To speed up the reconstruction of 16 properties destroyed in the May riots, the city of Minneapolis will provide $2 million in grants to help owners cover six-figure bills for demolition and cleanup, Mayor Jacob Frey announced Monday.

The announcement follows a Star Tribune report in August that showed how property owners were panicking after contractors submitted bids of $200,000 to $300,000 to tear down buildings that are not worth much more than that.

Frey said individual property owners can expect to receive at least $100,000, and as much as $170,000, to pay demolition and debris removal costs that will not be covered by their insurance policies. The city is using a combination of funding sources, including federal Community Development Block Grant (CDBG) money.

"We know that the rubble we've seen in some areas leads to public health concerns," Frey said. "It leads to public safety concerns. And it inhibits economic growth and development from ultimately happening."

Property owners said they were surprised by the news, in part because nobody from the city had contacted them to discuss their rebuilding problems.

"It didn't seem like anybody cared," said James Tindall Jr., who owns a small retail property at 112 E. Lake St. that was destroyed in the riots. "I was just going to let it sit there."

Tindall was stunned to receive a $250,000 bid to tear down his building and an adjacent property that was damaged in the riots. Tindall's property is worth $238,500, according to Hennepin County property tax records. "It's ridiculous," Tindall said. "I thought it would cost $5,000 or $10,000."

Contractors agree that prices for riot-related work are far higher than usual, but they said that is because government regulations require them to treat all debris from a burned-out building as hazardous. Industry veterans said those rules can double demolition costs.

Steve Poor, the city's director of development services, said the city hopes to send notices to the 16 property owners by the end of the week containing an offer of financial assistance as well as information about their responsibilities for cleaning up riot-damaged property.

"I think that is going to focus the property owners," Poor said. If owners do not have the "wherewithal to deliver," Poor said, the city will take over and bid the projects.

That came as welcome news to several property owners, who said they are confused by their demolition bids.

Ruhel Islam has received seven bids ranging from $125,610 to $269,900 for removing debris at the site of his former restaurant, Gandhi Mahal, and an adjoining property, but the low bidder recently told him it was increasing its price for reasons Islam can't understand. Islam said he was delighted to hear his property is on the city's list of sites qualifying for assistance.

"This is a big headache," said Islam, who hopes to open a temporary location for his restaurant in October. "Whatever insurance money I get, I am willing to give to the city and let them figure it out."

Frey said the city also plans to put another $5 million in its Commercial Property Development Fund to spur rebuilding efforts. The city will target major projects that need $200,000 to $1 million to complete financing.

The money is a small fraction of what is needed to rebuild after the riots. Though Gov. Tim Walz has estimated total damages at more than $500 million, insurers have informed the Minnesota Commerce Department that they expect to pay a total of about $280 million in claims. As of Aug. 7, insurers had paid out just $77 million for business losses, or 29 % of business claims.

Ade Alabi says his insurer is holding onto about $400,000 of his money until the city signs a release saying his debris has been hauled away. But Alabi said he can't afford to hire a demolition contractor because the bids are so high. Alabi's ruined property in the 2700 block of East Lake housed several businesses, including the Town Talk Diner & Gastropub.

"If they give me $170,000, that would help a lot," said Alabi, whose property is also on the city's list. "That would be a pleasant surprise."

Jeffrey Meitrodt • 612-673-4132