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Minneapolis Mayor Jacob Frey on Tuesday sought to cast the city as continuing its post-pandemic rebound while facing major challenges for its downtown property tax base amid political divisions.

"The state of our city is brimming with possibility and leaning into change," Frey said in his annual State of the City address, his seventh since being elected mayor.

Frey's chosen venue contained the tension woven into his message and its context: the Northstar Center, a previously tired downtown high-rise currently under massive renovations, an emblem of an ailment of vacancies afflicting cities across the nation. The smell of fresh drywall mud hung in the air of the eighth-floor conference space, part of a plan by developer Sherman Associates to convert much of the former office space to residential.

While Frey cast the Northstar project as exemplifying "a reimagining of how we think about downtown," he acknowledged that plummeting property values downtown threaten to result in stiff property tax increases for many homeowners and renters next year. The city's costs are rising, largely as a result of increases in wages for around a thousand unionized city employees.

Frey emphasized he has little interest in thinning the ranks of the city's roughly 4,000-strong workforce, and the City Council hasn't seemed inclined to do so either.

From left, Council Members Michael Rainville, LaTrisha Vetaw and Linea Palmisano, Council President Elliott Payne, Council Vice President Aisha Chughtai, and Council Members Aurin Chowdhury and Andrea Jenkins listen to Mayor Jacob...
From left, Council Members Michael Rainville, LaTrisha Vetaw and Linea Palmisano, Council President Elliott Payne, Council Vice President Aisha Chughtai, and Council Members Aurin Chowdhury and Andrea Jenkins listen to Mayor Jacob...

Renée Jones Schneider, Star Tribune

Gazing toward council members seated in the first row of an unfinished two-story room, he drew a line in the sand for what will likely be tense budget negotiations over the coming months. "This is not the year to add new, shiny programs," he said.

The council is controlled by a majority who are politically farther left than Frey, and a supermajority of the 13-member council has already overridden two of his vetoes: a symbolic resolution on the Israel-Hamas war, and a minimum-pay plan for Uber and Lyft drivers that could prompt both companies to leave the city or metro area.

In fits and starts, Frey and the council continue to negotiate, along with state lawmakers and rideshare companies, on the details of that plan and one moving through the state Legislature. A host of other matters, from homeless response to the future of policing and the former Third Precinct police station, remain areas where agreement has seemed elusive.

In his speech, Frey tried to persuade council members on his vision for the charred former police station, which was burned amid rioting after George Floyd's murder by Minneapolis police. Frey wants the building reopened to include elections offices and a voting facility, which he termed a "Democracy Center." He framed it in the thinly veiled context of a common foe he shares with the council: former President Donald Trump and his MAGA movement. "Voting in this country is under attack," he said. Last month, the council declined to endorse his vision.

Frey and the council will need to pass a balanced budget before the end of the year, and it's unclear how strongly council members will push some of their progressive ambitions.

Council President Elliott Payne called Tuesday's speech a "missed opportunity to talk about the challenges working people face" and said Frey struck too rosy of a tone.

"There's a real [need] in this venue to balance out a positive vision for the future while recognizing the real challenges we're facing right now," Payne said. "I did see the mayor make those efforts to name some of those challenges. One thing I was looking to see was a much more explicit call for unity around some of these challenges because the reality is that some of these challenges are much bigger than even what a local government can handle."

Specifically, Payne said he was referring to a dynamic within the current real estate market and property tax system that could result in this steepest tax increases falling on lower-income residents because their property values have risen the fastest over the past year.

For his part, Frey acknowledged the risk of hiking property taxes amid a trend of higher home values. "We pride ourselves on being an inclusive and accessible city," he said. "We will neither be inclusive nor accessible by taxing people out of their homes."

But much of the speech focused on accomplishments of the city and his administration, including an eightfold increase in construction of affordable housing units, a nation-leading plan to raise money to combat climate change, and a series of metrics suggesting the city's downtown has rebounded to some of its pre-pandemic vibrancy.

However, while his speech included a number of references to police heroism and hiring of public safety personnel, it made no mention of crime.