State gives Minneapolis nearly $3 million to clean up, develop polluted sites

What was once the site of an industrial dry cleaner in north Minneapolis is going to be transformed into 50,000 square feet of office space.

An old garbage dump in the North Loop will become a 10-story building with offices, retail and apartments.

And an agricultural facility that previously stored grain and oil near the University of Minnesota will house a rock-climbing gym.

The Minnesota Department of Employment and Economic Development (DEED) is awarding nearly $2.8 million to developers to clean up half a dozen polluted sites across Minneapolis, allowing them to breathe new life into vacant land and abandoned buildings across the city.

Government support for remediation at these sites is critical to getting projects done, said Kim Donat, general counsel at Wellington Management Inc. The commercial real estate firm is developing office space and artists' housing in the Harrison neighborhood, in partnership with the nonprofit Artspace.

"Without that support, these projects wouldn't be getting done," Donat said.

DEED awards statewide Contamination Cleanup and Investigation Grants twice a year with money appropriated by the state Legislature. This round of grants totals $4.6 million and will fund 10 projects in Minneapolis, Mankato, Rochester, South St. Paul and St. Louis Park that were chosen from a pool of 25 applications, according to DEED spokesman Shane Delaney.

The city acts as a liaison for the grant funds, identifying eligible projects and doling out the money later. Minneapolis officials selected 15 projects to submit to DEED and the Met Council during this grant cycle, and received cleanup funding for 12 of them — a total of about $5 million.

More than half is going to a Lennar project in northeast and a United Properties development in the North Loop. Both are mixed-use development projects that will each receive about $1.5 million for site cleanup.

United Properties is also getting more than $500,000 from DEED and the Met Council for a project two blocks from Target Field that will include a hotel, restaurant and theater. The site was once a lumberyard and parking lot, and is polluted with petroleum and other contaminants, according to DEED.

Construction is expected to start either this fall or the following spring and will begin with a few months of pollution cleanup, which is typical for an urban project, said Rick McKelvey, vice president of commercial development.

"Certainly in urban Minneapolis locations, it would probably be more uncommon to find a site that doesn't have some degree of contamination," McKelvey said.