Midway soccer stadium and redevelopment

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St. Paul Port Authority Will Partner With Milwaukee-Based Irgens for Midway Center

by on 29 March 2017

The St. Paul Port Authority voted on Tuesday to enter into a master lease agreement with both Minnesota United and Milwaukee-based commercial real estate developer Irgens to help redevelop the Midway Center into a transit-oriented mixed-use development. The redevelopment of the site, which has been talked about for years, may finally come to fruition with the construction of Minnesota United’s future stadium, which is expected to be completed in early 2019. But there is also a reality that the build-out of the entire 25 acres of Midway Center will most likely take years — maybe decades — to be completed, and will most likely be done in phases.

With Tuesday’s approval of the master lease, Irgens will control 60 percent of 15 acres on the site. Minnesota United, under the name MUFC Investor, will own 30 percent and the St. Paul Port Authority 10 percent. The partnership would lease 15 acres from RK Midway, and it’s owner Rick Birdoff. Irgens will also work with Birdoff on a strip of land the latter subdivided several years ago, running along Snelling Avenue from the bus barn site to University Avenue. Birdoff has said the parcel is his most valuable piece of property among the 25 acres. He had hoped to redevelop it first, which is still a likely scenario as most of the property presently sits empty.

Most of Birdoff’s properties across the U.S. are suburban-type strip malls with big-box stores as anchors. Birdoff will now be aided by Irgens’ vast experience in developing and managing larger scale properties. The master lease also offers the opportunity for the group to purchase the property from the New York-based Birdoff sometime in the future, with a deadline of Dec. 31, 2022. The St. Paul Port Authority would opt out of the deal if the property were sold, which it expects will occur before the end of 2017.

The St. Paul Port Authority became involved in the redevelopment of Midway Center when Birdoff seemed to get mired down with several long-term leases he had in place with current tenants, and which he wanted to honor. Those same leases have complicated the redevelopment of his 25-acre site which sits adjacent to the 10-acre bus barn property where Minnesota United plan on building their $150 million-plus stadium. In fact, it was at a meeting to find partners to redevelop that suburban-like ’70s-style strip mall that brought Minnesota United owner Bill McGuire and Birdoff together.

Ironically, the soccer stadium that appears a catalyst for redevelopment has also proven one of the biggest hurdles for Birdoff. While most of the stadium will be built on land owned by Metro Transit, there are still two acres that are needed by Minnesota United. That property sits on the northern-most end of the stadium and is owned by Birdoff and leased long term to Rainbow Foods, owned by SuperValu. The long term leases which were good for Birdoff’s business have not necessarily been good for the long-term development of the site from a community perspective. Part of the issue for Birdoff is he has been making money and a good amount of it. According to documents released by the SPPA, Birdoff’s lease fees generate $2.3 million per year even though most passersby would observe that the car-oriented, asphalt-laden shopping center feels run down and is not conducive to the feeling of a vibrant transit-oriented community. The property sits on an intersection that offers both light rail transit and bus rapid transit and is ripe for development.

Enter the St. Paul Port Authority

Seeing an impasse, the St. Paul Port Authority got involved with the Midway Center site trying to find a solution to some very complicated problems involving divisions of property, taxes, and long-term leases. They created an industrial development district in September of 2016, hoping to use their vast experience to help resolve some of the issues that were bogging down both Minnesota United and Birdoff. The biggest of those being the SuperValu-leased property, with SuperValu in the middle of a grocery war with just about everyone, including Target, and particularly Walmart.

SuperValue also owns the Cub supermarket just two blocks to the east. In 2010 Cub sued Walmart because of a lease agreement that they claimed allowed them to be the only grocery store in the shopping center. Walmart had been building superstores at many locations across the U.S. which included large grocery departments. When Walmart remodeled their Midway store they expanded their grocery section to 7,150 square feet. Cub demanded Walmart cut back their grocery section which they did not. The property owner, DDR MDT eventually filed their own lawsuit demanding Walmart stop selling many of their fresh produce items.

