Axios Twin Cities reporter Nick Halter spoke with Minneapolis Mayor Jacob Frey at Saturday’s MinnPost Festival. Here are the highlights of that conversation:
(Note: This transcript has been edited for length and clarity.)
Halter: People are back downtown in a lot of ways, but it is mostly visitors so far. We’re not seeing the full rebound for workers coming back. What is your administration doing to speed up this idea of turning some of these office buildings into apartments?
Frey: We are seeing record numbers of visitors come downtown. Last year, we saw a 45% increase in the number of people that were coming downtown to go to a ball game and watch a concert (and) go to the theaters. That actually put us at No. 1 one in terms of the rebound in the entire country of any major city out there. At the same time, we do not see the same numbers that we saw pre-COVID. And a whole lot (of it) is this remote work concept. It was probably inevitable. People were going to figure out that Zoom and (Microsoft Teams) was a thing, but it got expedited in about five to eight years by COVID-19, so cities around the country are having to react a whole lot faster.
We’re trying to convert as many of these buildings as we possibly can now. Notably, it’s not easy to convert every building. The glass, sleek skyscrapers just don’t work well for the transition. Where it does work is some of these older, often pre-World War II buildings. (In these buildings) the floor plate can be transitioned to units both market rate and affordable. So the city is doubling down on making sure that those units are transitioned. One, through subsidy. Two, we just passed an ordinance that streamlines the process, eliminates bureaucratic red tape to allow owners and developers that are looking to make this shift faster and easier.
The struggle here (is that it) is really expensive to do this. I talk to developers who say it’s as much as double the cost of new construction to turn an old building into apartments. You could just build a new apartment building for half the cost. It’s worth questioning how many of these buildings are worth preserving. Perhaps we need to talk about tearing some of them down.
Not every building is going to be able to transition. And in some cases, we should be thinking about what’s next for how downtown is used, and that may be creating a one block park, rather than having a building that is vacant. Yes, we are going to have to shift how we’re collecting taxes as a whole. And, yes, we’re going to need additional subsidies, too, because some buildings are ripe for that transition.
We’re hoping to get (a bill that would provide subsidies for transition) passed next session. It was going to be passed last session, and I’m confident there will be additional subsidies that will incentivize owners and developers to make that transition.
Halter: These office towers were paying huge amounts of taxes. The development happening here was adding to the tax base, and homeowners were shielded from a lot of the big property taxes you saw after the Great Recession. That is going to change this fall. It’s going to be a while before we start seeing the conversions (and) until we start seeing the office market pick up again. How are we going to deal with budget issues and is it sustainable to keep this level of property taxes going that we’re going to see this coming year?
Frey: It’s not sustainable for the long haul. We’re going to need to make some significant changes.
There has been a massive change in how property taxes are collected around the country. It’s not just Minneapolis, St Paul’s exactly the same. Virtually, in terms of property and tax increases, the suburbs are even higher. A few of these buildings downtown, they previously generated about as much property tax revenue as some other wards in their entirety. When that building sells for 40 cents on the dollar because occupancy has dropped, because people are working remotely, the tax revenue still needs to be collected. (The revenue burden) just shifts, and the people who pay for it (are) homeowners, renters.
We gotta find efficiencies in the city. There is no free money, and we have to be smart with what we’re doing with our tax dollars, and we’ve got to find a mechanism for collecting taxes that (isn’t) totally regressive. Property taxes disproportionately impact low-iincome people and seniors. There are many different collection nodes at the state, including local government aid that we haven’t gotten since the Pawlenty administration in significant form. We are going to the state this year to see what the additional sources that we can access (are). We’re going to find where to find efficiencies through vacancies at the city, and we’re also going to be looking at what other forms of revenue we’re going to be able to get.
Related | Bubbles as a violence de-escalation tactic? The Minneapolis mayor loves the idea.
