Developer's long, winding road

  • Article by: DON JACOBSON , Special to the Star Tribune
  • Updated: August 30, 2012 - 6:04 PM

Two former car dealerships in Bloomington are being transformed into apartments, restaurants and retail.

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In front of the Genesee Apartments in Bloomington this week were several of those who made the project happen: from left, Keith Ulstad, United Properties senior vice president; Brandon Champeau, development manager for United Properties; Ryan Dunlay, vice president of apartment developer Stuart Development Corp., and Stuart Nolan, founder and chairman of Stuart Development.

Photo: Elizabeth Flores, Star Tribune

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With the recent openings of apartments and two restaurants in its 14,000 square feet of retail space, a long, seven-year journey by United Properties and the city of Bloomington to redevelop two former car dealerships into the Penn & American mixed-use project is finally bearing fruit. 

Apartment developer StuartCo, which signed onto the $50 million project in 2008 to provide its first-phase residential anchor, already has opened two of its three Genesee Apartments buildings there, with the third set to debut next month. 

Meanwhile, Moe's Southwest Grill and Which Wich Superior Sandwiches this month became the first retailers in the redeveloped parcel that was once the Metro Mitsubishi-Kia car dealership.

What has appeared so far is only the first of two phases, which include the redevelopment of what was once a Dodge dealership to the north. Some of the Penn & American principals took an opportunity to look back and reflect on the peril-filled path they have had to negotiate.

Brandon Champeau, United Properties' manager of development, and Keith Ulstad, its senior vice president of retail investment and development, appeared at Penn & American along with Regina Harris, Bloomington's Housing and Redevelopment Authority administrator, to relate the saga to Minnesota Shopping Center Association members.

Ulstad said that when United Properties began the effort in 2005 with a sketchy concept, no one knew what would eventually happen.

"In 2005, the condo market was hot and the office market was softening, and we thought we could have a smorgasbord of uses here, but we didn't have a clear picture. It was in the shadow of our corporate offices down American Boulevard, however, so everybody who works at United Properties knew this corner," he said. 

By the end of 2006, conversations with the city began about what Bloomington was looking for and possible of subsidies. It turned out that the city most wanted quasi-urban density and a restoration of the street grid through the area.

The 2008 recession prompted United Properties to abandon plans of acquiring the entire block and reduced its focus to the two former car lots along Penn Avenue, Champeau said.

"We needed the city's help to carry that vision," he said. "One of the big things the city wanted was to re-create a block system. That would allow change to happen incrementally."

That's where Bloomington's Housing and Redevelopment Authority (HRA) entered the picture -- it moved to commit $12 million in city funds for the project, including striking a deal in which it would buy the two car dealership parcels should United Properties' plans not be able to weather the recession, Harris said.

"When we agreed to buy Mitsubishi we were obligated for the whole $12 million," she said. "Due to changes in eminent domain laws, our ability to assemble parcels went away. So this is where the city had to commit to the vision. We were in all the way or we were out. The City Council and the HRA made the decision, 'we're in.'"

When StuartCo committed to anchoring the first phase, the next huge hurdle was finding a way to connect the site to a signalized intersection, and that meant building a new road through the parking lots of neighboring landowners such as Klodt Cos., which owned the adjacent Morgan Circle Stores retail strip mall. 

It took months of negotiations to line up the easements for what it is now 80 1/2 Street, Champeau said.

"We had to go to them and say, 'We really need to take a sliver of your land here, we really don't want to pay you anything for it, and by the way, we're going to take 24 of your parking stalls as well.'"

The carrot, however, was the traffic and increased property values a completed project would bring.

Now they, along with potential apartment renters and shoppers, are on the verge of welcoming the long-time-coming Penn & American vision from the drawing boards and into the real world.

Don Jacobson is a freelance writer in St. Paul.

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