The East Side of St. Paul is at the beginning of a renaissance. The Hamm Brewery, formerly known as Stroh’s, is an important historic landmark with great urban revitalization potential. The City is reconsidering its original plan to demolish the site for light industrial development as a part of the Phalen Corridor Initiative. This preliminary feasibility study explores reuse, demolition and acquisition, and job production scenarios for the Hamm site. The conclusions are:
1) The City should buy only what it desires of the Northern section for the Phalen Corridor boulevard and related amenities because:
The Phalen Corridor Initiative (PCI) with support from the City of St. Paul established a working group in September 1999 with the task of exploring options for the possible preservation and reuse of the Hamm Brewery site (also known as Stroh’s ), as an alternative to its demolition and redevelopment for light industrial use by November 1999. This process was staffed by the City of St. Paul Department of Planning and Economic Development (PED), as mandated by the City’s Housing and Redevelopment Authority (HRA).
Friends of Swede Hollow's Goals Relative to the Hamm Brewery Site
Friends of Swede Hollow (FOSH) wish to save as many structures as possible, and commissioned this study to assess the feasibility of doing so. Much of the data cited was made available through the HRA/PED/PCI process. Other data was gathered independently by the FOSH consultants.
Thank You to the St. Paul Department of Planning and Economic Development
The Friends of Swede Hollow and this report’s authors would like to thank City staff and HRA members for supporting and leading an open, comprehensive, and democratic process to explore issues around use of this site. The expert testimony was informative and provided much of the factual basis of this report. The facilitation was firm, fair, and focused. City staff are to be commended for their diligence, patience, and professionalism. It was not easy for anyone, but we believe the resulting report to the HRA will reflect at least some movement by each participant towards a unified vision.
This study explored the following issues:
This is a feasibility/ fact finding report for the Hamm brewery location. In undertaking this report, and in its following recommendations, the primary concern was to consider the highest and best use of the Hamm property, while taking into consideration the sensitive political climate surrounding the property.
The first part of this report is simply a breakdown and comparison of similar projects and basic information on the Hamm property. The next part reviews options for redevelopment. A summary, conclusions and recommendations follow. Several final considerations are discussed at the end of this report.
FOSH looks forward to further collaboration with other interested parties towards continuing redevelopment of the site.
Banbury Place in Eau Claire, Wisconsin consists of 1,900,000 square feet of floor space. There was not a firm number given for renovation costs, since it is still being developed for mixed use, primarily light industrial, but it is over $40,000,000. The heating bills alone are over $3,000 a day, or over $500,000 per heating season. The purchase cost was $2,000,000. After 7 years being developed it has a 76% occupancy.
Schlitz Park in Milwaukee, Wisconsin consists of 1.6 million sq. ft. of space in 10 buildings. Costs exceeded $50 million including $23 million in tax exempt industrial bonds and a $2 million beautification and landscaping grant. The park was 100% leased as of 9-9-99, however current rents are $15-$18/sq. ft. and it has not as yet turned a profit.
Blatz Brewery in Milwaukee, Wisconsin consists of 400,000 sq. ft., developed primarily for housing at a cost of $16.6 million.
Hamm Brewery in St. Paul, Minnesota consists of 1.2 million
of floor space in 59 buildings on 33 acres of land. It is currently
I-1. Howard Gelb purchased it from Stroh for $1 million.
$3 million has been invested in property improvements by Mr. Gelb
past year and a half. Currently the brewery has a 90 %
in spite of an uncertain future for the property. The property is
showing a positive cash flow. According to the owner 220 jobs
on location in several companies. At least 6 of the 15 employees
working for the owner himself are East Side residents with wages
from $17 to over $30 an hour.
The Hamm Brewery site is best viewed as a property with three distinct sections. The eight-acre Northern section lying north of the railroad tracks contains the massive 180 foot grain elevators and several less significant structures. A 15-acre center section south of the tracks and north of Minnehaha Avenue contains a large number of buildings, most used for some type of warehousing. The Southern section lies just south of Minnehaha Avenue, adjacent to Swede Hollow Park, and contains a wide array of unique buildings arranged around unique spaces.
Before reviewing the options for the property, it is first necessary to get an idea if all or part of the buildings on the property are possible to reuse. Since, according to the current owner, 90% of the buildings are currently being rented, the obvious answer is a resounding “yes”, but what about the remaining buildings?