Halter: Two violent incidents with deaths have happened at Fifth and Hennepin in the last couple of weekends. You told me before we got here (about) one of the tactics you’re using is bubbles. Can you explain what you’re talking about?
Frey: I literally just heard this on my way over here. And so this is not like a well-scripted proposal by any stretch.
Prior to a couple of weeks ago, things were actually going significantly better. We had seen major drops of crime. We had a late night downtown safety plan that has been functioning extraordinarily well. We’ve been getting guns off the street in record numbers, which is wonderful and a great testament to the job that our police officers are doing, but getting record guns off the street means that there are record numbers of guns out on the street. So we are having to act as quickly and strategically as possible.
We’ve been trying a number of different tactics. One of them that I just heard on my way over here was a great tool to de-escalate is bubbles. I haven’t seen this yet, so I was going to get a video of how they do it tonight, but apparently, if you got a whole bunch of people that are looking to cause trouble, if you put bubbles out there, it’s really hard to look tough with bubbles floating around. People that are looking to cause trouble decide “I can’t look tough and be around these bubbles,” so they disperse and it deescalates the situation. The people who aren’t looking to cause trouble love bubbles. This is a little premature, but I thought it was a pretty innovative deal.
Halter: One of the storefront working group’s ideas was to flip them all, close Nicollet Mall to buses, allow open containers, potentially. But it could take Metro Transit two more years to get to the point where they close it to buses. Can we speed this up?
Frey: I think we could have a pedestrian equip. There’s some changes that we need to make in order to get there. Look, we’ve already got two largely bus-specific streets just next to Nicollet Mall in Marquette, Second. They were designed to handle bus traffic. This is not a massive, unbelievable shift that is insurmountable. We can have the buses go down, mark two, open Nicolet to pedestrians.
Just making Nicollet Mall pedestrian doesn’t make it a great pedestrian mall. You got to have people. If it’s too long of a pedestrian space and it doesn’t have the necessary density of people, you’re never going to get the necessary density of the shops that you want to see. Part of this whole deal is a transformation of downtown, where you got more residents there, you got more tourists and people looking to have a great time coming in. And then you’ve got more small local businesses that follow. If you look at East Hennepin, by way of example, or you look at North Loop, both are bumping with businesses. There’s barely a vacancy out there, and it’s because there’s a density of people, and that’s what we need to bring to Nicollet Mall as well to allow it to be pedestrian.
Halter: Uptown, particularly Hennepin and Lake, is a ghost town. What will it take to turn it around?
Frey: Uptown has been hit hard. There needs to be renewed focus on it, and we need to be watching out for these small local business owners who have the courage to say, “I’m putting down roots here.” We should be supporting them with our foot traffic and with our pocketbooks. And so there’s a few things that we’re working on to get things going again.
One, construction will end. It’s a pain, I get it. In defense of anybody who’s doing this work, it’s not just about the surface level of the street. It’s the guts of the street. You got old pipes that need to be fixed, otherwise you don’t get water. You got old electrical that needs to be secured, otherwise you have all sorts of flammable issues. It’s necessary. It’s going to be beautiful once it’s done. And we need to be doubling down investments. One example of where we’re investing is in our vacant storefronts initiative. Rather than just have a vacant storefront, we at the city are stepping up to help subsidize a plan to get local artists in there. Local artists get to set up their shop. It’s something that livens up the street. it makes you want to be on the street because it’s no longer vacant. We’re going to be setting this up and really targeting Uptown specifically and targeting specific support to those small and local businesses in the form of technical assistance so that we can make sure that new entrepreneurs can stay.
One of the most popular things to do is to say “Uptown is dead.” They were saying that in 2018, they were saying that in 2015, and they were saying that in 2012. What is true is that Uptown is changing and Uptown, I think, will always be in a state of evolution. That’s just how that neighborhood works. This is a more difficult stage of that evolution, but it will get better.
Halter: Can you speak to corporate leadership’s role in accelerating downtown core redevelopment?
