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An abandoned building on the edge of downtown Minneapolis quickly became a magnet for squatters, drug dealers and prostitutes, who left its hallways covered with trash, broken glass and graffiti. It appeared to be a sad end to the former Abbott Hospital, where scores of babies were born over its 70-year lifetime in the Stevens Square neighborhood.

But the building has had a rebirth of its own, thanks to a jaunty engineer’s dream of salvaging it and turning it into apartments.

“A lot of exciting projects [are] going on all the time in town, but this is kind of special for me in many ways,” developer Swami Palanisami told a crowd gathered for the opening of Historic Abbott Apartments. Palanisami, an engineer by trade, has had a hand in many major Twin Cities projects, including installation of the foundation for the new Vikings stadium.

State and federal historic tax credits helped pay for restoration of the building, saving it from the wrecking ball.

“It very easily could have been torn down,” said Will O’Keefe, real estate program coordinator for the Preservation Alliance of Minnesota. “But instead of tearing it down and having more than likely a vacant lot, you’ve got 123 units here.”

About 77 of the apartments at the property, at 18th Street and 1st Avenue S., are already leased. About 98 of the apartments are market rate, with another 25 geared at low-income renters.

Residents can take a short walk to either downtown or Nicollet Avenue’s Eat Street, or cruise into downtown on a bike lane located just outside their window.

“I have the … best view of downtown,” said Alycia Ingram, who heard about the apartment on Craigslist. She was attracted by the new amenities and parking.

Shut down in 2004

Originally built in 1910, Dr. Amos Abbott’s hospital underwent a series of additions before merging with Northwestern Hospital in 1970.

Archival news photos show that local luminaries of the 1950s and 1960s were happy to have their photos taken recovering from various ailments or showing off new babies in the hospital’s exam rooms.

The last babies were born on the property in 1980, followed by successive senior care programs that took over until the lights went out for good in 2004.

“They figured out which room was the birthing room, so we know which room I was born in,” said Judy Doty, the regional manager for property management company Metes & Bounds. Doty’s siblings and classmates were born at Abbott.

The Stevens Square neighborhood is hoping the restored building — a onetime blight of the area — will help jump-start activity in the neighborhood.

“That was the No. 1 security concern in our neighborhood when it was unsecured and open for anyone to go in,” said Steve Gallagher, executive director for the neighborhood. Drug traffic and livability crimes have decreased, he said.

The $24.5 million project was made possible through significant public investment. In addition to a $10 million mortgage backed by the federal government, another $10 million came in the form of historic tax credits, city affordable housing dollars, tax increment financing and Hennepin County remediation and transit-oriented development grants.

Palanisami put $2.8 million of private equity into the project and deferred an $808,000 developer fee, which he collects over time only if revenues exceed expenses and debt obligations.

Palanisami, who came to Minnesota in 1969, can’t help chart the similarities between his story and that of Dr. Abbott, who was born in India to missionary parents in 1844. “He came from India and he built a hospital [when] he was 66 years old,” he said. “I am from India. I am 66 years old.”

The project was previously named “Dunwoody Apartments” after William Dunwoody, a prominent flour magnate who donated the money for the original building after Dr. Abbott cared for Dunwoody’s wife.

New wings — including one devoted to children — were added in the 1920s, 1930s and 1950s. A report submitted to list the building on the National Register of Historic Places, prepared by local architectural historians at Hess, Roise & Co., notes that the building’s many additions are an important and rare reflection of “important phases of hospital evolution” in the early 20th century.

Abbott eventually merged with Northwestern. Following the merger, it grew inefficient for Abbott to maintain separate campuses, according to the historic listing submission.

The hospital left the Stevens Square building in 1980.

“The property needed a lot of work,” O’Keefe said. “And it’s gotten it.”

Eric Roper • 612-673-1732

Twitter: @StribRoper