A recent conversation with a Rainbow employee who did not want his name used, expressed the competitive nature of the grocery store business, especially with the addition of Hy-Vee expanding into the upper Midwest. “SuperValu would be crazy to give up their lease on the Midway Center site,” he said. “With Target, ALDI, Walmart and others — if I was them I’d never give up this property.”

Yet Minnesota United desperately needs the two acres of land where the Rainbow Foods currently sits. SuperValu’s resolve is seen most any day of the week as that particular Rainbow’s aisles are filled with products, yet only a handful of shoppers roam the empty store.

A possible scenario is a fairly expensive buyout of SuperValu’s long term lease and the promise of a right of first refusal for any future grocery store development on the property. According to Lee Krueger, president of the  Port Authority, Birdoff’s RK Midway has been in negotiations with SuperValue. However, with the new master lease agreement — which they hope to have signed in the next seven to 10 days — they would help Birdoff with that particular parcel of land. Meaning they will most likely get involved with the negotiations with SuperValu once the master lease is finalized.

Krueger said the build-out on the east end of Midway Center would most likely take years since there are so many leases in play on that portion of the property. “I don’t see anyone being in a hurry to leave,” Krueger said referring to those long term leases. “Retail leasing is probably the most complicated of all types of leases in real estate and we are honoring those leases.”

The master plan calls for retail, office, housing, and entertainment on the site. The Port Authority president said that nothing really changes with the new master lease and the long-term vision of the 25-acre site. They are hopeful however, that with the new agreement they will be able to execute that plan.

An approximate layout of the bus barn site and Midway Center and who will control the parcels.

“The Port Authority’s selection of Irgens, which has demonstrated a commitment to a vibrant, environmentally sustainable development and thoughtful building design, brings another exciting entrant to the St. Paul market,” said St. Paul Mayor Chris Coleman. “Irgens has a commendable track record of developing mixed-use, transit-connected projects. Like so much of the work that we’ve done in St. Paul, the Snelling-Midway project is a responsible and bold step toward St. Paul’s future.”


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  • Etch

    Another great article Brian.

  • Mike A.

    Funny. The first owner of the MN Kicks, Jack Crocker, was a CEO for SuperValu.

  • Brian Quarstad

    Thank you, Etch.

    Mike, I hadn’t thought about that but you are absolutely correct. Ironic for sure.

  • Ken Backhus

    Brian,

    Thanks for the update!

    Can you dumb this down for me? I keep on reading and re-reading articles like this on the Midway site. While I’m interested in the overall development and its progress, I’m mostly interested in whether and when we get the rights to the Rainbow 2 acres. Without that we screwed, right? So while slow progress continues to be made and I really appreciate the Port Authority getting involved, there still isn’t anything concrete on Rainbow.

    Your paragraph that begins “A possible scenario” is the most specific on this issue and yet while it perhaps signals an improvement in the prospects for getting the Rainbow 2 acres, it’s still no where near a done deal.

    Can you talk me back from panic mode? Do you think this will get resolved soon? Are we starting to edge towards even more delays in the new stadium’s opening date? I can stomach TCF for ’17 and ’18 but can’t face the possibility of going back there for any part of ’19.

    Thanks!!

    • Brian Quarstad

      They most likely will get the two acres needed but the negotiations are complicated and most likely will be expensive. If they didn’t think they could get it they would have probably been moving forward with plans to turn the stadium east-west at this point, which McGuire said was a possibility last December at the groundbreaking.
      I can’t really speak to when this will get done but my guess is once the Port Authority deal is signed, over things will move much more rapidly. St. Paul has a tentative plan to start demo in May. We will see.

  • nomadic loon

    The only business getting my business on that block will be the bowling alley downstairs. We all should be having beers there before jumping on the rail to TCF games because soon it will be gone. RK Midway has been a thorn…. but oh how cool it would be to have a bowling alley in the basement of the new stadium.