St. Paul nonprofit buys third former Madison Equities property in downtown

A St. Paul nonprofit focused on downtown development acquired a third vacant building in a struggling section of the urban core, another property that was once a holding of troubled Madison Equities.

Earlier this month, the St. Paul Downtown Development Corporation (SPDDC) paid $745,000 in cash for the historic Empire Building, a seven-story office building at 360 N. Robert St., and the Endicott Arcade, an adjacent one-story retail property. Both buildings have been empty and boarded up for several years.

The nonprofit launched less than a year ago as a subsidiary of the St. Paul Downtown Alliance with intent to redevelop key sites in hopes of boosting vibrancy and investments in the area. It now controls a trio of buildings that formerly belonged to Madison Equities, an embattled family business that was downtown St. Paul’s largest real estate owner before its COVID-induced collapse.

The organization plans to decide what to do with its properties — which include the Alliance Bank Center and the Capital City Parking Ramp — in the next year, SPDDC president Dave Higgins said.

That could mean converting the 55,000-square-foot Empire Building into housing or some other use. Or it could mean tearing down a structure to make way for new development.

While the SPDDC doesn’t have plans to purchase more real estate, Downtown Alliance president Joe Spencer said another acquisition “is not out of the question” if a distressed property in the central business district fails to capture market interest.

“Right now, downtown — particularly the core — is suffering from a lack of progress," Higgins said. “So first and foremost, we’re trying to be a force of momentum in the right direction.”

“It’s not comfortable and it’s pretty scary to have buildings boarded up into the core,” Spencer said. “There does get to be this crisis of confidence. We wanted to act as swiftly as possible to help staunch that.”

The work is not a purely charitable endeavor. The SPDDC is seeking to attract corporate and philanthropic investors who will accept below-market returns on contributions to its fund, which supports acquisitions, building maintenance costs and pre-development work.

A couple of early investors, who SPDDC leaders declined to name, enabled the group’s first purchases. The organization has not received any public dollars and plans to launch a more full-fledged fundraising campaign in the near future, Spencer said.

Along with Spencer and Higgins, members of the SPDDC’s governing board are affiliated with development and planning firm NEOO Partners, investment management firm Mairs and Power, Securian Financial and the St. Paul and Minnesota Foundation, according to documents filed with the IRS.

If the SPDDC decides to do its own redevelopment, it will have to assemble financing for a specific project, like any developer. In that scenario, Spencer said he doesn’t anticipate the nonprofit becoming a long-term landlord.

With the Empire Building and the Alliance Bank Center, the SPDDC controls two blighted corners on a three-block stretch of Fifth Street that’s struggled with crime and an uninviting streetscape.

That corridor is at the center of many revitalization efforts because of its location connecting premier attractions like Grand Casino Arena and Rice Park to CHS Field and Mears Park on the other side of downtown.

The group is kicking off engagement efforts to solicit community members’ ideas for improving the area.

One of Higgins’ and Spencer’s priorities is filling the Endicott Arcade retail space in 2026. Doing so could have a big impact on vibrancy as planning for more complex redevelopment work gets underway.

City Council President Rebecca Noecker, who represents downtown, said the city’s recently approved budget for next year includes $5 million for downtown projects that could support work like the SPDDC’s.