Frey: First off, we have a very philanthropic business community here, and I think the trick is not getting them to do philanthropy, the trick is getting them to target their philanthropy towards low- income people. If you look at big dollar gifts – not just in Minnesota, but nationwide – a huge percentage of those huge dollar gifts go to art and universities. We’re all for art and universities. It’s also really important to give money to poor people, and by that I mean organizations that help out low-income people, whether that’s through deeply affordable housing or shelter space.
The second thing is getting them to bring their people back downtown. I remember I had a series of meetings with a number of corporate business leaders downtown, and I said to them, “Alright, what do you need? What do you need me to do in order to bring your people back downtown?” This was in 2022, and what we heard most often was safety. We needed to be safe. We want you to put some beat officers out there, if you can, police officers in the area and/ or violence interrupters.
We increased the presence, and we made sure that there were beat officers out there. We found ways, through really strategic plans, to drive down crime. About three quarters of a year after we had proven ourselves, I went back to those same leaders, and I said, “OK, we did our part – now you do yours.”
What I heard most often was, “Yeah, safety was and is an issue, but the main issue is that we have too many employees that don’t want to come back. Now, what we’re finding is that both business owners and employees are recognizing the value of doing this in-person work. In my office, we come in five days a week. We’re extremely flexible. If anybody needs to leave for basically any reason, I don’t think I’ve ever said no.
A few years ago somebody said to me, “Mayor, you’re behind the times. The new thing is that we all work from home.”
And I said, “No, you’re behind the times. In 10 years, in 15 years, somebody is going to have this great idea where office culture improves. If people have the ability to look each other in the eye and have a conversation, you’re more likely to get promoted if/when a difficult situation or a crisis hits, your boss sees you and you’re willing to step up to do the difficult thing.”
I think more and more of these corporate leaders need to be making that jump. Many of them are. There is a consistent trend of where we’re about 70% coming in in some form, that’s up from 50% and 60%. I think that we’re going to get back up to somewhere around 80% to 85%, but we’re not going to get back to 100%. I’m in the reality business as mayor, and the reality is we’re not going to get back to 100. There’s going to be a chunk of that space that just needs to change, and we’re going to change with it.
Halter: But how do you run a skyway lunch shop when you have three days of business, how do you pay those taxes? How do you pay the rent when you’re really down to three days? Ideally, you’d have residents who came down for dinner, and you’d be like, more of a real 24/7 (business), but we’re so far from that.
Frey: You’re not wrong. So Tuesdays, Wednesdays and Thursdays, we’re seeing downtown pretty well (populated). The line at the salad place is out the door. I’ll acknowledge that Mondays and Fridays are slow, and there’s going to be a shift. It’s already taken place, not all of the skyway locations that we had pre-COVID are still there.
One of the things that we’re looking at doing is just something different than what people are used to. It’s not going to be the cities that are clinging white knuckle to what once was that are ultimately successful. It’s going to be the ones that are making the shift.
When it’s super cold and I’m looking for something fun to do with Frida, we drive to Edina to an indoor playground that they have in Edinborough. We could have that in the skyway. You could set up a scenario where you’ve got a playground, you’ve got places to eat for the parents to sit, maybe have a drink, pretend like they’re watching their kid, while their kid is having an absolute ball, and the parents are talking to their friends. It’s safe. It’s indoors, where you want to utilize some space. People pay money to go to Edinborough, and it works. There are some areas where we are right now looking to target an indoor playground. You’ll see me there. You’ll see Frida there, for sure. You’ll see a ton of other parents there as well.
There will be parking (for these playgrounds). I mean sometimes this stuff happens on the weekend. And so what we’re looking to facilitate is, yes, some form of reduced parking is also a possibility, and so there are some options as to how we can do that.
Editor’s note: Special thanks to Axios Twin Cities’ Kyle Stokes for logistical support in recording this conversation.
