Officials in many U.S. cities likely look with envy at the postrecession development either already underway or moving through the approval pipeline in downtown Minneapolis. On Friday, the City Council has a critical opportunity to keep that momentum going.
In its final scheduled meeting of 2013, the council is expected to decide the fate of what could be a transformative $400 million mixed-use development near the new Vikings stadium in Downtown East — a part of the city’s commercial core in desperate need of new life.
The project would include apartments, retail space, a parking ramp and a park, in addition to 1.1 million square feet of office space — making it the largest Minneapolis office development in more than 20 years. Ryan Cos. is developing the commercial and residential space, and Wells Fargo is expected to be the corporate anchor, owning and occupying two office towers with more than 5,000 employees.
Metrodome proponents promised nearby development when that stadium was built 30 years ago, but for a variety of reasons it never materialized. Now, just a week after the groundbreaking ceremony for the new Vikings stadium — a signature $1 billion, 1.7-million-square-foot venue — the City Council can help make Downtown East a property-tax-generating asset for decades to come.
Admittedly, the Star Tribune also would benefit from the project. The newspaper plans to sell five blocks of property, including its headquarters, and move into leased office space downtown. The newspaper building would be razed, and the five blocks would be used for the Ryan project and a two-block, city-owned park stretching west from the new stadium.
The park, often referred to as the Yard, would add a much-needed element of green space to Downtown East — space that would be shared by residential neighbors, stadium fans and office workers. No, the park would not be on the scale of New York’s Central Park or Chicago’s Millennium Park, but it can be a valuable city asset replacing mostly aging parking lots.
The City Council should be celebrating the fact that Wells Fargo plans to invest $300 million in the project rather than hunt for suburban space. Credit Minnesota native John Stumpf, the firm’s CEO, for seeing the value in a downtown location. Among other advantages, his employees will have access to a nearby transit hub that will become more valuable with the 2014 completion of the Central Corridor light-rail line.
Unlike many public-private partnerships, the Ryan project does not rely on tax-increment financing, which diverts new tax revenue generated by development to pay off public costs. Instead, the council will vote on a financing package that requires the city to issue up to $65 million in bonds to help pay for a 1,625-space parking ramp and for the Yard. Parking ramp revenue will pay off the bonds over 30 years, with Ryan covering any shortfalls for the first 10 years.
Mayor R.T. Rybak cites city estimates that over 30 years the project will generate $42 million in property taxes for the city, $50 million for Hennepin County and $35 million for the Minneapolis public schools. Based on that kind of return on a relatively modest investment with reasonable risk for taxpayers, the project is a clear winner.
It is not perfect, however. Depending on its level of growth during the three-year construction process, Wells will be moving employees from existing downtown office buildings in a consolidation — not creating 5,000 new jobs, as some project advocates have claimed. And more work lies ahead to ensure that the Yard becomes an active public space year-round.
But critics such as former Gov. Arne Carlson, who argue that the project, initially announced in May, is being rushed through the approval process, are too quick to dismiss the positives for Minneapolis — including much-needed growth in the tax base. We also have confidence that the financing package does not violate the stadium legislation or the city’s bonding authority, as several former city officials claim in a lawsuit filed Wednesday in Hennepin County District Court.
Development opportunities like Downtown East are unique among U.S. cities, especially in the Midwest. Minneapolis is fortunate to have a quality hometown developer in Ryan with a likely corporate partner in Wells Fargo that both see great potential in a long-forgotten part of the city.
As this page emphasized in its fall “Growing Minneapolis” series, Minneapolis has failed to keep pace with competitors such as Seattle, Portland and Denver. Along with the stadium, the mixed-use Ryan project is a critical investment in the Downtown Council’s 2025 plan for the city — and the type of development that should attract more commercial and residential investment in the area.
Not surprisingly, some of the same stadium critics who were quick to point out the lack of adjacent development created by the Metrodome are picking nits with Downtown East. Any public-private project of this size will attract naysayers.
The essential question is whether the deal is a good investment for the taxpayers of Minneapolis. The City Council will take up that question on Friday, and the answer should be an enthusiastic yes.