Minneapolis schools headquarters will spur W. Broadway revival

Tuesday's decision by the Minneapolis school board to build a new headquarters on W. Broadway comes at an especially good time for the frayed commercial artery on the city's North Side.

The school board's $27 million headquarters will bring 500-plus jobs to W. Broadway, which runs from the Mississippi River to Robbinsdale and will drive a two block-deep development between Girard and Fremont Avenues.

Most important, it will lend significant mass to the piecemeal redevelopment of W. Broadway that's occurred over the past several years, led by developer Catalyst Community Partners along with other building owners who have refurbished dilapidated and once-abandoned commercial buildings.

That halting progress was slowed and overshadowed by the devastating subprime mortgage scandal and subsequent housing bust that hit the North Side earlier and harder than any Twin Cities community.

But now the North Side economy is regaining traction.

The median sale price of a house, excluding the far-north Camden neighborhood, fell from $159,900 in 2005 to $38,500 in 2009, a 74 percent drop, according to the Minneapolis Association of Realtors. Yet prices started rising late in 2009 and the North Side median sales prices during the first quarter of 2010 rose 70 percent to $67,950.

"I sold several properties in March and April that ranged in price from $150,000 to $245,000," said Sarah Huss, an Edina Realty agent who sells Minneapolis and suburbs. "The number of distressed sales, foreclosures and bank sales are decreasing and the traditional market is increasing. So, you're seeing an earlier and faster recovery in what was the epicenter of the foreclosure tsunami."

Thanks to coalitions of residents, businesses and police, crime was down by 15 to 20 percent last year, the third year of decline, according to police statistics.

Ed Anderson, manager of the six-year-old Cub Foods on W. Broadway and Lyndale Avenue N., said the aggressive panhandlers, vagrants and thieves who used to hassle his customers largely are gone, in jail, treatment, or trained and employed.

"We knew this would be a long haul when we opened in 2004," said Anderson, who employs 160 people in the sparkling-clean store. "But crime and the depth of the housing foreclosures that nobody anticipated really hurt our business. The first [four months] of this year were our best ever. We're optimistic."

W. Broadway has lagged the commercial renaissance on E. Lake Street and E. Franklin on the South Side of Minneapolis where over the past 15 years abandoned store fronts and gin joints gave way to renovated storefronts, immigrant-owned businesses and restaurants.

With fewer corporate partners, the North Side has lacked the marquee projects that have helped anchor redevelopment project on Minneapolis' South Side, such as the conversion of E. Lake Street's abandoned Sears Roebuck store into a new headquarters for Allina Hospitals.

Henry Ford, a young neighborhood housing contractor, and veteran developer Stu Ackerberg of Catalyst Community Partners, embody the North Side's opportunity and challenge.

Ford, a North High graduate and neighborhood resident, started as a handyman in 1991 and has become a general contractor thanks to a growing relationship with Greater Metropolitan Housing Corp. (GMHC). Business-backed GMHC has been the single-biggest buyer of more than 200 foreclosed North Side houses since 2007. GMHC typically acquires a salvageable house for $40,000, invests $80,000 to $100,000, and sells the like-new houses for around $130,000, said Bill Buelow, GMHC's construction director.

Ford has overhauled several GMHC-owned houses over the past year, working budgets and hiring subcontractors.

"These vacancies lead to crimes and a lot of public costs," Ford said. "I like being part of rebuilding the neighborhoods and seeing families move in."

Ford is an adept financial manager, has hired a bookkeeper and keeps his overhead down by working out of an office in his home. That's helped him win Buelow's trust. Despite that, Ford still can't get a bank loan for working capital.

"Many lenders have slammed their loan windows shut for small construction companies," said Iric Nathanson, finance director of the consortium.

Leveraging foreclosure funds

Since 2007, the city has pooled about $35 million in city, federal, state and philanthropic investments to leverage close to $100 million in private dollars that has gone into foreclosure prevention, and the purchase, renovation and sale of more than 800 foreclosed North Side properties. The city is starting to cut into what has been a three-year inventory of about 500 foreclosed houses on the North Side.

The housing restoration work has kept a lot of construction workers going and helped local businesses rebound.

"We lost money in 2008 and 2009," said Darryl Weivoda, owner of nine-employee North End Hardware at Lowry and Penn Avenues. "I'm optimistic that we're going to have our best year in the nine years that I've owned North End. The housing stock was getting so cheap that people weren't investing. Now, we've got new owners buying and investing and other residents are fixing up their houses again and making repairs. We're busy."

Catalyst and other investors and donors are contributing more than $400,000 in equity to the project. Franklin Bank is the principal lender.

Ackerberg, who has North Side family roots, has redeveloped several commercial and housing projects, a church and a day-care center on and around W. Broadway since 2004. The Ackerberg projects, which also support community-based minority contractors and minority workers and trainees, have generated new businesses and hundreds of new jobs and patrons.

The 5 Points development, named for the confluence of five intersecting streets, already has inspired the facelift of several businesses across the street. Sue Wollan Fan, a former Best Buy and Accenture executive who runs Catalyst on a day-to-day basis, acknowledged the rising residential values have created the opportunity for a revitalized W. Broadway.

"The commercial corridor ... creates the greatest impression," Fan said. "This creates confidence and stimulates other investment."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com