Updated at 1:39 p.m.
A plan to dramatically alter the eastern edge of downtown Minneapolis through a mix of private and public development took a major step forward Friday when the Minneapolis City Council approved its basic elements.
The unanimous vote comes roughly two months after city leaders unveiled the proposal to build a mixed-use development, parking lot and large public park on land adjacent to the new Vikings stadium. The deal, worth an estimated $400 million, relies on the purchase of five blocks currently owned by the Star Tribune.
"How do you spell unanimous again?" a satisfied Mayor R.T. Rybak quipped to a reporter as he left the meeting. Further votes are expected this fall, when the Council must sign off on the specifics of the deal.
Friday's approval authorized city staff to develop a term sheet with developer Ryan Companies, which hopes to build a million square feet of office space, more than 300 housing units and retail space on two blocks. The city would be responsible for, among other things, borrowing $65 million to help build the parking ramp and park.
The terms of the Star Tribune's agreement with Ryan have not been disclosed, but a city development official said Friday that the average price per square foot is about $71. That makes the 12.5-acre plot of land worth about $38.6 million. Star Tribune management and Ryan, which has not yet purchased the land, declined to comment on the estimate.
Several questions remain unanswered. Among them is what to do with two major streets, Park and Portland Avenues, which would bisect the park. City finance officials must also find cash, possibly through development and naming rights, to pay for $10 to $15 million in park amenities beyond grass and street lights.
The city and Park Board are contemplating a unique concessions arrangement to pay for operating the park, which may include what Rybak dubbed a "destination restaurant" on its westerly portion.
The total health of the deal relies heavily on the performance of parking in the downtown east area. Parking revenues will pay down the city's 30-year debt for the project, and Ryan has agreed to guarantee against any shortfalls for at least 10 years -- or when the ramps turn a consistent profit.
The Minnesota Sports Facilities Authority has agreed to cover longterm shortfalls repaying the parking ramp bonds, but city coffers may have to be tapped to pay for the park bonds if parking revenues falter.
On top of the financial considerations, the design of Park and Portland Avenues will have a big impact on the look and feel of the park. Hennepin County, which owns them, has little interest in closing the roads altogether. Rybak said they will not look like they do today, however.
"It would be ideally dramatically smaller and much more park-friendly than it is today," Rybak said. "And potentially only open during rush hour."
As part of the deal, Ryan would retain the right to purchase and develop one-sixth of the two-block park. That would also place a buffer between the green space and Hennepin County jail, which abuts the westerly end.
Council Member Sandy Colvin Roy has also expressed concern about the possibility of naming the park "The Yard," as it is referred in city documents, given its proximity to the jail.
Rybak said on Tuesday that the city has not had an office development of this scale since the early 1990s. The owner and tenant is expected to be Wells Fargo, though they remain publicly uncommitted.
"We are just pleased with the continued progress of the project and we're continuing to do our part, which is evaluating our participation in it," Wells Fargo spokeswoman Peggy Gunn said Friday.
The city would issue general obligations bonds for about $65 million, but that does not include interest. City documents obtained via an open records request show that the principal and interest could be closer to $125 million, based on one calculation of future interest rates.