Torched in riots, Highland Plaza is up and running again in Minneapolis

Todd Bushy wasn't looking for a barber, but when he saw the sign advertising $8.99 haircuts at Cost Cutters last week he couldn't resist. The salon usually charges $16.95.

"That's a real good deal," said Bushy, who lost his janitorial job last year to COVID-19 and is trying to limit his spending.

Cost Cutters manager Jenny Nguyen said she will be slashing her prices for the next three months in an effort to woo customers back to Highland Plaza Shopping Center, at E. Lake Street and Nicollet Avenue in south Minneapolis, which was torched by rioters in May during protests over the death of George Floyd.

"We lost so many customers," said Nguyen, whose father opened the salon more than 20 years ago. "I will worry about making money later."

After an eight-month hiatus, Cost Cutters and three other Highland Plaza tenants reopened last week, marking a major post-riot turnaround in an area devastated during several nights of violence. Mall owner Tom Roberts, who is spending $5 million on the rebuilding effort, expects several more tenants to open their doors in the coming weeks.

Still, he noted, the center is a work in progress. Signs are still missing for several businesses, and the cooks at Cheng's Garden sometimes had to shout last week to make themselves heard over the roar of a concrete cutter in the space next door. While tenants tied balloons on the perimeter fence to attract passing motorists, workers were hanging drywall in the Subway outlet, which is scheduled to open in early March.

"It's looking pretty good," said Roberts, who has been overseeing the rebuilding project for months. "We just need to keep the graffiti guys away."

Though many landlords are still deciding whether or not to rebuild in the wake of the riots, Roberts charged ahead shortly after the fires were extinguished at Highland Plaza. The mall is one of more than 1,200 commercial properties ransacked or destroyed in Minneapolis and St. Paul in May, generating more than $500 million in estimated damages.

So far, however, insurance companies have been slow to pay claims. According to the most recent report from the Minnesota Commerce Department, $163 million of $293 million in commercial-property claims were paid as of December, or 55% of the total. By contrast, 89% of personal auto claims have been paid.

On Jan. 11, Acting Commerce Commissioner Grace Arnold urged members of the Insurance Federation of Minnesota to "redouble" their efforts to make payments as expeditiously as possible. Though there have been few formal complaints, Arnold said there could be several reasons for underreporting, including the inability of many customers to navigate the claims process.

"Whatever the cause, undue delays in claims processing hamper businesses' abilities to rebuild and erode trust in the insurance system," Arnold wrote. "Neither of these are desirable outcomes."

Several tenants at Highland Plaza continue to struggle with their claims.

Joe Zerka, whose A to Z Gas Stop was an early looting target and sustained more than $1 million in losses, said he has yet to receive a penny from his insurer, even though he has submitted bids for replacing his gas pumps and fixtures.

"I can't build unless I have the money," Zerka said. "I haven't even ordered my gas pumps because I don't have $250,000 to do it. How am I supposed to reopen?"

Mickey Liu said he also has been frustrated with the responses he has gotten from the company that insured his family's Best Wash laundromat at Highland Plaza. Because the washing machines sat idle for so long, mold took over, wrecking hundreds of valves and hoses. One of his water heaters also failed from corrosion. Altogether, the laundromat is facing about $50,000 in unexpected plumbing costs from the riot, none of which has yet been covered.

"The insurance company doesn't want to pay anything," Liu said. "They are giving us a real hard time."

Mark Kulda, spokesman for the Insurance Federation of Minnesota, said the Commerce Department data are misleading.

"The overwhelming majority of claims have been fully paid," Kulda said. "The only ones that haven't been paid are the larger ones, which are more complicated. And there are myriad reasons for why those can be slow."

In some cases, Kulda said, property owners have not told their insurer whether they will be rebuilding or not, which can delay compensation. He said it is also challenging to deal with damages caused after the initial event, such as the laundromat's moldy valves.

"That is going to require more investigation, because it can be real hard to determine what caused that mold to happen and whether the property owner took measures to stop it from happening," Kulda said.

At Best Wash, where business was slow all week, Liu said the ongoing construction and lack of signage was making it hard to lure back customers. During a site visit, Roberts told Liu that contractors would be hanging a large "now open" banner on the pylon this week. He also told Liu that he won't be charging any of the tenants rent in February, and rents will be cut in half in March.

At Cost Cutters, several longtime customers stopped in after making a visit to the next-door Dollar Tree, which reopened its Highland Plaza store in mid-January.

Christy Jackson, who has been coming to the salon for years to get her eyebrows waxed, squealed with joy when she walked into Cost Cutters last week.

"We're so excited," she told Nguyen. "I haven't had my eyebrows done since last March because I don't like the way anybody else does them."

Juan Huerta was thrilled to find that Cheng's was back in business. The carpenter stopped on his way home from work to pick up a $56 order, including one of the Chinese restaurant's most popular combos, chicken wings and French fries.

"We have been coming here for 20 years," Huerta said. "We love this place. Good food, good prices."

The last store to reopen last week was Los Hornos del Rey, a Mexican bakery. Though the bakery was ready to go almost two weeks ago, city workers had not yet inspected its new commercial oven, so bakers were idled for several days.

"It's frustrating for something like this to hang things up," said Diane Leverentz, a project manager at Classic Construction, the contractor in charge of the rebuilding project.

Leverentz, who had just returned from her first vacation since the project started in August, promptly contacted city officials, who signed off on the oven Tuesday. It took two more days of baking for Cecilia Guerrero to feel comfortable that her store had enough cakes, cookies, cupcakes and other goods to open.

One of the first customers to walk through her doors was longtime customer Mayela De La Rosa, who took her time picking out two bags of pastries and sweet breads to take home.

"I'm really happy, not just for me but for the owners," said De La Rosa, who lives a few blocks away from Highland Plaza. "The riots created a lot of negative things for our community. This [reopening] is good for all of us."

Now Roberts wants to make sure his tenants are protected in case riots break out again in March, when the first of four police officers charged in Floyd's death is scheduled to go on trial. Roberts has been talking to officers with the adjacent Fifth Precinct, who told him they may put fencing and razor wire around both police property and his to ward of trespassers.

If police don't take those steps, Roberts said, he will probably do it himself. He recently agreed to pay a fencing company $5,000 just to have them on standby in case more violence seems likely.

"From what I hear, people are going to challenge the cops and the neighborhood," Roberts said. "I hope they forget about the Fifth Precinct. But it's too early to tell."