St. Paul City Council/HRA Joint Meeting: TIF and CDBG Annual Updates - June 3, 2026
St. Paul City Council/HRA Joint Meeting: TIF and CDBG Annual Updates - June 3, 2026
The meeting featured two presentations: an annual update on Tax Increment Financing (TIF) by Jenny Wolf of PED, and an update on Community Development Block Grant (CDBG) and related HUD entitlement grants by Beth Elric, Grants Administrator. Council members posed detailed questions on mechanics, impacts, and policy considerations. No formal votes were taken.
Tax Increment Financing (TIF) Presentation
- Jenny Wolf explained TIF basics: a state-authorized tool allowing the HRA to capture increased property taxes from development to finance eligible costs that otherwise would not occur.
- St. Paul has 57 TIF districts generating increment in pay 2026 (47 HRA-administered, 10 Port Authority) with anticipated total collections of $32.7 million (HRA districts $28.5 million, 87%).
- Current capture rate is 6.08% of the city's tax base, well under the 10% threshold recommended for AAA credit rating.
- Outcomes from HRA TIF districts include 7,400 new housing units, nearly 2 million sq ft of commercial space, over 300 hotel rooms, and 4,000 parking stalls.
- Two types of districts: Redevelopment TIF (requires blighting conditions) and Housing TIF (for affordable housing). Both have 26-year maximum collection periods.
- Pooling: up to 35% of tax increments in a redevelopment district can be used for admin (max 10%) and affordable housing; at least 10% must go to affordable housing. In housing TIF districts, pooling percentages vary. The 65% of increments must reimburse project costs within the district.
- Council President Maker asked about the school district's treatment: they receive market-value-based referendum taxes even within a TIF district; only the tax-capacity-based levy is affected.
- Councilmember Bowie requested clarification on the 65%/35% split and how eligible costs are determined.
- Collections in pay 2025 were 90% of expected revenue; reductions due to property tax petitions and refunds.
- Decertification: TIF districts must decertify when in-district qualifying expenditures fall below 65% of cumulative collections. Early decertification is allowed if obligations are met; the HRA typically keeps districts open only to continue pooling for affordable housing. Council Vice President Yang and Council President Maker discussed whether the council should have a formal decision point on early decertification. Director McMahon noted state law is prescriptive and internal practices guide decisions, and that council members can be notified of upcoming decertifications.
- For pay 2027, five districts are expected to decertify early (three sub-districts of Emerald Park Redevelopment TIF, Phalen Village uncommitted sub-district, Pioneer Endicott). The released tax capacity could reduce city taxes for a median-value home by an estimated $9.11 per year from statutory expirations and $18.27 total including early decertifications (a 1.26% reduction).
- Councilmember Coleman noted the capture rate trend (declining) contradicts public narratives of overuse; Wolf attributed it to recovering tax base and decertifications.
Community Development Block Grant (CDBG) Presentation
- Beth Elric presented on the city's HUD entitlement grants: CDBG ($6.7 million in 2026), HOME ($1.3 million), and Emergency Solutions Grant ($500,000+).
- The 2025-2029 Consolidated Plan guides spending; annual action plans are approved each April. Current priorities: new housing, housing rehabilitation, economic development, public services, public improvements, and remediation of substandard properties.
- At least 70% of CDBG funds must benefit low- to moderate-income persons. Up to 20% can be used for administration and up to 15% for public services.
- Regarding federal funding outlook: President's budget proposed zeroing out CDBG and HOME. On May 21, the House Transportation-HUD Appropriations Subcommittee advanced a bill providing level funding for CDBG but with a 60% cut to HOME and a 6% cut to ESG. The Senate has not yet proposed. The bill also would exempt CDBG and HOME from the Build America, Buy America regulation for prior years, which has caused delays.
- Timeliness: HUD requires no more than 1.5 times the annual grant on hand 60 days before the end of the program year (June 1). Causes of non-timeliness include program income, returned funds, and unused project allocations. Out-of-cycle projects are introduced as needed.
- Of the $6.7 million CDBG allocation, about $4 million is allocated through the city's biennial CIB process. The remaining funds cover administration (~$1.4 million), public services ($540,000 for Right Track youth employment via Parks, $100,000 for Black Nurse Program via Ramsey County), direct project costs ($435,000), and other items.
- Council President Maker confirmed that the House bill restores CDBG level funding but cuts HOME and ESG. Councilmember Coleman asked about the 15% public services cap; Elric confirmed the city is well below that threshold. Council Vice President Yang inquired about the process for reallocating the $345,000 previously used for district councils (now redirected to North End Neighborhood Organization and NeighborWorks). Elric explained that the annual action plan process is used for unallocated funds, and changes to the CIB process would need to be made prior to the next two-year cycle.