Artist studio space, performance space, a gallery, and/or living quarters are feasible for many of the buildings south of Minnehaha, according to architect Jerry Allan of Criteria, Inc. However, none of this section of the property is considered in the job or cost calculations of this report. Redevelopment of this area will entail significant additional costs and will also generate additional jobs, with potential positive economic impacts for the community that are difficult to calculate. Ball park estimates suggest as many as 200 jobs could be developed in this section, however this research is beyond the scope of this study.
The taller brewery buildings that contain beer vats or other massive storage tanks currently are not rented, and would pose the biggest challenge to reuse. This also makes demolition of these buildings problematic, as the cost will be steeper than other buildings. The property contains about 10% of buildings with such structures that will take more research and or creativity to develop. The remainder of the buildings are in remarkably good condition, and reuse would be very possible.
Many of the buildings north of Minnehaha are being rented, and those that are not are in good condition and could be easily reused. Studio space was again mentioned, but the open floor plans also make it very possible for many businesses to use. Retail space or housing here would cost more and need more planning to work. Amy Wetterlin, the Executive Director of Metro East Development Partnership, said high-tech start-up businesses or those looking for office space would have no interest in these types of spaces unless they were finished and ready for occupancy.
According to local developers George Sherman and Rebecca
is more cost effective to retain and produce jobs in the existing
under existing ownership than to demolish and rebuild. According
to Jim McCombs, marketing “guru” in the Twin Cities, creative mixed use
of the site is very feasible, has been done successfully elsewhere, and
depends most on a strong community vision and effective
|COST TO CITY ESTIMATES
DEMOLITION AND REDEVELOPMENT
The Hamm Brewery site consists of 59 buildings, 1.2 million sq.ft. on 33 acres.
$4.5 - $12 million
Demolition estimates are based upon ballpark square foot figures and asbestos abatement costs supplied by Anderson & Son Demolition and Bolander & Sons Demolition. Final figures are not estimates provided by these companies, but rather are calculated by applying square foot demolition numbers to the different building types on Hamm Brewery property. A comparison with costs for these services at Milwaukee Depot demonstrates the following figures are conservative.
Open warehouse space: $2.50 - $3.50 sq.
Grain elevator demolition note - it is 18 stories tall and over 400 feet long made out of reinforced concrete. Definitely one of the problem industrial buildings.
Demolition for middle section and South of Minnehaha
$2.6 - $4.5 million
Total for demolition and asbestos abatement $6.0 - $9.2 million
Cost of purchase, demolition, asbestos abatement (est.) $10.5 - $21.2 million
These estimates can be compared to other examples of industrial demolition. Figures provided by Anderson & Sons Demolition for the Milwaukee Depot freight warehouse (8,000 sq. ft.) cost $125,000, over $15 per sq. ft. not including asbestos abatement. Extrapolated to the Hamm site, demolition costs would be $18 million. Asbestos abatement at Milwaukee Depot cost $66,000 at a rate of $8.25 per sq. ft. Thus, asbestos abatement at the Hamm site could cost $9.9 million. The total cost of $191,000 at Milwaukee Depot suggests demolition and asbestos abatement alone at the Hamm Brewery could cost about $28 million.
Note: These figures do not address potential hazardous waste
as may be required such as PCB ballasts, CFCs in fluorescent lights,
so on. Asbestos abatement may be higher. Filling of underground tunnels
throughout the site may add additional costs. Estimates do not include
costs for any site preparation, backfill or grading, or landscaping for
redevelopment. Finally, these costs do not begin to address the costs
redevelopment, which could reach an additional $25 to $40 million for
use, based upon minimum sq. ft. comparisons to both Banbury Place and
Park in Wisconsin.
There are basically three options for this property.
1. The first option is for the City of St. Paul to purchase
property and either:
This report will go over each of these three options, and make a recommendation on which option or options will be the best course for the highest and best use of the property. Factors considered in our evaluation include:
To examine the option of a City purchase of the entire property several factors need to be considered and taken into account.
