Downtown East project details debated in court

The future ownership and maintenance of a proposed park that will serve as the centerpiece for a $400 million mixed-use development in downtown Minneapolis was debated in a Hennepin County courtroom Wednesday.

A resolution over the matter is expected by year's end, but the legal squabbling hasn't delayed the project — so far.

On one side there were two previous mayoral candidates and a former City Council president, and on the other, the city itself and its independent park board.

At issue is whether the City Council has the right to establish and develop a park, in this case, a little over 4 acres bordered by Park and 5th avenues and 5th and 4th streets.

The debate stems from a lawsuit filed last week in Hennepin County that challenged the way the so-called Downtown East project is being financed, a plan that involves the city issuing up to $65 million in bonds to help pay for a parking ramp and the park. The five-block area slated for redevelopment is currently owned by the Star Tribune — the newspaper's headquarters will be demolished to make way for the park.

After Judge Mel Dickstein threw out four of five counts in the suit Friday, the remaining issue raised in the legal challenge alleges that only the Minneapolis Park and Recreation Board, an independent body, has the authority to acquire and develop parkland in the city.

The plaintiffs in the suit are software executive Stephanie Woodruff, 1960s-era City Council President Dan Cohen and Anoka County prosecutor Paul Ostrow, also a former council president. Woodruff and Cohen ran for mayor this year, and Ostrow chaired Woodruff's campaign.

But there are no firm plans yet on how the park will be designed and maintained. Ryan is expected to buy the land for the park from the Star Tribune for $13.9 million, and turn it over to the city in 2016.

Ostrow said the suit is about urging city officials to be "transparent and open" — and that public participation is inherent to the park board's mission. Plus, he noted, the park board currently requires two appraisals of land it is contemplating purchasing — a process that has been thwarted in the Downtown East project. The land set aside for the park is appraised for $17 million, he added.

Ostrow also said it is imperative for the judge to issue a permanent restraining order now, because Ryan is expected to close on the purchase of the land by Dec. 27, and the city hopes to issue the bonds early next year. If that doesn't happen, "we're forever lost," he said. "You're not going to be able to recall those bonds."

But city attorneys claimed that the city has purview over "public squares" and is therefore permitted to buy land for a park. In addition, the financing plan, which involves the city using its port authority powers to create an industrial district, also permits the purchase of parkland, the city maintained.

"Nothing prohibits us from acquiring a park and giving it to the Park Board," said Deputy City Attorney Peter Ginder, in a hearing that lasted about an hour.

However, deputy city attorney Peter Ginder said the city has the right to buy land for a park and subsequently turn it over to the Park Board to operate. "Nothing prohibits us from doing that," he said.

Dickstein asked several questions of the lawyers, but gave no hint on how he might rule. After Park Board attorney Brian Rice commented that the judge could be looking out of his office window at the project's park in coming years, Dickstein quipped, "You no longer can see out of the windows; because of budget cuts they don't wash them anymore."