A key Minneapolis city panel today signaled approval of a Downtown East development deal that will require the city to issue about $65 million in bonds for the $400 million project.
On a 4 to 1 vote, the Community Development Committee authorized city staff to begin negotiating terms and agreements with developer Ryan Cos. The vote is non-binding, but it does show that the basic concept of the deal has support on the City Council.
One major supporter is Lisa Goodman, who chairs that committee and also represents downtown. She praised the project for growing the tax base while reducing the risk to taxpayers.
“This is the kind of development we should be proud of,” Goodman said before casting her vote of support.
Goodman was joined by Council members Don Samuels, John Quincy and Robert Lilligren. Cam Gordon voted against the measure, saying he had concerns about some of the details – namely about Ryan developing the last half of the last block of a new park.
Rick Collins, vice president of development for Ryan Cos., praised the committee vote.
“This is a very encouraging first step as a part of the City Council process,” Collins said. “In a project that is as complicated as this and has as many parties involved as this one does, it’s important that we have milestones along the way to let us know we are on the right track and we have general agreement from many people to keep moving in the same direction.”
New details emerge
The $400 million project on the east side of downtown includes five city blocks that surround what will be the new Vikings stadium.
Ryan Cos., under the plan, would build two 20-story office towers that it hopes to sell to Wells Fargo for top-tier office space. It will also include 300 to 350 housing units and 40,000 square feet of retail and restaurant space.
The city, according to Minneapolis Chief Financial Officer Kevin Carpenter, would sell roughly $65 million in bonds. Of that, $40 to $45 million would go toward the construction of a parking ramp that would be owned by the Minnesota Sports Facilities Authority. The MSFA would send parking revenues to the city to pay off debt on the ramp. Ryan Cos. would guarantee the first 10 years of debt payments if revenue fell short.
The other $15 to $20 million go toward paying Ryan Cos. for two blocks that it would develop into a park known as “The Yard.”
Carpenter, after some prodding from Gordon, said Ryan was purchasing those two blocks from the Star Tribune for roughly $15 million. Carpenter said Ryan would not mark up the land price when it sold those two blocks to the city.
Collins confirmed that the Star Tribune land would be purchased for a price tag between $14 million and $16 million.
“I don’t dispute anything Kevin (Carpenter) said,” Collins said. “He gave you a range, and I think the correct amount is in the range.”
Hennepin County records show those two blocks to be valued at about $9.75 million. Mayor R.T. Rybak did not immediately respond to a phone message asking why the purchase price was so much higher than the assessed value.
Update: Deputy CPED Director Chuck Lutz said the sale price is higher than the assessed value for two reasons: The assesment was done before the Vikings stadium deal was approved and also because the assessed value does not always match up exactly with the actual market value.
The City Council will vote to authorize city staff to begin negotiating terms on July 19.