St. Paul & Minnesota Foundation invests $15M to help revive downtown St. Paul

The St. Paul & Minnesota Foundation plans to invest up to $15 million in a nonprofit aiming to turn around some of the most troubled real estate in the capital city’s downtown.

The state’s largest community foundation on Tuesday announced the funding for the St. Paul Downtown Development Corporation (SPDDC), which has been acquiring distressed properties in the urban core and strategizing how to redevelop them.

The investment will boost the SPDDC’s initial $30 million provided by Securian Financial and the Bush Foundation. The Fortune 500 life insurance company and both philanthropic organizations are based in downtown St. Paul, which has struggled to rebound from the pandemic and the collapse of its largest commercial landlord, Madison Equities.

Over the last year, the SPDDC purchased several of Madison Equities’ former properties: the Alliance Bank Center, the U.S. Bank Center, the Capital City Plaza Parking Ramp, the Empire Building and the Endicott Arcade. Many of the buildings are vacant and in need of substantial repairs.

The St. Paul & Minnesota Foundation knows the struggles well as a former tenant of the U.S. Bank Center. Before the organization moved its offices to the nearby Osborn 370 building in early 2025, chief investment officer Shannon O’Leary she had to warn visitors of recurring elevator malfunctions.

“When a section of our downtown goes dark, it is not only an economic problem,” O’Leary said. “Residents route around it. Visitors leave right after the show. Shift workers lose hours.”

The foundation’s contributions to the SPDDC are not donations. But a portion of the St. Paul & Minnesota Foundation’s dollars will come from its new Future Ready fund, which targets a below-market-rate return of 1%, reducing risk for other potential investment partners, O’Leary said.

“These are truly special dollars that don’t exist in many places,” she said.

Additional money will be invested in the redevelopment of specific properties, O’Leary said. The foundation will seek a more standard market-rate return, between 8% and 12%, on those dollars, she added.

SPDDC president Dave Higgins declined to say how much of the downtown investment fund has been spent so far to acquire and maintain buildings. Those dollars are also funding work with architects, contractors and consultants to explore redevelopment scenarios, Higgins said, though most projects would need to seek financing to fully fund construction.

Specific plans have not yet been determined for any building, Higgins said, but the SPDDC is prioritizing work on the Alliance Bank Center. The 16-story office building, located in the heart of downtown, was abruptly condemned in March 2025, displacing businesses and shutting down a key skyway thoroughfare.

Higgins said he hopes to have a strategy for the property in the next 12 months. Earlier this spring, the SPDDC hired consultants that formerly worked for Cincinnati’s 3CDC, a development nonprofit that downtown officials have described as a model.

“We continue to be confident that meaningful housing units will be a part of at least some of these projects,” Higgins said. “We also continue to be working on and believe strongly that ground-floor commercial is a really, really important component of downtown’s turnaround.”

O’Leary attributes some of St. Paul’s challenges to its high concentration of government, hospital, educational and nonprofit properties that are tax-exempt. The foundation has a history of helping downtown with riverfront development and the launch of District Energy, the central heating and cooling system, she said.

“The low tax base really does put the city in jeopardy anytime there’s any kind of an economic downturn, and then we go through a pretty significant years-long recovery process — only to find ourselves back here again, probably once every 20 years,” O’Leary said. “I’d love for this redevelopment and vision for downtown St. Paul to come with long-term stability for our downtown.”

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