Developer faces deadline for reopening Gold Nugget

The Gold Nugget restaurant must reopen in Minnetonka's Glen Lake neighborhood by the end of January or developer Tom Wartman will face a $1,500-a-day fine for every day it is delayed.

Minnetonka City Council members set that deadline and the penalty last week, though several said they would be reluctant to collect the fines in such a challenging economic climate.

The restaurant closed in summer 2006 to make way for Glen Lake redevelopment and had been due to re-open by the end of this year. The new deadline gives the developer 30 more days. Wartman announced that he has found a manager and partner for the restaurant and is aiming to open it in the east end of the new Exchange Building by the end of December.

The Exchange Building, with 52 apartments and businesses on its first floor, is the one part of the tax-assisted Glen Lake redevelopment that Wartman has delivered so far.

Four years ago, he and the city agreed that he would build 40 high-end condos on Kinsel Point overlooking Glen Lake and more than 100 moderately priced condos on a north site near the Fresh Seasons grocery. Due to the downturn in the housing market, he is now heading for default on the promise to deliver those developments by the end of the year, and city officials are preparing to renegotiate the terms and timetable of a new agreement with the developer, said City Manager John Gunyou.

Some residents said they feel let down because the developer has not delivered the condos, and the City Council is also disappointed, said Council Member Terry Schneider, who lives in Glen Lake.

"But we are better off than other communities where developers are walking away from the deal. Several major developers have said 'Here are the keys back, we can't under this climate do these projects any more,' " Schneider said.

What the council will have to decide is whether it wants to take the Kinsel Point property back from Wartman, because the city has the option to buy it or to give him an extension and wait for the market to come back, Schneider said.

On the north side next to the grocery, Wartman has suggested it may be possible to build senior housing instead of condos, and the council will have to wrestle with whether that is a good alternative, Schneider said.

In the meantime, the city council voted 5-2 to give Wartman a city note verifying the original understanding that Wartman would get back $2.4 million over 13 years from new taxes generated by the development if he can deliver the anticipated $28 million in new construction.

Wartman told the council he plans to use the city note as collateral for a bank loan that in part will pay for the Fresh Seasons grocery store he plans to open in Victoria. "I have more than $3 million in cash in redevelopment of Glen Lake. This is a way for me to go and borrow so I can continue to meet the needs and requirements of what I have to do," he said.

Wartman's agreement with the city gives him the right to ask for the $2.4 million note at any point, but so far he is in line to receive about $1 million from new taxes generated by the Exchange building, said community development director Julie Wischnack.

The city is hoping that new tax revenue from the Glen Lake redevelopment district will pay for $250,000 in street improvements by the city, but Minnetonka is not on the hook for any other costs related to the development, Gunyou said.

To avoid renegotiating the development agreement during the holidays at the end of the year, the city council will consider extending the existing agreement by a few months, Schneider said.