City says lawsuit threatens Downtown East development

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December 12, 2013
By: Ben Johnson
Ben Johnson

An emergency hearing was held this morning to hear arguments stemming from a lawsuit filed against Minneapolis by former City Council President Paul Ostrow and former mayoral candidates Stephanie Woodrow and Dan Cohen regarding the five-block Downtown East development deal.

Ostrow, who is an assistant Anoka County Attorney, argued on behalf of the plaintiffs before Hennepin County Judge Mel Dickstein in a 90-minute court session. Ostrow asked for a temporary injunction that would put the development on hold until the lawsuit is decided, but Judge Dickstein indicated that the lawsuit would not be ripe for judgement until the City Council approves the project, which is expected to happen tomorrow. 

City Attorney Susan Segal warned that the complex, $400 million deal - which includes two office buildings planned to house 5,000 Wells Fargo employees, a parking ramp and a two-block park -  could fall apart if the lawsuit delays the deal past Dec. 27. After Dec. 27 the purchase agreement between the Star Tribune, which owns the five blocks slated to be redeveloped, and Ryan Cos., the developer of the project, expires.

No immediate information was available on when Dickstein might issue a ruling, but conversations with Segal and Ostrow indicate that it would likely come before Dec. 27.

As for the actual lawsuit, the plaintiffs' argument was based on two central claims.

First, the state stadium legislation capped Minneapolis' contribution at $150 million, which the city has earmarked entirely toward the stadium's construction. The stadium legislation also requires 2,000 parking spaces in a ramp within one block of the stadium, which is being met through the constuction of a parking ramp on one of the five blocks in the Downtown East development.

The city is issuing up to $65 million worth of bonds to pay for that parking ramp, and Ostrow said that additional city expenditure violates the $150 million cap set in the stadium legislation.

"All the city has to do is make sure that the stadium bill itself is enforced, and the Vikings will have to be responsible for the parking ramp," said Ostrow.

Deputy City Attorney Peter Ginder said that the Downtown East development deal and the Vikings stadium deal are two seperate entities which have some mutually beneficial elements, as is often the case when large developments are built near each other. The parking ramp will be needed for the Wells Fargo employees and it also happens to satisfy the stadium's legislative parking mandate.

"I urge the court not to conflate this development deal with the stadium deal," said Ginder. "This is a development deal that happens to abut the stadium."

There is also a provision in the stadium legislation that says "the city may make expenditures or grants for other costs incidental and necessary to further the purposes of this legislation," although Ginder and Ostrow disagreed on how to interpret that provision.

The second major point had to do with the park in the Downtown East development. Currently the park is being developed under the direction of the City Council, and Ostrow argued that only the Park Board has the authority to develop parks under the City Charter. The Park Board has nothing in its comprehensive plan regarding a downtown park and has been minimally involved in early planning efforts.

Ginder countered with Gold Medal Park and Peavy Plaza as prior examples of the City Council developing and overseeing parks, and that the park may eventually be turned over to the Park Board someday.

The parties also argued over Minneapolis using its port authority powers to issue bonds for the project instead of having to go to the Board of Estimate and Taxation to borrow money, which is the usual procedure.