The Once and Future River

Promenades and parks, cappuccino and condos: Tomorrow's upper Mississippi looks dandy. But first, can't city hall get rid of those grimy scrapyards? Why, yes.

The first, and so far only, sure funding source for the project was green-lighted by the city council on September 17. The vote gave the go-ahead to a strategy that will take the profits from the city's own Upper Harbor Terminal, which sits on the west bank near the Lowry Bridge, and deposit the money, via the MCDA, into an account earmarked for the river revamp. But there have never been any profits at the Upper Harbor Terminal: the average deficit on the port since 1991 has been $700,000 a year, in part because the city is still paying off bonds issued to build the terminal. Once that happens, in 2000, net income is projected at $350,000 per year. At that rate, it will take a good many years for the account to reach $200 million. If anything, the vote was at least a show of support for the recasting of the upper river; where the real money will come from is yet to be determined.

None of which addresses Jeff Schoen's situation. "My question, specifically, is, Have you identified the use for my site at this point in time?" he stepped to the microphone and asked at the meeting that night.

It was a simple question. But getting a simple answer has been difficult. And that lack of an answer is what led to Schoen's current predicament: He's stuck with a property the city won't allow him to sell and won't step forward to purchase.

Why? The not-so-simple answer is this: In December 1998 the city council slapped a moratorium on the corridor north of Broadway Avenue, including all industrial uses within 300 feet of the river. The purpose, the council made clear, was to freeze industrial development in order to give the city time to come up with its master plan. The moratorium, which was recently extended for another year--prohibits all affected business from making any changes to their properties which would require a city-issued permit. No expansions, no big improvements. It also prevents any alterations in what the property is currently used for. To be excepted from the moratorium, a business has to apply to the council for a waiver.

When Schoen put Harmony on the market last spring, an interested buyer quickly surfaced: the Minneapolis Public Schools. The schools wanted the building for a program designed for kids with emotional and behavioral problems. They were willing to pay the $1.95 million asking price and were looking for a space they could occupy by the start of the 1999 school season. But despite this potentially happy union of a willing seller and buyer, the deal would require a waiver.

Biernat made it clear from the start that he opposed to the sale, saying it wouldn't make sense to put a school on land that the grand plan would ultimately recommend using for a different purpose. According to protocol, council members generally defer to their colleagues' desires for development within his or her ward. Without Biernat's support, there was little point in the schools' applying for the waiver. No deal.

Meanwhile, a second potential buyer came forward: Chrysalis, a women's center based in south Minneapolis. But Chrysalis soon walked away from negotiations, after deciding they couldn't afford the buildout costs at the site. Strike two.

Then a third buyer surfaced. Jim Nygard wanted to keep the building's current use as a sound stage and set-design studio, where he would house his two companies: Nygard & Associates and Nygard Set Design. Schoen was excited by the promise that the business he'd poured so much of his time, creativity, and money into would continue to operate. What's more, he figured this sale wouldn't require a waiver from the moratorium, because the same use would be continued.

By mid-July Schoen and Nygard had a signed purchase agreement in place, with a closing date set for September 1. But Nygard wanted to know for sure what the city's long-term plans in the area were before proceeding. He says the MCDA's director of housing, Jerry Boardman, told him that a developer was working on a proposal for new housing north of the Grain Belt building--right where Harmony stood--and that the city was set to begin purchasing the land within 15 months. Nygard balked, and he pulled out of the purchase agreement, leaving Schoen once again in the lurch.

And so it goes, Schoen says, with the city making it impossible for him to sell to anyone except, perhaps, the city itself. As Schoen's attorney John Roth puts it, "No one's going to buy the building under these circumstances. Basically what it brings us down to is probably having to bring suit against the city. If the city's going to prevent somebody from selling, they ought to buy it or pay the consequences."

The city's plan to overhaul its entire zoning code, which should be completed by the end of the year, only tightens the hold. (Zoning codes govern what type of property can legally exist on a given piece of land.) As for the upper river corridor--including Harmony's property--the rezoning will likely switch land that has long been used for industrial and commercial purposes into land dedicated to high-density, upscale housing, office buildings, and public leisure space.

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