For a decade, the Pillsbury A-Mill, a National Historic Landmark situated on prime real estate along St. Anthony Falls, sat dormant.
But developer Dominium saw possibilities. It bought the distressed property from BNC Bank in 2013 for a song.
That same year Dominium scored approval for a $100 million renovation plan to transform the old workhorse into a 251-unit paradise of affordable housing lofts for artists, complete with a yoga studio, rooftop deck, and other amenities.
The Plymouth developer trumpets itself "for creative solutions to unique and challenging development projects." It would do just that when it came to getting funds to pay for the massive rehab baby.
Because the project involved a historic property that was being reconfigured under the affordable housing umbrella, Dominium amassed a treasure chest of public monies. Grants from the Minnesota Department of Employment and Economic Development, Hennepin County, and the Metropolitan Council. Federal and state tax credits. Low-interest construction financing from the city of Minneapolis.
The A-Mill Lofts cost $665,000 per unit to build, or about $400,000 more than the average affordable housing unit, according to a report from the University of Minnesota's Institute on Metropolitan Opportunity.
The originally pitched $100 million project price tag was more like $170 million. Yet it cost the developer next to nothing.
In addition to what Dominium paid for the property, the company's investment totals just $500,000, according to previous testimony from Dominium's Owen Metz to the Minneapolis City Council.
County tax records today show the three-plus-acre A-Mill is assessed at almost $42 million.
Rents start at $900 for a one-person household. About 85 percent of all residents are white with an average yearly income of just below $30,000. Contrast these numbers with other low-income housing in the Twin Cities, which is made up of 80 percent minorities with an income mean of $17,000.
A-Mill tenants don't have to earn a living as artists, but residents have to be able "to demonstrate a commitment to the arts," according to the company.
"The poverty housing industry in the Twin Cities is a $300-million-a-year industry that's highly profitable to big development firms like Dominium," says University of Minnesota professor Myron Orfield. "These people are experts at assembling all sorts of different kinds of subsidies. On this project I think they realized what a payday it was going to be."
Founded in 1972, Dominium operates in 23 states, making it the nation's second largest owner of affordable housing. It properties are valued at more than $2 billion.
Private firms like Dominium, Orfield argues, have "captured" what's become known as "Politically Opportune Subsidized Housing," or POSH developments. "One of the reasons a project like this costs so much and nobody says anything about it is because there's so many sources of funding available. These sources are only paying attention to their own budgets and not how the big picture fits together.
"The sad part about it is for the same money you could build a few thousand affordable housing units."
The good part for Dominium, on the other hand, is pretty much everything.
It can build housing tailored for artists because a 2008 federal law exempts artists' housing from tax rules requiring credits be used only for units open to "the general public."
Dominium's rent caps can end after 13 years, which means $900-a-month rents become $3,000-per-month rents. Over the same period, Dominium owns the building free and clear. Suddenly, a $170 million rehab becomes valued "at $300, $350 million, or whatever someone is willing to pay," says Orfield.
"And we what find often is it's not single working moms with two kids living there or even struggling artists, but like this one guy who owns a sailboat dealership and likes to paint."
Dominium's Owen Metz did not respond to repeated messages seeking comment.