Construction has started on a $28 million-plus resurrection of the Coliseum building, the largest reconstruction project along the Lake Street corridor after the 2020 riots.

The riots following the police murder of George Floyd devastated the commercial hub at 27th Avenue and E. Lake Street near where the 85,000-square-foot building stands. The area has slowly revived, with Cub and Target renovations and various other reconstruction.

But the ambitious projects like reimagining the Coliseum are key to the revitalization of the commercial corridor — especially as they bring local ownership into play.

The Coliseum is led by nonprofit developer-manager Redesign and three Black business owners who plan to transform the long-neglected building by 2024. The objective is affordable rents for 25 small businesses owned by people of color, including immigrants.

"We are thrilled to embark on this exciting community-ownership project and the ongoing revitalization of Lake Street," said Taylor Smrikárova, Coliseum project manager at Redesign. "Our vision is to create a dynamic space that centers on BIPOC ownership and builds community wealth."

Redesign in 2021 purchased the building from an absentee owner for $2 million. Partners include Tri-Construction and Watson-Forsberg, Sunrise Bank, U.S. Bancorp, New Markets Tax Credits, Mortenson, MinnPACE energy finance, Metropolitan Consortium of Community Developers and the McKnight Foundation. Grants of $1.75 million and $750,000 from Hennepin County and a state "Main Street" redevelopment matching grant also helped.

Returning properties to local ownership and supporting small businesses also is a goal of city management and community stakeholders along Lake Street, 38th Street and W. Broadway corridors that incurred an estimated $350 million in vandalism and arson damage in the riots.

"The building has a legacy of community support," said Janice Downing, owner of CommonSense Consulting, an investor and tenant in the building. "The Freeman's Department store was known for credit to Blacks, going way back. That building is for all. We're continuing the legacy with top-of-line, affordable office space and an event center.''

The building will be a "representation of the healing that this area has been through," she said. "It will demonstrate the community's resiliency with vibrant communal spaces, public art, and cultural installations, making this … a collaborative community effort."

The Coliseum also is being built back better than it was before the pandemic.

"This building wasn't fully leased or in the greatest condition," said Alicia Belton of Urban Design Perspectives, the architect, an owner and tenant. "This project will create dynamic space that preserves the building's historical charm and meets the needs of today's residents and businesses."

Chris Montana, the lawyer-turned-entrepreneur behind expanding Du Nord Social Spirits, is consolidating and expanding his distilling and warehouse operations a few blocks from Coliseum. Montana, an investor, also will open a first-floor bar and lounge in Coliseum.

A yet-announced restaurant affiliated with Du Nord is planned, as well the reopening of Mama Safia's, a Somali-themed restaurant. There will be a hair salon and barber shop. And an event center.

The century-old Coliseum boasts good bones and terrazzo flooring. It will connect eventually to a geothermal HVAC system, under construction several blocks east at the site of a riot-destroyed U.S. Bank branch that was donated by the bank to Redesign for redevelopment.

Smrikárova, degreed in architecture and real estate finance, leads development at Redesign, the nonprofit developer that has operated in the Seward and Longfellow neighborhoods since the 1970s.

The funding is coming largely from financial institutions, including sale of $14.7 million in New Market tax credits to U.S. Bancorp and Midwest Minnesota Community Development Corp. and other nonprofit financiers. Financial institutions invest in state-and-federal tax credits on building-preservation projects in lower-income neighborhoods. Redesign will remain an owner until the tax credits are exhausted after seven years and the remaining three owners refinance.

The three individual owners are investing $1.5 million from the Minneapolis Commercial Property Development Fund, a city-derived fund that helps capital-light entrepreneurs acquire buildings in challenged neighborhoods. The no-interest loans are forgiven after 40 years, unless an owner sells earlier to other than an heir. The idea is to help small minority entrepreneurs build equity through property ownership.

Commercial lenders are rarely likely to offer the same financing terms in troubled areas as in high-end commercial and retail districts, said Erik Hansen, director of Minneapolis economic development.

Owners typically have little equity and building valuations lag because owners can't get premium-market rents.

"When you rehab an old building in these commercial corridors, it costs more than it's worth in most cases," Hansen said. "The collateral and income ... are not there.''

There are energy and materials "sustainability" savings through renovation.

"Minneapolis is about regeneration,'' Hansen said. "The city wants to preserve some of the history of the corridors."

Hansen estimated that Minneapolis riot-recovery construction since 2020 has topped $200 million. The $50 million-plus residential-commercial reconstruction of the destroyed Wells Fargo branch site at Lake and Nicollet Avenue is scheduled to break ground later this year.

Correction: The name of the development fund was incorrect in an earlier version.