The Calhoun Square Planning and Development Process

By | February 8, 2021

A five year saga dominated by controversy and national interest rates of 18 percent.

Developer Selection

Five serious proposals were submitted to the Minneapolis School Board and Minneapolis Planning Department:

  1. A Free Parking lot – proposed by members of the Business Community.
  2. A Community Center – proposed by members of the Resident Associations.
  3. A Greek Retirement Home – proposed by the nearby Greek Church.
  4. A Thematic single story mall on a portion of the block.
  5. A Community Commercial Center (Calhoun Square) covering the school site and most of the balance of the block including a multi story parking facility – proposed by Ray Harris and future partners Doug and Martha Head.

The Parking Lot proposal, the Community Center proposal, and the Greek Retirement Home proposal were eliminated because they proposed tax exemption and didn’t meet the planning department commercial guidelines. The Calhoun Square proposal was selected by the City and School Board – contingent upon the procuring of a satisfactory financing package and design approval.

Land Acquisition and Financing

The Calhoun Square development proposal required the inclusion of seven separate land parcels.

  1. The Calhoun School Site – price by appraisal
  2. A one foot wide by 165 ft long parcel owned by a speculator requiring public condemnation
  3. A small newer building (replacing a Junior League building destroyed by fire). The owner would not sell – we negotiated a 95 year lease of the land – building was demolished.
  4. Four privately owned properties/buildings. Federal tax laws allowed certain tax benefits if at least 75% of exterior walls of buildings older than 50 years old were preserved. Since our plan was proposing an infill of existing and new buildings – we had already been planning to rejuvenate these buildings when construction began.
Calhoun Elementary School

Financing

The City of Minneapolis – The miracle of Calhoun Square is that it even HAPPENED when national interest rates were 18%. Actually, the City of Minneapolis only guaranteed $2.7 million by the sale of bonds guaranteed by the full faith and credit of the City. This City guaranteed by use of tax increment financing turned out to be the main reason for the huge controversy. Actually, Calhoun Square benefited the city financially at least 100 fold and probably even 200 or 300.

Revenue Bonds – (guaranteed by NW National Bank and First National Bank) The Director of the City Development Agency, Jim Heltzer, said “The two banks would only guarantee the bonds when I stepped on their air hose.”

Developer Equity – Yes, my family ate rice and spaghetti for awhile.

Contractor Deferral – Kraus Anderson not only worked on the project for more than five years – and also were willing to defer receiving their well earned fee. Thank you Lloyd Englesma!

Urban Development Action Grant/Loan (UDAG) – Funds were made available from the Federal Government in order to build additional parking spaces – not required by the development project.

Miscellaneous – There were several other not inconsequential kinds of financial assistance.

The end result was SUCCESS in spite of 18% interest rates! Design approval was received and Calhoun Square would be built!

Controversy

Five years of controversy and several hundred heated meetings with passionate opponents and equally passionate proponents and more than enough fodder for all of the legitimate and questionable media resulted in Calhoun Square. The opposition used some of all of the following:

  • Too much traffic, too much litter, and too much noise are all excuses that have been used by project opponents since Adam and Eve days.
  • Another “DALE” eg. Southdale, Rosedale
  • Does area meet blight designation requirement for tax increment financing?
  • Required business or tenant replacement
  • Project will be such a failure that the whole area will be blighted
  • Project will be so successful that the whole area will be high rise buildings

My assessment of the entire controversy is that most of us are uncomfortable with CHANGE – of any kind. “It could be better and could be worse.” “Just leave it alone.” There is no one alive now that will admit they were opponents of the original Calhoun Square.

Return to main article – Uptown and Calhoun Square

Part 1 – Liquor Patrol Limits Law

Part 3 – What happened at Calhoun Square and by Whom

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