The Minneapolis City Council gave the City of Lakes Community Land Trust exclusive rights to buy and rehab a city-owned commercial building on East 26th Street, with the key goal to eventually sell the property to a minority-owned small business.
The commercial land trust deal is a first for the city because this trust focuses on commercial property — not housing. And because the pilot project is targeted and hopes to provide affordable space to a minority-owned company.
Rebecca Parrell, project supervisor for Minneapolis' business development division, said that until now, the land-trust models in the city had focused exclusively on housing.
The 19 E. 26th St. property, which sits near Nicollet Avenue in the Whittier neighborhood, is a two-story structure attached to a row of similarly sized business buildings.
The 1901 building housed a money-wiring service on the first floor and a two-bedroom apartment on the second floor. But the property went into tax forfeiture some years ago. The city of Minneapolis bought it from Hennepin County in January 2019 for $181,000.
The City Council last week voted to give the City of Lakes Community Land Trust first dibs to buy it. The trust now has 18 months to buy the building. But first it must prove to the council that it has adequate financing, rehabilitation plans, architectural drawings, building permits and a viable tenant.
"This is very different from the private sector, where you just sell a property to the highest bidder," Parrell said. "The goal here is public benefit. It is trying to create a wealth-building opportunity for entrepreneurs to own properties."
Other cities such as St. Paul already have used land-trust arrangements to help shore up neighborhoods in need of affordable and senior housing and revenue- and tax-generating businesses.
The City of Lakes trust intends to first buy and fix up the 26th Street building and then find a minority business owner wishing to buy the building over time via a "rent-to-own" agreement, said Jeff Washburne, executive director of the trust.
Domonique Jones, the trust's program director, said the deal demonstrates city leaders' "commitment to breaking down systemic racial barriers and uplifting community ownership of land. I am glad to be a part of it all."
Minneapolis City Council President Lisa Bender said the arrangement will be a win for everyone involved.
"I am thrilled to support this partnership with City of Lakes Community Land Trust on this city-owned lot," she said in a statement. "The commercial land trust is a way the city can address the racial and gender equity gaps in commercial property ownership and support locally owned businesses and emerging entrepreneurs who contribute so much to our neighborhoods."
While the city has done countless land-trust deals involving residential properties, this first effort aimed at small business has taken a lot of effort to arrange.
In 2018, the council and the city's planning professionals began researching the possibility of using commercial land trusts to boost community economic development efforts. Staffers began identifying possible partners and commercial properties that might be suitable for the arrangements and structure that are part of a land trust.
Under a commercial land-trust deal, an approved organization will buy land or a building and hold onto it, so traditional property-flippers and investors don't have access to it. The property instead remains a part of the trust and adopts a specific mission.
For example, the trust might help low- and moderate-income families buy homes. The trust might use bond money to assist with down payments, prevent bank foreclosures and tax forfeitures, keeping shop mortgages affordable while also building up a neighborhood.
For nearly two decades, the City of Lakes Community Land Trust used its trust to foster affordable homeownership. It helped 400 Minneapolis families get into their own homes by helping with down payments and by agreeing to split the property's equity once a family decided to sell the home.
Three years ago, Washburne said, it started work to create a similar model that could benefit local small businesses.
Last week's council vote was the first of three victories toward that effort. Besides the council action, an entity called the Land Trust Bank agreed to sell two City of Lakes trust north Minneapolis commercial properties near N. 35th and Penn avenues. Those parcels also will be rehabbed and sold to small businesses.
Washburne and Jones expect the trust will meet all requirements and complete purchasing the three commercial properties before the end of the year.
Dee DePass • 612-673-7725