Surly Brewing Co. says it wants to build a $20 million brewery on an industrial site near the University of Minnesota, if the popular craft beer maker can get public funding to help clean it up.

Cities across the metro lined up last fall to snag Surly's "destination brewery," which was made possible by a 2011 change in state law that allows breweries to sell pints of their beer on-site. The Brooklyn Center-based company wants to build a massive new facility, complete with a restaurant, beer garden and event center.

After months of research, Surly is setting its sights on a lot that once was home to a potato processing plant near University Avenue SE. in the Prospect Park neighborhood of Minneapolis. It's just down the street from what will eventually be the Central Corridor light rail's "Westgate" station.

Surly is working with the city to apply for environmental remediation grants to clean up the 8.3-acre area, which has had a century of industrial use. A city document pegs the total cleanup at $2.5 million.

The construction of such a major attraction -- Surly enjoys a cult following for its Furious, Bender and other brews -- in an often-overlooked industrial corner of Minneapolis would represent a major victory for city officials, who frequently salivate over both the beer business and transit-oriented development.

The company wasn't ready to say it is committed to the site, however, particularly since there's no guarantee it will obtain the cleanup funding. Their "short list" still includes another Minneapolis site west of downtown, as well as one in Brooklyn Center and another in an unnamed suburb.

A city description of the project says it will feature a 50,000-square-foot, single-story structure containing a brewery and beer hall, as well as adjacent "recreation space and festival gardens." Another 40,000 square feet will be available for expanded brewery operations.

Surly's real estate consultant, Tom Hauschild, said the benefits of the site are its size, central location, industrial zoning and proximity to public transit.

"The site has some great attributes. But it also has some great challenges," Hauschild said. "And the environmental conditions and the buildability of the soil are two major ones. So if those two things can be rectified at a reasonable cost ... this could be a great solution for Surly."

Property records show the site is owned by Northern Star Co., a subsidiary of Minnetonka-based Michael Foods, which makes potato products. A Michael Foods official did not return messages for comment.

Located on Malcolm Avenue and 5th Street SE., the "Malcolm Midway Site" is home to little more than slabs of concrete and piles of rocks. One side is next to a loading bay with major truck traffic, while another features massive storage containers.

Potential suitors are required to first seek approval from the local jurisdiction, in this case the City Council, before their applications are sent to the granting agency. Surly is seeking about $1.5 million from the state Department of Employment and Economic Development, and looking to the Metropolitan Council and Hennepin County for the rest.

Surly still has to win the grants, which are awarded competitively, and expects to have decisions in January. If all goes as planned, Hauschild said, "We'd love to be brewing beer there in 2014."

Brian Golberg, project manager for a local planning group called Prospect Park 2020, said the neighborhood group's board voted Monday to support Surly at that location, which he called "underused" and "neglected."

He said the Surly proposal fits with Prospect Park 2020's goal to create a "new city within the city" in the area, which he thinks could attract $1 billion worth of investment over the next 10 to 20 years.

"Besides Surly, there are a couple of other developments that are being proposed right now," Golberg said. "But we are expecting as the light rail gets ... closer to completion that we're going to be seeing more and more."

Eric Roper • 612-673-1732 Twitter: @StribRoper