COST: Cost of the property is perhaps the smallest cost and/or concern, but seems to have been the cause of much speculation and perhaps apprehension for both the owner and the City. These are the facts as we have been able to determine:
Thus, the City of St. Paul could spend over $20 million dollars ($10M sale + $10M demolition) before any new structures are built on this 30+ acre property. Even if new industrial park businesses were built without any additional city funds, this is a substantial cost.
JOBS: There were 375 jobs here when Stroh Brewery closed. As Laurie Louder of the Port Authority stated on the developers panel of Oct. 18, the target number of jobs under a light industry redevelopment scheme at the Hamm site is 650, at 100% occupancy. As in the Williams Hill project, businesses will be committed to trying to achieve 70% of NEW hires as residents of Saint Paul, with 10% of those jobs targeted to go directly to East Side residents.
The question is: how many years would it take before new jobs would be available? Another question would be: what action plan and development plan would need to be in place before the City could realistically purchase and maintain this property? And thirdly: how do these projections compare to the job impacts of the present owner’s reuse scheme?
If the City purchases the property with the intent of reuse, a developer or developers need to be found willing to tackle the project and partner with the City/Port Authority.
Again, a simple question needs to be asked: why would the City undertake a massive redevelopment project when currently 90% of the space is rented and is already being developed by a private party?
The second option would be the City’s buying the minimum it desires to accommodate the Phalen Corridor boulevard and develop community amenities: purchase of the 8 acres north of the railroad tracks. This appears to be the least risk and cost on the City of St. Paul’s part, though there would be cost in purchasing the property and demolition of the grain elevators and other structures on the property. Purchase, demolition, and site prep could run between $3 - $4 million. This parcel of land has been mentioned as a sculpture park or green space for the community.
Under this option, the center section could continue to be developed to enhance job density, perhaps with City input of funds previously considered for purchase and demolition. City assistance in developing an on-site recruitment and training facility targeted to East Side residents might also be considered. Similarly, support for infrastructural improvements, financing assistance, and other public investments to enhance the marketability of the unique buildings on the south side of Minnehaha could be part of Option 2.
In short, the goal of this option is to maximize the public’s return per dollar of private investment.
The third option is to simply let the owner develop his property as he sees appropriate. This would be the least-cost scenario for taxpayers. Partnerships with the city and/or community could be beneficial.
PRELIMINARY CONCLUSION: OPTION 2 IS PREFERRED
If the City desires the right of way for the new road, the second option makes the most economic sense, and has the most common sense behind it.
The current owner appears to be a strong asset to the community, marketing the existing buildings well enough to have achieved 90% capacity, hiring local workers when at all possible, heating and otherwise securing and improving the property, keeping graffiti off of his buildings, repairing vandalism, and cooperating with neighborhood community groups in all of these efforts.
The purpose of this report was to conduct a preliminary fact finding and feasibility report in order to make a primary recommendation to Friends of Swede Hollow as to the highest and best use of the Hamm Brewery site. The highest and best use was generally defined as determining the most logical, feasible businesses or enterprises that could fit into the property site that would provide the most benefit to the community, primarily through jobs, that also would be the most cost effective use and make the most economic sense overall. In short, what makes the most common sense.
After reviewing the cost estimates for land acquisition, building demolition and asbestos abatement for the Hamm property, the next logical step was to compare these numbers with a recent Port Authority project, the Williams Hill Business Center.
The Williams Hill Business Center was 5 years in the making, at a cost of $10 million of public money, and just over $17 million in private money. Williams Hill is located on 27 acres and has 377,000 sq. ft. available for businesses. The Williams Hill Business center currently has 266 jobs, and when filled to 100% capacity is projected to have 653 jobs and 5 businesses. The cost per job for the City/ taxpayers comes to just over $15,000.
The number of jobs currently at the Hamm Brewery site is over 220, according to the owner, developer Howard Gelb. The Hamm site is 90% leased and is turning a profit. Gelb purchased the site (also known as Stroh’s ) for $1 million, and has already invested over $3 million in additional dollars in its redevelopment. If projected out to 100% capacity there could be 250 or more jobs at the Hamm brewery site under current ownership, not counting potential job creation south of Minnehaha. In addition, six of the property management jobs in Gelb’s office at Hamm are held by East Side residents. Tenants may also employ an unknown number of East Siders.
