Linden Hills, with all of its leafy, lakeside charm, makes for an improbable battle zone, yet the idyllic neighborhood in southwest Minneapolis tilts nervously on the front lines. Real estate developers, sensing a back-to-the-city shift in the market, have been busy measuring its main thoroughfares for new projects that fit the city’s policy aim of “densifying” commercial corridors.

Neighbors quickly sounded the alarm, stopped the invaders at every turn, and even clamped a moratorium on new development in the area until they can settle on a new, presumably more restrictive neighborhood plan.

“Our hope was to provide housing for people who wanted to downsize but stay in Linden Hills,” says developer Mark Dwyer, whose plans to transform a restaurant/parking lot at 43rd and Upton (now Famous Dave’s) into a corner of urban-style housing and retail have been repeatedly shot down.

As in other attractive neighborhoods in Minneapolis and St. Paul, people tend to prefer their surroundings just the way they are. Even along main streets, where city planners envision stretches of four- to five-story apartments over shops with lively pedestrian and transit options, the idea has met stiff resistance. As it turns out, the last thing the neighbors want is more neighbors.

Trouble is, more people and a growing tax base is precisely what Minneapolis and St. Paul need most if they hope to remain viable, livable, competitive cities. After six decades of declining population and sliding wealth, the need to grow again is critical.

That’s the wider perspective that never gets mentioned at the tumultuous zoning hearings and neighborhood meetings that still play out as melodramas: greedy invaders against heroic defenders of hearth and home. It’s an outdated script that fails to consider the cities’ larger needs or the shifting real estate market.

If, as developers and demographers suspect, the appetite for urban living is growing; if the local market is poised finally to join Seattle, Denver, and other national trendsetters; if last year’s modest uptick in core city population is the start of something truly significant, then the question must be squarely confronted:

Are Minneapolis and St. Paul really ready to grow? Or are their vigilant neighborhood politics and problematic zoning code poised to stop urban-style density in its tracks—or, at least, to make growth as difficult as possible, and drive away the developers, new people, and tax base that the cities need so badly?

Mayors Chris Coleman of St. Paul and R.T. Rybak of Minneapolis have pronounced their cities ready to grow. Indeed, city officials in Minneapolis, where a recent population spurt is most impressive, point to the nearly 6,000 residential units added in the teeth of the housing slump (with 2,800 more on the way) as proof that their strategies are working.

But developers and urban geographers have doubts, citing not only persistent neighborhood opposition but also fastidious bureaucracies, parochial politics, outdated zoning codes, and insufficient tools to finance the urban infrastructure needed to support growth (streetscape, transit, etc.).

Those shortcomings are best evaluated after a quick trip through the past six decades to see how Minneapolis and St. Paul arrived at this point.

Driven by Suburbia

Starting in the 1950s, it was suburban growth that tripled the metro population and remade the Twin Cities as one of the nation’s most admired and competitive places; the core cities were left behind. They retained their symbolic skylines, cultural attractions, and classic neighborhoods and parkways. But their once-solid blue-collar districts slipped gradually into poverty and social dysfunction as household sizes declined and middle-class families migrated outward. By 2010, Minneapolis had lost a fourth of its population, and household incomes in both core cities had fallen 32 percent below the suburban average, a staggering gap by national standards.

As a whole, the Twin Cities metro stacked up impressively against its highest-performing rival markets. But the metro was flourishing in spite of—or, perhaps, at the expense of—its struggling core. The 2010 census results cast a long shadow on the disparity. The core cities of Denver, Seattle, and Portland, Oregon, were growing and prospering along with their suburbs. Each added 45,000 to 55,000 people within their boundaries over the decade, and each recorded 28,000 to 38,000 units of new infill housing, enough to capture a 13- to-19 percent share of overall metro population growth.

In contrast, Minneapolis and St. Paul lost 2,100 people. While the cities managed to add a modest number of new housing units—15,000—those gains were offset by big population losses in north Minneapolis. As in most of the past 60 years, the core cities’ share of metro growth was zero. Income results weren’t much better, with Minneapolis and St. Paul suffering substantially higher poverty rates than top rivals.

Urban experts posed a scary question about the Twin Cities region: Can a body be truly healthy without a healthy heart? “My concern is that you’re not positioning yourself for the future market,” says the Brookings Institution’s Christopher Leinberger, lamenting the failure of Minneapolis and St. Paul to share in the region’s growth. “You think it’s still 1970.”

Good News, Bad Behavior

Finally in July came some good news. The Metropolitan Council released estimates showing a sharp reversal in population trends. Sixty percent of growth during 2010 had come in the central cities or inner suburbs. Minneapolis had quite suddenly added nearly 5,300 residents and St. Paul nearly 1,300, while many outer suburbs had suffered losses for the first time.

