The Midtown Global Market won initial approval Tuesday for $1.5 million in public loan forgiveness, but the city postponed a decision on whether to subsidize free parking at the south Minneapolis market, which has struggled to make ends meet.

Mayor R.T. Rybak has been pushing to help rescue the finances of Midtown — one of his signature achievements as mayor — before he leaves office at the end of the year. Last week, the City Council's budget committee nixed a $185,000 proposal to subsidize its operations in favor of allowing the market to compete for it in a grant program.

The market was a core component of the former Sears building's transformation on Lake Street into apartments and a corporate home for Allina Hospitals. It opened in 2006 and has since become a hub for multiethnic foods and home to about 40 predominantly immigrant-driven businesses.

The council's community development committee on Tuesday approved a proposal to forgive $1.5 million in outstanding debt the market owed to the city. The market has paid about $1 million of its debts already. That loan forgiveness is contingent on private lenders converting about $2.2 million in debt to equity.

"I can't think of anything more powerful that we could do as a council than to help Midtown Global Market with long-term debt," said Council Member Gary Schiff. "It will help their fundraising, it will help their long-term stability and it signals, I think, a new era of stability for the market."

The market operates at a deficit, though it has been reduced from $770,000 in 2008 to $260,000 in 2013. Given the market's finances, city staff concluded that the business would be unable to pay its debts over the next 10 years. The market is owned by two nonprofit community groups.

Conceived 10 years ago and opened in 2006, the Midtown Global Market occupies the former Sears Tower on E. Lake Street in south Minneapolis. It is home to about 40 businesses, most operated by immigrants.

The committee delayed, possibly until next year, a separate proposal for the city to pay $150,000 to subsidize free parking. The market has relied on a one-time Hennepin County grant and Ryan Cos., the owner of the ramp, to help support the free validated parking for customers in the past. Ryan needs parking revenue, however, partly so it can repay about $1 million in city loans related to parking expansion.

Market manager Mike Temali said last month that the free parking is important for the market to ensure the health of its grocery business, a vital component to sustaining the operation over the long term.

The market previously provided three hours of free parking, but it was reduced to two hours in 2013. Ryan has proposed lowering it to one hour, but the market is concerned this would hurt business, according to a report prepared by Ryan.

"I would like to see some sort of compromise that looks along the lines of one hour of free parking, we would cover that," said Council Member Lisa Goodman, who reasoned that time above that is likely related to restaurant customers rather than grocery shoppers.

Eric Roper • 612-673-1732

Twitter: @StribRoper