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A group of St. Paul business owners and neighbors are suing the city and a local nonprofit over plans to establish a permanent day shelter for homeless residents at the site of the original Red's Savoy Pizza location on East Seventh Street. 

In July, the St. Paul City Council, acting as the Housing and Redevelopment Authority, agreed to lend $1.4 million to Listening House in order to advance the organization's plans to transform the vacant building at 421 E. Seventh St. into a resource center for people experiencing homelessness. 

The lawsuit filed in Ramsey County District Court alleges the city did so without imposing any conditions or restrictions on the project to protect against harm to the surrounding neighborhood, despite knowing the shelter "will attract unsafe criminal behavior and lawlessness." 

The lawsuit filed Wednesday against the city and Listening House also claims the city failed to follow appropriate procedures by not providing public notice or holding a public hearing before authorizing the loan. 

Plaintiffs on the lawsuit include the owners of Heppner's Auto Body, Bulldog Lowertown, Dark Horse Bar & Eatery, Gopher Bar, Schurmeier Lofts, Dacotah Properties, Saramar Enterprises, Kay-Key's Lock & Safe, Earl & Wilson Event Center, MB Properties, Barrel Theory Beer Company and local residents Matthew D. Gross and Tom and Sandra Erickson. 

Another daytime shelter run by the Listening House closed this spring. 

The Freedom House, operated out of a city-owned building in the West Seventh Neighborhood, also faced challenges with a lawsuit and neighborhood complaints surrounding an uptick in crime. 

The lawsuit against the new project points to this recent history, alleging "it is well documented what will happen based upon the Freedom House disaster."

Kamal Baker, a spokesperson for St. Paul Mayor Melvin Carter's office, said the city has received the filing and will respond. 

"As we have throughout the course of the pandemic, we're focused on connecting people experiencing homelessness to services, shelter and pathways to housing, including collaborating with partners in our community who provide vital supports," Baker said in a statement. 

Karl Yeager, the attorney representing the Listening House, declined to comment Friday, pending his return from travel and further review of the case. 

A hearing in the case is set for Wednesday morning.

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