City officials greeted the numbers with cautious optimism. “I think we were just a decade behind the national trend,” says Tom Streitz, Minneapolis’ city housing director.

Although growth had been slower in St. Paul, the city has exhaustively prepared for development along University Avenue, where a light rail line will open in 2014. “We’re waiting for the developers to find us,” says Principal Planner Lucy Thompson.

The Met Council’s estimates could be an aberration. With a history of overwhelming preference for suburban living, it’s hard to put too much stock in one year.

Still, Minneapolis and St. Paul would be smart to do what businesses do when a favorable market appears. If the CEO proclaims growth of market share as the top priority, the company marshals its forces to pursue that goal. Unfortunately, cities are more complicated than businesses.

Start with the notion that city residents are skittish about newcomers bringing parking and traffic hassles and fraying the quiet decorum of many city enclaves. Indeed, political systems in both cities are lined up mainly to protect the wishes of the residents already in place, not to go prospecting for infill development. The reason: Neighbors vote; prospective neighbors don’t.

And so, developers face an uphill fight whenever they propose to change the status quo, especially in the popular districts where new people most want to live.

“An obstacle course” is how developers describe the infill process in St. Paul, and especially in Minneapolis. The builder of, say, a mid-rise, market-rate apartment/retail building along a busy street might easily face a dozen major hurdles before a half-dozen city boards, commissions, and councils.

Neighbors With a Veto Hammer

Each of those steps is intended to protect the integrity of the existing neighborhood—a worthy goal. But even if all of those hurdles are cleared, there’s no guarantee that the project will go forward because neighbors (and their organizations) hold what amounts to veto power over every proposed infill development. If a new building would block somebody’s view or cast a shadow on a bike path or add a few additional cars to an already busy street, the project can be stopped—or at least pared to a size that reduces the developer’s profit to the point that the project is no longer commercially appealing.

Moreover, because a neighborhood group can always find a reason to stop a project—and city council members are beholden to these voters—lenders are wary of almost any proposal to infill the city. Financial uncertainty is a developer’s greatest obstacle, and the infill process is riddled with it.

It’s especially so in Minneapolis where the city’s planning staff is sometimes pulled in opposite directions because it answers not only to the mayor, but also to 13 council members, each with a parochial interest. Mayor Rybak may proclaim population growth a top priority, but that doesn’t make it so. A project may fit perfectly into the city’s comprehensive plan, but that doesn’t guarantee its approval.

“Even if you follow the rules, the city eventually turns the project over to the mob and emotion takes over,” says developer Michael Lander, who has had a stormy history trying to practice urban development in Minneapolis.

John Shardlow, senior associate at Stantec Consulting Inc., agrees that politics too often trumps planning. “We are our own worst enemy,” he notes. “At the last minute, elected officials and neighborhood activists come in with a whole new process and a different crop of people, and the original planning goes out the door.”

Suburbanites in Disguise

Some see the local aversion to density as a cultural trait. “As they say, we are a prairie people,” notes developer Kit Richardson, who ran smack into prairie people in 2005 when he proposed a series of condo towers to match or exceed the height of the Pillsbury A Mill near downtown Minneapolis. His proposal was delayed by objections to its scale, and the financial crash of 2008 killed the project altogether, although another developer is now building a four-story apartment complex on the same spot. “Density is still a four-letter word,” Richardson insists. “People here have never experienced high-quality urban density and so they can’t imagine anyone wanting to live in a setting like that.” It’s a common comment among developers that any building above two stories is a skyscraper in the Twin Cities.

Indeed, most of Minneapolis and St. Paul was laid out in a grid of single-family houses. Even along main thoroughfares, most buildings are low and separated by parking lots. The message is clear: Many urbanites are suburbanites at heart and don’t want their commercial streets intensified into rows of mixed-use development that adds population and reduces reliance on cars.

In political terms, there’s no apparent constituency for density. At zoning hearings and planning commission meetings the issue is still cast in hero/villain terms. The notion that Minneapolis and St. Paul need density to pay for street repairs, police salaries, and other services that are more costly in aging cities goes unspoken. Likewise, no one stands up to argue that well-designed density would increase the region’s competitive profile by appealing to the urban preferences of a new generation. Politicians, business leaders, and community activists have done a poor job of selling the idea. Even residents who grasp its importance fall back on the NIMBY response—build density, but in a different neighborhood.

Streitz, the Minneapolis housing director, believes that the recent building surge may be turning the tide, however. Over the past three years only 12 of 47 projects have been “killed dead” by neighbors. Still, many projects are scaled back and opposition persists, he concedes. “Any time you butt up against single-family neighborhoods you’ll run into this problem.”

