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Request for Committee Action

A briefing memo explaining the purpose, background, and impact of the requested action.
Exclusive development rights to The John Buck Company: 250 4th St S, 309 2nd Ave S, 217 3rd St S, 215 3rd St S (RCA-2021-00472)

ORIGINATING DEPARTMENT
Community Planning & Economic Development
To Committee(s)
# Committee Name Meeting Date
1 Business, Inspections, Housing & Zoning Committee Apr 20, 2021
Lead Staff:
Erik Hansen
Presented By:
Erik Hansen
Action Item(s)
# File Type Subcategory Item Description
1 Action Development Project

Authorizing exclusive development rights to The John Buck Company for City-owned property located at 250 4th St S, 309 2nd Ave S, 217 3rd St S, and 215 3rd St S for a period of 24 months for development-related activities regarding the Public Service Center Block.

Previous Actions

None.

Ward / Neighborhood / Address
# Ward Neighborhood Address
1. Ward 3 Downtown West 250 4th St S, Minneapolis, MN
2. Ward 3 Downtown West 309 2nd Ave S, Minneapolis, MN
3. Ward 3 Downtown West 217 3rd St S, Minneapolis, MN
4. Ward 3 Downtown West 215 3rd St S, Minneapolis, MN
Background Analysis

The proposed action grants exclusive development rights to four City-owned parcels on the Public Service Center Block (Block) to The John Buck Company for a period of 24 months to act as the City’s development partner in the creation of a development concept for the Block.  The City-owned portion of the Block consists of three contiguous, City-owned buildings recently vacated of its permanent tenants due to the construction of the City’s new Public Service Building.  Those buildings include the old Public Service Center (250 4th St S), the City of Lakes Building (309 2nd Ave S) and the Community Service Building (215 and 217 3rd St S) and represent approximately 2/3 of the block bounded by 3rd St S, 4th St S, 3rd Ave S and 2nd Ave S.

Staff recommends granting The John Buck Company an exclusive rights period of 24 months for the Block commencing on the date of execution of an exclusive rights agreement.  Staff believes that John Buck Company’s experience with numerous development types and complexity of projects in multiple markets better aligns with the City’s development objectives for the Block and with the 2040 Plan. Buck has demonstrated experience redeveloping blocks of similar complexity to the Block in other cities, particularly Chicago.

Background

In 2019, the City issued a request for proposals (RFP) for development of the Block and received one proposal.  The City rejected the proposal for not meeting the Block’s development objectives.  Given the challenges of redeveloping the Block, the City decided to issue a request for qualifications (RFQ) rather than another RFP.  Unlike an RFP, which seeks a semi-developed plan for a site, an RFQ seeks a qualified entity with which the City can collaborate to create a development plan that would be approved by the City Council.  Once the plan is approved, the City and the developer would negotiate a redevelopment agreement by which the City will convey the Block to the developer for redevelopment.

The City issued an RFQ on August 28, 2020.  The City received two submissions – Alexander Company from Madison and The John Buck Company from Chicago.  Both firms are relatively new to Minneapolis.  The John Buck Company owned the IDS Center for about 18 months from 2004 and 2006.

Proposers

Due diligence on both firms did not reveal anything unusual or disqualifying about either entity.  A staff team reviewed the submissions, which led to follow-up questions to both firms and interviews with both.

Alexander Company has been in operation for about 35 years.  It is nationally recognized for historic preservation projects.  The firm favored preserving both the Public Service Center and City of Lakes buildings but indicated it would still be interested in developing the Block if the City decided to move in a different direction. The firm’s portfolio includes a mix of preservation projects and new construction.  Annually, it is involved in over $250 million in development.  The firm has developed projects in 6 states and 46 communities, which include 280 buildings, 7,900 housing units and 1.8 million square feet of retail space. The firm has a track record in developing affordable housing. Development services are generally provided in-house, although it is open to hiring local firms as part of its development team. The firm has a great deal of experience collaborating with local units of government and prioritizing diversity, equity and inclusion on projects.

The John Buck Company has been in operation for 40 years. It has developed, owned or are targeting projects in 14 markets in 12 states.  The firm’s portfolio includes a mix of historic preservation and new construction projects. It has completed 42 office projects, totaling 15.6 million square feet; 9 residential projects, totaling 3,850 units; 11 hotel projects, totaling over 4,000 rooms; and 642 units of student housing. The firm has a track record in developing affordable housing. Development services are generally provided in-house, although it is open to hiring local firms as part of its development team. In fact, the firm has already begun discussions with a number of local firms. The firm has a great deal of experience collaborating with local units of government, most notably Chicago, as well as prioritizing diversity, equity and inclusion on projects.

Exclusive Rights Agreement

A 24-month exclusive rights agreement will give The John Buck Company (Developer) the exclusive right to work collaboratively with the City to arrive at an approved Design Plan and to negotiate the terms of a redevelopment agreement outlining the terms under which the City will convey the Block and the Developer will develop it.  The exclusive rights agreement would include the following five sequential milestones. The timelines listed below are estimates included for informational purposes but will be subject to change with CPED Director approval in the event that unforeseen circumstances arise in the planning and negotiation processes:

1) Strategic Advice – 3 months

Prior to developing a preliminary Design Plan, the developer will have 3 months to advise the City on several Block-related issues including the economic viability of retaining all or a portion of the City-owned buildings on the Block. Staff will work with the Developer on a community engagement plan that will include the Downtown Minneapolis Neighborhood Association (DMNA) and other groups for review and comment on the Developer’s report and recommendations.

2) Preliminary Design Plan – 6 months

The Developer will have 6 months to complete the preliminary Design Plan, which include preliminary land uses; design; nature of improvements and how they would bring active public uses to the site; number of parking stalls, if any; any other information that would help the City understand and evaluate the concept.  The Developer will follow the engagement plan for review and comment on the preliminary Design Plan.

3) Final Design Plan – 9 months

The developer will have 9 months to complete the final development plan. The final Design Plan will build upon the preliminary Design Plan and will include detail on land uses, sources and uses of funds, market study and public benefits. The Developer will follow the engagement plan for review and comment on the final Design Plan.

4) Term Sheet – 3 months

Once the City Council approves the final Design Plan, the developer and City staff will negotiate a term sheet, which specifies, among other things, what is to be developed, the conditions by which the City will close on the Block, the timing for the development, etc.  The term sheet would be approved by the City Council during this period.

5) Redevelopment Agreement – 3 months

Following City Council approval of the term sheet, the developer will be required to enter into a redevelopment agreement with the City based on the term sheet and comply with any applicable City requirements.