One reason prompting the city's action, which was approved by the Minneapolis Community Development Agency, was interest that Allina Health Systems expressed in the north half of the 17-acre site for expanding its campus and adding a parking ramp.
Developers STA Associates, a partnership of Ray Harris and David Jasper, had proposed building a $140-million redevelopment project with more than $10 million in Federal and local government subsidies. The project would have created Great Lakes Center with more than 1.9 million sf of office, light manufacturing and retail space.
City officials expected the project would create from 4,000 to 5,000 jobs, with as many as 1,000 of them to be filled by nearby residents in the Powderhorn Park neighborhood of Minneapolis.
The developers had talked about developing a portion of the property into a telecom hotel. But while the owners would likely have received a nice rent for that use, telecom hotels employ very few workers, especially the kind of jobs the city wanted to provide to the neighborhood. The city also objected to that use, says Steve Cramer, executive director of the MinneapolisCommunity Development Agency.
The Minneapolis-based developer bought the site from Sears in 1998, primarily with the help of financing from the city and Marquette Banks, which also must approve the settlement. But they were stymied in landing the necessary financing to complete the project, and the city decided to start foreclosure proceedings on the property last month.
STA will receive $300,000, representing the $225,000 in equity they invested in the property and a $75,000 return (8% interest); the city will release $800,000 in redevelopment money that was held up last year plus $600,000 to pay off liens and create a clear title to the property. In a year, the city will pay $742,000 to buy some adjacent properties from STA.
A tenant in the project, Minnesota Diversified Industries (MDI) would have to approve the land sale to Allina because it occupies a portion of that site. The city is ready to sell a nearby building on the site to compensate for that move.
"We want them to be a long-term part of the project, but their current location conflicts with what Allina wants to do," Cramer says. He hopes the various deals with Allina, Marquette and MDI can be put together by the end of this month.
The site is bounded by Lake Street, Chicago Avenue, 10th Avenue and 28th Street.
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