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St. Paul and the troubles of redeveloping awkward buildings

MinnPost photo by Peter Callaghan
Eight months since Mayor Coleman urged the St. Paul Port Authority to purchase the Macy’s site, and a year and a half after the department store chain announced it was abandoning St. Paul, reality is setting in that the old building likely isn’t going anywhere.

When the conceptual plan for developing some of St. Paul’s most prime real estate was released in March of this year, it seemed like it could check most of the boxes of any downtown booster’s wish list. 

The future outlined in the plan, Prosper: Momentum is Building, [PDF] was especially impressive when it came to the block in the center of downtown, where the abandoned Macy’s department store site once filled a key block with mid-century mediocrity.

Instead of a windowless block of bricks, there would be glassy office and residential towers, along with a low-rise entertainment and retail complex, including a multiplex theater, a hotel, street-front shops and — if the renderings were to be believed — lots of young and fashionable people. 

“While people might have called such a plan for downtown St. Paul far-fetched just a few years ago, today they simply ask, ‘How soon can we make this happen?’ Mayor Chris Coleman said in his state of the city speech that same month. 

Now, six months after Coleman delivered that speech, eight months since he urged the St. Paul Port Authority to purchase the Macy’s site and a year and a half after the department store chain announced it was abandoning St. Paul, a different reality is setting in: that the old Macy’s building likely isn’t going anywhere. 

It is not from lack of interest. It is, instead, the building itself. After paying $3 million for it, the port authority wanted to tear it down to make it even more attractive to prospective developers. But then came sticker shock: the engineers estimated demolition would cost $13 million. 

“In a perfect world, we’d have $13 million sitting around that we had nothing else to do with,” said Lee Krueger, senior vice president of development for the port authority. “We don’t.”

Which means a site the port authority’s sale brochures proclaim as holding the epicenter of downtown remains exactly that kind of building most cities don’t want at the epicenter of their downtown —  it’s big, it’s homely, and it’s empty.

So now what? While the ongoing struggle to develop the site doesn’t change its importance to the redevelopment of St. Paul, it does raise larger questions that aren’t likely to go away, either: about struggles of retail in the city, about the evolution of the city’s downtown core (and whether the Macy’s building is itself historic); and about how involved the government should even be in real estate development. 

St. Paul vs. retail

In January, 2013 when Macy’s announced it was closing the store, many in town were surprised, said City Council Member Dan Bostrom. He said those who have been around for years remember a store once known as Dayton’s as the center of a bustling downtown retail district.

“In the 60s, there were two or three other major department stores. Downtown was bustling or Dayton’s wouldn’t have built that store there,” Bostrom said.

Yet Minneapolis retail consultant Jim McComb, who worked for Dayton-Hudson until 1974, said the store was a struggle even when he was with the company, largely due to the size of the market area “and that was when department stores had a fairly large segment of the general merchandize industry.”

That share has since lost half of its strength to discounters and superstores, he said. St. Paul is not alone in this. The day Macy’s announced the closure of the St. Paul store, it also decided to close stores in Pasadena, Honolulu and Houston. “Changes in the industry pretty much say the building is not going to be reused for retail of the type of quality they’d want in downtown,” McComb said.

Proposed Grace-Wabasha Court site development
“Prosper: Momentum is Building” plan
The proposed Grace-Wabasha Court site development in this rendering “completes the historic Hamm Building block” with a base of retail/entertainment and office with a boutique hotel above.

He struggled to think of viable new uses for the existing store. That’s why he thinks the city needs to “bite the bullet on the costs of demolition.”

“Given the market conditions, having the city control that site through the port authority is not only a logical but a wise decision,” he said. “It’s a great site for something. But the great site will have to be cleared to do that something.”

When bad buildings are (maybe) historic

When demolition was a viable option, another awkward issue was being quietly debated, even at the risk of spoiling the plans contained in “Prosper: Momentum is Building,” not to mention the dreams of Mayor Chris Coleman:  Is the Dayton’s department store historic, worthy of protections afforded significant historic and cultural resources?

The current building’s origins date to the early 1960s, when Minneapolis-based Dayton’s department store wanted a downtown St. Paul location. After buying a former Schuneman’s store in 1959, Dayton’s began planning for a new store across Wabasha Street, recalled McComb.

Victor Gruen, the Austrian-born architect who had just created Edina’s Southdale, the nation’s first enclosed shopping mall, was commissioned. The modern architect devised an inward-looking building that allowed shoppers to drive into the central city, park in the attached garage, shop and return to their cars without stepping foot on the sidewalks outside.

Downtown would battle the mall by trying to be like the mall. In his American Institute of Architects Guide to Downtown St. Paul, Larry Millett, calls the resulting building “an uninspired work.”

