When Minneapolis officials began debating plans for the Upper Harbor Terminal project last year, the designs called for a first-of-its kind music venue that could hold up to 10,000 concert goers.

But that element of the plan soon became controversial, with critics of the amphitheater worried it could raise property taxes and displace some of the people who currently live in and around McKinley, the neighborhood bordering the Mississippi River where the Upper Harbor Terminal project will be located.

To help quell those concerns, the City Council convened a citizen-led advisory board — the Upper Harbor Terminal Collaborative Planning Committee (UHTCPC) — to brainstorm ways for developers and the city to avoid any negative consequences of the development for residents.

But now that committee must answer a question that could make or break residents’ support for the performance arena: Who — or what — should run the facility along with First Avenue?

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A complicated structure

Besides the performance venue, the city’s concept plan for the Upper Harbor Terminal project calls for 300 to 500 units of housing; park space; and 40,000 to 85,000 square feet for businesses along Dowling Avenue.

Plans for the project’s music venue call for it to host up to 30 big-name shows and 40 community events throughout the year, attracting up to 363,000 people to the area. The city says the venue would create about 560 new jobs in construction and 270 new positions in sales and operations once it opens.

Under the project’s exclusive rights agreement, which was finalized in 2017, the city of Minneapolis must legally control the venue, which is expected to cost between $26 and $49 million to construct. That way, the city can lobby for and use bonding money from the state to build it.

In 2018, state lawmakers agreed to pay $15 million in bonding dollars for the first phase of the Upper Harbor Terminal project, money that will go toward redeveloping portions of the public right-of-way, building park space and installing utility systems before 2022; the city of Minneapolis has agreed to match that amount to help pay for the project.

But the city also plans to request $20 million in bonding money from the state Legislature this year to pay for construction of the venue, though Gov. Tim Walz’s 2020 bonding proposal does not include any money for the Minneapolis project. City officials say draft language for the request is in the works, and Minneapolis Mayor Jacob Frey has visited the state Capitol to stress the importance of the project to lawmakers.

Before any legislation can progress, however, the city must first finalize the facility’s ownership, said Shauen Pearce, Frey’s economic development and inclusion policy director.

Early on, city officials picked United Properties as the master real-estate developer for the 48-acre site, overseeing big-picture concepts and designs. Then, shortly after, First Avenue — which currently operates five venues across the Twin Cities — joined the development team, and the company is preparing to build, co-own and run the music venue, a setup much like the city has with the Guthrie Theater and St. Paul has with the Palace Theater. In addition to First Avenue, the venue’s design team includes LSE Architects, SHoP Architects and Coen + Partners.

If the state’s approves the city’s $20 million bonding request, First Avenue would need to raise an equal amount of money to help pay for the building’s construction. Then, under current agreements, the city would cover ongoing maintenance costs once the venue opens for concerts.

But city planners and City Council Member Phillipe Cunningham, whose Ward 4 includes the T-shape property where the project will be located, said the city does not want to join First Avenue as the property manager — or own the venue itself as it does with the Target Center — because they don’t want to be on the hook for future remodeling costs.

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“With the Target Center — that is a huge issue that we deal with as a City Council, of trying to make sure we can afford the capital improvement cost for that building,” Cunningham said. “The city council does not want the city, the taxpayers to be responsible.”

Trying to create a new model

So who will partner with First Avenue? On Wednesday, committee members debated possible scenarios. The development team could create a new group, possibly with a board of directors, or partner with an already-established organization. The third party could be a nonprofit Community Development Corporation or a community-investment trust.

No matter its composition, however, the partner would play a part in holding First Avenue accountable on everything from racial equity to ticket sales, according to First Avenue CEO Dayna Frank. “This idea came up because there were a lot of questions like, ‘Who can guarantee in the long term that this space is created and operated to be culturally relevant and to be an authentic, meaningful to the North Side,’” Frank said.

Pearce said neighborhood associations in the area have discussed the possibility of filling the ownership role. Project leaders said the group’s workload will depend on its composition and goals. “[It] could receive checks or it could be on-site and, you know, be walking around and helping food vendors,” Frank said. “Literally, there’s 180-degree options.”

Before the UHTCPC makes a recommendation, it wants more details from the development team to understand, exactly, what it envisions for a community-ownership model, which would be a first-of-its-kind setup for Minneapolis.

In recent weeks, committee members have called into question the community-ownership model’s financial feasibility and the lack of specificity on what the amphitheater will look (and sound) like for neighboring residents.

Several committee members last week said the city’s African-American community faces an uphill fight to establish a successful Community Development Corporation due to systematic disinvestment in the north Minneapolis neighborhoods, and the ability to do so for the music venue will require the right combination of skills and money. They also stressed the critical role of First Avenue and the city to help the new organization survive.

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“A lot of well-intentioned things will happen in our community where people will throw money at us and we’ll create new businesses, create co-op grocery stores and once they fail … then it’s all of the sudden, like, ‘Man, those people didn’t do that right,’” said UHTCPC member Alexis Pennie.

But some committee members said the first-of-its kind ownership model has the potential to make sure North Side residents benefit from the massive redevelopment project. “I really believe we have a chance to do things the right way,” said committee member Markella Smith.

The committee could finalize its recommendations for the setup during an all-day planning workshop on Saturday. The City Council will have the final say on the composition of the venue’s ownership team.