MPR: Minneapolis Target store opens, but controversy doesn't end

Minneapolis Target store opens, but controversy doesn't end
By Art Hughes
Minnesota Public Radio
October 9, 2001

The downtown Minneapolis Target store opens to the public this week after years of legal and political conflict over the cost and appropriateness of the project. For some, the store is a long sought-after discount retailer for people living and working downtown. For others, it's a $60 million boondoggle and ammunition to oust public officials who support it.

The new Target store opens this week on Nicollet Mall in downtown Minneapolis. See larger image.
(MPR Photo/Art Hughes)

CUSTOMERS WON'T BE ABLE TO GET IN UNTIL WEDNESDAY, but Target executives and other invited guests looked on Monday night as Minneapolis Mayor Sharon Sayles Belton cut the ribbon to formally open the store. To the Target Corporation it's merely store number T-13-75. But with a three-story glass entrance and a tony brick facade, it barely resembles its big, boxy suburban cousins. The opening is seen as the return of mid-priced retail in downtown. But it's also the culmination of a contentious and costly development, providing fuel for election-year battles - a reality vaguely referenced by the Target Corp.'s John Griffith.

"You will not find anywhere near the amount of investment that has taken place - privately - on these three blocks. Major corporation headquarters, significant retail, major boost to the CBD area. And anybody that tries to cast aspersions on that - well, shame on them," Griffith said.

There have been plenty of criticisms during this election year. The three top challengers in the Minneapolis mayoral primary railed against Sayles Belton's support of the project, portraying it as a gift to Target and developer Ryan Construction at the expense of small business and affordable housing. Remaining challenger R.T. Rybak continues to hold it up as the quintessential example of so-called corporate welfare.

At the same time, there are different versions of how much the city paid. The Minneapolis Community Development Agency, the office that shepherded the deal, puts the public cost close to $60 million. MCDA project coordinator Phil Handy says $35.5 million of that goes for what's called site assembly - buying the land, paying legal and regulatory costs, and cleaning up any lingering pollution - things that would need to be done no matter who developed it. Handy says much of the rest, nearly $18 million, paid for construction of the underground parking ramp that the city now owns and operates. Handy says this money shouldn't be viewed as a subsidy.

The three-story glass entrance and brick facade distinguish this Target store from its boxy, suburban cousins.
The costs of downtown development

Address - 900 Nicollet Ave. S, Minneapolis

Developer - Ryan Construction Co.

Public cost of the store site - $59.9 million

Price Target pays for the store - $16.3 million

Target's first store was built in Roseville in 1962 by Dayton's department store company as a cheaper, higher-volume outlet. Target Corp. is based in Minneapolis.

"It's part of the public infrastructure of the city that the city pays for and operates, because we need to to have a vibrant healthy downtown," says Handy. "Likewise, the public improvements - the skyways and sidewalks and things like that - are legitimate public costs."

Handy says the city was planning a parking ramp anyway, and a Target-type store in that area has been a city priority for the past 20 years as a replacement for the large chains, like J.C. Penney and Woolworths, that pulled out of downtown and built stores in shopping malls.

The city's portion of the cost is in the form of tax increment financing, in which the city sells bonds for the project with the promise of added property taxes once it's improved. The Target financing is complicated further, because the tax potential of three seperate blocks are factored in. Some critics have taken to saying the public cost is more than $115 million. That number comes from a 1997 memo by then-city finance director John Moir, who includes what he calls future costs. The MCDA's Handy says that's somewhat like adding in the interest on the mortgage to figure a home's purchase price.

"We view that as more the future value of the payments rather than the present value of your investment. I don't know of any other development entity or business that would look at an acquisition price as sum total of the debt service on the financing," Handy says.

In the end, there is no formula to determine when incentives for development go from being reasonable to unacceptable. George Latimer,an urban studies professor at Macalester College and a former St. Paul mayor, says the difference between a 'subsidy' and a 'public cost' is merely semantic. Latimer says whether voters think they're getting their money's worth is something that can only be measured over time.

"There are cities, clearly, with very very hot markets - Seattle, Boston, Washington D.C. - in which that kind of subsidy may not be needed. There are other cities that are quieter than Minneapolis like my city of St. Paul, in which that kind of investment, public investment or subsidy, might absolutely be required. You have to exercise judgement and gather the facts. Calling it 'public costs' vs. 'subsidy' isn't really going to get you much in terms of finding the right answer," says Latimer.

Target opens the doors on Wednesday. It plans some in-store promotions but very little fanfare for the store's grand opening on Sunday - the same day 38 other new Target stores open around the country. Officials with the company say the low-key approach is typical in markets where the Target name is already well known.

More Information

Minneapolis Community Development Agency

Target Corp.

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