A key city committee on Tuesday approved a complicated financing package that will spur a $400 million mixed-use real estate development in downtown Minneapolis.
Part of the package endorsed by the Community Development Committee includes authorization for the city to issue up to $65 million in bonds to help pay for a 1,625-space parking ramp and a public park near the new Vikings stadium.
Both are important cogs in the overall Downtown East project, which also includes two office towers (reportedly for Wells Fargo & Co.), up to 400 residential units and retail shops on a five-block parcel now owned by the Star Tribune.
The matter will be considered by the full City Council on Friday.
The financing plan, which involves the city using its port authority powers to create an industrial district, met with no resistance during a public hearing that lasted less than an hour. Several people who either live or work in the neighborhood said they welcomed activity in a section of downtown that has long resisted any ambitious development projects.
Lynn Regnier, executive director of Elliot Park Neighborhood Inc., said the proximity of the project will have a positive residual effect on all of eastern downtown — an area that has “a shared history of disinvestment. … It brings value and vitality to the area.”
The financing plan approved by the committee Tuesday calls for developer Ryan Cos. to privately finance the office, residential and retail space, at an expected cost of about $350 million. The Minnesota Sports Facilities Authority (MSFA) — the public body in charge of building the $1 billion Vikings stadium adjacent to the project — and the city will pick up most of the other costs.
The city will issue general obligation bonds as early as February to raise $32.6 million to help pay for the ramp, with the MSFA pitching in another $16.3 million. In addition, bond funds also will help pay $18 million toward developing the park, which the city ultimately will own.
Ryan will be responsible for bond payments for 10 years, perhaps longer if certain revenue targets are not met. The stadium authority will own the ramp, with the city retaining “air rights” to develop on top of the structure.
While he did not attend Tuesday’s public hearing, former Gov. Arne Carlson wrote on his blog that the arrangement is “far more complicated than any Rube Goldberg device.” He questioned how the city can issue bonds for a development it doesn’t own, a deal that the city’s Chief Financial Officer Kevin Carpenter said is legal.
In addition, the committee approved creating an industrial development district for the development, a move that will bypass the semi-independent Board of Estimate and Taxation, which usually approves city borrowing.
No one at Tuesday’s meeting objected to the arrangement, but Carlson questioned it.
“Time and again history has shown that secrecy and haste are the enemies of good government and good public policy,” he said.