Frustrated by New Business Options?: Why We Get What We Get in West St. Paul

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Lately it seems like every time a new development is announced in West St. Paul, there’s consternation that it’s not what people wanted. There’s frustration that we seem to have a lot of fast food, auto parts stores, and apartments.

Residents aren’t alone in that frustration: “We came on the council thinking we’d have more influence in getting a Wendy’s here, for example,” Mayor Dave Napier said during a recent town hall meeting. But the City Council just doesn’t have that kind of power.

There are specific reasons why we get what we get in West St. Paul, and while we don’t have complete control there are some things we can do.

Let’s explore the realities of why that is and hopefully manage expectations about what West St. Paul can do to attract or deter certain businesses. We’ll look at the big picture reasons and then explore some common questions such as sit-down restaurants, apartments, small businesses, entertainment, and more.

The Big Picture

There are three main reasons why the city can’t dictate what businesses come to town:

1. It’s a free market.
2. Zoning and ordinance limits have their limitations.
3. Incentives can only do so much.

Let’s drill down into each one…

1. Free Market

“As much as we, as a city and as private citizens, wish we could pick and choose what businesses come to West St. Paul, we can’t force anyone to come,” said Samantha Green, chair of the Planning Commission. “Much like we can’t keep any business that falls into our zoning requirements away.”

First and foremost, this is a free market, capitalist society. If you want the city to dictate which businesses come to town, well, that’s a government-controlled system more akin to communism or socialism.

“We can’t control property that we don’t own,” said the city’s Community Development Director Jim Hartshorn.

If you own a plum piece of real estate on Robert Street, you have the freedom to sell to the highest bidder. And that’s frequently what happens. A lot of property on Robert Street is owned by people who live out of state and their main concern is often the bottom line. 

Which leads us to the other component of a free market system: money. Profit determines what types of businesses come to West St. Paul. You may not think Cane’s chicken fingers are that great, but the drive thru line wrapped around the restaurant and spilling onto Robert Street says otherwise. The market has spoken. 

Do we really need a third standalone car wash or a fourth laundromat? Whether or not we need them isn’t the point—a developer thinks they can make money. You can bet developers have done their research and know what a given market can support. They’re unlikely to invest millions in a project if it’s not going to pay off. 

The free market is perhaps the biggest factor at work in what comes and goes in West St. Paul. 

2. Zoning and Ordinances

While we are in a free market system, we actually put a lot of limitations in place to restrict where and how businesses can operate. Thanks to zoning laws, a gas station can’t open next to a single-family home for example.

West St. Paul wields a lot of power with our zoning laws and ordinances. We already limit a number of types of businesses, including pawn shops, alcohol and tobacco stores, massage parlors, auto shops, sex-related businesses, and more. The limitations can be about location (no bingo halls within 600 feet of schools, churches, or residential property), operations (selling liquor requires a license and compliance checks), or even physical layout (the Comprehensive Plan requires most businesses to abut Robert Street).

But it only goes so far.

“If they fit all the code and zoning and they’re not asking for public funds, we don’t have a lot we can do to stop something that may not be the number one priority for the city,” Council Member John Justen said during a recent meeting.

This begs the question, how far can the city go with zoning and ordinances to limit businesses? We could ban national chains (like this extreme approach in New York), drive thrus (as recently proposed by a former mayor), or some list of “undesirable” businesses. But there are often unintended consequences—most restaurants want drive thrus these days, not just fast food, so if you ban drive thrus you could be keeping out sit-down restaurants as well. 

This restrictive approach assumes the “right” business will come along. But what if they don’t? Driving away business could leave us stuck with vacant storefronts. West St. Paul already has a lot of vacant retail space. How picky can we afford to be? 

3. Incentives

The city can only do so much to limit businesses, but what can we do to attract businesses? 

Recruiting is an option, and Hartshorn is aggressive in reaching out to potential businesses. We can pick and choose which businesses we recruit.

But realities still come into play. Multiple sit-down restaurants considered the former Perkins site, but they all rejected it as too small to accommodate a takeout window. And we’re always at the whim of the land owner. That’s what happened with the former Bakers Square site—Crew Carwash made an offer too good to resist after mere days, before Hartshorn could even make a case to other developers.

The city can certainly welcome and recruit businesses, but at the end of the day there’s only one incentive that really talks: money. The city can throw taxpayer money at potential businesses in the form of grants (several local sit-down restaurants recently used city grants to remodel), cheap land (if the city owns the land, a lower sale price can be an incentive), or reduced taxes (the ridiculously complicated tax-increment financing or TIF). 

