Stalled Whittier development moving ahead

A new commercial and light industrial development along the Midtown Greenway is moving forward again, after being temporarily stalled in the wake of the scandal swirling around former City Councilmember Brian Herron, said Tom Reynolds, executive director of the Whittier Community Development Corporation.

The parcel, known as the Elroy site, is located south of the Greenway between Pleasant and Pillsbury Avenues. The planned facility of at least 58,000 square feet should create more than 120 jobs, Reynolds said.

It will include an expansion of Karmel Square, the Somali market just south of the Elroy site, he said. It will also include 26,000 square feet for such things as a food-processing incubator, a soup manufacturer and/or a bakery.

"We are talking with three different investor groups," Reynolds said. "We believe the project will be up and running by September."

The Whittier CDC focuses on commercial development and eyed the site for a light industrial incubator. It dropped the idea in 1999 as financially not feasible.

The Whittier CDC then partnered with Basim Sabri, owner of neighboring Karmel Square, to develop the Elroy site, he said. Sabri invested $750,000, or 75 percent of the partnership’s total. Sabri served as president of Karmel Properties LLC, and Reynolds served as secretary/treasurer.

According to plans submitted to the city, the $4.5-million development would vacate Elroy Street, which separates the site from Karmel Square. The Minneapolis Community Development Agency, the owner of the Elroy site, had approved the land sale to the Karmel Properties said Wayne Olson, project manager for the MCDA.

The partnership had bank commitments and was signing leases with prospective tenants, Reynolds said.

Before the deal was finalized, however, prosecutors accused Sabri of offering bribes to Herron for help on a project unrelated to the Elroy site development. Sabri has yet to go to trial. Herron resigned last year after pleading guilty to extorting money from another businessman.

When accusations surfaced against Sabri this summer, Reynolds said the MCDA put the Karmel Properties project on hold temporarily.

Asked about how Sabri’s connection to the project affected it, Olson said he did not want to characterize what the issues were. "We are working with the developer at this point to figure out what to do next," he said.

Reynolds said the CDC has not reached terms with an alternative investor yet.

"We may buy out Sabri," he said, adding that Sabri would be, at most, a 10 percent partner.

Sabri declined to comment for the story, saying he was too busy.

Jeff Langaard, executive director of the Whittier Alliance, said he wanted the organization to review any changes in plans.

— Scott Russell