Minneapolis city officials are not renewing an entrepreneur's rights to build a grocery store at a crucial corner of the North Side, dashing hopes of bringing a promising development to a low-income area where fresh food is scarce.
A top city leader says the demise of Praxis Marketplace at Penn and Plymouth Avenues is emblematic of the failure of broader efforts to revitalize the North Side. The grocery store's fate also highlights the enormous obstacles that still face developers looking to invest in north Minneapolis.
"Too many individual examples like that exist where we can't even as a community … rally to get a friggin' grocery store built in north Minneapolis," Council Member Lisa Goodman said earlier in November.
The company is pleading for more time to wrap up a complicated financing package, but the city says it has waited long enough after granting an extension and offering significant taxpayer subsidies.
Praxis' founder, Glenn Ford, and a neighborhood group say the city is giving up just as the grocery project is gaining momentum. The Northside Residents Redevelopment Council, the neighborhood group, passed a resolution this week urging the city to grant a six-month extension to the Dec. 31 expiration of the development rights.
"Why is it cemented that it's not going to happen if you have a developer" who is committed to the project? asked the group's chair, Ishmael Israel. "I don't care if it's the 11th hour."
This barren corner stands as a scruffy reminder of the city's fledgling attempts at a North Side revival.
The city inherited the land in 1991 from a shuttered McDonald's, and leaders quickly dreamed of expanding an adjoining strip mall known as Plymouth Plaza.
Then-City Council Member Jackie Cherryhomes said at the time the mall would become "the key to rebuilding Plymouth Avenue as the prime neighborhood shopping area that it once was."
The expansion never occurred. The mall shut down, despite a city-subsidized overhaul. It is now a University of Minnesota outpost.
The city sought proposals several years ago to develop the corner and another across the street, which has since been converted into a temporary parking lot for Hennepin County's nearby North Point health center.
Many believe the intersection is brimming with potential, particularly since in several years it will be served by a new rapid bus line down Penn Avenue. A Bottineau light rail station will be just a 10-minute walk away.
"That is the most promising development node along Penn Avenue," Israel said.
Praxis told the city it would build a grocery store of up to 30,000 square feet on the site. The Minnetonka-based company is pursuing similar grocery projects in several other Midwestern cities that have neighborhoods with few grocery options — after initially focusing on north Minneapolis.
None of the stores have been built yet, but Ford's goal is to eventually supply them with locally sourced goods, creating spinoff food-related jobs. Praxis' vision has also expanded to include building aquaponics facilities for raising fish and vegetables.
"If you were looking for the [industries] that could help you the most in an urban area, you would create jobs around food," said Ford, noting that urban neighborhoods were historically packed with small food manufacturers.
Through grants, forgivable loans and tax credits, the city has offered Ford $1.8 million toward his $7.2 million grocery project. It agreed in 2013 to extend the development rights until the end of this year, with conditions that Praxis submit site plans and apply for a city loan by certain dates — neither of which occurred. Ford said he was waiting to secure the financing before moving forward with more expensive engineering measures.
The deal hit a snag when Ford needed to bridge a financing gap in obtaining money through a federal program for immigrant investors. AIG Ltd. Commercial Bancorp then agreed to help finance the entire project, making the immigrant investor program unnecessary, but only if a major aquaponics operation was added. Ford had not intended to pursue aquaponics in Minneapolis, but now he hopes to do it on another site.
The rights were extended once in 2013. A spokesman said the city only learned this fall of AIG's involvement, which was contingent on building an aquaponics facility it had never heard of. That, coupled with the failed deadlines, spurred a letter that the city would not be renewing the development rights.
"There's been a lot of time committed," said Kristin Guild, the city's business development manager. "And there's potentially an opportunity cost of holding this off the market." Guild said the city usually grants development rights to more imminent projects.
Ford says he could have the financing fully secure after an additional 90 days. "The site's been empty for 20-plus years," he said. "So the fact that I couldn't move heaven and earth yet in two years — and you see that I'm engaging pretty serious capital to the table to do that — I don't think that that makes me a slug."
When Ford appeared at Goodman's committee in 2012, he said the funding needed was secured. Goodman warned of the challenges of financing grocery stores — typically a low-margin business. "People are going to expect you to build a grocery store," Goodman said at the time. "And they're kind of disappointed by … failed attempts in the past to do something like this. And I don't want to get folks' hopes up that this is going to happen, when in fact it's not."
Council Member Blong Yang, who represents the area, said Ford should have been forthcoming about the time he needed before accepting the development rights. He worries the fate of this project could discourage other smaller entrepreneurs who lack Ford's resources. "I am willing to pull people's hands to get through the process if I need to to spur economic development," Yang said.
As for spurring commercial development on the North Side, Yang said the city may want to consider public safety approaches like flooding West Broadway — the primary commercial corridor — with a more constant police presence. Cub Foods on West Broadway pays up to $250,000 a year on security, he said.
"Once we do that and businesses realize, 'I don't have to put 10 percent of my profits or my overhead on security,' I think that's going to give them a little more faith in saying, 'I'm going to locate my business here,' " Yang said.
Council President Barb Johnson, who represents the northern half of the North Side, pointed to a deeper and more stubborn problem.
"It's really hard to start a business up there because people don't have any money," Johnson said. "We have a concentration of poverty, and there isn't enough spendable income."
Guild said Ford is welcome to apply again if the city issues another request for proposals for the site, which is likely.
Ford remains optimistic about completing a project in Minnesota. "I'd have no qualms going over to St. Paul, and I'd have no qualms going to Brooklyn Park," he said.
Eric Roper • 612-673-1732
Twitter: @StribRoper
