Wanted: buyers for empty lots in the Village

Mendota Heights is exploring ways to fill three empty lots in the heart of its version of downtown -- a cluster of specialty shops, offices and multi-unit housing known as the Village at Mendota Heights.

The $60 million development, tucked amidst small streets off the intersection of Hwy. 110 and Dodd Road, opened in 2005 and has navigated its way through the recession.

Only a smattering of its office and retail space, heavily geared to independent local merchants, is vacant. Terri Bly said business at her organic beauty products boutique, the Nature of Beauty, has improved since she relocated from the bustling commercial strip of Grand Avenue in St. Paul.

"It was the best thing we could have done," said Bly, who moved about two years ago. She said many of her longtime customers live in the suburbs and prefer the easy highway access and ample parking at the Mendota Heights location.

A 60-unit senior housing complex owned by Dakota County has a waiting list for its apartments.

But after seven years, some of the condos and townhouses built at the Village still have not sold. More townhomes were supposed to be built on the empty lots, but it wouldn't be prudent to add more, said Minneapolis developer Ross Fefercorn, whose firm oversaw the mixed-use project. "The for-sale market is still very soft," he said.

Fefercorn's development agreement allowing his firm to buy the lots from the city has long since expired. That means Mendota Heights is looking for takers, and city officials say they already have heard from potential buyers with a variety of ideas for developing the sites.

United Properties believes the Village would be an ideal location for one of its Applewood Pointe senior cooperative housing complexes, according to Brian Carey, an executive vice president of the Bloomington-based development firm. United has built seven in the Twin Cities since launching the concept, geared for "active seniors," in 2004.

Carey said United has presented some preliminary concepts for a building with up to 64 units and that they "have been warmly received by city staff." A city spokesman confirmed United has shown the city a site plan for the vacant parcels but said it's still too early for anything to be brought before the City Council.

"We're under no pressure to sell," said Mayor Sandra Krebsbach. She said she has heard of one potential buyer showing interest in building market-rate apartments on the vacant site. The City Council has informally discussed other possible uses, like a small medical office building or a family-style restaurant.

"We want to take the time to find the right type of development, and we want it to be compatible with the rest of the Village," she said.

Upscale apartment development has begun moving beyond the urban core and into some suburbs, but Fefercorn said he doubts Mendota Heights would agree to rental housing at the Village. The city has long favored owner-occupied homes, which account for about 88 percent of its housing stock, according to the Metropolitan Council. That compares with 70 percent for the seven-county metro area.

About three years ago the city had a shot at selling one of the parcels to the American Academy of Neurology, which would have built a new headquarters. But the organization later decided to build its new home in Minneapolis, near the Guthrie Theater.

"That is one of those needle-in-a-haystack type of projects, something that is very hard to find. It would have been a good use in that location and would have brought a lot of people to the Village," Fefercorn said.

Fefercorn said that in time, the housing market could recover sufficiently to support townhouses or condominiums on the parcels. The site also might suit a medical office building or clinic, he said.

Even with the vacant lots, Fefercorn said the Village has achieved many of its goals, drawing about 600,000 people a year to a site the city once used as a dumping ground for street sweepings. The project was funded in part by $4.5 million in tax-increment financing from the city and a $1.3 million Metropolitan Council grant.

"This is not just about serving Mendota Heights," he said. "It draws a lot of business from West St. Paul, Inver Grove Heights, Lilydale, parts of Eagan -- all markets that had been underserved before."