The City of Minneapolis touted 1100 Second Street South as “one of the last parcels available in the Mill District,” a neighborhood where the Guthrie, other amenities, and easy access have created a relative sweet spot in a sour downtown real estate market.
But when the city took bids last September and October, the only offer came from veteran developer Jim Stanton of Shamrock Companies in Coon Rapids, and he bid $87,000 less than the asking price of $437,850.
What’s up? The problem for the city is that the small corner lot is hemmed in—by Stanton’s Park Vista condominiums, a planned $70 million development. Last spring, Stanton bought three parcels at Second Street and 11th Avenue South for $3.25 million. In September, the city approved construction of 150 units there with underground parking. Stanton doesn’t need the fourth lot, but would use it to add green space to his luxury project.
“It’s a beautiful site,” he says of the 66-by-148-square-foot sliver of land. “It looks out at Gold Medal Park. The upper floor would overlook the river. And it would generate $800,000 a year in taxes for the city.”
That last remark is a pointed reference to a disagreement between Stanton and the city. Minneapolis officials have said that if they accept his bid, it’s far enough below the appraised value of the lot to qualify as a public subsidy. As a result, it would trigger a requirement that Stanton turn 20 percent of Park Vista into affordable housing.
“You can’t make housing work at that price,” Stanton says. He questions why the city’s appraisal on this latest lot is far higher than on the three he purchased just last spring. His project already has a green light without the added green space, he points out, so if he can’t reach an agreement with the city, “it’s not the end of the world.”
Miles Mercer, of the city’s community planning and economic development department, declined to comment, citing ongoing negotiations with Stanton in early December. The lot isn’t so tiny that it couldn’t be developed by someone else, Mercer says. But “is the market there to build something?” he asks. “That’s the open question.”
The Right Place for Condos
Shamrock Construction’s planned Park Vista would be among the first condominium developments downtown after a two-year dry spell. Others have abandoned projects or converted them. The $25 million Mill District Apartments that opened in November were planned as condos.
But Stanton believes a site in the Mill District still makes condos a good long-term investment. “People like that end of town,” he says.
He should know. He opened the 282-unit Bridgewater condominiums there in 2006, sold 140 units quickly, then took two and a half years to close on the next 90. He’ll start Park Vista when he’s sold 20 of the remaining 51 Bridgewater units.
“We held our prices very firm,” Stanton says. “It slowed sales down, but people are buying again.”
