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The developer is working to retain ownership of the Mill Trace property.
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Two condo projects headed for foreclosure
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By Michelle Bruch
A Minnesota bank is foreclosing on land owned by two Downtown condo developers.
The sites in foreclosure are Mill Trace, a newly occupied condo building at 619 8th St. SE, and part of a block at Park Avenue and South 10th Street that was slated for two condo towers.
John Elliott, a real estate agent who is selling condos at Mill Trace, said there weren’t enough sales in the building.
“They couldn’t pay the construction loan,” Elliott said.
He said about a dozen people live in the 50-unit building, and several buyers backed out of their purchase agreements. The remaining condos are selling at low prices, he said, but sales would be better if the media would stop scaring off buyers.
“I’ve been in the business 42 years, I’ve seen it happen several times,” Elliott said. “It’s what happens when the market goes in the dumper and the media makes a big deal out of nothing. All the publicity about all these foreclosures exacerbates the problem.”
The developer now has until March 2008 to try to reclaim the property. Otherwise, Minnwest Bank M.V., the lender that foreclosed on the site, will own Mill Trace. Minnwest Bank was the highest bidder at a Sept. 13 execution sale, with a bid of $6.3 million. A representative of Minnwest Bank said he could not comment on the foreclosure because it is in litigation.
Niles Schulz, the developer of the project, blamed the foreclosure on poor marketing and sales.
“The overall housing picture has some influence on it, but I think that’s probably less of an issue than most people would assume,” he said. “We need to reach the right people.”
Schulz said the bank does not want to own the property, and he is confident that he will retain ownership through refinancing or closing more sales in the next six months.
Resident Carol Perusse has enjoyed living at Mill Trace for the past year. She visits the Mill City Farmers’ Market, she walks to the river about three times each week, and she loves Kafé 421.
“Apparently the builders are behind on paying their bills,” she said. “I am a little worried about it.”
She doesn’t understand why the building isn’t more full, because it had the most reasonable prices she could find.
Mary Selly-Navarro signed a purchase agreement last spring and closed on a Mill Trace unit two weeks ago. She has three children in school who will live in the building.
“I hope it doesn’t affect us at all,” she said of the foreclosure. “It really is a beautiful property. Hopefully they will fill up the building with good people.”
When banks acquire property through foreclosure, they typically work to sell the remaining units at a discount, according to Mary Bujold, president of Maxfield Research. Some banks rent out condos, Bujold said, but most financial institutions keep a tight rein on the property to protect its value.
“People who have purchased already won’t necessarily be affected by having the bank own the units, provided the bank continues on with a plan to sell the units,” Bujold said.
Sachin Darji, an adjunct associate professor at the University of Minnesota Law School, said existing homeowners could see their condo market values drop if the bank starts unloading units for much less than earlier purchase prices.
“To have a bunch of vacant units like that in limbo for a while is not a good situation,” he said. “It makes it difficult for existing owners, even if the market wasn’t already bad, to sell.”
According to the Hennepin County Assessor’s office, the site was originally purchased in August 2005 for $1.15 million. County records indicate that Mill Trace Properties took out a loan for construction from Minnwest Bank in August 2005 for $9.5 million, with the balance payable on or before Aug. 31, 2007. Minnwest foreclosed on the loan in July, saying that $6.6 million was still due at that time.
Bujold said the construction loan terms in this case are very typical. However, developers can run into trouble with construction loans if sales are slow and the developer has not secured permanent financing.
A second foreclosure
Minnwest Bank is also seeking foreclosure on the site of a proposed condo project in Elliot Park.
Heritage Development, a developer that is now called Omni Investment, has planned to build residential towers on much of the block at Park Avenue and South 10th Street.
Recently, Minnwest sent out a notice of foreclosure citing a default on conditions of a combination mortgage security agreement and fixed-year financing statement executed by Heritage Development.
The developer told residents at a Sept. 20 neighborhood meeting that he has no intention of losing the property.
“We’re moving forward with business as usual,” said Omni Principal Michael Moriarty. “We’ve spent about 11 months trying to come together with the lender. We don’t believe we are going to lose the property at all.”
Moriarty said they have not been able to come to terms with the lender. He did not elaborate further on the circumstances leading to the foreclosure.
Elliot Park Neighborhood Inc. Community Development Coordinator David Fields characterized the dispute as the bank “playing hardball with Omni,” and said residents would be astounded at a reappraisal of the site.