- Chair Johnson asked how larger projects (e.g., community centers) get considered; Elric noted that PED competes within the CIB process and that out-of-cycle funds can assist city departments after project cancellations (e.g., North End Community Center).
- Councilmember Bowie asked about linking spending to consolidated plan goals (e.g., housing rehabilitation); Elric clarified that the five-year plan identifies needs, annual action plans allocate funds, and not all goals need to be funded each year. The single-family rehab program is suspended, but multifamily rehab continues.
Key Outcomes
- No formal actions or votes were taken.
- The HRA is expected to bring forward early decertification actions for five TIF districts in the future.
- Council members expressed interest in a formal policy or notification process for early decertification decisions to weigh trade-offs between affordable housing pooling and property tax relief.
- The CDBG update highlighted significant federal funding risks and the city's reliance on the CIB process for capital project allocations.
- The next annual action plan (for program year 2027) will be presented in April 2027; the next CIB process for CDBG capital funds is expected in the upcoming year.
Meeting Transcript
Councilmember Bowie. Councilmember Coleman here. Councilmember Kim? Here. Councilmember Joes. Here. Councilman President Maker? Here. Chair Johnson. Here. All seven are present. All right. Thank you guys. So we have two presentations today. One on the tax increment financing, so TIFF, and then another on the community development block grant. So CDBG. And first up, I have Miss Wolf who will be presenting on TIFF as well. The presentations are attached as well for folks who are looking in. This is item number one for discussion. So thank you, Ms. Wolf, for making the time over to uh come across the street here to give us this presentation. We appreciate just you taking some of our questions in advance. Um I think we were able to cover quite a few things in our previous conversation, but just to preface, there were several um different topics that came up throughout the year last year as a part of the budget process. There was a TIFF district that was decertified last year, which prompted questions as well. So I was just wanting to and more insight when it came to just learning more about the process overall and the process after decertification. There's actually quite a few different things in here that I think will be not new information to our council members, but definitely good refreshers, especially for community members who may have been watching our TIFF presentations that we've now had every year since we've been here. But really, really excited to hear your presentation. Welcome, Miss Wolf. Oh, good morning, Chair Johnson, thank you, and members of the city council. Uh, my name is Jenny Wolf with PED. I will be presenting today on tax increment financing with annual update information. The summary of topics listed here is all included in my slides, but many uh will be very brief as they have been included in prior presentations. For example, what is TIFF? TIFF is authorized by state law and enables the HRA to capture the increased taxes to finance development that otherwise would not occur. Here is an illustration from the State Department of Revenue that I like to use as a classic example of TIFF. It demonstrates that when properties have declining values due to blighting factors and disinvestment, the taxing jurisdictions will benefit from a stabilized taxable value, creating a steady revenue stream, and then they'll realize the gain when the TIFF district expires, increasing the overall tax base. How does TIFF work? At a high level, when a new TIFF district is certified by the county, they set the original market value tax capacity that will be fixed for the taxing jurisdictions, and then they calculate the increased tax capacity each year and remit the distribution of the taxes from the increased value to the TIFF authority. The taxes from the value in place prior to the creation of the TIFF district will continue to be sent to the taxing jurisdictions. The local tax capacity based taxes from the increased value will be sent to the TIFF authority. And in the case of the HRA or the port authority, all property taxes generated from other tax levies would be sent to the applicable taxing jurisdictions on the full value of the development, which includes market value-based taxes for the school district and state levied taxes for commercial properties. This slide includes illustrations from the Office of the State Auditor reflecting the full payment of taxes by TIFF properties and the purpose of capturing the increased taxes to pay the eligible costs that enabled the development to occur. And this slide shows a graphical depiction of the distribution of an annual tax payment. And this is an actual, this is actually the proposed uh TIFF district graphic. So this reflects a housing only project, so there isn't any commercial taxes, and it uh reflects a pledge of 65% of the collected tax increments to cover the eligible costs, enabling the development to occur. And this is approximately 53%. You can see a little over half of the pie of the total tax payment, which is the lighter blue slice, and then the remaining 35% of the collected tax increments are for admin and pooling for affordable housing, and this equates to an additional 28% of the tax payment, and that is 8% in the orange slice for admin and 20% in the gray slice for affordable housing. This leaves 19% of the tax payment that is remitted to taxing jurisdictions. That's the darker blue slice. Reflect in the bar chart, the large distribution of market value-based taxes to the school district in the green bar, which in this case reflects an amount 16 times greater than without the creation of the TIFF district.
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