Entrepreneurs and nonprofits invest in commercial real estate to keep north Minneapolis local

Architect and North Sider Jamil Ford has helped design numerous buildings that went up in north Minneapolis in the last decade. In a few months, he will lead a development of his own.

Several entrepreneurs such as Ford and nonprofit organizations are working to bolster local ownership and affordable leasing of commercial properties in north Minneapolis, especially local businesses led by people of color who they fear could be displaced as the area develops.

"You talk to anybody on the North Side and they can feel the change," said Jeff Washburne, executive director of the City of Lakes Community Land Trust, one of the organizations involved in the effort. "It's racially. It's economically. It's containers on the street, people rehabbing homes. … It's flipping quick and values are going up.

"… All these guys that have been holding onto these properties along Broadway [Avenue], that price point is going to get to the right point and they are going to start selling and the community will have no say in what happens."

Earlier this month, protesters at a City Council meeting voiced their concerns over the Upper Harbor Terminal project, a 48-acre redevelopment of an industrial stretch along the Mississippi River, which some fear will lead to the gentrification of the surrounding north Minneapolis neighborhoods.

The area has already begun to price out some small businesses, and community advocates said it's best to be proactive before more development dollars begin to trickle in.

The directors of the City of Lakes Community Land Trust voted last month to start a pilot land-trust program for commercial properties similar to what it has done for more than 200 families to buy homes.

With the help of about $200,000 of seed money provided by the Jay & Rose Phillips Family Foundation, the commercial land trust would purchase and redevelop a commercial property for possible lease or eventual sale to midsize businesses from the community. If the building is sold, the commercial land trust would provide a renewable ground lease for the property.

Similar to the residential land trust, the commercial land trust would be made up of members from the community who elect an advisory board that makes decisions about properties, thereby safeguarding the community's interests.

"This is an opportunity to provide community members and residents a way to impact real estate outside of planning and zoning," said Erin Jerabek Heelan, who worked as a consultant for the project. "The real power is whoever owns the land."

More funding from other potential partners such as government entities like the city of Minneapolis would be needed, and the group also wants to hire a director for the program by midsummer.

"The land trust is a fine strategy, but if we are going to want solutions, we are going to need a lot more strategies," said John Francis Bueche, executive director of the West Broadway Business and Area Coalition.

High vacancy rate

On the West Broadway commercial corridor, only 17 percent of business owners own the space they are occupying, according to a 2018 report for the coalition completed by the University of Minnesota. About 22 percent of commercial spaces on West Broadway sit vacant, and many buildings need substantial renovations due to deferred maintenance.

For new developments, which have higher lease rates, national retail chains with proven track records often are more appealing to property owners than local businesses.

"There aren't enough spaces that are affordable," said Warren McLean, president of the Northside Economic Opportunity Network (NEON), which has offices on West Broadway.

In 2016, NEON opened a business incubator that offers members co-working space as well as private offices. The space is busy, although McLean said he is concerned about the vacancies on other parts of West Broadway.

"It is a drive-through and not a destination," he said, of the corridor. "The challenge is that it needs to be in the right hands."

NEON is exploring the idea of creating a fund to redevelop commercial property in north Minneapolis, McLean said.

The Community Reinvestment Fund (CRF), which is based in Minneapolis, is working to establish an "Opportunity Zone" fund that could funnel development dollars into north Minneapolis and other areas. Opportunity funds are designed to spur economic development in economically-distressed areas by allowing investors to delay or avoid paying capital gains taxes if they invest in one.

"Our vision is to create a fund that will be a source of friendly equity capital, sort of like people have when they have a rich relative," said Frank Altman, co-founder and chief executive of CRF.

With construction prices and other costs on the rise, it can often take a variety of financial resources to get a commercial development off the ground in north Minneapolis, said Shannon Rusk, senior vice president of development for Oppidan Investment Co.

"You need to look at the demographics and build to the needs of that market," said Rusk, who was part of the team who oversaw the recent development of the North Market grocery store, which was a project of nonprofit Pillsbury United Communities.

Owning their dreams

Across the street from the North Market, entrepreneur Houston White has his own vision of success.

His barbershop/coffee joint/clothing store H. White Men's Room (HWMR) is the center of his idea to create a commercial hub of the Webber Camden neighborhood which he has dubbed "Camden Town."

White wants to create a node of other small businesses in an expansion he plans to build on his corner of N. 44th and N. Humboldt avenues. The development would have a larger barber shop, patio, restaurant, maker's space, ice cream shop, wine bar and possibly micro-apartments on an upper level.

"This corner is 'black excellence,' " White said, using a term that he emblazons on the clothing he sells. "That's what we do here. We aren't dependent on any one part of the business."

White, who used to build luxury homes, said he believes in the free market over programs such as land trusts, which he said don't generate enough wealth for the purchaser who never really owns the property.

"I'm not against nonprofits, but you have to invest in us and get out of the way," White said. "You aren't going to own our dreams."

Chris Webley, chief executive of co-working and event venue New Rules, thinks there can be a middle ground between private and public financing for development.

He has partnered with the Phillips Family Foundation and black-owned TRI Construction to own and develop a more than century-old building at 927 W. Broadway and an addition for offices, a gallery and food pop-up space, maker's space and music venue.

Last year, the city awarded the group exclusive development rights for the $5 million redevelopment with the trio expecting to break ground in August. The long-term goal is for TRI Construction and New Rules to eventually refinance the project's debt and buy out the foundation's interest.

"The same processes that developers have been using to date aren't working in terms of the issues of lack of ownership and lack of affordable spaces," said Webley, who also owns New Rules' current space on Lowry Avenue.

Ford, who grew up on the North Side, said north Minneapolis residents and stakeholders should be at the forefront of the area's revitalization.

"Rather than hoping the right developer comes along … we [the north Minneapolis community] are the people that have the answers," he said in an interview last week.

Ford co-founded Mobilize Design and Architecture and plans with his Ideal Development Group to redevelop two vacant, city-owned buildings on N. Fremont Avenue into Baldwin Square, a complex inspired by writer and playwright James Baldwin.

Baldwin Square will consist of a bookstore, art gallery, restaurant, second-floor offices and a black box theater which Ford said he hopes will provide guests with an intimate experience that raises the bar for what amenities are currently offered in the area.

"We want to change the perception of north Minneapolis."

Nicole Norfleet • 612-673-4495 Twitter: @nicolenorfleet