Minneapolis officials Wednesday said the group hoping to convert a city-owned warehouse into an urban farm, housing and community hub must pay the full price agreed upon in 2023, despite missing out on promised funding from Minnesota lawmakers.
The East Phillips Neighborhood Institute (EPNI), the nonprofit that aims to transform the former Roof Depot building on the city’s South Side, last month asked the city to lower the agreed-upon price of $11.4 million for the site ahead of the approaching Sept. 15 purchase agreement deadline.
Minneapolis Community Planning and Economic Development Director Erik Hansen said the city can’t accept the counteroffer. The city has an obligation to recoup taxpayer money spent on the property, he said.
“Selling below the agreed price would further burden ratepayers,” Hansen said.
Residents of East Phillips fought for years to buy the building, and ultimately reached a $15.9 million deal with the city brokered by state lawmakers to purchase the property in 2023, which includes funding for the purchase agreement and to recoup costs for the city. The city bought the property in 2016 to expand its public works campus in the neighborhood, including new buildings for the water department.
The Minnesota Legislature awarded $6.5 million toward the deal that year, and promised an additional $5.7 million once EPNI raised $3.7 million on its own. EPNI raised its share, but lawmakers failed to deliver the $5.7 million in consecutive sessions at the capitol, creating a funding shortfall. EPNI asked the city to lower its price to $10.2 million.
Negotiations between the city and EPNI remain open, Hansen said. A 60-day extension period will automatically begin on Monday, creating a real deadline of Nov. 15 to complete the purchase.
EPNI members were prevented from entering the city’s press conference about the Roof Depot Wednesday, which was held in a small conference room in the public services building downtown. As the meeting began around 11:15 a.m., blinds descended from the windows, blocking the view for about seven members of the public who tried to attend.
Dean Dovolis, president of EPNI’s board, told reporters he only was aware of the press conference because media outlets had reached out to the group for comment.
Hansen said he sent EPNI a letter rejecting their counteroffer of $10.2 million Wednesday morning. Dovolis received the email at 11:05 a.m. and read it aloud to reporters after the meeting.
“This is not good faith negotiating,” Dovolis said. “They pull the curtains down. They isolate us.”
Dovolis said the group has tried to talk with the city several times, but has only received limited responses. EPNI hosted its own press conference in August outlining its request for a lower price.
If the money isn’t paid or a new agreement isn’t reached by Nov. 15, the site would be sold through some form of bidding process, Hansen said, which EPNI could participate in. The city will not pursue more public works projects on the site.
Minneapolis officials hoped to use the building, which was originally a Sears warehouse, for an expanded public works site. The city has a large public works facility in an adjacent lot and planned to move most of the water department to the site.
The deal negotiated between the city, EPNI and Minnesota lawmakers in 2023 included three pots of state money. The state in 2023 approved $2 million for the building purchase and $4.5 million to support the city’s water fund. The additional $5.7 million was to come in 2024, but never got approved.
The purchase agreement is for $11.4 million, excluding the money for the water department. EPNI asked the city to sell them the property for $10.2 million, which includes the $3.7 million the group raised plus the money awarded by lawmakers in 2023. But the $4.5 million can only go toward the city’s water fund, Hansen said.
“We recognize the importance of this site to the East Phillips community, and we respect the efforts EPNI has made to pursue their vision, but we must also honor our responsibilities to Minneapolis residents,” Hansen said.
Dovolis said the city should be open to selling the building for a lower price based on its appraised value. EPNI received a $3.7 million appraisal for the site from Sunrise Bank, he said, and he doubts the city will be able to get more money for the property through a bidding process on the open market.
“Why are they asking one of the most disadvantaged communities in the city to overpay for this building?” Dovolis told a group of reporters. “This is a deal Trump would like.”
The city has spent more than $19 million on the building, Hansen said, including the $7.1 million purchase price, an additional $7 million in engineering and design fees for its planned buildings. The figure includes more than $700,000 in security payments, according to the city. The city also expects to spend millions more to build a new water yard facility at a different site in northeast Minneapolis, Hansen said.
EPNI says the costs incurred by the city to maintain the building seem excessive and should not fall on their organization. The group also cast doubt that the city will be able to recoup those costs from a new buyer.
Dovolis said EPNI wants to work with the city to get the purchase completed and begin work on its project.
