The Interloper

Hines Interests joins in the stadium game. What does that mean for Twinsville?

During the twilight of the now-adjourned legislative session, it became clear that state lawmakers had all but discarded any work on new stadium proposals. This was a particular fall from grace for the Twins, who had brokered a deal with Hennepin County whose passage, just weeks earlier, seemed a forgone conclusion. Now that that's over, it's worth recalling mid-June, when the owners of the proposed ballpark site announced that they had teamed with an international real estate developer to fast-track the transformation of their downtown Minneapolis parcels--with or without a stadium.

It seemed as much out of left field as the stadium deal itself; the purveyors of "Twinsville," a marketing concept writ large in just the last year, pretty much propelled the renewed movement toward a ballpark just northwest of the Target Center. What's more, nobody knew much about Hines Interests, the Houston-grown urban developer with more than 80 offices worldwide and some 900 development and management credits to its name. As Bill Chopp, the local rep for Hines, quipped to the Strib on June 12, most people "think we are the ketchup company."

$5 million (or more) for this lousy parking lot? Condos, offices, even a hotel could come to the North Loop--even if a stadium doesn't
Nick Vlcek
$5 million (or more) for this lousy parking lot? Condos, offices, even a hotel could come to the North Loop--even if a stadium doesn't

Even so, Bruce Lambrecht and Rich Pogin, the co-owners of the Rapid Park lot that would house the new Twins stadium, have essentially turned the entire project over to their "development partner." Turns out there are a number of reasons why the move made sense. For starters, it could have served to force the stadium issue at the legislature, spurring lawmakers to approve the sales tax needed by Hennepin County to foot a good portion of the ballpark bill. (That didn't pay off in the short term, but some legislators and even the governor are talking about another special session in the fall to address stadium issues.)

Additionally, Hennepin County needs to buy the air rights and land for a stadium. With Hines on board, the Twinsville owners could boast that they had a legitimate partner to carry forward a city of Minneapolis master plan for Downtown East/North Loop. City leaders have long looked at the mostly industrial area as ripe for gentrification, and Hines would be a significant piece that spurs major public-private redevelopment. Earlier in the session, funding for a Northstar commuter rail line was approved at the Capitol, with a major stop in the heart of the Twinsville. Other transit plans and infrastructure are already in place. In other words, Pogin and Lambrecht all but removed themselves from the political battle that is sure to take place as the land becomes increasingly valuable.

It's a theory that Mike Opat, the Hennepin County commissioner who put together the deal with the Twins, doesn't dispute. "It was smart to get out of the politics of it," Opat says of Lambrecht and Pogin. "They fancy themselves as lobbyists at the Capitol. But the perception was that they were just self-interested land barons."

 

When the Hennepin County Board held a public hearing on the stadium issue in late April, Dave Lawless, the county's budget director, made a curious comment. Commissioner Gail Dorfman pressed Lawless on the hidden costs in the proposal, especially how much it would cost the county to buy the land. Lawless said some numbers had been bandied about, but declined to say what those were. Then he urged the commissioners, "Don't share those with the public."

"It's a well-guarded secret," says Steve Minn, the former Minneapolis council member who now is a developer around town. "There's a number. I assure you Pogin and Lambrecht have said, 'If you get to X, then you can have it.'" Minn surmises, however, that the number has never been put in writing by either party, because it would then be available through data practices laws.

Sometime around 1985 or 1986, according to Pogin, he and his partner bought the Rapid Park site, along with some other vacant lots that were not particularly desirable two decades ago. But that was before the rejuvenated Warehouse District, the Target Center, and the current downtown housing boom. Through three different interests--Land Partners II, Duddy Limited Partnership, and Minikahda Mini Storage LTD--Pogin and Lambrecht own land assessed at some $16.7 million and bounded by Washington Avenue, North Seventh Street, and Third Avenue North, according to state and county records. (Some believe the land is worth twice as much as that.) According to Hennepin County, the Rapid Park lot is worth some $5.4 million. (Pogin and Lambrecht have another $9.7 million in land from two storage facilities they run in Fridley and St. Louis Park.) A deal the two had offered the county--seven acres of the stadium site for some $13 million and a couple of parcels--went off the table in January.

If the two have learned one thing from sitting on a piece of property that was once left for dead, it's patience. They've also earned the reputation as rather savvy entrepreneurs. After all, they are the ones behind "Twinsville"--a made-up moniker for the area surrounding Rapid Park. Their take-it-or-leave-it attitude toward a ballpark seems a stunning about-face.

"We're on a two-track plan," Pogin says, "Frankly, the stadium makes it a more difficult plan."

Further complicating matters is the presence of Hines. Started in Houston in 1957 by Gerald Hines, the private company has become a paragon of international urban development, managing some 93 million square feet of space and controlling $11 billion in assets. Trade magazines list it as the second-largest office owner in the United States, and largest office developer. But it also has done major projects in London, Moscow, Warsaw, and Beijing. In recent years, Hines increasingly has ventured into the stadium market, building Petco Park in San Diego for the Padres and a hockey arena in Glendale, Arizona, for the Phoenix Coyotes.

Locally, Hines has been referred to as "the biggest private landlord in downtown Minneapolis" and owns some 40 percent of the "Class A" space downtown, most notably the Wells Fargo Center, U.S. Bank Plaza (formerly the Pillsbury Center), and other major office towers. Hennepin County records value some of the Hines properties at $100.7 million, $89 million, and $11.7 million.

There has been talk of grandiose plans--mostly from Pogin--for anywhere from 1,000 (with stadium) to 3,000 (without) condo units, along with potential retail and office space that would transform the suddenly burgeoning North Loop neighborhood. But local Hines rep Chopp is less than forthcoming about details, saying that the plans are in very early stages. "We don't know if we'll do office or residential or maybe even a hotel," Chopp says, adding that there are swaths of land in the area owned by the county and the city that Hines would like to get control of. "And we're less sure of a stadium."

Both Chopp and Pogin point to the passage of the Northstar funding this legislative session as a key turn of events, guaranteeing that the area will be a transit hub. Pogin and Lambrecht's vacant lots are suddenly more valuable than ever.

It's a fact not lost on Opat, who still holds out hope for a ballpark. "They can inflate the value if they really have a plan for it,"' Opat notes, hinting that the county might use eminent domain rights should the cost spiral out of control. "If they forgo the opportunity to have a ballpark, it would be a foolish choice."

That's why it's essential for Hines and the landowners to come up with a plan as quickly as possible. Chopp says that the city's master plan for the area is the "model" for what they're considering, while Pogin says a two-year plan, complete with budget, is nearly completed. Is this a ploy to avoid eminent domain? "Oh, absolutely," Pogin responds, adding, "It's always a lose when we go through a condemnation."

As for Minn, a relatively disinterested observer, he sees the strategy benefiting both the county and the developers. "The Hennepin County commissioners can make a public panic by saying eminent domain is the only way to get the land," Minn asserts, adding that condemnation is a costly process. "Then they can justify whatever figure they pay for it. It's a fair negotiation tactic for both sides."

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