Converting Industrial Areas

The trick, then, is to steer infill development away from attractive areas where people want to live toward unattractive areas where people might be convinced to live. Rybak poses the challenge this way: “Where can we realistically locate more people?” Both cities hope they can entice growth in under-used industrial districts.

St. Paul has succeeded in Lowertown, an extraordinary collection of restored brick warehouses close to Union Depot, Mears Park, and the developing Saints ballpark. The city also hopes to produce clusters of new housing on the West Side Flats, at the former Schmidt and Hamm’s breweries, and possibly at former East Side manufacturing plants once operated by 3M and Whirlpool.

Its greatest opportunity is the abandoned Ford Plant in Highland Park. The 122-acre site offers spectacular river views and proximity to parks and higher-end retail. It’s a “fresh canvas” that any mayor would love. “If you consider the Ford site and Central Corridor,” says Coleman, “you have the opportunity to grow the tax base and set the stage for a couple decades of growth.”

Minneapolis, meanwhile, has made progress on refilling several industrial districts, partly because national builders regard the city as a prime market for young, upscale renters. “We took a lot of criticism but the proof is in the numbers,” says Mike Christenson, the city’s former economic development director. “We did it in a down market, without subsidies and without fanfare.”

Indeed, a mini boom is underway in the North Loop, and a bigger boom is pushing east from Lake Calhoun along the Midtown Greenway, where young professionals are establishing a colony of sorts. Nearly 3,000 units have been built in the last three years with 1,200 more in the pipeline, according to city officials.

Minneapolis has targeted a dozen other areas for growth, including the West Bank, Linden Yards near Bryn Mawr, Shoreham Yards in upper Northeast, and Lyndale Avenue south of Minnehaha Parkway. But its most intriguing goal is to refill most of downtown’s 140 shabby surface parking lots and double the downtown residential population to 70,000. A study is under way to discover how to encourage redevelopment on those lots especially now that a new Vikings stadium might make them even more valuable for surface parking.

How to Maximize Growth

Intentions are nice, but they’re not enough to maximize growth potential. To restore population levels of the 1950s—a goal for both cities—St. Paul would need to add 27,000 people, and Minneapolis 140,000. That’s a tall order, especially with neighbors demanding growth happen almost entirely in unattractive areas.

If the cities have any realistic hope of meeting those goals, two reforms are essential.

First, zoning codes must be modified. Traditional codes emphasize segregation of uses: single-family homes here, apartments there, shopping here, industrial plants over there. That’s fine for much the city but fails utterly in targeted areas along transit/commercial corridors and in former industrial districts. Those are places where urban energy is generated by the liberal mixing of homes, shops, schools, bars, cafes, offices, small manufacturing, and the like. They are places where zoning should emphasize design and attractive public spaces.

Codes should also carry more flexibility than the intensely prescriptive rules now in place. Developers should be able to erect mixed-use buildings along busy, tree-lined streets without having to seek so many special exceptions. If they want to build higher than, say, four or five stories, they should be required to add extra amenities for neighbors—pocket parks, playgrounds, pedestrian lighting, etc. That way, there’s a density payback.

Both cities have moved cautiously toward this “form-based” approach. St. Paul’s “T” zoning along the Central Corridor emphasizes street-level design. Minneapolis’ “B4N” zoning in downtown’s periphery encourages 10-story buildings and street-level activity, and requires no parking spaces. Those approaches should be extended to other areas, along with rules making it clearer that density is welcome and expected.

“I see us continuing to move in that direction,” says Jason Wittenberg, Minneapolis’ acting planning director. The code should reflect a city’s aspiration, he says. Second, the state must allow cities to use “place-making tools” to finance the infrastructure needed to support urban infill. Most cities use forms of tax increment financing to accomplish that goal. They borrow against future tax revenue to install tree-lined sidewalks and lighting, or in some cases streetcar rails. That kind of place making, in turn, encourages more development.

Let’s be clear: a person won’t buy or rent a nice city apartment if she can’t walk out her door onto a pleasant, safe, and perhaps even beautiful sidewalk that allows easy access to the rest of the city. Creating those attractive public spaces takes money and commitment.

St. Paul’s new $31 million streetscape for University Avenue is intended to lure light rail passengers to live and shop (on what was/is a uniformly ugly commercial strip) when the line opens in 2014. The $20 million Midtown Greenway, an abandoned railroad trench converted to a bike trail, has become Minneapolis’ best housing catalyst. The city has even hired a specialist to push hard on transit-oriented development along all major rail and bus corridors, but funding for place-making is absent.