“When this brick box emerged from the rubble of downtown renewal it was hailed by the local press as a signal work of modern design,” Millett wrote. “Today it is hard to fathom why.” Windowless and lacking in “urban presence,” Millett wrote that it commits the ultimate sin in retail architecture: “It’s flat-out dull.”

Pioneer Press Building
MinnPost photo by Peter Callaghan
An analysis of potential impacts of Green Line LRT construction on historic assets in St. Paul determined that the area of downtown anchored by the Pioneer Press Building could be eligible for listing on the National Register of Historic Places.

The opinion is shared by others who have learned to despise the types of urban renewal buildings that — taking advantage of vast pots of money from the federal government — were built in 1950s and ’60s to replace turn-of-the-last century commercial and retail buildings.

Edward Goetz, director of the Center for Urban and Regional Affairs at the University of Minnesota, said Gruen’s design is the opposite of current thinking about downtowns, which emphasize “walkable streets to supply the vibrancy to support all kinds of other activities.”

Goetz also finds it rich that urban renewal, which was used to demolish hundreds of historic buildings, is now itself eligible for historic status.“Urban renewal was so ahistoric that it’s kind of ironic,” he said.

But an analysis of potential impacts of Green Line LRT construction on historic assets in St. Paul determined that the area of downtown anchored by the Pioneer Press Building (formerly Minnesota Mutual Life Insurance) could be eligible for listing on the National Register of Historic Places [PDF]. Known at mid-century as Capital Centre, the nine-block area took nearly two decades to complete between 1955 and the mid-1970s, according to the Green Line analysis. 

“Although few of the structures are architecturally distinguished by themselves, as a group these buildings effectively convey the stylistic and planning goals of the Modern era and illustrate an important era in the city’s history,” the report said.

One of 16 contributing structures in the district: Macy’s.

Based on that analysis, the St. Paul Heritage Preservation Commission in January urged the port authority to try to save the 1963 building. (No one has actually pursued historic designation for the area.)

How deeply should government be involved?

Shortly after Macy’s announced the closure of the store, St. Paul offered its services to expedite a sale. The port authority even offered to guarantee earnest money required by Macy’s when a San Francisco-based retail developer was taking a look at the project. But after that deal lapsed and the city feared a second developer was looking at less-desirable uses for the structure, the mayor decided to move.

“I had a developer who basically wanted to extend the parking into the building with some minor state offices,” Coleman said. So he urged the port authority to make an offer. Macy’s accepted.

The port authority has experience in turning around distressed real estate. But several people involved in the process noted that the port’s skills are with industrial properties. Downtown commercial and residential sites are not in the port’s comfort zone, which may be why it would like to turn over the development work to private interests. 

“We see it as a relay race,” said the port authority’s Krueger. “We can run the first leg or two but we don’t want to finish the race.”

Wabasha Street activity
“Prosper: Momentum is Building” plan
This rendering is meant to illustrate the activity that might occur at Wabasha Street looking north.

When the race started, those first legs were to include demolition of the old store, at least before they realized the price of doing so. Still, the authority is confident it can help facilitate the right buyer and developer — as long as no one expects it to develop the property itself.

“We’ve had substantial interest in a retrofit,” said Thomas Collins, Senior Vice President of Marketing & Communications for the port authority. “We’re negotiating with several people on the site.”

But is that the role of government, to step in when private developers won’t?

Goetz, of the Center for Urban and Regional Affairs at the U of M, said he didn’t think it unusual that local government would come in financially on the Macy’s site. “Most cities are extremely concerned about the health of their downtowns and will be willing to invest in redevelopment schemes,” he said.

City Council President Kathy Lantry, one of two council members to also serve on the port authority board, said the port staff has expertise in real estate that can be tapped in this case.“It is such a critical site that control was the most important thing,” she said. “If someone comes in with a proposal, we can say ‘No, we don’t think that’s the highest and best use.’”

Lantry said she wasn’t convinced that the current building should be demolished even before the estimates made it too pricey. She said windows could be punched through the outer walls and while a possible historic designation “closes some doors, it opens others” such as historic tax credits that could help finance a project.

Coleman is quick to defend the city’s role, to point out just how important the site is to his hopes for the central city. The city has seen investment around Rice Park, where historic buildings and an expanded Ordway Center generate activity, and around Mears Park in Lowertown. “But in the center you have a concentrated zone without much activity,” he  said. As such, Coleman says it isn’t enough just to get any project there. “I just wanted the right vision.”  

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Comments (12)

  1. Submitted by Theo Kozel on 09/24/2014 - 10:41 am.

    Curious about the demolition costs

    I’m curious if someone can speak about a few questions that linger in my mind after reading this article: Roughly how much did the Port Authority expect the demolition costs to be? Why are the costs so much greater than they anticipated? I agree that it’s best for the city to have control over such a central location, St. Paul doesn’t need its own Block E (nor does Minneapolis, for that matter).

    • Submitted by Jim Buscher on 09/24/2014 - 11:41 am.

