Above photo: An artist’s rendering of the planned residential development at The Heights, a mixed-use development slated to bring 1,000 living wage jobs,1,000 affordable housing units, and strong environmental benefits to Saint Paul’s East Side. LHB Corp.
St. Paul is tapping Inflation Reduction Act funds and the state’s new green bank to turn an abandoned golf course into a large-scale mixed-use development.
Plus, it all runs on geothermal energy.
For nearly a century, Hillcrest Golf Club was home for golf aficionados in St. Paul, Minnesota. Opened in 1921 on land that was originally home to the Dakota people, the 110-acre course was designed by the brother of pro golfer Harry Vardon, grandfather of the modern golf swing. Over the course of its storied existence, the property was bought by Jewish businessmen as a haven for Jewish golfers facing antisemitism and survived challenges from caddy strikes to a fire that engulfed its clubhouse.
In 2017, its owners sold the property. Two years later, as owners struggled to find a buyer due to soil contamination issues that would complicate redevelopment, it was purchased by St. Paul’s Port Authority.
Today, the abandoned golf course is set to enter the next phase of its life as The Heights, a large-scale, mixed-use development that will create 1,000 units of affordable housing and 1,000 living-wage jobs, through several light industrial buildings. Paired with the state’s first-ever geothermal energy system, developers say, the whole project should be net-zero.
And the city is tapping into federal funds through the Inflation Reduction Act to make it all happen, as outlined in a new case study by the Local Progress Impact Lab, which equips local elected officials with tools to build racial and economic justice through local government. The case study aims to serve as a guide for others who want to do something similar.
“We really see the Inflation Reduction Act as providing localities with this once-in-a-generation opportunity to leverage federal funding to advance racial, economic, and climate justice for communities,” says Jillia Pessenda, Local Progress’s Minnesota chapter manager.
St. Paul’s Port Authority, which has experience in cleaning and redeveloping brownfields, is leading the transformation of the golf course as the sole land owner and the primary developer.
“There were some challenges to getting the site redeveloped, which is really why the St. Paul Port Authority got involved,” explains Kathryn Sarnecki, the port authority’s chief development officer. “Mercury contamination was widespread due to historical fungicide use to keep the greens looking nice and green after harsh Minnesota winters. There’s also some petroleum areas, some fertilizer areas, and buried debris.”
Since purchasing the property in 2019 for $10 million, the Port Authority partnered with the City of St. Paul, which is leading the planning process, and engaged with the city’s diverse and working-class East Side community to determine how the project can be as sustainable and equitable as possible.
The private sector wasn’t stepping up, so they decided it would be a good opportunity to create jobs, affordable housing, and “increase the city’s tax base to help support our parks, schools, community services, and all the great things our tax dollars pay for,” Sarnecki adds.
“Early on, the City of St. Paul’s resilience officer asked us if we could make the 112-acre site a net-zero carbon site,” Sarnecki recalls. “We said, well, we don’t know, but let’s figure out what it would take and what it would cost.”
A feasibility analysis showed that a geothermal system paired with solar could create a carbon-free energy source, but that it would cost around $100 million to implement. The project’s housing partners, Sherman Associates in collaboration with JO Companies and Twin Cities Habitat for Humanity, wanted to be sure that the system wouldn’t interfere with affordability. So The Heights team got creative.
“What really made this project work was the energy company stepping up to do the community system,” Sarnecki explains.
A local energy company, Evergreen Energy, created a new nonprofit called Heights Community Energy to design, install and operate an aquifer thermal energy system that will – along with solar power – provide energy to the 10 buildings that will eventually exist at The Heights.
The other two pieces of the puzzle that have been critical are federal tax credit funding from the Inflation Reduction Act and a $4.7 million loan from Minnesota’s new green bank. It was the very first loan made by the Minnesota Climate Innovation Finance Authority (MnCIFA), which was established during the state’s legislative session last year.
“The Heights’ renewable energy system is a prime example of where public financing is crucial to fill the gaps that exist with traditional financing,” the green bank’s executive director, Peter Klein, said in a March press release announcing the loan. “Once the multi-family housing and [light]-industrial buildings are constructed, the development agreement requires the buildings be hooked up to the energy system. At that point, the private sector will be willing to step in and fund the system.”
Once connected, The Heights Community Energy expects to recover about half of the project’s total cost through Direct Pay tax credits from the IRA. Because IRA payments only come once a project is placed into service, the loan from MnCIFA was critical for bridging the gap.
The Heights is also designed to be an all-electric community that meets LEED-Platinum Certification requirements.
The development will also offer several housing and pricing options, including a mix of high- and mid-density housing options — several multifamily buildings, single-family homes, twin homes and townhomes — both for sale and for rent. In addition to residential and light industrial buildings, the community is set to include 25 acres of parks and green space, neighborhood gathering spaces, public art and bike infrastructure.
Infrastructure and site preparation could be ready by 2025, according to the city, and the entire development is set to be complete by 2030.