City approves transformation of Downtown East
The Minneapolis City Council and Mayor R.T. Rybak today approved an agreement to move forward with Ryan Companies’ $400 million redevelopment in Downtown East. The development will transform five square blocks and will include 1.2 million square feet of new office space, making it the largest commercial development in the city in 22 years. The Downtown East project also includes new housing, retail, parking and skyways, and will create a new, two-block park.
Under this agreement, the City’s participation in the project is limited to financing the new public park and a portion of a new parking ramp. The project is estimated to generate about $1.1 million in annual property taxes to the City in the first year and an estimated $42 million over the first 30 years. Over the same 30 years, Hennepin County is estimated to net about $50 million in property taxes and the Minneapolis Public Schools will net about $35 million.
When completed, Wells Fargo will purchase the buildings that will house 5,000 to 6,000 employees in an area of downtown currently dominated by surface parking lots. In addition, the project is expected to create more than 1.4 million hours of work for 2,000 to 2,500 workers in the building and construction trades.
The City will finance $18 million for the park, $33 million for the parking ramp and $4 million for limited site preparation. The bonds that are sold to finance these elements will be repaid by using parking revenue from the newly-constructed parking ramp and the existing Downtown East ramp.
The ramp revenue that will be used to make bond payments over 30 years is based on reasonable projections: the projections assume that monthly parking leases at the new ramp would be slightly less than the lease rate today at the nearby Haaf ramp. In addition, because payments coming to the City from Ryan Companies will cover the anticipated debt service in years 1–10, the City has no financial risk in those years.
No tax-increment financing will be used.
The package includes money to acquire land for the park, mitigate the property and begin to build the park. Park design and construction will be enhanced with a private donation campaign, which has been started with a $1 million donation from the Minnesota Vikings. Park operations are intended to be covered by the commitment of nonprofit sponsorships within the park.
Published Dec 13, 2013