All around Lake Street, hundreds of business owners now face difficult choices

Uncle Hugo's and Uncle Edgar's are really one business, specialty bookstores serving science-fiction and mystery fans. They are — or were — on Chicago Avenue South just off Lake Street in Minneapolis.

There was not much left on Monday afternoon. There was no visible smoke, yet the unmistakable smell lingered in the air from the recent fire.

"I don't know yet," said Don Blyly, the owner who founded Uncle Hugo's in 1974, when asked about rebuilding.

He doesn't know what kind of settlement he will get out of his insurer. He doesn't know if the city will even allow new construction of a small, one-story building like the one he had.

It will take weeks to sort all that out. Then, he said, it would take at least a year to design, build and furnish a new store.

And, at 69, Blyly doesn't know yet if he wants to start over.

The "Uncles" resided in a building built, according to Hennepin County records, in 1922. Blyly thought it was more like 1915. While still early, he said the ballpark estimate is that a new store would have twice the cost of the previous space.

Even with donations and GoFundMe fundraising, it could take years for this commercial corridor in the state's largest city to fully come back. Even when it does, it might not look like the Lake Street of early May.

In the days following the killing of George Floyd while in the custody of Minneapolis police, at least 360 businesses, most in Minneapolis, have been damaged, and not just along Lake Street. More than 60 shared the same fate as the Uncles bookstores — consumed by fire.

Lake Street isn't in just one neighborhood, by the way. It's a long commercial corridor that has existed in Minneapolis for generations, particularly for immigrants. At one end is Uptown, a vibrant mix of housing and commercial space along with a landmark cinema, and about 5 miles away it ends at a bridge into St. Paul.

In between, there is a broad mix of independently owned shops, restaurants and service businesses along with brands such as Target, Taco Bell, Arby's and Aldi. It has storefront places to get checks cashed and send money abroad as well as branches of U.S. Bank. It has African hair-braiding services, a bicycle cooperative and a Spanish AM and FM radio station.

It's one place to go for farm-to-table American meals and also to find great — and usually low-cost — food from Mexico, Ecuador, Somalia, China, Greece, Scandinavia and elsewhere.

Much like the concept of naturally occurring affordable housing, meaning older apartments that charge far lower rents than new buildings, there are older and more affordable buildings in commercial areas.

For owners of a building that had been destroyed, recovery depends a lot on insurance.

The best outcome for insured owners would result from a policy that funds the replacement cost of the building, rebuilding pretty much what was there and with comparable materials.

One policy variant offers what is called functional replacement. That would let a business rebuild but not necessarily with comparable materials or the same design.

A cash value policy is worse. An older building with lots of wear is not worth as much as the cost of new construction. So a business owner may conclude it would be better if what's left was cleared away and a for-sale sign went up.

Business owners who operate on a lease also have a problem with physical damage or fire, and business owners needed insurance, too.

The owner of the El Sabor Chuchi restaurant on Lake Street told a colleague that insurance cost too much so he went without it. He arrived at his restaurant one morning last week to confirm that it had burned, later saying "17 years of work is gone," including the 10 years it took to save the money to open.

Commercial leases commonly require tenants to have liability insurance, although that's about protecting landlords from what happens inside the tenant's space. Business owners also can buy a more complete package, often rolled together in what's called BOP insurance, that protects against other risks. That can include coverage for lost income of being shut down.

Since March, restaurants, stores and other businesses have had to contend with a dramatic decline in traffic due to the COVID-19 pandemic. Maybe some businesses couldn't pay their May insurance bill.

Even if business owners had paid for business interruption coverage to make up for the loss of income for a time, tough decisions are ahead if it takes longer than that to get the space ready to reopen, or if the landlord chooses not to rebuild. That could mean trying to start over somewhere else.