Minneapolis’ Downtown East redevelopment: Where’s Wells Fargo?

Ryan Companies
The development would rise on land currently owned by the Star Tribune, which would abandon its dreary headquarters and vast parking lots for new digs elsewhere downtown.

It’s been a whirlwind. My neighborhood, Downtown East, probably hasn’t heard so much news about itself since the Guthrie Theater opened back in 2006.

In case you don’t know the area, it’s the acreage between the Mississippi River and Seventh Street to the north and south and from I-35 to Portland Avenue from east to west. Its major landmarks, aside from the Guthrie, are the Metrodome and lots of surface parking lots. By thine empty parking lots do I know thee, oh Downtown East.

Anyway, on Monday night, the Minnesota Sports Facilities Authority, the Vikings and their architects, the HKS Group, with all the fanfare they could muster, including music, videos and sports stars, revealed plans for the new $975 million stadium. In case you missed it, the building will have a transparent roof pitched to shed snow, glass walls and sleek modern lines that are somewhat reminiscent of the main branch of the library on Hennepin.  

Less than 24 hours later came more news—the announcement Tuesday of a $400 million redevelopment of five blocks between downtown and the new stadium. Word had it that Wells Fargo was going to build an office complex flanked by apartments. The development would rise on land currently owned by the Star Tribune, which would abandon its dreary headquarters and vast parking lots for new digs elsewhere downtown. So said Mike Klingensmith, the paper’s publisher who’s looking for about 130,000 square feet.

I got a sneak preview by (unintentionally) arriving early at the surface parking lot where the press conference was to take place. Public relations factotums were struggling to hide the seven-foot tall architectural rendering under a green cloth that the wind kept blowing aside. But I had a peek. The scene it displayed looked west from the vantage of the new stadium. Brightly lit hi-rise offices and residential complexes bordered an elegant city park where crowds lounged on the grass taking in a movie. It was beautiful. I wanted this in my neighborhood. Wait! This was my neighborhood, and I would soon be living in this scene. Goodbye surface parking lots. Hello, urban sophistication.  

New era announced

It wasn’t long before Mayor R.T. Rybak, infuriatingly unwrinkled and unsweaty in the 90-degree heat, took the podium to announce the beginning of a new era. “The dog days are over for Downtown East,” he declared. Coming soon are two 20-story office towers, 40,000 square feet of retail, 300 units of housing, all of it to be built with private money. No tax incentives, government lending or grants involved. The development, if all went well, would produce $3.5 million a year in property taxes in the first year.

Rick Collins, vice president of development for the Ryan Companies, the moving force behind the plan, chimed in with some numbers of his own: 1,700 parking spots, 5,000 to 6,000 office workers, ground-breaking in early 2014, open for business in 2016. “It’s impossible to imagine how different this will look,” he said, nodding toward our bleak surroundings.

The park, which Rybak has branded The Yard—because people living nearby could use it like their own space to play with the dog, sit in the sun and maybe toss a ball—would play host to concerts, fairs and public events (Amy Klobuchar’s presidential campaign launch speech?) while visually connecting the stadium to downtown and supposedly to the University—although, I hate to remind these enthusiastic civic boosters, but there’s an immense barrier between the last two called I-35.

Where is Wells Fargo?

By this time I was wondering: Where is Wells Fargo? Surely, one of their luminaries would have shown up to proclaim how happy and proud the bank was to take part in this immense reclamation of downtown Minneapolis.

In any case, Rybak and Ryan had worked out a clever financing mechanism for the park—and it was all based on, yes, a parking ramp. The city would issue general-obligation 30-year bonds to build a 1,300-stall ramp for the Minnesota Sports Facilities Authority, which Ryan would build. (The Vikings stadium legislation guarantees the creation of at least 2,000 spots.) And the city would issue more bonds to pay for The Yard.

The whole shebang would cost $65 million, not counting interest, which, these days, is almost negligible anyway. The Sports Authority would own the ramp, but the city would collect the parking fees to repay the bonds. In Minneapolis tradition, the ramp would be jam-packed on game day but sit empty the rest of the week. With two office towers nearby, however, the development’s backers are predicting that the ramp would do plenty of business.

