It takes a lot of planning and coordination to create utopia. Try it in the middle of two cities and a major university and it gets even more complicated.

A turning point is near in an effort to transform a very gray industrial area — gray concrete, gray warehouses, gray grain bins — near the University of Minnesota at the border of Minneapolis and St. Paul into an “innovation district” with much broader appeal to residents and business.

Its chances look good, but the next few months will test landowners, public agencies and neighbors as crucial elements of a grandiose plan must take root. “It’s a huge coordination effort, and timing is getting tight,” said Richard Gilyard, architect and principal of Prospect Park 2020, the neighborhood’s dedicated planning group.

The neighborhood’s history dates to the 1880s, when it was built by a single developer, and its southern half is home to some of the oldest and most distinctive homes in Minneapolis. But the northern portion is considerably less attractive, and the Prospect Park 2020 group is particularly focused on remaking the area north of University Avenue, where a giant railroad yard and unused grain silos create a bleak boundary.

Their idea is a “living laboratory,” a neighborhood anchored by scientific and technical centers mixed in with residences, artistic centers, mass transit and the latest ideas in environmental sustainability. Its leaders plan to test their core principles on a two-block stretch in the northern part of Prospect Park, near a transit stop along the Green Line light rail, which opened last year, and the Surly brewery and restaurant complex that opened this year.

For their pilot program to get off the ground, two key pieces of the puzzle need to move into place soon: funding for an initiative called “Green 4th Street” and the creation of district stormwater and district energy systems.

The water and energy systems have yet to be funded, built and implemented, but several projects ready to begin construction are creating pressure to get them running soon. The Green 4th initiative, which would create a landscaped corridor along what is now a stained and cracked street slab, has the cooperation of the city but needs to find more money.

Within the two-block test area, Prospect Park Properties, run by Jeff Barnhart, owns a nearly three-acre site that will likely be redeveloped into a hotel, apartment, restaurant, grocery and retail project by Chicago-based Harlem Irving Cos. The Cornerstone Group is working to finalize financing on a 189-unit senior apartment project on a 2.4-acre parcel across SE. 4th Street. Aeon is slated to begin construction next door on 65 affordable apartments.

“It’s really important that these early projects get the key elements of these systems in place and particularly those big projects, because if you lose them as a customer you begin to nibble away at the economic viability of the system,” Gilyard said.

Prospect Park Properties and Cornerstone have both endorsed the broader vision for the neighborhood. Both firms aim to break ground next spring.

“All of a sudden the light rail finishes up, the economy turns around and we get approached by everyone you can think of,” Barnhart said. “It’s just a huge site and we knew we didn’t have the horsepower to give it what it deserves. We knew we had to bring a key developer here to help build it.”

The concept of district energy and stormwater management would replace the traditional model, where individual property owners manage their own water and energy, with one central system that users could essentially “plug into” at savings in both cost and resources.

District stormwater is the closest to becoming reality. The Mississippi Watershed Management Organization (MWMO) has been a part of a committee analyzing the potential for a district system, which it plans to test on the same two blocks as the greening program along SE. 4th Street in Minneapolis, between 29th and Malcolm.

“Everyone has to have some skin in the game. Things are quickly converging and a decision needs to be made. Between now and the end of the year, we need to get all of the landowners to agree,” said Stephanie Johnson, a principal at MWMO.

If all the landlords on that short stretch sign contracts in the next month to participate in the stormwater system, then MWMO’s board will vote in December on whether to proceed with the project. Two of the six parcels are currently looking for a buyer, with the other landowners in agreement with the concept.

MWMO has not committed financially, but hopes to share construction and design costs of about $1.6 million with landowners. The landowners would pay annual operating and maintenance expenses that the organization forecasts to be about $17,000 a year — roughly the same as what they would pay under the old system.

Eventually, the theory goes, enough users would be plugged into the system to make it cheaper, with treatment that is above and beyond the city’s standards. Those cost savings could then be redirected into other district improvements — like rain gardens that would be a habitat for pollinators.

One of the defining features of this “city within a city” initiative is also among its greatest challenges: trying to create something where another system already exists. Organizers secured support of planners and leaders in both Minneapolis and St. Paul, with Minneapolis recently giving it the first “innovation district” classification in the city’s history.

“There is strong support for the concept and then a more measured response when it comes to resources and where we allocate those,” said Kjersti Monson, Minneapolis director of long-range planning.

Chief among the district’s financial needs include the reconstruction of SE. 4th Street. The city’s 2015 budget includes the makeover of the street’s surface, but everything above and beyond an ordinary repaving — burying power lines, adding trees or other nonstandard improvements — must be funded by the Prospect North Partnership, a group formed to include large businesses and public entities in the neighbors’ efforts.

That difference adds up to about $1 million, and the partnership has raised about half of that so far.

“We’ve been charged with designing, specifying it and giving the city the documents so it can be in the city’s file. This has been a big part of the partnership’s role and a lot of money has been spent on consultants,” Gilyard said.

City officials say they’re pleased to see interest from developers in the area, but hope to see more commercial users invest in the district.

“It would be easier if there were significant pressure from a major economic development contributor, like if a major company came in,” Monson said. “Right now it’s just residential developers. The city’s primary interest is the economic development and there’s some crickets chirping there. And that’s the university’s interest, as well.”

This is also the desire of the partnership. Its geographic location near the university is no accident. The group hopes to attract academic-related research facilities and any potential spinoff companies. Those remain to be seen.

“Our fear was that, left to normal market forces, this would just be more of the same. More student housing, more pizza, more beer,” Gilyard said. “It’s kind of a miracle that we’ve got three or four landowners right in the heart of the deal who have bought into the project.”

Kristen Leigh Painter • 612-673-4767