Minneapolis may rescue Midtown Global Market

Outgoing Minneapolis Mayor R.T. Rybak is seeking nearly $1.8 million in city funds and loan forgiveness to rescue one of his administration's signature projects: the Midtown Global Market.

The privately owned marketplace on the ground floor of the Midtown Exchange building has grown popular as a bustling hub of multiethnic eateries since it opened in 2006. But it has been plagued by annual deficits, which have been covered in recent years by fundraising that has begun to dry up.

In the coming weeks, the City Council will consider whether to give the market $185,000 to support market operations and $85,000 to subsidize free parking and to forgive about $1.5 million in outstanding debts to the city.

"I need all of your help to call your council members and say we need continued support for the global market," Rybak told a crowd earlier this month.

But some City Council members are opposed, questioning why the city would bail out one private business and subsidize parking.

"I find this to be absolutely outrageous," Council Member Lisa Goodman said at a budget presentation this fall. "There are plenty of good organizations in town that have a public purpose [and] we do not fund their operations."

The redevelopment of the former Sears building into apartments and a corporate home for Allina Hospitals was one of the few major project subsidies of the Rybak administration, totaling about $30 million. The market, which benefited from more than $2 million in city loans, now draws more than 1.2 million people a year.

The city's top development official, Jeremy Hanson Willis, warned at a budget meeting in September that without city support "there will not be a Midtown Global Market or the Midtown Global Market that exists will be dramatically different from [what] it is today."

The market's chief manager, Mike Temali, says things are not quite that dire. Temali works at the Neighborhood Development Center, one of two nonprofit community groups that own the market.

"If we don't get it from the city, I don't have any idea where we will get it," he said Monday. "But on the other hand, we are survivors and the businesses in there are survivors and the customer base is highly dedicated. We will keep doing everything possible to figure it out."

The market has reduced its annual operating deficit from about $600,000 to $200,000, partly by raising rents and adding more tenants, Temali said. It has raised about $3.5 million from private donors to help cover the gap. Much of the remaining deficit pays for staff members who help the more than 40 predominantly low-income and immigrant business owners operate their firms and do marketing. .

Temali said the operating subsidy likely would be needed for only two or three years, until the business becomes fully sustainable. He noted that it is the only public, year-round market open all week in the Twin Cities and that supporting the businesses means it incurs costs that other landlords do not.

"Year-round indoor public markets, nationally — which become iconic and big attractions in Seattle or Philadelphia or Cleveland or wherever you want to look — are very typically supported in some significant ways by the public sector one way or the other," he said.

The city has loaned the market about $2.5 million, approximately $1 million of which has been paid. The current proposal would forgive the remaining $1.5 million, contingent on a number of private lenders forgiving (or transferring into equity in the facility) about $2.2 million. Temali said Rybak met with the three banks in September.

Market customers now can park for free by getting parking passes validated while shopping. That was made possible by a Hennepin County grant, which provided for validation machines and a set amount of subsidized parking; the market does not own the nearby parking ramp. Visitors have used up the allocated amount of parking, and $85,000 would continue it about for another year, Temali said.

The idea of a free parking subsidy might not sit well with some on the council. "I don't expect free parking in this city," Meg Tuthill said at the budget hearing.

Temali said the parking is aimed at growing the grocery component of the market, which ensures a steady flow of customers. "Nowhere in Minnesota do you pay for parking for grocery shopping," Temali said.

The $185,000 for operations is included in the mayor's 2014 recommended budget. The other two components will be considered separately, starting at the community development committee in December, according to the mayor's office.

"They have proved their value as an asset and the mayor wants to make sure that are they around long-term, and so in consultation with them thinks that these are a couple of ways that the city can continue its involvement in this highly successful project," Rybak spokesman John Stiles said Monday.

Eric Roper • 612-673-1732

Twitter: @StribRoper