Primary new owner, Ryan Cos., is set to begin its proposed $400 million project next to the new Vikings stadium.
The sale of five blocks owned by the Star Tribune Media Co. in downtown Minneapolis was finalized Tuesday, clearing the way for a $400 million development of housing, offices, parking, retail shops and a park next to the new Vikings stadium.
Four blocks were sold to Minneapolis-based developer Ryan Cos., and the fifth block was sold to the Minnesota Sports Facilities Authority (MSFA), the public body overseeing construction of the $1 billion stadium.
Terms were not disclosed. However, the MSFA bought its block, which will be used for a six-level parking ramp, for $7.7 million.
Ryan has proposed two 17-story office towers spanning 1.2 million square feet, 200 apartments, shops and restaurants on street and skyway levels, a 1,610-space parking garage and a public park that will span close to two city blocks. Wells Fargo & Co. has committed to move about 5,000 of its employees into the office portion of the project, which it will own.
The Star Tribune’s headquarters — home to the newspaper since 1919 — will be demolished. About 600 employees will be moved next year to new offices in downtown Minneapolis. The new location has not been determined.
“A deal of this size and complexity requires the collaborative work of so many people, and Downtown East is no exception,” said Rick Collins, Ryan’s vice president of development. “We benefited from a very committed client in Wells Fargo, a patient seller in the Star Tribune, a city excited to re-create a part of downtown and the MSFA and Vikings were welcoming in terms of the impact on their stadium project.”
The area has long resisted wholesale development after the Metrodome opened in 1982. But as the Mill District boomed along the Mississippi River, and development consumed open land in the North Loop, Downtown East remains one of the last frontiers for developers in the city’s downtown.
“Businesses are very positive about this project,” said Dan Collison, president of the East Downtown Council, a business group. “What they are bringing to the area is not just shiny new buildings, but employees, housing and green space.”
The project also will be connected to the downtown core by skyway through the Jerry Haaf Memorial Parking Ramp at 4th Street and 4th Avenue S.
The closing on the land has been delayed for more than a month largely because financing has been described by those involved as highly complex, bundling funds from private and public sources, including the city and the MSFA.
“It’s going to be one of the most significant developments that we’ve seen in the downtown in many years,” said Michele Kelm-Helgen, chairwoman of the MSFA. “I’ve also never worked on a more complex project where there’s been so many partners and so many different pieces that were all connected together.”
The city agreed to issue up to $65 million in general obligation bonds to fund the parking ramp and park, with Ryan paying the annual debt service for 10 years.
Minneapolis Mayor Betsy Hodges said in a statement that the project “will bring $400 million in new development to a long-moribund part of our city, turning a sea of surface parking lots into a bustling, connected hub of economic activity with a new, green, public park as its centerpiece — and all without a penny of public subsidy. It will benefit business, workers, visitors and residents and dramatically sets the stage for future development.”
One unknown piece at this point involves how the space above the parking ramp will be developed.
Ryan and Mortenson Development of Golden Valley, the stadium’s general contractor, are vying for the development rights above the ramp, and for a strip of land along S. 4th Street. Ryan has proposed a $104 million, 28-story apartment tower with 282 units, while Mortenson has pitched a $63 million 300-room Marriott hotel. The city is expected to choose a proposal in March.
The city will also purchase the park from Ryan once basic improvements are made; a committee has been formed to determine the park’s “vision” and guide its design.
This isn’t the first time the land has been in play — a previous deal calling for the Vikings to buy four of the Star Tribune blocks for $45 million fell apart in 2007. The team, citing turmoil in the credit markets, backed out of the deal. More recently, city staff have estimated that the five-block parcel would sell for about $38 million.
Since Ryan announced the plan last May, it has been fraught with delays related to various challenges, in the courts and elsewhere. A May groundbreaking is now planned, with the project slated for completion by mid-2016.