Poor Downtown office occupancy rates might force developers to take an additional year to finish redevelopment of the picturesque Ivy Tower, 1115 2nd Ave. S.
The tower, built in 1930 as the headquarters of the Second Church of Christ, Scientist, has been vacant for many years, and the grounds around it are a parking lot. But developers hope to restore the building while adding 200,000 square feet of adjoining office space.
Problem is, nobody wants to rent Downtown at the moment. Project Director George Kissinger of the Minneapolis Community Development Agency (MCDA) said that about 17 percent of office space already available Downtown sits vacant.
A City Council committee on Sept. 19 granted developers a deadline extension that allows them to wait until February 2004 to show they have sufficient financing in place -- based on leasing agreements. The original deadline was February 2003.
"They still may get everything put together in the original time line, February of 2003," Kissinger said. "I would say we are being prudent given today's real estate market."
In return for the extension, Kissinger said, developers Ivy Tower Minneapolis LLC will examine whether housing might be integrated into the complex.
City Councilmember Lisa Goodman said there is nothing unusual about the extension.
"If they want more time -- and they have done a good job to-date of maintaining the property or working toward a successful resolution of the property -- it makes sense that we would concur with that," she said.
The rook-shaped Ivy Tower's redevelopment is expected to cost between $46.2 million and $47.2 million, according the most recent figures from the MCDA.
Of that amount, $27 million is expected to be privately financed and $7 million would come from developer's funds in the project. Between $11.5 million and $12.5 million would come from city-backed tax-increment financing, according to the MCDA. Tax-increment spends some of a project's future, higher property taxes to make sure it happens.
In addition to the office space surrounding the historic building, the tower itself would be turned into a high-tech conference space including a coffee shop, a Minneapolis history museum and meeting rooms.