Brooklyn Park moves forward with $7.3M mall purchase for small-business center | Government

The Brooklyn Park City Council approved the purchase of a shopping center off Brooklyn Boulevard July 19 for the eventual construction of a small-business center.

The city has offered $7.3 million for the purchase of Northwind Plaza mall and the nearby CVS, located at the intersection of West Broadway and Brooklyn Boulevard. The owner of both parcels, Hargis Northwinds LLC, accepted the city’s offer for both parcels.

“I do support this project and I’m pleased that they did accept our offer,” said Councilmember Susan Pha. “I’m looking forward to us moving forward with this purchase because it really gives us an opportunity to really realize the small-business center that we wanted to see in our community, and then also have the opportunity for affordable commercial space, and not just rental of that but ownership opportunities.”

The 27,000-square-foot former Xperience Fitness building is expected to be repurposed into a small-business center. The center will provide affordable space for use by small businesses and entrepreneurs.

Once the purchase agreement is signed, the city will provide $80,000 in earnest money to the owner. The city will then have a 60-day due diligence period to review the property.

If the city is unsatisfied with the purchase after the 60-day due diligence period, it can either fully withdraw from the purchase and have the earnest money refunded, or can attempt to renegotiate the purchase price with the owner.

One tenant, a volleyball club operating out of the Xperience Fitness building, will not have their lease renewed, and as a result, the city will have to pay relocation fees for the club.

The development of such a facility has been in discussion for several years. In 2020, the city received a $100,000 Metropolitan Council Livable Communities Demonstration Account grant to advance work on the project.

The council directed city staff to search for a vacant commercial space rather than constructing a new, more expensive space.

Using the grant funds, the city hired a real estate representative and architects to explore the prospect of redeveloping a space for the business center. In May, the council told city staff members to move forward with negotiations to purchase Northwind, rather than lease the space.

If the sale moves forward, renovation and reconstruction is anticipated to begin in winter 2022. 

Councilmember Boyd Morson asked that the city make an effort to keep rents affordable and retain existing tenants in the shopping center.

Breanne Rothstein, economic development and housing director, said the city plans to keep rents comparable to their current rates, but that the city has not yet reviewed the existing lease agreements or their rent rates.

“I’m not sure that it’s affordable, to be perfectly honest,” she said.

The council also approved a budget amendment for the next phase of the project, which is anticipated to cost $336,548. Included in these costs are the due diligence work to be completed before closing on the property.

Broken down by category, these costs include $31,600 in due diligence work, $228,000 in architecture costs, $70,000 in construction management and owner’s representation, and $6,948 in relocation costs for the existing volleyball club tenant.

These costs will be funded by grant dollars, the Economic Development Authority’s general fund, and tax increment financing.

Since the city has the option to not purchase the property, the city is risking up to $45,000 in general fund dollars for this pre-closing work.

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