Stillwater's Zephyr train depot sells for $2.5 million

One of Minnesota's largest private foundations has paid $2.5 million in cash for the train depot on Stillwater's north end that most recently was home to the Zephyr Theatre before it shut down last year in a tangle of fraud allegations and financial mismanagement.

The building's sale to the Manitou Fund, recorded by the state Department of Revenue on June 9, was first announced in April, but the sales price was not disclosed at the time.

The sale will help the Zephyr Theatre organization pay employees who were left holding worthless paychecks when the theater closed last fall, an attorney for the organization said Thursday.

The Manitou Fund plans a rapid, multi-million dollar renovation of the site at 601 N. Main St. to convert it into a school in time for classes this fall, according to statements and documents submitted to the city of Stillwater.

The building will house River Grove, a K-5 elementary charter school formed in 2017. The school needed to find a new home after the Amherst H. Wilder Foundation announced last fall that it planned to sell the land and buildings River Grove had been leasing.

A statement from River Grove said the Zephyr building will be its interim home as it searches for a new, forest-based campus. The statement went on to say River Grove has formed an "ongoing collaborative partnership" with the White Bear Lake-based Manitou Fund.

The train depot's sale will give the Zephyr Theatre organization a needed infusion of cash to pay numerous debts: In addition to the train depot mortgage, it owed at least $272,000 in back taxes, employee pay and credit card debt when it closed last fall, according to its board chair. A full financial accounting of its debts has not been made available, and it's unclear how much money the organization owes on the 2018 mortgage it took out to buy the depot.

Meanwhile, a federal lawsuit brought by a former Zephyr employee who said he was owed some $11,000 in unpaid salary and PTO has reached a settlement, according to a notice filed by Magistrate Judge Elizabeth Cowan Wright. The terms of the settlement have not been released, but both parties will be filing paperwork to have the suit dismissed, the judge wrote.