The challenge with money as an incentive is that there’s only so much to go around. With all the needs in the city, from roads to sewers to public safety, subsidizing private business is rarely at the top of the list.

“We don’t have money to pay up front,” said Hartshorn. While incentives help sweeten a deal, they’re often a small piece of the pie.

Deciding factors on incentives are if the project creates market value, if it’s something the community wants or needs, and if it’s necessary to make the project happen. 

“We won’t give money to fast food or laundromats or the car wash—they came in on their own,” said Hartshorn, referring to Crew Car Wash and Tumble Fresh Laundry. 

Whatever incentives West St. Paul can offer, they don’t overcome the economic realities. It goes back to the free market. 

Specific Issues

That’s a general overview and of course there are caveats and exceptions to everything. But let’s look at some of the specific questions and issues that have been raised in recent years.

Sit-Down Restaurants

A lot of people clamor for more restaurants in West St. Paul. We’ve certainly lost restaurants over the past few decades, but we currently have around 60 restaurants. That number would easily land us on this list of most restaurant-dense cities.

“We probably have twice the restaurants of most towns this size,” said Hartshorn. 

That list of 60 restaurants is definitely weighted toward fast food. Some people specifically want sit-down restaurants, and we’ve got about 10 (and we did just welcome FoodSmith last year, and that required a parking variance).

So why can’t West St. Paul attract more new sit-down restaurants? 

This is an issue where we’re facing a double whammy. 

First, national trends: Sit-down restaurants are on the decline. This started before the pandemic. In the mid-2000s, sit-down restaurants accounted for 53% of the restaurant industry. As of 2016, fast food claimed that 53%. Fast casual dining (think Chipotle, Noodles, Panera, etc.) is also quickly growing based on a preference for “convenience, quality, portability and healthfulness,” according to Darren Tristano, president of the restaurant industry tracking firm Technomic.

Second, local realities: Developers look at median home value and household income, and West St. Paul’s demographics are going to be on the lower end. Our working class economy is a much better fit for fast food and fast casual restaurants, which is why we have so many. 

Given the national trends and the local realities, we’re not likely to get many sit-down restaurants. We’re competing against the entire region, and our numbers just don’t compare. 

“Let’s celebrate and support the businesses we have here,” said Council Member Lisa Eng-Sarne. “There are almost 60 restaurants in our five square miles and many of them independently and West St. Paul-owned, including Amore Coffee—our local gathering place; El Cubano—a treasure that St. Paul often tries to claim; and FoodSmith—a brand new sit-down restaurant that opened a week before the pandemic and got hit hard. I believe we will see more unique businesses coming to our city with the recent residential developments and I’m so excited for the opportunity for our community!”

Large-Scale Retail

Another common question is why can’t West St. Paul attract large-scale retail shopping, like Kohl’s or an enclosed mall. 

Again, we’re facing an uphill battle with both national trends and local realities. 

Nationwide, enclosed malls aren’t doing so well. Nor are the large-scale retailers that often anchor those malls. One industry expert expected a full third of U.S. malls to close by 2030. With the pandemic, he revised that estimate to 2021. 

And locally, we’ve already seen that story. The Signal Hills mall may have been groundbreaking when it opened in the 1950s. But as malls became ubiquitous across the Twin Cities and especially with the opening of the Mall of America in 1992, Signal Hills couldn’t compete as a regional attraction. West St. Paul lost the enclosed mall as well as JC Penny and Herbergers more than 20 years ago. They’re not coming back.

Again, it’s a matter of demographics. Developers look at our population, our home values, and our household income. They know how much a store can make in an area and they can do the math. 

Everybody loves to mention Kohl’s, but in addition to the above realities, with existing Kohl’s stores in Bloomington, Cottage Grove, Eagan, Roseville, and Woodbury, there’s no way this national chain would open a new store in West St. Paul. 

Entertain Me

How about something to do? Many people have clamored for some entertainment, whether it’s a movie theater, bowling alley, roller skating rink, arcade or something else. Again, national trends point the way: bowling is slumping, the economics of roller rinks are hard (and COVID-19 killed the closest rink, Fun Zone in Woodbury), and movie theaters were slumping before the pandemic and now face an uncertain future. If Mall of America struggles to maintain entertainment options, how can West St. Paul compete?

Some of this is nostalgia for the past. West St. Paul had multiple theaters, but they all closed as theaters shifted to the megaplex model. We also had a bowling alley, but it went bankrupt and the city stepped in, ultimately leading to the deal that brought L.A. Fitness to West St. Paul.

What about something more homegrown, like a community center? This is an entirely different idea and something that could work. But there’s one big problem: money. 