“This isn’t a case of them crapping out on payments,” Fields said.
A representative of Minnwest declined to comment on the foreclosure, due to litigation.
According to the Hennepin County Assessor’s office, the current owner purchased several parcels on the block from 1010 Partners LLC for $4.8 million in December 2004.
The redevelopment project has been on hold for several months.
Moriarty said Omni might build market-rate apartments, instead of only condos, in the first phase of construction about 18 months from now. He said the developers are in no hurry to build, however. Omni applied for a demolition permit earlier this year to take down the Enger building at 1010 Park Ave. Moriarty said they hit a hurdle when the city asked them to explain precisely what would replace the Enger building.
In the meantime, the developers have not been able to secure a new tenant for the Enger building since the Outsiders and Others gallery moved out in March.
Moriarty said he understands that the neighborhood continues to be curious about the status of the project.
“I don’t think it’s about curiosity, it’s about life,” replied Elizabeth Beissel, senior pastor of Augustana Lutheran Church.
Reach Michelle Bruch at 436-4372 or mbruch@mnpubs.com
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City declares snow emergency
UPDATED February 8, 2010, 1:28pm
By Cristof Traudes
With snow falling almost non stop since Sunday, the City of Minneapolis this afternoon declared a snow emergency.
Starting at 9 p.m. today, cars will not be allowed to be parked on either side of snow emergency route streets. From 8 a.m. to 8 p.m. tomorrow, cars should only park on the odd side of non-snow emergency route streets, and from 8 a.m. to 8 p.m. Wednesday, cars should only park on the even side of non-snow emergency route streets. Cars parked on the wrong sides of streets will be ticketed and towed.
To look up what streets are affected when, click here. More information is at ci.minneapolis.mn.us/snow.
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Development update :: AIA MN kicks off weekend of pro bono design
By Gregory J. Scott
It could be a scene out of some Bravo reality television show. Beginning at about 8 a.m. on Saturday, Feb. 13, teams of student and professional designers will have less than 24 hours to turn nonprofit proposals into graphic realities. The one-day scramble is part of the 23rd annual Search for Shelter Charrette, a weekend of pro-bono design organized by the American Institute of Architects Minnesota’s Housing Advocacy Committee. Nonprofits that lack the funds to hire a professional design firm submit wish-list building proposals — anything from a simple redesign of a lobby space to an inside-out renovation of an entire apartment complex. Then volunteer architects, landscape architects and interior designers collaborate to produce visual tools
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Park Board votes to open search for next superintendent
UPDATED February 4, 2010, 9:05am
By Cristof Traudes
President says Superintendent Jon Gurban has done great work but that moving on 'happens as the natural growth of an organization' The Minneapolis Park and Recreation Board is set to move beyond Superintendent Jon Gurban, voting 6–3 Wednesday night to begin a search for candidates.
It’s the will of Minneapolis’ residents, said a majority of the board that included all three new commissioners. The campaign trail sealed Southwest’s Brad Bourn and Anita Tabb’s decision, they said, while Northeast’s Liz Wielinski said people brought up the issue repeatedly last fall.
But three of the board’s longest-serving commissioners fought back, stringing along a discussion that dominated the night’s meeting.
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'Beyond Our Differences' screening on Friday
UPDATED February 3, 2010, 5:02pm
By Sarah McKenzie
There will be a special screening of the documentary “Beyond Our Differences,” a film exploring the positive impact of religion and spirituality in the world, at the Mayo Memorial Auditorium at the University of Minnesota campus Friday.
Peter Bisanz, the film’s director, will be on hand after the screening for a Q&A session.
Bisanz of St. Paul is the director and founder of New York-based Entropy Films. He is one of the World Economic Forum’s Young Global Leaders — a group of people committed to turning their visions for positive change into action on a variety of important social causes.
