The long-awaited, long-debated Mozaic development proposal for the Uptown area of Minneapolis got an important boost Tuesday from the city after sharp questioning by some City Council members over tax-exempt bonding for the project.

They wanted to know why a proposed $11 million allocation of tax-exempt bonding for the project's parking ramp would generate only two new permanent jobs when it is authorized under the federal economic stimulus program.

Developer Stuart Ackerberg popped up to assure the council's Community Development Committee that more jobs will come if the financing the panel endorsed Tuesday is OK'd by the full council next month. Plans call for the six-story ramp with 435 spaces to sit atop a first floor with 11,000 square feet of retail space that he'll finance privately, Ackerberg said.

He said that restaurants or other retail business he plans there will add at least 50 jobs.

Moreover, if the project goes ahead as planned, he'll eventually add three stories with 65,000 square feet of office space above the ramp, plus more commercial space on Fremont Avenue. The project would occupy the parking lot behind the Lagoon Theater and also include a public plaza and a ramp to the adjacent Midtown Greenway.

Ackerberg said later that building the ramp will take a year and support 57 construction jobs. But committee Chair Lisa Goodman told him: "We're not in the business of funding construction jobs. We're in the business of financing living-wage jobs."

The $50 million Mozaic proposal has been debated for most of this decade after the original proposal for a 13-story tower raised density concerns. But a downsized project won city Planning Commission approval, although Ackerberg said he'll return there soon for approval of phasing of the project. He's dropped plans for condos on the site. "We're chasing a market that keeps dissolving in front of us," he said.

The city wouldn't actually lend money to the ramp under the allocation, but rather confer tax-exempt status on bonds to be sold privately to investors. The ramp wouldn't ordinarily qualify for such financing, but the stimulus tax exemption has broader eligibility, according to Bob Lind, the city's business finance manager.

Although Uptown is one of the city's more robust business areas outside downtown, Lind said it's within the borders of one of the census tracts targeted by the city for recovery aid based on indices of distress. Ackerberg Group is providing $5.6 million in equity for ramp financing.

The ramp project isn't home free. Ackerberg needs to obtain lender financing for the first-floor retail before the stimulus deadline for closing on the bonds by the end of the year. He's hoping construction can start by the end of March.

The panel also approved without debate $16.5 million in similar tax-exempt bonding for a five-story, 61,000-square-foot downtown building for the American Academy of Neurology. It is moving from St. Paul to a site at S. 2nd Street and Chicago Avenue with 150 jobs.

Steve Brandt • 612-673-4438