The largest development deal in recent Minneapolis history cleared its final hurdle at City Hall on Friday, jump-starting a plan to reshape the stagnant downtown area adjacent to the new Vikings stadium.

The $400 million project includes two office towers expected to be owned by Wells Fargo, apartments, retail, a parking ramp and a nearly two-block public park.

“We stand at the brink of doing something I believe is quite remarkable, which is to literally transform a part of town,” Mayor R.T. Rybak, the primary champion of the deal, said before the unanimous City Council vote Friday. “I love a lot of things in this city, but I don’t love vacant parking lots in places where there could be vitality.”

A last-minute legal challenge in Hennepin County District Court failed on most of its merits Friday afternoon. A group that included two former mayoral candidates sued the city earlier this week, alleging that city officials were exceeding spending caps in the Vikings stadium legislation by committing extra money to parking facilities already required by that bill.

Judge Mel Dickstein ruled against that claim because, he wrote, the parking ramp is integral to the development project and “exists independent of the stadium” — despite benefiting that project as well.

Dickstein did issue a temporary restraining order based on another argument in the lawsuit, however, pending more discussion of whether the city has authority to acquire and maintain parks independent of the Park and Recreation Board. A hearing on that matter is expected next week.

Public-private venture

The bulk of the project will be privately funded. The public component involves the city borrowing up to $65 million to build a 1,600-stall parking ramp and a basic public park. The Minnesota Sports Facilities Authority, which is overseeing stadium construction, will pay $10.3 million for skyways connecting the buildings to downtown and $16.3 million to fund one-third of the parking ramp.

The city’s debt is expected to be repaid by revenues from two parking ramps, with shortfalls backed by a guarantee from developer Ryan Cos. that will last at least 10 years — until the ramps turn a consistent profit.

A key remaining question is how to pay for improvements to the park, since nearly all of the money set aside for the project will be spent on land acquisition, demolition and cleanup. That effort is expected to rely heavily on fundraising, though Rybak said Friday that the sale of development rights above the new parking ramp could also raise money for the park.

The project proved to be much more popular on the City Council than the polarizing Vikings stadium deal, largely because of its ability to attract private investment and the potential to improve an underutilized part of downtown.

“Our community will now house fantastic and connected new spaces to live and work, and the city of Minneapolis will collect tens of millions of dollars in taxes over the coming decades,” Mayor-elect Betsy Hodges, who missed the vote because of a meeting with President Obama in Washington, said in a statement. “Surrounding neighborhoods will be more connected by public spaces and with new green corridors and skyways.”

Ryan Cos. Vice President Rick Collins said they expect to break ground in April 2014, completing the two mixed-use buildings in late 2015 and early 2016. The park is expected to be complete in June 2016.

The Star Tribune, which owns much of the affected land, has been open to selling the blocks in question for many years. Collins and Steve Yaeger, a spokesman for the Star Tribune, declined to comment on the sale price Friday. Estimates from city staff in July showed the newspaper could make upward of $38 million from the sale.

The development requires demolition of the 94-year-old Star Tribune headquarters to make way for the park. A city historic preservation panel attempted to block the demolition, but was overruled Friday by the City Council. Yaeger said the Star Tribune expects to make an announcement soon about where the newspaper plans to move.

Wells Fargo Vice President Brent Hanson said Friday they hope to sign the deal with Ryan to own the buildings next week. Hanson said they are still in the “planning process” as to where the roughly 5,000 employees expected to occupy the office towers will originate.

In his last days in office, Rybak will seek to sell the city’s development rights above the new six- or seven-story parking ramp, which he noted will feature views of a stadium, park and river. He envisioned it possibly becoming a hotel, residential building or office space.

“I’ll be meeting with a developer who’s coming in from out of town today [Friday]. Another one is coming in Monday,” Rybak said. He added: “If I wasn’t an almost-broke former mayor, I’d go bid on it myself.”

Staff writer Janet Moore contributed to this report.