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Ade Alabi, a Woodbury-based real estate investor, embodies the conundrum faced by owners of buildings destroyed in the riots on Lake Street in May 2020.
The devastation is stark at the corner of E. Lake Street and 27th Avenue, a block east of the arson-destroyed Third Precinct police station.
Alabi's building, called the Odd Fellows, and the Gandhi Mahal restaurant building on the south side of E. Lake Street were destroyed. The century-old Coliseum on the north was badly damaged at what's known as the "downtown intersection" of the Longfellow neighborhood.
Alabi, who acquired the Odd Fellows building in early 2020 for $2.8 million, lost his tenants, including a Spanish-language radio station, a nightclub, restaurants and several offices.
"I was told by a contractor that it would cost $8 million or more to rebuild the same size building, about 36,000 square feet," Alabi said last week. "The bank can help, but can't finance it all."
Insurance covered most of the $2.8 million Alabi paid; plus $400,000 for a damaged restaurant he owned.
"That leaves a big gap in what it will cost to rebuild," Alabi said. "I still hope to rebuild."
Meanwhile, the former owner of the Coliseum last month sold its hollowed-out shell for $2 million to a community developer, Redesign, which is now wrestling with how to finance a restoration that could take $14 million.
The value of the damaged-to-destroyed buildings, even with insurance proceeds, generally falls far short of the cost of rebuilding. And projected cash flows from the types of business that drove the last wave of growth on Lake Street generally is not enough to attract full financing from commercial lenders.
The recovery of riot-damaged areas — Lake Street and W. Broadway in Minneapolis and University Avenue in St. Paul — was set back when the promise of help from the state government was diluted by a compromise in the Legislature.
Democrats in the Minnesota House proposed a $150 million loan fund to help riot-damaged businesses. Republicans in the Senate insisted the funds be offered to businesses in the rest of the state, too. The compromise was a statewide fund for "Main Street" economic recovery and relief from the pandemic.
"Our goal was to free up $150 million," said Commissioner Steve Grove of the state Department of Employment and Economic Development, who negotiated for the Walz administration. "We've done it for other parts of the state when disasters hit. The House was onboard. The Senate had different ideas. The package was a compromise."
The owner of a business affected by the riots, such as Alabi, may still qualify for a grant of up to $750,000, instead of a larger no-interest loan. And there's the possibility of similar support from the pandemic recovery fund.
Erik Hansen, the Minneapolis director of economic development, said the erosion of the riot-focused state aid by Senate Republicans will make rebuilding tougher and slower.
There was a narrative at the Capitol that businesses in Minneapolis, a city seen as too liberal and anti-police by conservatives in the state, was asking for a bailout. City and suburban business leaders tried to counter that. For instance, Jonathan Weinhagen, chief executive of the Minneapolis Regional Chamber of Commerce, touted its study that showed the city is an economic engine for the rest of the state.
Meanwhile, the new owner of the Coliseum, long-time community developer Redesign (formerly Seward Redesign), turned to a $2 million low-interest loan from a $30 million Mpls-St. Paul acquisition fund created by Twin Cities LISC, a nonprofit financier.
Redesign Executive Director Chris Romano and project manager Taylor Smrikárova, who has an architectural background, said Hennepin County has dropped the Coliseum's assessed value of from about $3 million to under $1 million since the 2020 damage.
Redesign moved to buy the building from the owner's widow, at the request of the community and the Lake Street Council, the business association that aims to rebuild with local building owners and tenants.
Smrikárova and Romano, who hope construction can begin before winter, believe the historical nature of the building will support tax-credit investors of up to $10 million. And their bankers are working to secure that. They still have to find $6 million, which could involve some of the state money, loans and anything else they can scrape together.
They already have signed up some tenants, including Chris Montana's Du Nord Spirits and Alicia Belton of Urban Design, both Black entrepreneurs from the neighborhood. They would own their space.
"The community wants this corner to recover and they want local ownership," Romano said. "They want their downtown back. The shared ownership of this nearly block-wide building is important historically and to this community.
"The plans for Odd Fellows and Ghandi Mahal are impressive, too. But it's going to take them time. The Coliseum will be first and add to the landscape."
Smrikárova added: "I would love reconstruction to start this fall. We don't want this big building vacant through the winter. There are financial gaps. But we're going to get going."
Separately, the Australian owner of a smaller building diagonally across the street from the Coliseum hasn't responded to inquiries about rebuilding. A ground-level barbershop reopened in it, but most of the building is boarded up.
Neal St. Anthony • 612-673-7144