In a recent interview, Bisanz said the concept for “Beyond Our Differences” came about while he was at the Dalai
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Twin Citites janitors vote to authorize strike
UPDATED February 1, 2010, 10:38am
By Gregory J. Scott
A near unanimous vote by over 500 union members has given Downtown janitors the authority to strike. Over 4,000 janitors in the Twin Cities have been working without a contract since Jan. 8. Negotiations with cleaning contractors have made little progress since then, and last Saturday's vote gives the bargaining committee the power to call a strike. Two more negotiation dates have been scheduled over the following weeks, but the affirmative vote means that the janitors who clean the vast majority of Downtown office buildings could walk off the job at any time. One of the major sticking points in talks is the green cleaning agenda proposed by the janitors. SEIU Local 26 has sought a transition to day shift cleaning, which the union argues could reduce
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Northeast spotlight :: Crafty entrepreneurs
By Sarah McKenzie
Stroll into I Like You and you are bound to find something that catches your eye. There are adorably hip outfits for little ones, artwork by notable local artists like Amy Rice and Adam Turman and all kinds of other handmade odds and ends you likely won’t find anywhere else. Owners Sarah Sweet and Angela Lessman recently moved their store to the neighborhood after a couple years in Kingfield in southwest Minneapolis. They plan on offering craft classes this spring to inspire other people in the community to tap into their own creative powers. Sweet recently spoke with the Downtown Journal about the business. DTJ: What do you look for when thinking about items for your store? Sweet: We look for things that you
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Community notebook :: Janitors’ union sets strike vote
By Gregory J. Scott
1 Comment
Janitors’ union sets date for strike voteAfter two full weeks of working without a contract, a union representing more than 4,000 Twin Cities janitors decided last week to set a strike authorization vote over unfair labor practices. The vote was scheduled to take place on Saturday, Jan. 30, at the union’s weekly member meeting. At press time, the outcome was not yet known, but the Downtown Journal has been posting web updates regarding this story at downtownjournal.com. SEIU Local 26 — Minnesota’s Property Services Union, which represents security officers and window cleaners in addition to janitors — had arranged for two additional weeks of negotiations at the end of last year, pushing the final deadline for a new
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Study shows uptick in Downtown skyway traffic
By Gregory J. Scott
If you’ve noticed a bit more jostling during your skyway lunch dashes, you’re not alone. Foot traffic in the elevated corridors jumped 4 percent in 2009, and in some areas pedestrian counts reached a 10-year high. The uptick is the major take-away from a report issued last week from Minneapolis-based Pedestrian Studies, a national consulting firm that analyzes foot-traffic patterns for people whose business depends on that sort of thing — shopping centers, property managers, organizers of public events. Pedestrian Studies founder Peter Bruce has conducted annual skyway counts in Minneapolis since 1991. For this study, Bruce focused on the corridors connected to Downtown’s major buildings, including City Center, Gaviidae Common, Northstar
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Biz buzz :: The Forum
By Gregory J. Scott
New restaurant to open in former Goodfellows spaceA former executive at Cargill is opening a new restaurant in City Center, taking over the space previously occupied by Goodfellows. The new restaurant, called The Forum, will blend comfort-food favorites and traditional chop house fare. It will also offer a “changing destination menu” that every month highlights a different culinary tradition from a region of the United States. Chef Christian Ticarro, executive chef at the Canyon Grille in Coon Rapids, will head the kitchen. The opening is planned for early April. The Forum takes over one of Minneapolis’ most historic spaces, the old Forum Cafeteria, which operated from the 1930s to the 1970s. The space was most recently
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Proposal would double fundraising needs for planetarium
By Cristof Traudes
In a shaky economy, it’s hard enough just to raise money. Try watching thought-to-be-secured dollars fall away. That’s what backers of the Minneapolis Planetarium project have been doing in the weeks since Gov. Tim Pawlenty presented his 2010 bonding proposal, a bill that would delete $22 million that’s been guaranteed to the Minneapolis Planetarium Society since 2005. Without the bonding, the society is looking at more than double the amount of money they need to raise to get the long-planned project up and running. “If the $22 million goes away, I think we have to really reconsider how everything looks,” said Angus Vaughan, president of the Minnesota Planetarium Society. The proposed planetarium would be a $35 million
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A tale of two housing markets
By Gregory J. Scott
// What do the 2009 numbers mean for Downtown? //The number of sales swelled, but median prices plummeted. Affordability reached a record high, but so did foreclosures and short sales. Realtors feel a twinge of optimism, but economists keep a nervous vigil. Since its release two weeks ago, a year-end report on the 2009 Twin Cities housing market has generated mixed emotions and mixed data, matching nearly every encouraging sign of a turn-around with a reason to keep hopes in check. And while real estate watchers metro-wide have chimed in with outlooks for the Twin Cities as a whole, getting an isolated assessment for Downtown has proven more difficult. “We stray from offering specific, neighborhood-level
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