      I believe the costs have increased due to the close proximity of the light rail line. They’ll have to be slower and more methodical with bringing it all down.

  2. Submitted by Bill Lindeke on 09/24/2014 - 11:01 am.

    brand new center for Jai Alai

    I think that’s one sport poised for a rebound.

  3. Submitted by John Manning on 09/24/2014 - 11:23 am.

    This is a welcome, thorough article of a topic that can seem as flat and unappealing as the Macy’s building itself — but it is merits more public understanding of the trade-offs and issues with downtown development efforts in St. Paul. Thanks for the coverage.

  4. Submitted by James Hamilton on 09/24/2014 - 11:34 am.

    Who DIDN’T see this coming?

    Those of us who’ve lived in St. Paul and its surrounding communities for the last 50 or more years should be very familiar with the City’s efforts to foster and control development in the core of the city and elsewhere. I, however, find it extremely difficult to recall a successful venture.

    I do recall the opening of Dayton’s in the early ’60s. The main entrance on the northeast corner (Cedar and 7th St.) consisted of an always-open air curtain. It opened into the store from a small plaza containing a well known sculpture as its centerpiece. Dayton’s was surrounded by street level retail, movie houses and competing department stores.

    Over the next decades, suburban malls took their toll on downtown. The City’s response was to close the main artery of downtown life (7th St.) and route traffic north, around the City’s core. We invested in a World Trade Center ( a name many younger residents are unfamiliar with today). We invested in a tower intended to anchor lowertown, Galtier Plaza. It’s since sold numerous times, typically for less than the seller paid.

    The results are in. The City of St. Paul and its Port Authority have no business engaging in the development business. In particular, it had no business purchasing the building in question. At the very least, it should have done its due diligence and explored the cost of demolishing a building that anyone with any experience knew or should have known was filled with asbestos containing fireproofing. (The date of construction was all one really needed to know.)

    There was a reason Macy’s was happy to let a full city block go for a mere $3 million. There was no reason for us to buy it.

    Perhaps we can give it to a tribe interested in operating a casino located right on the Green Line and taking advantage of the hordes of passengers passing by on their way to and from our $250 million empty depot.

  5. Submitted by Dave Peterson on 09/24/2014 - 06:49 pm.

    Tear it down

    If the city wants to ever reclaim a vital downtown center, it needs to find the money to tear down the vitality killing Macy’s. It’s time to reopen the original 7th Street as a pedestrian friendly retail street. Demolishing the Macy’s would be a giant step in that direction.

  6. Submitted by Eric Ferguson on 09/24/2014 - 11:15 pm.

    Why purchase it from Macy’s?

    I don’t see why the port authority bought it from Macy’s. Why not let disposing of the building be Macy’s problem and collect property taxes in the meantime? Maybe Macy’s would pull that trick where businesses “donate” a building to a city so it can get out of paying property taxes, but at least then the building would have been free.

    • Submitted by Jim Buscher on 09/25/2014 - 03:39 pm.

      Macy’s wasn’t going to demolish it. They were going to sell it to whomever would take it off their hands. The city stepped in before it wound up being bought by some out of state REIT just looking to collect some easy parking revenue for who knows how long. Look at the vacant parking lot across from Macy’s. How long has that sat undeveloped? Over ten years now. The city didn’t want the same thing to happen with this building.

  7. Submitted by Christopher Williams on 09/25/2014 - 09:09 am.

    Downtown Retail

    It’s not just St. Paul having trouble pulling off downtown retail. Just look across the river at City Center, Block E, The Conservatory, and St. Anthony Main.

  8. Submitted by Paul Udstrand on 09/25/2014 - 09:20 am.

    Historic?

    I suppose it’s an historic example of ugly, but I think some decent photographs would more than suffice as an historical record.

    As for government involvement, once again our so -called representatives let us down. Instead of buying the building the city should have just told the owners to hand it over or pay for it’s demolition. Why can you abandon a giant building in the downtown core? And why would a city PAY for an abandoned building? And why can’t you charge the those who abandoned it for part of the demolition costs?

    I suppose the owners could have sat on it and claimed to be looking for a buyer for 20 years but they’d still be paying property taxes on it wouldn’t they? And eventually a city can take action and declare an unoccupied building to be abandoned.

  9. Submitted by Walker Angell on 10/27/2016 - 11:08 am.

    It’s not just it’s depressing ugliness.

    Good article Peter. There is so much bad about that building. But it’s not just it’s depressing ugliness (“mid-century mediocrity” was really too nice) but also the negative impact it has on the sidewalks and streets around it. Just eliminating the building and having a vacant lot would be an improvement.

    Enough retail to fill even half of the street frontage is not likely to happen. We’ve a glut of retail already and demand isn’t likely to increase. Residential and office space can work and can be done in a way that enhances the streetscape rather than kill it.

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