Streetcars are another intriguing catalyst both cities would like to revive if funding can be found. The modern version has paid handsomely in Seattle and especially in Portland where a $100 million line near downtown generated $4 billion of private investment over the past decade, mostly in housing.

Minneapolis’ push to help finance 100 new green homes on its depleted North Side is another effort, one that calls attention to the core cities’ greatest barrier to growth: the widespread perception that city life is unsafe and that city schools are a risky choice. The importance of making progress on the basics can’t be overstated.

“Minneapolis and St. Paul think development is just going to come to them because the market is shifting, but that’s not quite true,” says Colleen Carey, president of the development firm The Cornerstone Group, who finds it easier to build urban-style housing in inner suburbs like Richfield and Hopkins. “The cities don’t realize how much the deck is still stacked against them.”

Steve Berg is a longtime journalist and editorialist on urban planning issues.

Case Studies

DOWNTOWN/HIAWATHA LINE

It’s astonishing that in the decade since light rail came to downtown Minneapolis the five downtown stations have produced zero private development. Yes, housing has sprouted within several blocks, and two big stadiums have materialized. But it’s a mystery why downtown still has 140 surface parking lots begging to be filled, several of them adjoining light rail stations.

Frustrated city planners have launched a study to discover the perverse reasons why keeping surface lots is more lucrative than developing them. Among the probabilities: low taxes, low overhead, and minimal requirements for greening and maintenance.

Meanwhile, it’s clear after a decade of operation that the Hiawatha Line was designed to minimize, not maximize, development. Tracks should have run down the center of Hiawatha Avenue, opening the non-industrial side of the street for pedestrian activity and mixed-used buildings.

Despite the city’s stated intentions, zoning along much of the Hiawatha corridor remains single-family residential.

LINDEN HILLS

Developer Mark Dwyer tried—and failed—for four years to build Linden Corners, a five-story housing stack over street-level retail at 43rd and Upton. A buzz saw of opposition forced him to cut the project in half (40 units to 18), making the apartments considerably pricier. “Now I’m getting complaints that they’re not affordable,” says Dwyer, who hasn’t quite given up on the project, now called 4250 Upton.

At 46th and France, meanwhile, a five-story, 63-unit building continues to draw resistance. “Clearly it’s not in the city’s best interest to keep saying ‘no,’” says Council Member Betsy Hodges, who nonetheless backed a development moratorium that brought several initiatives to a standstill. “We want to see development happen, but it’s got to be the right scale.”

MIDTOWN GREENWAY

The Greenway has been a catalyst for new housing, but all hasn’t gone smoothly. A classic example was the Lander Group’s proposal in 2006 for condos and retail next to a clump of high-rises on an eight-lane stretch of Lake Street, across from Lake Calhoun’s north shore. Seventy luxury units were envisioned in four buildings ranging from three to 10 stories. When neighbors objected, the developer trimmed the project to 46 units in smaller buildings no taller than seven stories. But opposition persisted, the market cooled, and the company abandoned the effort.

“It came down to a few people who wanted to see the lake from their attic windows, and, somehow, that was considered more important than growing the city,” says the firm’s president, Michael Lander, who conceded that his failure on Lake Street sapped his enthusiasm for working in Minneapolis.

A recent proposal at the site by Bigos Development (including versions with 13 and 8 stories) was also shot down by neighbors, and a project farther east, at Lyndale and 29th, has drawn opposition from bicyclists because it would cast a shadow on the Greenway during several months of the year.

FROGTOWN

It’s not only affluent areas that object to greater density. In St. Paul, fears that the new Central Corridor light rail line would raise property values (and taxes) and bring gentrification to struggling Frogtown led neighbors to restrict the height of new buildings along University Avenue west of the Capitol. The clear message to developers: No Starbucks, please—and don’t try building anything significant here. “We’re shooting ourselves in the foot,” complained Ramsey County Commissioner Jim McDonough. “The effect will be to push development farther west, away from where it’s needed the most.”

CUPCAKE

Cupcake, a popular Minneapolis bakery-cafe, ran into requirements that it add 10 parking spaces to the area and then neighborhood concerns about beer/wine service when it tried to expand to Grand Avenue in St. Paul. Cupcake pulled the plug on St. Paul and is going to the Mall of America instead.

TRADER JOE’S ON LYNDALE

Trader Joe’s failed repeatedly to get permission to locate a grocery store on Lyndale Avenue in south Minneapolis, first over the city’s 1930s era liquor zoning laws that gave Hum’s Liquors exclusive rights to the neighborhood, and at a different site due to neighborhood objections to traffic it would bring. Other neighbors objected to a national chain replacing locally owned businesses at the site. Trader Joe’s was denied a zoning variance and has walked away.