A $240 million makeover for a blighted Minnehaha Creek site in Hopkins

A little used stretch of Minnehaha Creek and a long-vacant industrial site in Hopkins will get a nearly quarter-billion dollar makeover.

The Hopkins city council and the Minnehaha Creek Watershed District (MCWD) recently endorsed a plan from Minneapolis-based Alatus Development to build a 14-story tower and a handful of low-rise buildings with 775 housing units including townhomes, market-rate and income-restricted rentals and 125 for-sale co-ops for senior citizens. Those buildings will be situated around a new pond and trails that will provide more recreational opportunities and better access to the creek. The project will also have 23,500 square feet commercial space.

The city and the MCWD have been working for years to redevelop the site, a 17-acre, triangular-shaped parcel that's sandwiched between Blake Road and Minnehaha Creek, which flows through Hopkins on its way from Lake Minnetonka to the Mississippi River.

"It's a unique collaboration," said Kersten Elverum, the city's director of planning & development. "Our interest is supporting transit, but really celebrating the creek is a goal that we both share."

The MCWD purchased the site in 2011 as a key piece in its restoration of Minnehaha Creek through "its most degraded and hidden stretch," according to Elverum. For years the site was home to a cold storage facility that was demolished in 2018. About five of the 17 acres will be used as a storm water treatment pond to capture run-off that's now going into the creek untreated, Elverum said. Alatus will eventually pay $11.25 million for the remaining 12-acre site.

Now that Alatus received development rights, Lux said next steps include meetings with community stakeholders before starting the formal entitlement process. He expects construction of the first phase of the project to begin next year pending final approvals including a request for a public subsidy.

According to planning documents, the Alatus proposal includes a request for 13.2% of the development cost - or about $31 million - in public assistance including tax increment financing and grants. Elverum said the final public subsidy won't be determined until a financial analysis is completed.

The proposed project will be one of the most dense for the city and the biggest yet for the long-time developer, which has built several luxury condo and mixed-use apartment projects in the Twin Cities and Rochester.

"These near-in suburban sites are really the next incredible opportunity for redevelopment projects like this," said Bob Lux, Alatus founder and principal.

Alatus hired Dallas-based Humphreys and Partners Architects, which has designed tens of thousands of rentals in mixed-use developments across the country. Lux said the new pond will be created in a recreational manner akin to a similar feature at Centennial Lakes Park in Edina, which is used by paddle boaters in the summer and ice skaters in the winter.

Because that stretch of Minnehaha Creek has been mostly grown over and not easily accessible to the public during the time the cold storage facility was alongside it, Elverum said the MCWD put a high priority on a redevelopment project that would allow better use of the creek. The group, in partnership with the city, considered several other proposals for the site but none offered the same density and range of housing options.

In addition to improving access to the creek, the city also put a high priority on transit-friendly features. The site is adjacent to the Cedar Lake Trail and across the street from the under-construction Blake Road Station, which is part of the Southwest Light Rail Transit expansion that will connect to the Metro Green Line light rail system.

The affordability component, Elverum said, also helped make the Alatus plan more appealing than other proposals. The city had set a goal that a minimum of 10 to 15% of the new units should be for lower-income renters. The Alatus proposal exceeds that requirement with 161 income-restricted units with another 79 integrated into the market rate buildings.

"The Alatus development came with the most variety, both having affordable rental townhouses and senior co-op that's owner-occupied," she said. "It's hitting on a lot of different areas and that's what the council liked."