Paul as a whole ($954 vs. $901, respectively, in 2017). Other than the ripple effect noted above, these lower-density buildings could be attractive as teardowns to developers of market-rate rentals.

Thus, large developments of market-rate rentals jeopardize the charming lower-density apartment buildings that exist along Grand Avenue and elsewhere in the neighborhood, which qualify as naturally-occurring affordable housing. Not only do they support and enhance the historical character and charm of the neighborhood, but they are also affordable compared to new developments such as the Vintage on Selby and

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Snelling, where rents for studios range from $1300 to over $2000 a month, and small 1-bedrooms start at over $1600 and go has high as $2500 a month.

Developments Such as This Are Not Going to Solve the Challenges Facing Grand Avenue, and May Even Cause Harm

Adding population is not a panacea to improving the business/commercial climate on Grand Avenue. Contrary to the belief by some that adding population and density will lead to more business, research and retail trends suggest that this is not the case. Consider that:  The Twin Cities retail vacancy rate is 9.4% per the January 2019 Compass Report by Cushman & Wakefield—the highest rate since 2010. This is despite Census Bureau data showing population growth of 7.5% over the same period, and an unemployment rate of 2.0% heading into 2019.  The problems leading to increased vacancies on Grand have multiple causes. An established local business owner recently told an online forum that he and fellow local retailers felt these included: 1) Steady property tax increases. 2) Mandatory minimum wage increases 3) Paid sick time regulations 4) Sky high rents/leases. 5) Properties owned by out of state corporations or REITs. 6) Internet sales encroachment. 7) Residents struggling to leave their couch to get out and support their business neighbors 8) Diminished retail diversity further encourages #7. 9) Over-saturation of brick and mortar in the broader metro area. 10) Showrooming and a misguided perception that it's always cheaper online.  The Uptown area of Minneapolis has grown in population by 4% since 2000, driven by the construction of several high- and mid-rise apartment buildings in the past few years. The proportion of housing that is rental is now 73%. However, this increased density has not translated into a healthy retail climate, with multiple store and restaurant closures and vacant storefronts. In a recent interview with Phil Roberts, owner of Parasole restaurants in the Mpls/St. Paul Business Journal, he noted that one of their two restaurants in Uptown is struggling, attributing this to a combination of high rent and low weekday traffic. He also noted that with high apartment rents, potential customers are “house poor” and less likely to eat out. Commercial real estate brokers in other articles cite this factor, as well as the loss of parking, increases in crime and changes in retail and consumer buying habits.  The use of Amazon is growing exponentially, and other retailers such as Target and Walmart are seeing as much as 30% of their business coming from online purchases.  There are over 900 housing units on Grand and immediately adjacent on the side streets up to the alleys between Grand and Lincoln and Summit avenues. It is unlikely that 69 more units—or 200 or 300—would make a substantial difference, nor is there any guarantee that “house poor” millennials—as noted in the grocery section and above--will shop on Grand, just as they appear not to be in Uptown.

And, the increased traffic, parking and pedestrian safety issues that accompany increased density could actually drive potential visitors to Grand Avenue away. Even for current Summit Hill residents, a neighborhood survey done in 2018 showed a perception that traffic, parking and pedestrian safety are already problems.

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