Ranks of bright apartment buildings line Olson Highway west of downtown Minneapolis, split by a sinuous wildflower-lined boulevard that by late next year will create a new link to the south. Just beyond the apartments, there's an airy new residence for seniors, a unique housing complex for people with memory problems and a community center for both.

But nearby, acres of vacant lots sprout weeds instead of the neighborhoods of owner-occupied houses and condos they were supposed to get.

Twenty years after Legal Aid filed a landmark lawsuit to reshape four aging North Side housing projects, the landscape has changed substantially. But a significant portion of the promised redevelopment remains unfulfilled, and there's no timetable for completing it. Nor has anyone studied how the low-income people who were supposed to benefit made out once they were resettled.

Landmark lawsuit

Filed in July 1992, the lawsuit described a virtual apartheid for people living in public housing or using federal rent vouchers in Minneapolis that illegally isolated them in high-poverty, high-minority areas of the city.

Since the case settled in 1995, an estimated $225 million has been spent to erase the four projects that once straddled Olson and to rebuild the area. Hundreds of project residents moved to new public housing in the suburbs. Others used 900 new federal rent vouchers to move there or to safer areas of the city.

"Big picture, we achieved virtually all of what we were trying to do with the decree," said Tim Thompson, who formerly directed the lawsuit for Legal Aid. "The one area that we fell a little short was with the ownership units at Heritage Park."

The lawsuit arose from Legal Aid's contacts with occupants of the 770 units of aging rowhouses that deteriorated as the area's poor soils shifted. The suit aimed to provide those renters or those using rent vouchers a broader geographic choice so they could live in areas with less poverty and crime. Eventually, 298 new public units were built in Minneapolis by 2006, 200 of them on the site of the old projects.

But the signal accomplishment of the settlement was to build 472 public housing units in more than 30 metro suburbs. That wasn't finished until 2006, five years after the last family left the projects. That decentralization of public housing units to suburbs is something no similar public housing desegregation settlement accomplished, according to national experts.

The rise of Heritage Park

The new community known as Heritage Park has risen on the projects site, creating mixed-income buildings where public housing residents live next to those who can afford market rents. There's also new single-family housing, some of the units once fetching $400,000. But vacant parcels dot the area and some new houses are rented out. And although it's home to a broader range of incomes, the area remains 85 percent minority.

Only 90 ownership homes of a planned 360 have been built; they were supposed to bring more higher-income people to the area.

Many who bought houses in Heritage Park are now underwater on their mortgages. On one block, owners of newly built homes have lost a combined $1.5 million in value. The neighborhood's median home value has slumped from a 2007 peak of $260,000 to $144,000 now, an even steeper drop than in the surrounding Near North area.

"It's certainly the worst investment I ever made," said one buyer, Mark Manns. He lived in Burnsville and his wife Sherrie worked downtown and lived in Blaine when they decided "to build a new house and be close to everything."

He paid more than $472,000 in early 2008 for a house on Van White Boulevard, the redevelopment's Main Street. The assessor values the house at $210,500 now.

But since the housing market crash, there are deals to be found. Toni Bowles and her husband, Walter, paid just $200,000 for a house next to Manns' in 2009.

"It's a terrific house in a terrific location," she said.

The Bowles house originally sold for $614,000 in 2007 to a woman later convicted of identity theft in a mortgage fraud case. She let it go to foreclosure.

The largest questions looming over the vacant lots of Heritage Park are what type of housing will get built and when. The vacant blocks south of Olson were slated for 193 single-family homes or condo or townhouse units to offset the 440 rentals.

But that stalled when the developer hired to create the first 167 units of ownership housing north of Olson didn't complete the job. A 2003 development agreement called for those units to be finished by mid-2005 for multifamily buildings and mid-2006 for single-family homes -- well before the housing market collapsed.

One reason for delay was that the boggy soils were even worse than anticipated, meaning up to 20 feet of soil had to be replaced. That drove lot prices to $50,000 or even $100,000 -- many times the cost of a lot elsewhere in the North Side and higher than metro fringe lots.

'Too far apart'

Richard Copeland, the sole remaining partner of the development team, was born in the projects. He heads Thor Construction, which teamed with Sienna Corp. to prepare lots for builders. "They were very cumbersome working with the city, because they were a suburban builder," Copeland said of Sienna.

Most builders backed out of dealing with the city "because they couldn't deal with the stringent requirements," he said. For example, an architectural review of each proposed housing unit had to go through multiple reviews that took months, he said. "There's much more rigor and pressure in building in the inner city," Copeland said, adding that builders told him costs were 20 to 25 percent higher than construction on an undeveloped site.

Matt Goldstein, a city project manager, said the city spent years negotiating repeated amendments to its contract with the development partnership, but in the end "we were too far apart." Copeland and the city have agreed on voluntary city foreclosure on the 18 lots the partnership bought from the city.

"I think Heritage Park was more difficult to redevelop than could have been anticipated," Goldstein said.

There's talk that the city may release a request for proposals this fall to gauge developer interest in the vacant areas. City development officials suggest that market-rate and high-end rental might better fit the market for housing, citing the proximity of Target Center and Target Field. But the final stipulation filed in the lawsuit appears to bind the city to developing ownership housing there.

Steve Brandt • 612-673-4438