Even if its income isn’t sufficient to repay the bonds, the Ryan Companies have pledged to cover any shortfalls for the first 10 years and half of any deficits in years 11 to 30. But all that doesn’t matter, said the mayor. Even if not one single person ever parks in the ramp, the $30 million to $50 million in extra property taxes generated by the development of the office towers and apartments would more than offset the expense.

To get this done, three things have to happen: First, approval by the Minneapolis City Council. Judging by the number of members of that body milling about, that shouldn’t be a problem. Second, winning the bid to build the parking ramp from the Sports Authority. That may be a tougher nut. It has recently commissioned its own parking study, and who knows what the consultants will come up with? Third, a tenant for the office towers.

What? Wells Fargo had not signed on yet?

Well, no. Apparently, the bank’s participation in the project is not yet nailed down. One reporter asked if there was a plan B, in case Wells decided to expand its operations elsewhere. The response: “We’re working very hard on Plan A.”

Was Ryan planning to build this all on spec? Immediately to my mind came the picture of a high-rise office tower sitting empty, flanked by unoccupied apartments alongside a weed-choked empty lot. I asked Collins: “We would never build anything on spec,” he assured me.

So if Wells Fargo fails to sign on, the project is a no-go.

Back at home an hour later, my brain operations restored by air-conditioning, I wondered why the mayor and Ryan Companies had decided to unveil the plan before Wells Fargo had made a commitment. After all, without them, the plan is—I hate to say it—pie-in-the-sky. I shot Collins an email to ask why, but he, perhaps wisely, hasn’t answered.

Comments (10)

  1. Submitted by David Koski on 05/15/2013 - 09:40 am.

    Build it and they will come?

    Thank you for writing this article.

    • Submitted by Alex Cecchini on 05/15/2013 - 11:15 am.

      Ryan Co’s Plan

      Shows what the private market’s attitude to ‘build it and they will come” mentality is. It’s a no go unless they are 97% sure they’ll have a single tenant (WF) for it or fill 95% of the space with multiple tenants.

      The public sector should act in this way – stop building bridges, freeways, overpasses, and even transit hoping that the development (“they”) will come and bring in more tax revenue. The fact that we have spent so much money on projects like Hiawatha LRT, CC LRT, and the Vikings Stadium (2 of the 3 I can at least get behind for equity and environmental reasons) and a project like this is STILL questionable goes to show what little return the public gets from massive investments. The right path would be for the public to pay for things that are the result of development. Ex. buying back under-utilized land to build a park abutting high-value land, which then increases those land values further. Ex. building a light rail line that connects major nodes of high value places, further increasing mobility of the people between them.

  2. Submitted by Alex Cecchini on 05/15/2013 - 10:29 am.

    IF this thing does go through

    Assuming Wells does sign on (or some other tenant), there are still other big questions/concerns..

    – Why are we on the hook for providing parking spaces for the stadium? Yes, I understand this was worked in to the stadium legislation. Yet another requirement for public cost outside the cost of building the stadium itself. If parking is so important to the Vikings or the success of the stadium, I’m sure a free-market real estate developer would be willing to take on this (very high) risk. Yes, Ryan guarantees break-even for 10 years and half the difference for the next 20. Awesome. So we’re already expecting that some combination of private and public entities MAY have to (and likely will) subsidize the desire for cheaper-than-market-rate car storage. After we spent so much money on wonderful Hiawatha and Central Corridor Light Rail lines, and more than likely Bottineau and SW LRT lines (plus commuter rail, aBRT improvements, and even a Minneapolis streetcar system in the works). Let’s stop continuing to induce people driving to downtown with public money.

    – As it stands, let’s play the game and be in a world where the parking is truly mandated and on the public’s dime. We absolutely must demand better design. Yes, it is faced with residential/retail on the south side. But the other 3 faces of the main ramp and all 4 sides of the smaller one will blight the walking/living experience exactly like the Gateway Ramp does. We must demand better form, at the very least wrap the main ramp along 3rd St with other uses. Or, going more boldly, build it under the park like the one under the LRT station or Millennium Park in Chicago.

