Plaza Verde in Minneapolis finds a new owner

Lake Street's Plaza Verde building, once vacant and rundown, now hums with the activity of barbers, tae kwon do classes, dentists and nonprofit agencies.

And the hub of immigrant businesses and community gathering space appears to be gaining momentum. It has attracted a private buyer, about a dozen years after the city-subsidized renovation of the building at Lake Street and Bloomington Avenue S. The change of hands from its nonprofit ownership, which is still not finalized, also will pay down a chunk of the city's initial investment.

The expected purchaser is Khadar Adan, a Seattle resident and East African immigrant who plans to move his family to Minneapolis. "I love the building because the way that it was rehabilitated, it [was] done very well," he said.

While the transaction would be a jolt of investment for a project that has had trouble meeting expenses in recent years, the City Council member who represents the area wants to ensure that it remains a home to immigrant entrepreneurs and an accessible event space in line with existing plans for the area.

"It's one of the projects that helped to create that Latino identity for the corridor," said Council Member Alondra Cano, who is particularly concerned about the possibility of rising rents.

Adan, who plans to renovate the building's third-floor ballroom, said that he would honor the current leases and that he intends to continue the small-businesses focus of the building. He has heard from prospective tenants at nearby East African malls who are interested in relocating there, for example.

"We are not changing the current [tenants]. We will renegotiate the leases after the leases expire," Adan said, adding that any changes would be "very fair."

The 41,000-square-foot building is one of several Lake Street business incubators overseen by the nonprofit Neighborhood Development Center (NDC) — the majority owner of Plaza Verde — that are now seeing better returns after rocky financial news in recent years.

The Midtown Global Market at Lake and Chicago Avenue S. is now turning a profit for the first time in its 10-year history — before NDC's business support costs — several years after seeking debt relief from the city. Mercado Central, a Latino co-op marketplace across from Plaza Verde, is also now turning a profit and will begin repaying its debt to the city this year after a two-year reprieve.

NDC Vice President Mike LaFave said the private interest in Plaza Verde could indicate more enthusiasm for the central Lake Street area.

"I think that will be borne out over time," LaFave said. "But we would like to believe that it's hopeful of an economic resurgence in this part of Lake Street."

Plaza Verde was built as a Masonic Lodge in 1923 and housed an antiques market until becoming vacant in 1998. Before it was renovated in 2004, the building was one of the largest vacant properties in the central Lake Street area.

"There was on the third floor probably half a foot worth of pigeon feces," LaFave said. "The front on the street level was all boarded up and dark."

Now its ballroom plays host to quinceañeras, weddings and community meetings. A mural in the main stairwell pays homage to Mexican heritage, just steps from the Somali Museum of Minnesota.

About 13 businesses are scattered throughout four floors, ranging from translation services to an education center for American Indian young people.

"The building is very nice. It's very diverse," said Liban Alishire, a broker with Ace Insurance, which recently moved into the ground floor. "It's unique to have the [Somali] museum."

Fernando Perez Rivera has been growing his tax and accounting firm since moving into the building several years ago. But he said crime around the building, such as drug dealing and prostitution, has posed challenges for attracting new clients.

LaFave said that crime is hard to combat in a building that is open to the public like Plaza Verde, but that there has been increased presence of a private security firm.

With the sale, Council Member Cano said she wants assurances that the building will be active at night, in part to deter crime.

"My question is always: 'OK, so how are we going to keep the lights [on] and doors open after 5 or 6 p.m., when people go home?' " Cano said.

The $4.2 million overhaul of the building in 2004 was made possible by a complex web of funding, including federal tax credits and loans from the city, Wells Fargo and the Northwest Area Foundation. The latter are being repaid through property taxes generated by the project, under a tax-increment-financing district.

The pending sale would repay the city for a $246,000 loan and restart repayments of another city loan of a similar size — one that had ceased due to insufficient cash flow on the building.

Adan is investing more than $425,000 of his own equity into the project, derived in part from the sale of a family-run hotel in Ethiopia, and he is in the process of securing two new mortgages. That financing remains incomplete, meaning the deal is not yet a sure thing.

A City Council panel gave initial signoff last week to a restructuring of the city loans. A final vote is expected Friday.

Eric Roper • 612-673-1732

Twitter: @StribRoper