Opus to commission: Give us more time on riverfront project

Six months.

That's how much more time the developer that was slated to turn prime riverfront property in downtown St. Paul into office, housing and hotel space wants in order to land a major tenant for the $200 million project.

That request from Opus Northwest came a day after it cancelled a $10 million purchase agreement with Ramsey County, which has been trying to shed the former West Publishing complex and vacant jail for years.

The developer cited a bad economy and bad timing in pulling out of the deal. But on Tuesday, Opus was in front of county commissioners requesting negotiations for a new deal and sharing its plans for the 6-acre site that stretches along Kellogg Boulevard and the Mississippi River bluffs from Market to Wabasha streets.

Commissioners reacted warmly to the plans and ultimately decided to have a closed-door session to discuss their options. Technically, the deal is dead and the county could seek new suitors.

Still, Opus made clear its interest in sticking with the project.

"We have no intention of throwing in the towel, but we do need more time," said Tim Murnane, an Opus senior vice president. He said $250,000 has already been spent on designs.

Opus gave notice Monday that it was opting out of the contract, which allowed the developer to keep $250,000 in earnest money that would have become nonrefundable Tuesday. Had Opus gone forward, it also would have had to deposit $750,000 on Tuesday.

But to go forward, a major office tenant is needed, Murnane said. He said there have been meetings with potential clients -- four more are scheduled in the next four weeks, he told commissioners Tuesday -- but no deals are imminent.

At the end of the first quarter, the vacancy rate for office space in downtown St. Paul stood at 26.3 percent, compared with 16.9 percent for the Twin Cities overall, according to a recent research report by the Twin Cities office of Colliers Turley Martin Tucker, a real estate company. The vacancy rate for downtown Minneapolis was 16.5 percent at the end of the first quarter.

Commissioners Jim McDonough and Jan Parker questioned whether six months was enough time to strike a deal.

Murnane said he was sensitive to the county's needs and thought it was a reasonable amount of time.

Late in 2006, a deal with a team of local developers who planned to tear down the jail and build upscale condominiums collapsed because the condo market dipped and construction costs rose.

In January, Opus and the county signed a purchase agreement for the $10 million price.

Commissioner Rafael Ortega said he was impressed with the plans described Tuesday and called for a secret session. "I don't want to negotiate this right now," he said.

The riverfront project currently breaks down to:

• a 22-story office tower with up to 500,000 square feet of space

• a 30-story tower with room for a 250-room hotel and 100 condos

• a six-story "cliff-dweller" building -- built to the height of the bluffs -- with room for 26 housing units

• a 35-foot-high platform that runs the length of the development

• a quarter-acre park at street-level on top of the cliff-dweller building.

Commissioner Janice Rettman told Murnane she wasn't going to ask him any questions because she viewed the contract termination as Opus being "off the table."

The commissioners also decided to continue planning the relocation of 600 employees currently working in the West building. Options range from leasing space to buying an existing building to building a new building, or a combination of those.

Chris Havens • 651-298-1542