Completion date for The Rune in Alexandria pushed back a year
A lingering dispute with the Minnesota Pollution Control Agency over pollution monitoring wells and increased costs led to the delays, according to Rob Thompson, managing member of GoodNeighbor Properties.
ALEXANDRIA — The Rune project at the corner of Third Avenue and Broadway in Alexandria is still encountering delays.
At Monday’s Alexandria City Council meeting, the developer, GoodNeighbor Properties, requested – and received – an extension of the deadline for receiving tax increment financing .
The new completion date for the $25 million project is Dec. 31, 2023.
A lingering dispute with the Minnesota Pollution Control Agency over
pollution monitoring wells
and increased costs led to the delays, according to Rob Thompson, managing member of GoodNeighbor Properties. He provided this timeline to the city:
- When purchasing the property in 2019, the MPCA said it would close the pollution monitoring wells within one year.
- During COVID-19, the MPCA would not meet in person and would only discuss the project by phone with the GoodNeighbor environmental engineer.
- GoodNeighbor began excavation work last summer to prove to the MPCA and its bank that no contamination remained. Fill was used and no contaminated soils were found.
- In September 2021, the MPCA allowed four wells to be closed in the footprint of the building. This cleared the way for the physical construction to begin.
- Because of the cost of inflation, the project had to be re-bid. The final cost increased significantly because of “massive inflation” increases in steel, sheetrock and other materials.
- GoodNeighbor resubmitted its finance package to a bank because COVID and the war in Ukraine led to cost increases of 25% to 30%.
- Financing closed on May 11, 2022.
- Construction began on May 16, 2022.
- As of Oct. 28, 2022, the MCPA has still not committed to closing the final eight monitoring wells on the northwest corner of the property in 2023.
When asked by the council if the MPCA will close the wells soon so the project could make the new deadline, Thompson expressed doubts. He described the wells as a "30 year monitoring process that achieved nothing." He said it was also difficult to communicate with the agency because it kept making changes in personnel that caused them to go back to "square one."
Thompson added he may ask the city to make a recommendation to the MCPA and enlist the help of local senators and representatives.
The council approved the tax increment financing district for The Rune project back on Feb. 25, 2019. A section of the contract with GoodNeighbor required that unless there were “unavoidable delays,” the project had to be completed by Dec. 31, 2020.
At GoodNeighbor’s request on April 13, 2020, the completion date was extended to Dec 31, 2021. In November 2020, the developer received another extension to Dec. 31, 2022.
The extensions do not change the terms of agreement. It only changes the completion date. The agreement still provides 15 years of tax increment.
The Rune is a four-story complex that will consist of commercial and retail space, including a new restaurant, Mill Valley Kitchen, which had been scheduled to open in 2022 before the delays hit.
The Rune will also include 72 market-rate apartments, ranging from studios to one- and two-bedroom units.
Four stories will be above ground on the Broadway side and three stories above ground on the Hawthorne Street side. The first floor, which will be at ground level on Broadway and have underground parking on the Hawthorne side, will be the commercial level.
There will be another underground parking level below this with 153 stalls.