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Financing and cost are issues, too, for Minneapolis’ Pillsbury A-Mill project

Pillsbury A Mill
CC/Flickr/altfelix11
The Community Development Committee decided to delay action on the Pillsbury A-Mill site.

The would-be developer of the Pillsbury A-Mill lost another round with the Minneapolis City Council Tuesday, when the Community Development Committee decided to delay action for one month.

The developer had requested preliminary approval of $75 million in tax-exempt Housing Entitlement Bonds.

Two weeks ago, the developer appeared before another City Council committee seeking a variance on the number of parking spaces required for the 252 dwelling units planned for the A-Mill site. 

The developer planned to set aside parking spaces for commercial tenants, leaving less than one space per apartment.

That committee disagreed, voting to allocate all spaces for apartment dwellers and their guests. The lack of commercial parking, however, will make finding commercial tenants more difficult.

The Community Development Committee didn’t just delay a decision on the bonds.  When they meet in four weeks, they will reconsider the bonding request and a $3 million tax increment financing proposal from the developer, who said the project cannot go forward without both funding sources.

“I’m disappointed,” said Owen Metz of Dominium, which plans to convert the A-Mill into affordable living space for artists at a total cost of $113.4 million. “The project on its merits is valid,” he said, adding that the dialogue between his company and city officials will continue.

Council Member Lisa Goodman, who chairs the committee, grilled Metz about the wisdom of moving ahead on the bonds without also considering the tax increment financing.

“If we can’t do it without the TIF deal, why allocate the bonds,” said Goodman, who explained earlier in the meeting that she is no great fan of such financing.

Scraping together the $75 million in bonds will not be easy. Each city is given a yearly limit on the amount of revenue bonds that can be sold based on population.  Minneapolis has only $26 million available but is working with St. Paul to use $30 million of its allocation which officials do not plan to use.

The St. Paul bonds would be transferred to Minneapolis without any expense to St. Paul in what was described as a routine practice by Dollie Crowther of the Minneapolis Community Planning and Economic Development Department. The city is seeking another $20 million in bonds from the Minnesota Housing Finance Agency.

Many of the neighborhood residents who spoke were repeats from the parking space debate two weeks ago. It was clear none of them had warmed to the proposed development.

“If the issue is affordable housing, why are we spending $450,000 per unit,” said Kathleen Flynn Peterson, who lives in the neighborhood.  “This is an expensive project,” she said. “This is not the right project for this development.”

Goodman said the per-unit construction price of $450,000 could build a very nice private home in Minneapolis.

The project would include a gallery, performance space, a dance studio, a clay studio and a painting studio. There would also be a fitness center and a rooftop deck. 

“I was so excited about the preservation of this historic site,” said Nylice Miers, who is the daughter of artists and a writer. She is now less than excited. “As a taxpayer, I’m aghast. All of the alarm bells in my brain are going off,” she told council members.

Supporters of the plan were more interested in the historic preservation of the project and the jobs the construction might provide.

“This is one of 26 national historic landmarks in Minnesota,” said John Anfinson of the National Park Service. He urged council members to look beyond the issue of affordable housing and focus on the preservation issue.

“These are the most important historic landmarks, not just to the state, but the nation,” he said. 

 “The city needs to save this historic structure,” said Jeff Muller of the Carpenters Union, adding that the jobs created by the project would come at a time when unemployment in the building trades is an estimated 20 percent. “As skilled craft people, we take enormous pride in our work and the work that came before us.”

 “It is an expensive project,” said Metz at the close of the public hearing.  “There’s not going to be a cheaper time, and there’s not going to be a more efficient time to save this building.”

Council Member Diane Hofstede, whose ward includes the A-Mill location, thinks the four-week delay might be a good thing.

“Sometimes stepping back is an a-ha moment,” said Hofstede afterward. She thinks the extra time will give people a chance to “reflect on what’s been proposed and re-examine it to see if there is another way of delivering the project.”

The A-Mill compound has been vacant for 10 years.

Two Cities blog, which covers Minneapolis and St. Paul City Halls, is made possible in part by grants from The Saint Paul Foundation and the Carolyn Foundation.

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Comments (1)

Parking is overrated

This whole area from the A-Mill down to the University has been rapidly densifying in the past decade and looks to keep on going. The idea that they need one parking space per resident (for artists?) seems so 1987. The city needs to be a lot more coherent in what they demand out of developers if they're going to be claim to be planning for a "sustainable" Minneapolis. I agree that $450,000 per unit is clearly very high, but it's really an expense of rehabilitating the building more than anything else. Who knows if the place will even stand up by itself long enough for a developer to come in without a subsidy and sell 250 condos for a million bucks a pop?