Redevelopment plans in limbo at Northeast Mpls.' Superior Plating

A plan to redevelop the former Superior Plating site in northeast Minneapolis into hundreds of apartments and retail shops may be in peril.

Rich Kauffman, an executive with Florida-based DLC Residential, said Thursday it's unclear whether the firm will move ahead with plans to purchase the 5.4-acre property. DLC has signed a letter of intent with property owner First & University Investors to buy the site at 315 1st Av. NE. for an undisclosed sum.

"We're at a point where we have an issue to resolve with the seller," said Kauffman, who declined to elaborate.

One serious issue facing redevelopment efforts of the former industrial site is pollution contamination. Originally developed as a streetcar repair barn in 1891, Superior Plating began operating on the property in the mid-1950s as a metal finisher. In November 2011, the company declared bankruptcy and shut down about a month later.

First & University Investors, a partnership between City Center Realty Partners of San Francisco and Chicago-based WHI Real Estate Partners, bought the property in June 2012 and continued a cleanup effort to prepare it for possible redevelopment. DLC's purchase of the property is contingent on any pollution discovered there being remediated.

When the partnership moved in December 2013 to demolish a building on the site and clean up any pollution discovered, the cost was expected to be about $3 million, said Jerry Stahnke, a project manager with the Minnesota Pollution Control Agency, which is overseeing the cleanup.

Now that figure has ballooned to $6.2 million after a series of metal plates, chunks of concrete, structural beams, asbestos-flecked piping, a metal tank and other possibly contaminated debris was found under a subfloor, Stahnke said.

Kauffman, who is DLC's president of construction for the Midwest region, was scheduled to meet with representatives of the Nicollet Island-East Bank Neighborhood Association's Superior Plating task force Thursday evening to discuss redevelopment plans. But the meeting was canceled at midday.

In an e-mail to members, Association President P. Victor Grambsch wrote, "in doing their due diligence checks on the site DLC has determined that certain questions and uncertainties about the long-term operation of the pollution abatement systems required at the site may prevent them from proceeding with the project."

The association has said it prefers high-density residential and retail development on the site.

On its website, DLC says it focuses on developing, constructing and managing income property "in the strongest emerging markets across the United States."

Recently, it closed on its first Minnesota property, parcels containing an Olive Garden and a Chili's restaurants, in St. Louis Park near the popular West End office, residential and retail development. The Chili's parcel will be redeveloped into 158 apartments, Kauffman said.

DLC isn't the first real estate developer to show an interest in the site. Minneapolis-based Ryan Cos. in 2005 proposed a 600-unit luxury condominium project, but backed out the following year, citing softening sales and the glut of high-priced condos on the market at the time.

The Superior Plating property is perhaps the largest redevelopment opportunity in the Northeast neighborhood, which has undergone a revival over the past two decades that has involved the renovation of historic buildings into shops and restaurants and the construction of hundreds of new upscale condos and apartments.

A few blocks away, the ­former Totino's Italian Kitchen site is currently being redeveloped into Red 20, a 130-unit six-story apartment building with street-level retail.

Janet Moore • 612-673-7752