The City Council unanimously approved the financing plan for the $400 million Downtown East development plan at its last meeting of the year today.
Mayor R.T. Rybak said the deal will allow the city to take an area dominated by surface parking lots and “turn it into a neighborhood.” He also praised Wells Fargo for agreeing to be the owners of the two office towers proposed for the site — making it the largest ownership relocation in the city’s history.
City Council Member Cam Gordon (2nd Ward), who was among the group of Council members who voted against the financing plan for the new Vikings stadium, said he views Ryan Cos.’ Downtown East project in a different light. “The financing really works out to the city’s benefit,” he said.
City Council Member Meg Tuthill (10th Ward) was one of the members supportive of the Vikings deal — one of the most controversial projects city leaders have voted on in recent years. She said the Ryan project would not have happened without the Council’s vote to approve the Vikings deal. “I can’t think of a better Christmas present,” she said of the Downtown East development.
The project will be the largest office development in the city in more than two decades featuring two new office towers with more than 1.1 million square feet of office space for Wells Fargo, housing, retail and a new two-block park. Ryan Cos. is purchasing the property for the development from the Star Tribune and would demolish the newspaper’s building to make way for the project.
The towers are expected to house 5,000 to 6,000 employees.
The City Council’s Ways & Means/Budget Committee approved the financing plan for the project Wednesday.
Committee chair and Mayor-elect Betsy Hodges said she’s “absolutely supportive” of the project, adding it is a huge opportunity for downtown that also carries with it a challenge to make sure the park has strong programming so it doesn’t become a “giant dead zone.”
Other Council members raised similar concerns about the park, noting that programming budgets for parks throughout the city have faced cuts.
While the project has strong support from city leaders, it is not without critics. Former mayoral candidates Stephanie Woodruff and Dan Cohen, along with former Council President Paul Ostrow, have filed a lawsuit against the city over the project. The suit alleges the city is spending more than the $150 million allowed in stadium legislation for stadium-related costs, among other things. Former Gov. Arne Carlson has also criticized the proposed financing for Ryan’s project on his blog. (Note: This paragraph has been revised to correct the dollar figure referenced about the lawsuit.)
A judge dismissed four of the five claims in the lawsuit today. A hearing has been set Dec. 18 for further review of the claim arguing the city doesn’t have authority to establish a park.
Earlier this week City Attorney Susan Segal said she’s confident in the city’s position and will be asking “the court to expedite any proceedings in this case so that it can be put to rest as quickly as possible.”
“The agreement being considered by the City Council has been very carefully assembled over many months, working closely with partners both inside government and out, to ensure that it meets all of our legal obligations and provides a significant benefit to the public,” she said. “Although there are many facets to the proposed agreement because of its large scope, it uses standard financing tools that have been used by Minneapolis and other cities many times in the past.”
Despite its critics, the proposal sailed through the Council’s committee-approval process.
The Council’s Community Development Committee approved the financing plan for the project on a 6-0 vote Dec. 10. Several people spoke in favor of the project at the Council’s Community Development Committee meeting.
New Downtown Council CEO Steve Cramer lauded Council members for finding a way to make the complex deal happen.
“The Downtown Council heartily endorses this proposal,” he said, adding it hits on many of the goals of the Downtown 2025 plan — a vision for growing a more vibrant and livable downtown.
Lynn Regnier, executive director of Elliot Park Neighborhood Inc., said the neighborhood organization is excited to see the area transformed from a “sea of bleak parking lots.”
The latest version of Ryan Cos.’ proposal for a new five-block development in Downtown East has the developer and the Vikings kicking in more money for the project.
Details of an updated financing plan for the $400 million project were revealed to the City Council’s Committee of the Whole on Dec. 5. Ryan has pledged $350 million to finance the office towers, housing and retail portion of the development — $3.7 million more than they originally committed to the project.
The Vikings have also agreed to donate $1 million for the two-block park.
Rybak said the additional financial contributions from Ryan and the Vikings were key elements in making the latest proposal viable in a briefing with reporters before the Committee of the Whole meeting.
Here are highlights of the proposed financing plan:
— Ryan will privately finance $350 million for the office towers, housing and retail;
— The Minnesota Sports Facilities Authority (MSFA) will pay $28.9 million to build the skyways and a portion of the Block 1 parking ramp (see map); and
— The city will finance about $57 million of the project by issuing bonds — $19 million for the park; $33 million to pay for a portion of the Block 1 parking ramp; and about $5 million in other site costs. The debt service on the bonds will be paid by revenue generated from the parking ramps. Ryan Cos. will make payments to the city for the first 10 years and after that revenue from the parking ramps will go directly to paying off the debt service.
The city is basing projected parking revenue on the amount generated at the nearby Jerry Haaf Memorial Parking Ramp.
The MSFA also plans to transfer development rights for an area above and next to the Block 1 parking ramp to the city (see map). City staff will issue an RFP for the site now that the Council has approved the deal.
Rybak said the site is prime real estate and he has already been in talks with interested developers. Rick Collins, vice president of development for Ryan Cos., said the developer is potentially interested in the site, but is staying focused on its already very “full plate.”
Wells Fargo and the Vikings have also come to an agreement allowing Wells Fargo to have a large sign with their logo on top of the office towers. The signs are also subject to the city approval process.
According to a report prepared by CPED, the Ryan project is expected to generate $3.9 million in property taxes in its first year — of that, $1.1 million would go to the city. Over time, the development is expected to generate $40 to $45 million in property taxes for the city.
Rybak will remain involved in the project after he leaves office by serving on a committee overseeing the park, which will be controlled by the city — not the Park Board.
The management of the park will be modeled after the Millennium Park in Chicago and require fundraising to pay for ongoing maintenance and programming.
“This is a place that I hope will be very active,” he said, adding he’d love to see youth from around the city gather at the park for soccer games.
At the Committee of the Whole meeting, City Council Member Cam Gordon (2nd Ward) also expressed hope that the park would serve the broader community and not just wealthy residents.
Under the proposed agreement, the Vikings can use the park during game days and an additional 10 days throughout the year. The MSFA will be allowed to use a portion of the park up to 40 days a year. On those days, they will be allowed to restrict public access to specific areas within the two-block park, but the remainder of the park would remain open.
Park and Portland avenues, which run through the development area, will remain open, but Rybak said he hopes they can become more pedestrian friendly. “No matter what, [the streets] are way too big,” he said.