A community center would need to be almost entirely funded by local taxpayers, whether it’s straight up subsidized or relies on user fees. That would be a hefty addition to the budget, with ballpark costs including an initial $7 to $10 million for construction and ongoing costs of $700,000 to $900,000 per year. 

The city previously looked at partnering with the YMCA before they closed their West St. Paul location, but nothing panned out. 

“Coming to the other side of this pandemic, it is more important than ever that we look at ways we can bring our community back together—public spaces are key,” said Council Member Robyn Gulley. “From thousands of conversations these past months, I can say that we have wide support for a community center in West St. Paul, and while we may not have funding to achieve this immediately, we should use this time as an opportunity to learn as much as we can about what people in West St. Paul want and need from a community center and how we can work to build it.”

What the community wants and needs is an important question—one of the challenges is that a community center might not offer anything new. The city already has recreation programing. Workout facilities are available through several private gyms and the YMCA (albeit across the street in Inver Grove Heights). An indoor pool is lacking in the city proper, but swim lessons and other activities will soon be available at the high school. A senior program exists at the Thompson Park Activity Center. Community rooms for rent are available at Harmon and Thompson Parks. 

A community center could be a way to bring all these things together and create synergy as well as a community gathering place. But the funding remains an unanswered question.

The Apartment Boom

Another question that frequently comes up with new development is why do we have so many housing projects. There have been a lot in recent years, with four major apartment projects under construction right now—Town Center One, former K-mart, Gateway Place, and the Westlyn.

The short answer? Yes, we need more housing. Apartments especially because they allow a fully developed suburb like West St. Paul to increase density. The Housing Plan puts it this way: “In an effort to continue to attract a strong customer base, Robert Street must offer more than just retail.”

Sit-down restaurants are a long shot because of the reasons listed above, but one way to make them more viable is to increase our customer base. More people in West St. Paul means we can support more businesses. All the housing projects in recent years will improve our chances of bringing in other businesses.

“One thing developers tell me is they like how we are positioning ourselves for the future,” Hartshorn said. All the development increases our numbers and shows that things are happening. “That’s always a win. It’s fun—I can drive them around and show them the construction happening.” 

There’s already been more interest in Signal Hills thanks to the new apartment project at the former K-mart.

What About Small Business? 

Another common question is what can West St. Paul do to encourage more small businesses. 

“Mom and Pops are very tough,” said Hartshorn. “How do you know who’s out there who wants to start a restaurant? How do you recruit them?” 

The city does work with Open to Business, but the deck is stacked against small businesses. Banks often don’t want to invest in risky startup ventures. The deals are often smaller and don’t qualify for TIF or other financing options. 

This is an area where West St. Paul could do more to recruit and incentivize small businesses, but we also need to recognize that it’s an uphill battle. 

“You have to get creative and you have to be lucky,” said Council Member Wendy Berry. “Look at Thai Pepper jumping on drive thru-only or Tii Cup opening during a pandemic. That’s a perfect confluence of factors and the city had little to do with it.”

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Council Member Justen, who also owns Eclipse Music, likes to point out that West St. Paul supports three different music shops and a music school. While it might be hard to recruit small businesses, this is evidence that we can definitely support them. 

What Can We Do? 

This isn’t all to say there’s nothing we can do. It’s more about accepting the reality of our situation and working to improve. Some of that has to do with our attitude and reputation.

“When developers investigate new locations, it’s common for them to go on Facebook and review Council meetings,” said Hartshorn. “They see the good and bad comments and form their opinions, which creates our reputation.”

Some of the frustration also stems from perception as opposed to reality. We’re known for fast food chicken, but we’ve actually got twice as many taco places.

It’s also important to recognize the value of what we have, and support it. Unique sit-down restaurants like Jamison’s Irish Bar, FoodSmith, and Beirut are increasingly rare. If you want to keep them, support them with your patronage and positive reviews. 

It’s easy for any of us to get in a slump and stick to the usual. Try something new. Try our taco tour or rundown of Asian eats for some inspiration. 

We need to recognize and build on our strengths. Our density, home values, and income levels are all improving. We have strong schools and parks, and our transportation network is good. With the revamped Robert Street, development is booming.

“When I’m visiting a restaurant in a neighboring community that I know ours would love, I say hello to the owner or chef if I can and make myself available and known to them,” said Council Member Eng-Sarne. “This is work all of us can be doing. Try, ‘Hey, I love this location, have you ever thought about West St. Paul?’”

Finally, if you have questions about this process or want to know why some business is going in or why we can’t get some other business, you can contact Jim Hartshorn. He’s happy to answer questions and take suggestions reach out to the city.

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