Rehabbing a rundown Minneapolis landmark

The wait for an elevator in Abdi Mohamoud's building on Minneapolis' West Bank can stretch to 15 minutes, so he often walks up eight flights to his apartment, through a stairwell with rusty pipes.

Once, a pipe burst near the elevators, spewing dirty water and forcing a family to evacuate. The building's washers and dryers sometimes eat Mohamoud's quarters or leave his clothes dirtier than when he put them in.

Tenants at the state's largest affordable housing complex recite these and other defects at Riverside Plaza, which the current landlord says was built too cheaply and has critical systems and parts failing.

That's why the Minneapolis City Council last week took the first step toward helping to finance a $113.7 million purchase-rehab of the multi-building complex that hovers over two freeways. The council's preliminary earmarking of $80 million in tax-exempt bonds -- to be bought by institutional investors and repaid from rents -- was encouraged by dozens of predominantly East African-immigrant residents bused to City Hall.

They represented an estimated 4,440 people who populate the 1,303 units at the site once known as Cedar Square West -- a population greater that some of the state's smaller counties. Federal vouchers subsidize the rents for 62 percent of the units, compared to a mere 20 percent when the complex opened in 1974.

Without thorough replacement of pipes and building systems, "we're basically asking for a disaster," Matt Goldstein, the city's coordinator for the project, told council members. Some warn that a building failure could flood the low-income housing market with tenants seeking shelter.

Yet the price tag has raised some eyebrows, especially among longtime critics of developer George Sherman, managing partner of the group that bought the complex in 1988 after the federal government foreclosed on the original developer.

What may also surprise some is Sherman's pursuit of $21.6 million in federal and state historic tax credits for a complex only 36 years old. "To award such status to that property is to insult and abuse historic preservation," David Markle, a Sherman critic, wrote to federal officials recently.

But Charlene Roise, historic preservation consultant for Sherman, said she's confident the project will win the National Register of Historic Places listing needed to use the tax credits. Because it's less than 50 years old, the property must be proven exceptionally important.

Roise said it qualifies on two counts. First, it represented a new approach to urban renewal that emphasized planned, self-contained communities. Second, it represents a significant work by architect Ralph Rapson. Although detractors dislike the concrete spartanism of the towers, deriding their style as Brutalist, Roise says the complex is more properly French Modernism and is in the awkward stage new architectural styles go through when they're 30 to 50 years old.

"Love it or hate it, the historical significance of the building is clear," she said.

Breaking down

But it's a building that's breaking down.

Sharif Mohamed has lived there with his parents for three years. He echoes complaints that his building is often too hot or too cold during the transition between heating and cooling seasons. Heavy rain sometimes comes through windows into their 36th-floor corner apartment, soaking the rug.

Former resident Liban Mohamed said he got stuck in the elevator several times, including once by himself for an hour. "They had in the firefighters to get me out," he said. Abdishakur Mohamed said it took months for management to replace his ailing refrigerator, and a hole in his bathroom where a pipe was replaced still hasn't been covered.

"Most of the Somalis here don't complain because they believe if they complain they'll get kicked out," he said. Community organizer Abdirizak Bihi is campaigning for Somalis to fill some of the estimated 300 construction jobs during the rehabilitation.

Although the tax-exempt status of the bonds earmarked for the project makes them only modestly cheaper in today's markets, that still would bring a vital $23 million in low-income tax credits to be sold to investors.

The financing package will reshuffle the ownership partnership and finance a rehab that's more basic than cosmetic, except for the repainting of the faded colored panels on the towers. Workers will replace heating, cooling, plumbing and other systems. Sherman said pipes are bursting because they're rusting both from the inside and the outside. He said insufficient insulation allows condensation to form and quicken rust.

Looking back to the buildings' origins under controversial 1970s developer Keith Heller, "a lot of decisions were made using fairly inexpensive materials, but I think that has been coming back to haunt the building," Sherman said. He hopes to close on financing in November, while crossing his fingers that no major systems fail over the winter.

Markle calls for more federal scrutiny of the $7.6 million developer fee in Sherman's project budget. Sherman defends it as compensation for taking on "a huge amount of risk." He said he'll personally guarantee $50 million to equity investors. He said that much of the fee is deferred and based on the property performing as expected.

"Not only is there risk, but the work is phenomenally hard," he said. "It would be easier for me to sell this to some New York investor and make three or four times more."

Steve Brandt • 612-673-4438