If the City were to purchase the Hamm Brewery site, the cost for acquisition would be between $4.5 and $12 million dollars. If the city were to level the site for light industrial jobs, the cost would be between $11 and $21 million. These figures do not address many probable costs for environmental remediation, nor any unanticipated expenses that a project of this scope often encounters. If the city created a light industrial business park of 377,000 sq. ft. useable space on the Hamm site’s 33 acres, at 100% occupancy there would be a potential for 653 jobs after 5 years. If filled to capacity, the cost per job per taxpayer comes to just over $32,000. However, 7 businesses would be displaced and 220 jobs lost, for a net gain of 433 jobs for the site – or just 411 net jobs assuming 100% occupancy as Gelb’s plans progress. For a net gain of 411 jobs, the taxpayers’ cost per job would be $51,000.
If the city decides not to purchase the Hamm property, and simply lets the current owner proceed with redevelopment that is already underway, 250 or more jobs may exist at the Hamm site within the next 2 years. This does not include potential job creation south of Minnehaha. The cost to the taxpayers comes to $0 per job.
What makes the most economic sense, what makes the most community sense, and what makes the most common sense and constitutes the highest and best use for the property is to simply let the current owner improve and develop the Hamm Brewery property. Nonetheless, public investments in partnership with the current owner could enhance the job density of the site, and create significant amenities for the surrounding community.
If the City desires a portion of the Hamm site for the Phalen Corridor boulevard and related improvements, it should purchase the Northern section of the property, and create green space for the community which should include a park and sculpture park. This will help balance the business, commercial, and possible creative use of the entire property for the benefit of the neighborhood.
The center section of the property is the most financially productive as is, and could be more productive with some infrastructural improvements. A few buildings with huge storage tanks pose a problem for reuse. Should any demolition take place, there are major environmental issues in this section that would require significant investment to correct. These include asbestos removal and stabilization of the underground tunnels. Overall, buildings in this section are in good condition, with upkeep and repairs obvious to anyone who has toured the site.
The Southern section of the property is the most problematic. While it has great historical and architectural appeal, the buildings in this section will be a challenge to redevelop (or a challenge to tear down). This section could be sought as a possible donation for community ownership such as a land trust or alternatively conveyed via a 99-year lease. The owner is open to developing the property on a building-by-building basis with community interests and input in mind, is open to working with the City, and has been receptive to ideas and possible tenants brought forth by Friends of Swede Hollow. Some uses already considered could potentially add over 200 jobs to this section.
|OTHER POINTS TO
A predominant political issue with the Hamm property (and
neighborhood residential properties) has been the interest expressed by
the City concerning a possible purchase. This government expression of
interest, and even the Hamm working group community planning process,
made it difficult for Howard Gelb to rent space, and virtually
for neighboring homeowners to improve their properties. It is clearly
the best interests of the community to have this resolved
The corridor of brick buildings along East Minnehaha Avenue is visually very impressive and an asset to the community. Demolition of the landmark 1863 Hamm Brewery would be a loss for the community and the City of St. Paul as a whole. Once an historic structure is demolished it can not be put back.
Recent successful urban renovation efforts have centered on historic renovation and aesthetic appeal. In fact, the US Conference of Mayors in 1999 adopted the following “Urban Development Principles:”
Grants could be given to neighborhood groups as a cost effective way of working with the current owner to implement new visions for the property, with incentives for this new or mixed use development given a priority. A $100,000 grant to a neighborhood group would go a long way to helping implement a positive change for the betterment of the community
If the City decides to buy only the northern piece of land, it should be encouraged to financially support continued efforts by FOSH to facilitate the development of the property according to the Working Group Vision, which will hopefully be in harmony with FOSH’s vision. Those efforts would include:
|BACKGROUND ON THE
The consultants who compiled this report on behalf of Friends of Swede Hollow are:
A FINAL WORD OF THANKS
The Friends of Swede Hollow and this report’s authors would
to thank City staff and HRA members for supporting and leading an open,
comprehensive, and democratic process to explore issues around use of
site. The expert testimony was informative and provided
of the factual basis of this report.
Friends of Swede Hollow also express their gratitude to the
of St. Paul Housing and Redevelopment Authority, the City’s Department
of Planning and Economic Development, and the Phalen Corridor
for their efforts , past and future to cooperate with the community in
finding the highest and best reuse for the Hamm Brewery.