Minneapolis’ Block E: The Failure Continues

The Twin Cities have a long history of expensive, poorly planned development projects. Notable cases include the Hubert H. Humphrey Metrodome in Minneapolis’ Downtown East neighborhood, St. Paul’s downtown revitalization efforts, and various aborted urban renewal projects in impoverished north Minneapolis. The Minneapolis-St. Paul metro area is home to approximately 2.87 million people, with less than a quarter of them residing in Minneapolis and St. Paul proper. City officials see this as a problem, and have launched several development public-private partnerships designed to attract new residents, businesses, and retail customers from the suburbs as well as from other regions.

Downtown Minneapolis’ Block E remains one of the most controversial projects ever undertaken by the city. In 1987, the city council voted to condemn the entire block, after years of redevelopment saber rattling. Prior to its razing, the block was dominated by adult-oriented businesses which attracted a clientele that city officials found undesirable. And nearly overnight, Block E went from a somewhat seedy business district to full-blown urban wasteland, complete with gang-controlled open-air drug markets. The neighborhood’s astronomically high crime rates (according to police statistics, about 25 percent of all downtown crime took place on Block E in the late 1980s) likely led to local residents dubbing the city “Murderapolis.”

Over the past few decades, strange crime-fighting and urban development programs have ensued, which include blasting Italian opera music over large speakers on the street corners to annoy drug-dealing gang members, and the construction of a new $148 shopping mall and a hotel—with $39 million in public support—when the entire downtown was watching its retail consumer base dry up.

Predictably, Block E has been a complete failure. On December 31, 2009, McCaffery Interests Inc., the original developer of the retail complex, sold its stake to Union Labor Life Insurance Co. (ULLICO), the notoriously mismanaged union-owned financial services company. The Minneapolis Star Tribune, whose editorial page ranks among the chief cheerleaders for public real estate investment in Minneapolis (due to its editors being stuck in a 1960s Hubert-H.-Humphrey-liberal mindset, like much of the state?), was optimistic about this change in ownership:

The new ownership arrangement at Block E should help the struggling entertainment and retail complex capitalize on two big changes in downtown Minneapolis: the new Twins ballpark opening in April, and a redesigned Hennepin Avenue that includes two-way auto traffic and pedestrian improvements.

However, within four months, ULLICO announced it was selling Block E to Minneapolis developer Bob Lux. The new Minnesota Twins stadium, Target Field, has since opened, but retailers continue to vacate their spaces or file for bankruptcy (the notable exception being Kieran’s Irish Pub, which opened its new location in March).