Construction of a 40-story luxury condo tower near the Mississippi riverfront across from downtown Minneapolis remains on hold despite a recent ruling in its favor.

A judge recently dismissed one aspect of a suit filed by the Neighbors for East Bank Livability (NEBL) that would have prevented Alatus LLC from demolishing a Tudor-style building on the site. The judge delayed a decision on complaints related to the height and density of the 214-unit building until April 19.

"I can't say it's a victory until I know the full course of the appeals process," said Chris Osmundson, development director for Alatus. "But it's certainly a win at this point for the Alatus team, for the project and the city of Minneapolis."

The sleek glass and steel tower would replace a 90-year-old Tudor-style structure that was once the St. Anthony Falls Commercial Club and most recently housed a Washburn-McReavy Funeral Home, at the corner of Central Avenue and SE. 2nd Street.

The quarter-block site is in the Marcy Holmes neighborhood and adjacent to the Nicollet Island East Bank neighborhood in a historic section of northeast Minneapolis that is defined by bustling low-rise storefronts that are now home to popular shops and restaurants.

There are only a handful of buildings in the area that are taller than the grain elevators that are adjacent to the six-story Pillsbury A Mill, which closed in 2003 and was the oldest operating mill in the city.

In 1971, to honor the critical role of the St. Anthony Falls and the sawmills and flour mills it powered in the history of the city, a wide swath of neighborhoods on both sides of the river was included in the St. Anthony Falls Historic District, a national designation that restricts various aspects of development in the area.

In November, Alatus planned to begin demolishing the former funeral home and a newer adjacent building that housed the St. Anthony Athletic Club. It called off the bulldozers after the suits were filed.

Late last year, William Griffith of the Larkin Hoffman law firm filed the suit on behalf of NEBL, which has pursued two sets of claims that are focused on demolition of the building and the project's incompatibility with multiple guidelines that govern development in the St. Anthony Falls Historic District and in the Marcy Holmes neighborhood.

Those claims appeal a September decision by the Minneapolis Planning Commission that granted the developer a conditional-use permit and variances to exceed overlapping regulations that limit height and density limits in the area.

In its request for an injunction, NEBL contended that the approval is an "extreme departure" from the city's own regulations, and would set a "dangerous precedent placing historic and residential districts across Minneapolis at risk."

The group contends that by approving the project, it overruled the decision of the Minneapolis Heritage Preservation Commission, which rejected the zoning variance based on the height of the 483-foot tower.

The narrow tower will set atop a broader base that will include a lobby, parking, housing and retail. The tower will have 40 floors of living space, but an elevator penthouse and other mechanicals extend an additional two stories.

At a court hearing late last year, Judge Daniel Moreno ordered the parties to trial on March 13, but that trial was canceled and the claims related to demolition of the structure, which were brought about as a Minnesota Environmental Rights Act (MERA) claim, were dismissed during a series of summary judgments. MERA is a state statute aimed primarily at protecting natural resources, but resources with historic designation have also been under consideration under the act.

"We intend to appeal the judge's dismissal of those claims," Griffith said. "We feel it's of paramount importance that the state be able to pursue historic preservation separate and apart from any city."

Jim Buchta • 612-673-7376