Proposal would turn historic hospital into apartments

These days the original Abbott Hospital in Stevens Square looks more like a minimum-security prison than an urban apartment building.

Fences crowned with barbedwire surround the 101-year-old building and boards cover the windows where patients once looked out toward Downtown.  

But thanks to a persistent developer and the help of historic tax credits, the building may soon be renovated into a 123-unit apartment building with space for a couple commercial tenants on the first floor.

The developer, Swami Palanisami, is a long-time engineer with a portfolio that includes many housing renovations in the Twin Cities. He said his goal is to begin work this fall in order to have tenants in the “Dunwoody Apartments” by Thanksgiving 2012.

Palanisami is asking the city for $1.6 million in Tax Increment Financing assistance and an $875,000 affordable housing loan.  Those would be the last steps before starting the $19.5 million project, he said.

City Council members and neighbors have applauded the project as a key piece of property in spurring future development in the Stevens Square neighborhood.

“This will give other developers reason to invest in the area,” said City Council Member Robert Lilligren, whose 6th Ward includes the vacant building at 110 E. 18th St.

City Council members indicated at a May 4 Community Planning and Economic Development they’re supportive of the project. The committee directed staff to begin an analysis to determine if setting up a TIF district is appropriate and justifiable. That is likely to take a few months.

The four-level building is slated for a complete renovation, inside and out. That includes new landscaping, new windows, underground parking and the restoration of the old balcony along 1st Avenue, Palanisami said.

The building will have a mix of studios and one- and two-bedroom apartments. Of the 123 units, 25 will be for affordable housing for people earning less than 50 percent of the area median income.

Rents will range from $750 to $1150 for 1-bedroom apartments and $1042 to $1,400 for two-bedrooms.

The building has been vacant since 2005, when the City of Lakes assisted living home closed. Since then, it’s been a frustrating piece of property for neighbors, said Steven Gallagher, executive director of the Stevens Square Community Organization.

The building became a popular destination for transients, druggies, drug dealers and prostitutes, Gallagher said. It got so bad that the Minneapolis Police Department had to stop using it for a K-9 training facility.

“They were concerned for the dogs’ safety,” Gallagher said.

After a 2007 meeting with neighbors, the property owner, Gateway Commons, built a fence around the property.

But Gallagher said that hasn’t completely solved the problems. Just two weeks ago transients were found in the structure.

“It’s a place away from everyone else that certain individuals want to get into. We just let the owners know, and they usually respond within a couple days,” he said.

Gallagher said prospective developers in Stevens Square and existing landlords have raised concerns over the building because it’s also an eyesore.

“We’re trying to bring in developers to work on the 18th and Nicollet area, and one of the major concerns that was brought up was that building, and what’s happening with it,” he said.

Change may be just around the corner. The National Park Service has approved the project for $5.2 million in historic tax credits and the U.S. Department of Housing and Urban Development is set to loan another $9.6 million for the improvements.

City Council Member and CPED Chair Lisa Goodman (7th Ward) praised the project for its low per-unit development cost. Based on the $19.5 million total cost, each unit would be renovated for an average of under $160,000.

“This is the kind of project where the developer really has a lot of time and money into it and those are the kinds of projects we consider partnerships,” she said. “It makes sense to leverage that money with some of our own.”

Reach Nick Halter at [email protected]