EDA action moves Marktplatz Mall housing project forward

By RON LARSEN

Journal Staff Writer

NEW ULM -- Developer Bob Petroff is one step closer to getting at least part of his Marktplatz Mall converted into a multi-family housing facility as the New Ulm Economic Development Authority voted Tuesday to convey title for the land beneath the mall's platform to Petroff's Retail Investments company.

However, the title transfer's approval is contingent upon Petroff showing proof that he has reached a satisfactory agreement with Herberger's concerning parking in and around the mall entrance at the north end of the building.

Petroff has until Dec. 31, 2005 to begin construction on the four-story housing project at the south end, or he will have to pay the $10,000 which was to have been paid to the EDA upon completion of a 25-year lease. The lease was a part of the development agreement when the mall was built in 1988.

City Attorney Hugh Nierengarten told authority commissioners the original developer, New Ulm Mall Partners, signed a 25-year lease for "air and land rights" to the property below the mall platform. NUMP made a lump-sum, lease payment of $1 for the lease, Nierengarten said. The city then was responsible for all "maintenance and upkeep costs" associated with the property beneath the platform for the duration of the lease.

"The city will tell you we've spent a fair amount of money in the upkeep and maintenance of that property which included the lighting beneath the platform," Nierengarten said.

"I was the one who insisted they wouldn't get this for nothing, thus I inserted the $10,000 buy-out at the end of the lease."

However, Petroff, in petitioning the City Council for an early end to the lease, requested that the $10,000 "buy-out" be forgiven as ending the lease nine years early would save the city nearly the same amount in yearly maintenance and upkeep costs.

City Manager Brian Gramentz told the council he estimated those costs averaged about $1,000 a year so he recommended accepting Petroff's offer.

Nierengarten warned the EDA that there would be some loss to the city in revenue as the residential portion of the mall would be exempt from downtown parking district levies.

Petroff showed the city council schematics indicating there would be eight one- or two-bedroom units per floor, and the individual units are expected to sell for an average of about $150,000 per unit. The one-bedroom units would have a den, and the two-bedroom units would have two bathrooms. There also will be a roof-top garden to enhance downtown living.

Nierengarten told the authority Petroff has set pre-selling at least 10 units as the trigger for going ahead with the project.