    – Skyways. Come on. I’m sure the people who can’t stand the bitter cold for the 1-2 months of the year when it really bites will lambaste me (forgetting that cities like Toronto survive just fine without them). The proposal continues to extend this network that divides our street-facing retail/restaurant opportunities (how many crappy sidewalks are so because what abuts them is a blank wall). Skyways remove the always-public nature of sidewalks. And, they ensure that many visitors to the stadium for Vikings games or other events can do so without ever setting foot on the ground in Minneapolis. This is bad for other the businesses this development is supposed to continue to support. Let’s also not forget the immense cost they add to the public portion of the stadium/DTE proposal, all so a relatively small number of people can add a sliver of convenience to their trip.

    – The park itself. Assuming all these things go through (WF, parking, city council, etc). What will the park be? Rybak said the $65M (parking ramp + park) basically covers clearing it and seeding it. They don’t know what will go in or if it will require significantly more money. My take.. it needs to have a good (natural feeling) water feature like a mini pond. At least one playground facility. Some basketball and tennis courts. And a single baseball field. Plus random open spaces. And yes, all this can fit in that area if they don’t cater to the needs of 8 Vikings game users with giant open plazas (the stadium sit has that already) but focus on residents and workers in the area first. And again, wouldn’t it be nice if the $65M the city was willing to spend went entirely to an amenity like a park rather than mostly towards 2 giant car-storing facilities?

  3. Submitted by David Peterson on 05/15/2013 - 11:05 am.

    I am a fan…

    Positives: 8 potential blocks of surface parking and stack them on to one garage. Give Downtown a featured, well connected, park that is so badly needs in an underutilized space, preserving the higher end development space in the central biz district. Leverage park to create higher value office space nearby. Great point by Marlys, parking facilities which will actually have a dual purpose, a true rarity for the Twin Cities.

    Negatives: Risk of a market down turn or not anchor tenant turning this into some awful scaled back and half-cooked version in reality. Losing at least a block of prime development real estate to the park.

    Overall, seems like a much needed win… If it happens at all.

    • Submitted by Todd Hintz on 05/15/2013 - 12:38 pm.

      Parks

      Committing a block of prime real estate to a park sounds like a bonus to me. I’d put that one in the win column.

  4. Submitted by roger parkinson on 05/15/2013 - 12:52 pm.

    StarTribune building

    Dreariness is in the eye of the beholder, I guess. I worked in the StarTribune building from ’82 to ’92. It was a bit dreary when I got there, but we renovated a number of times, and it was not dreary in ’92. And much was redone after that. I visited a couple of years ago, and it looked really great.

    Roger Parkinson

  5. Submitted by Bill Schletzer on 05/15/2013 - 01:10 pm.

    Where’s Wells Fargo?

    Writing their ransom demands.

  6. Submitted by Logan Foreman on 05/15/2013 - 04:51 pm.

    The stadium funding solution

    The Strib has constantly supported this stadium knowing full well that it would benefit its real estate holdings in this parking lot disaster area. Tax the Strib’s gain at 50% and help pay the public’s share.

  7. Submitted by Paul Udstrand on 05/17/2013 - 10:49 am.

    Typical

    This is typical Rybakism. The guy never has explained exactly how MPLS is going to come up with it’s $15+ million a year share of the stadium financing. This is all a Democratic version of Republican magic planning… the magic will happen.

    Ya know, there’s been a lot of celebration over the “release” of the Vikings stadium plan, and for reason the media, including MinnPost is eating it all up. I hate to say it but this stadium is bound by the same economic realities of every other stadium, and those realities create dead zones around stadiums.

    Look, this stadium will have a roof, which means that it will be used year round in a lot of different ways. So let’s talk about parking: Well, any parking near the stadium will fill up with stadium event parking, so if you’re Wells Fargo, thinking about bringing in hundreds of workers for thousands of square feet of office space, where are your workers going to park? Do you want invest millions of dollars in a space only to have your workers compete with event parkers for space?

    All of these drawings of parks and buildings are very cool but all over America with few exceptions those plans give way to dead zones and acres of parking for a reason. All of this going to cost hundreds of millions ON TOP of the billion that’s going into the stadium itself. No one has yet explained where all that money is going to come from.

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