While small business gets squeezed, big business gets bailed out
Back in 2018, Finance & Commerce wrote:
A concrete fortress of a parking ramp appeared to be the former Macy’s future after its 2013 exit from downtown St. Paul.
What emerged is Treasure Island Center, with 540,000 square feet of office, retail and sports uses and potential to draw 600,000-plus visitors yearly for hockey and figure skating at the building’s rooftop ice rink.
The rink is the Minnesota Wild’s practice home, serves as home ice for Hamline University’s men’s and women’s hockey teams, and has 5,500 hours of community use available yearly.
Other tenants include a two-level Walgreens, the Minnesota Housing Finance Agency, a St. Paul Police Department office, and a TRIA Orthopedic Clinic. A Tim Hortons coffee and doughnut shop and Stacked Deck Brewing are to open this spring. It also has 800 parking spaces.
Making the difference was a public-private partnership between the St. Paul Port Authority’s nonprofit funding arm, Capital City Properties, and Minneapolis-based developer Hempel Cos, said Lee Krueger, the Port Authority’s president. The entities formed a joint venture, Go Wild LLC, which owns the building.
Randy McKay, a principal at Hempel Cos., called the project “a suburban model downtown.”
“We’re seeing that already and we just opened. It’s going to be a bigger economic influence than anybody would have ever thought,” McKay said.
This did not happen. The adjacent Lowertown area began experiencing problems shortly after Finance & Commerce hit “post” on that article and, in 2020, Covid-19 hit. The Treasure Island Center is now a deserted ghost town. The Minnesota Whitecaps, who played at the Tria rink, relocated to the less vibrant surroundings of Richfield last year. The Tim Horton’s is no more. Closed, too, is Stacked Deck Brewing. When they closed in October 2021, they explained:
The saga that landed us in this unfortunate position is long and winding and of soap opera proportions. We’ll spare you the details, but suffice it to say, the hardships we have endured over the past year have gone beyond the capabilities of a small brewery like ours.
This cut no ice with the owners. In January last year, the Minneapolis/St. Paul Business Journal reported:
The landlord of the Treasure Island Center in downtown St. Paul has filed a lawsuit against Stacked Deck Brewing, a craft brewery in the space that shut down last year.
Go Wild, the joint venture that owns the building, wants about $1.3 million in rent and related fees from the now-closed brewery and taproom, according to a complaint filed in Ramsey County District Court this week.
According to records in the complaint, Stacked Deck in 2017 agreed to a lease at the Treasure Island Center, located at 400 Wabasha St. North. Current annual rent is roughly $93,000 and was set to increase to more than $142,000 by 2029.
Last March, Go Wild sent a notice of default to Stacked Deck, and in November, the landlord notified the brewery it was terminating the lease and still wanted to be paid through August 2029. Past-due rent for the space is about $255,000 while future rent obligations total more than $1 million, according to documents in the lawsuit.
The failure of the Treasure Island Center now sees Go Wild LLC, the joint venture between the St. Paul Port Authority’s nonprofit funding arm, Capital City Properties, and Hempel Cos, struggling to pay the bills. The Pioneer Press reported recently:
With parking revenue depressed, the reinvention of the former Macy’s Department Store building in downtown St. Paul into a multi-purpose office, restaurant, retail and hockey complex has required an emergency cash infusion in advance of a pending refinance through Colliers Funding.
Capital City Properties, the nonprofit real estate development arm of the St. Paul Port Authority, is loaning the joint venture behind Treasure Island Center up to $3.6 million to avoid defaulting on a $40 million mortgage that matures in September.
The board of Capital City Properties, which became the majority investor in the joint venture in the early days of the pandemic, approved the operating loan to Go Wild, LLC on March 28 by a vote of 5-0.
There are sources of funding available to large, well connected, taxpayer backed enterprises that are not available to your average craft brewery.
The problems facing downtown Minneapolis are well documented (by us, anyway). Those facing downtown St. Paul ought not to be forgotten.