When a Caribbean restaurant closed despite getting a public subsidy to stay open, it marked a defeat in government efforts to prop up businesses disrupted by construction of the Central Corridor light-rail line.
But along came Foxy Falafel, which took over the vacated spot soon after the worst of the construction moved down the road.
"I saw great potential," said Erica Strait, the owner and chef at Foxy Falafel. "There's a lot of residential spaces going up along the light rail."
Nearly as many businesses were born as died during construction in the corridor, where hardship for some created opportunities for others, according to a recent report on the impact of the construction.
Along the route from the west bank of Minneapolis to downtown St. Paul, 76 businesses closed or relocated during 17 months of the heaviest work, which ripped up sidewalks, obliterated parking and blocked traffic.
But during the same time, 73 businesses opened in the corridor. Some were drawn in part by the expectation that light rail eventually will bring more customers.
"New people are coming in and they're willing to take risks, which if you're a city, you want," said Mike Zipko, chairman of the Midway Chamber of Commerce.
A different reality faced some of the business veterans of the corridor. "If you were a business that was kind of living on the margins before the construction project started, you could not absorb any loss of customers," Zipko said.
The disruption caused by the construction was well publicized and led to a lawsuit by businesses against federal and regional agencies building the rail line. A federal judge ordered the Metropolitan Council and the Federal Transit Administration to conduct a study on the impact. Their recent report relied on research by the University of Minnesota, local business associations and the Wilder Foundation and will become the focus of public hearings early next month.
It summarizes the business openings and closings and quantifies some of the anecdotal accounts of hard times. Small retail businesses saw their monthly sales drop 30 percent on average, with losses ranging from 2 to 84 percent.
Yet the report also says three-fourths of the businesses plan to remain in the corridor.
Looking for character
As for the new arrivals, many are restaurants, small shops or firms with an artistic bent.
Momentum Design Group is an architectural firm that moved from Hopkins to University and Raymond in St. Paul for a bigger studio and "a new identity ... out of a suburb," said partner Brian Gadient.
"We're excited about opening those windows during the summertime and hearing the city life going on," he said. "We can only anticipate what the light rail is going to sound like going down the street here."
"Character -- we were looking for that," he added.
The firm moved to its new location in March and is among the 73 businesses that opened between February 2011 and June of this year, according to the report.
Foxy Falafel, which had operated as a food truck, opened in August without public subsidy in the space once used by Caribe Caribbean Bistro, on Raymond a block north of University. Caribe was among more than 100 struggling businesses that got interest-free loans of up to $20,000 since 2011 from St. Paul and Minneapolis to help survive the light-rail construction. The loans are forgiven if the businesses remain open for five years.
Caribe closed, but it pleaded hardship and St. Paul waived repayment of the loan. At least one other business that received a loan -- a coffee shop -- also has closed. The other businesses that have closed along the corridor never received the loans.
The report concluded that $11 million in subsidies and other assistance were somewhat effective -- at least as a public-relations tool.
Businesses surveyed "saw some important overarching quality in these programs despite perceiving most of them to be only minimally effective in their specific goals," the report said. "The services ... appear to be effectively accomplishing something, if only primarily the generation of good will among recipients."
"Greater adverse effects would have occurred had the final construction mitigation strategies not been employed," the report said.
Pat Doyle • 612-673-4504