This rendering provided by Alatus shows the proposed $60 million City Hall and mixed-use residential and retail complex on Central and 40th avenues NE. in Columbia Heights. (Trisha Collopy/The Minnesota Star Tribune)

Beginning this spring, downtown Columbia Heights will undergo big changes with a new mixed-use development that city officials acknowledge is a risk but believe has potential to revitalize the north-metro community.

"The council wanted to shoot for the moon," said Aaron Chirpich, the city's community development director. "There isn't a template for this. … Any bold vision takes an element of risk."

It's an unusual mixed-use development combining a new City Hall, 265 market-rate apartments, and coffee shop and cafe space, all under one roof. Construction of the $60 million, six-story building in the city's central business corridor will kick off this spring, after council members signed off on the land usage and zoning Monday night.

The city is partnering with Minneapolis-based developer Alatus to demolish a vacant city-owned property on the corner of Central Avenue and NE. 40th Avenue to make way for the project.

Chirpich noted a comparable development in Oakland Park, Fla., but the closest mixed-use examples in Minnesota don't quite match up to what Columbia Heights is shooting for. Waconia City Hall is in the same building as senior market-rate public housing. Moorhead City Hall is in the middle of a privately owned mall, though Moorhead might sell to find a new home for City Hall.

Columbia Heights council members recently reviewed a rezoning proposal before giving final approval Feb. 24. Chirpich said this is a critical phase of the project, but up ahead is a "tangled web of contracts and agreements." The city will own the space for City Hall and share building and parking ramp maintenance costs with Alatus.

The existing City Hall, at 590 NE. 40th Av., was built in 1942 and has extensive deferred maintenance, including asbestos and ADA noncompliance. An architecture firm estimated renovation costs would exceed $6.6 million, so the city checked out replacement options. They considered adding onto the new public safety building or rebuilding in the existing location. But a stand-alone City Hall would run between $8 and $10 million, Chirpich said.

The partnership is significantly cutting cost. The City Hall portion of the new mixed-use project — about 20,650 square feet — is around $5 million, Chirpich said, and Alatus will receive between $8 and $10 million in tax increment financing (TIF), to help fund its share. "This project doesn't happen without TIF," he said.

Chirpich said folks at City Hall weren't convinced it would be the right fit and suggested putting more commercial space on the first floor rather than city administrative offices. But he said the project was scaled to meet what the market can withstand.

To boot, increased density via new apartments, he said, will drive other amenities and activity. Already the city approved conditional use permits for a brewpub and vintage arcade. The permits for Rail Werks Brewing Depot and Starcade got the go-ahead earlier this month to fill vacant spaces in a strip mall at 4001 NE. Central Av.

Columbia Heights' 2040 comprehensive plan, finalized last fall, included replacing the City Hall and redeveloping the corner of 40th and Central. The building on that corner, formerly Northeast Business Center, 3989 NE. Central Av., has been vacant for six years. The city's Economic Development Authority (EDA) bought the building in July for $2.8 million, Chirpich said. EDA's intent was to develop the property, as there's a "longstanding desire to revitalize" the city's primary corridor.

The market-rate apartments are the first for Columbia Heights in more than 30 years, Chirpich said. The units will feature top-end amenities at a lower price point than what people could find in downtown Minneapolis, he added.

At Monday's meeting, Council Member Connie Buesgens and resident Amada Márquez Simula, who is running for mayor, asked about Airbnb. Both expressed concerns over residents renting out units through the online service or subletting for extended periods.

Barrett Corwin, senior financial analyst for Alatus, said the leases wouldn't allow subletting or Airbnb rentals. Corwin said other Alatus properties in the state do allow these transactions, but the Columbia Heights project does not.

Kim Hyatt • 612-673-4751

The Columbia Heights Economic Development Authority purchased the former Northeast Business Center, at 40th and Central, last July. The city hopes to build a mixed-use development combining a new City Hall, apartments, coffee shop and cafe space on the site. (Trisha Collopy/The Minnesota Star Tribune)