29 August 2023
On St. Paul’s Prior Avenue, the Prior Works building spans more than 481,000 square feet of commercial space, and it’s drawn some 46 tenants as diverse as the Can Can Wonderland mini-golf, a video arcade and bar, the car-sharing nonprofit HourCar, the high school mentoring program College Possible, Theater Mu and BlackStack Brewing.
What is the former American Can manufacturing building missing? A new owner. And that could include you, at least in part.
The “You Gotta Have Heart” mini-golf hole is a nod to the history of the Can Can Wonderland building and its days of tin can production. Designed by Eric Fetrow, fabricated by Matt Carlyle, with the Tin Man fabricated by Dale Lewis. (Photo courtesy of Jennifer Pennington)
With Orton, a Santa Barbara, Calif.-based development firm, looking to sell the 1960s-era Prior Works building after a decade of ownership, the Creative Enterprise Zone, a community-based nonprofit in the St. Anthony Park neighborhood, hopes to purchase the building with the help of everyday community residents, who would become part investor-owners.
The CEZ is opening a $1 million community investment opportunity, with the goal of buying the largest commercial real estate property in the zone and keeping it affordable to small businesses over the long term.
Angela Casselton, executive director of the CEZ, said that after some eight months of planning and negotiation, the nonprofit has the building under contract through a purchase agreement.
The overall project cost — including purchase and a new vapor mitigation system — would be $17 million, most of it structured as traditional debt. Still, with the goal of boosting local ownership, she wants to raise $1 million from everyday Minnesota-based member-owners, rather than resorting to borrowing exclusively from private corporate lenders.
“The CEZ is under a lot of pressure,” Casselton said. “There’s a lot of demand for maker’s spaces. This is a really important building for us. It has over 45 tenants. We would hate to see that building continue to cycle through another resale. New investors have a lot of priorities, and prices can still go up. We just don’t want to see a lot of displacement.”
Community support
So far, the effort has raised $300,000 in community support by working with two private investment partners, as well as a private Real Estate Investment Cooperative that the nonprofit helped launch — the Taproot Investment Cooperative.
Taproot, a membership organization with its own board of directors, plans to come in as an investment partner on the building. It incorporated this year with the goal of raising funds in order to make pooled investments in commercial properties, mostly within the Creative Enterprise Zone. Their mission is to retain affordable commercial and industrial space for local businesses, among other community benefits.
The CEZ hopes to secure an additional $600,000 by Sept. 30, largely by getting members of the public to join Taproot.
“You yourself are not individually owning the building, but you’re part of the shared investment through Taproot,” Casselton said. “The co-op will pay dividends on the preferred shares. It’s for-profit. It’s an investment, not a donation. The more we can raise, the less we have to borrow.”
“We can’t quote any specific returns, because it’s all very subject to what the specific investment is, and how the investment performs,” she added.
Taproot, which is overseen by a seven-member board, is selling memberships beginning at $1,000. It’s looking for Minnesota-based investors willing to invest for seven to 10 years. For more information, visit taprootinvestment.com.
“This is the only building they’re looking at right now,” said Renee Spillum, board chair with the Creative Enterprise Zone and an investor with Taproot.
Spillum, who has been overseeing the due diligence process around purchasing 755 Prior, is a former employee of the community-focused Seward Redesign, through which she managed several commercial and industrial redevelopment projects.
“I think this is going to take fire,” Spillum said. “There’s a lot of people who wish there were investments available to them in line with their values, and if they’re not an accredited investor, there’s not even opportunities like this for them to invest in places where they shop and do business. This could really be an example of what it could be, when people come together to own the places where they shop and work. This could be replicable.”
Cooperatives
The concept of investment cooperatives purchasing buildings, with community backing, to prevent the displacement of small businesses has drawn support in other sectors of the city.
The Hamline-Midway Coalition recently launched a real estate cooperative, and St. Paul Mayor Melvin Carter has begun to explore how the city can support commercial worker cooperatives and tenants’ cooperatives.
Home to more than 40,000 jobs, the Creative Enterprise Zone serves as St. Paul’s largest tax base and includes the commercial-industrial areas up and down both Raymond and University avenues along the Green Line. The nonprofit formed in 2009 and hosts the state’s largest mural festival — the annual Chroma Zone Mural & Art Festival — among other creative and entrepreneurial initiatives.
In late 2021, the CEZ purchased a one-level former bank branch location from Sunrise Banks at University Avenue and Vandalia Street, which is now home to its headquarters, as well as three other nonprofits.
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