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Port Authority will lease 15.6 acres of Midway Center property

Posted on 07 February 2017 by Calvin

Stadium should open in 2018 or 2019; superblock redevelopment may take up to a decade or more

The St. Paul Port Authority will lease 15.6 acres of the Midway Center property, under a plan approved Jan. 24. It’s hoped the lease will kick off long-awaited shopping center redevelopment, which is supposed to happen in conjunction with a planned Major League Soccer stadium for Minnesota United FC.

If all goes as planned, soccer stadium construction could start in earnest in April and be completed in 2018 or 2019. Redevelopment of the shopping center could take much longer, possibly a decade or longer.

superblock-photoPhoto left: The proposed lease agreement puts the Port Authority in the position of being a shopping center master tenant. The goal is to find a development partner or partners, and a new potential owner or owners for the 15.6-acre shopping center property. Redevelopment of the shopping center property could possibly take a decade or longer according to officials. The illustration is an example of an almost infinite number of development possibilities. (Photo provided)

The lease agreement, which was recommended for approval Jan. 17 by the Port’s credit committee, puts the development agency in the position of being a shopping center master tenant. The goal is to find a development partner or partners, and a new potential owner or owners for the 15.6-acre shopping center property. Port Board members said they don’t want to be a long-term property owner or developer. Instead, the agreement is touted as facilitating redevelopment.

The Port Authority created a development district at the shopping center last fall.

A private development partner or partners could be announced this month as talks are underway with several interested parties. “The (lease) project will facilitate the Major League Soccer project and will likely be a mixed-use development in a commercial district,” Port documents stated.

Tenants would be consistent with a master plan approved by the St. Paul City Council last year, according to the agreement. That plans calls for offices, retail, restaurants hotel space and apartments on the 34.5-acre “superblock” bounded by Pascal St. and St. Anthony, Snelling and University avenues.

Port Authority President Lee Krueger has characterized the Port’s necessary participation due to the “complicated financial aspects” of redevelopment. RK Midway and Minnesota United FC owner Bill McGuire have been in talks for several months but aren’t commenting about how that is going.

The Port Authority involvement and the likelihood or another developer are being watched closely by Union Park District Council as the council’s land use and transportation committees prepare to review more detailed site plans for the soccer stadium before construction begins in April. The detailed site plan starts city staff review this month. That plan will provide more detail on issues including utilities, streets and contamination sites. Several district council committee members said they are concerned that development plans unveiled last year by Minnesota United and RK Midway have stalled and that a new development partner could make changes to the master plan.

“It’s fair to say that there are a lot more questions than answers at this point,” said Union Park District Council Executive Director Julie Reiter.

The Port Authority has done similar deals before, with the redevelopment of the former Macy’s store downtown as the most recent example. That space is being redeveloped into a practice rink for the Minnesota Wild and retail/office space.

The property covered by the Midway Center lease includes much of the shopping center, including Rainbow Foods and properties along University Ave. It doesn’t include land along Snelling, including the former American/Midway Bank Building and a building housing Big Top Liquor. That property would continue to be owned by RK Midway. RK Midway also would retain the vacant lot at the northwest corner of Pascal and St. Anthony.

The master lease agreement gives the Port up to 120 days to do its due diligence, determine the financial viability of the lease and the potential cost of any environmental remediation required in connection with development. This time period would be used to complete an agreement with a development partner or partners. RK Midway would retain control over the shopping center during that time.

If the agreement moves forward it would be assigned to the Capital City Partners arm of the Port Authority. A limited liability company of Capital City Partners and private develop would be formed.
The agreement is for 52 years, the same duration of the city’s agreement with Minnesota United and Metropolitan Council on the stadium.

Annual rent will be negotiated, based on the existing revenues collected from the shopping center’s current tenants, for years one through five, with a three percent increase for years six through 10, and a five percent increase for each five-year period hereafter.

Little work has been done on the old bus garage property despite a ceremonial groundbreaking in December 2016. Xcel Energy has relocated some utilities, and lead contractor Mortenson Construction has hung a banner on a fence.

But Rainbow and stores to the east need to be torn down to make way for the planned soccer stadium.
Minnesota United officials wish to have the stadium open in 2018, but Port and team officials have said a 2019 opening is more likely. Most of the stadium will be on 10 acres owned by Metropolitan Council, where a Metro Transit bus garage stood for many years.

Another aspect of the agreement has the Port overseeing environmental cleanup for the entire superblock, not just the stadium site as announced earlier. It has pollution from several sources, including decades as a streetcar and bus garage facility and from a long-gone dry cleaner in the eastern part of Midway Center.

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