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Preserving a Vision for Progress
and Driving Commercial Development in North Minneapolis
Case Background
Together a team of financial professionals and attorneys preserved a vision for economic growth in the North Side of Minneapolis. The former headquarters building for Thor Construction at the corner of Penn Avenue North and Plymouth Avenue North represented a monument to progress toward economic development and collaboration in the North Minneapolis community.
Thor Construction undertook the construction of the building as the general contractor and hired subcontractors to perform substantial work. The project was financed through a series of transactions, with post-construction financing consisting of a $1.76 million first-position loan plus a complex $11.45 million tax-credit finance program. The financing structure was an investment in the area both in the short term and the long term, with the goal of creating sustained economic growth. The building was also part of a complex leasing and co-ownership arrangement, that included other minority-owned businesses tenants, an African-American heritage museum, community development agencies, and Target, who sublet to other businesses, including Summit Academy.
During construction, Thor Construction had not paid all of its subcontractors for their work on the project. Subcontractors filed mechanic's liens totaling $700,000 and the holding company stopped making mortgage payments, leaving more than $10 million in secured debt unpaid. To complicate the matter further, since the project had been financed using tax credits, foreclosure by a lien holder or a co-lender would have seriously impacted multiple constituency groups.
Because Thor Construction collapsed in 2019 and disappeared as the owner and operator of the building, no one was left to make important operating decisions for the building, which caused the viability of the leases and other contractual commitments to be at risk. In October 2019, Old National Bank placed Thor HQ into receivership and Alliance Management was appointed as the receiver. Alliance hired Stinson to serve as receiver's counsel.
Alliance had four goals while operating as the receiver:
- Market and sell the building,
- Resolve any lien validity and priority disputes,
- Preserve the tax financing structure, and
- Preserve the building's role as a cornerstone of economic growth in the neighborhood.
The successful negotiation with Ground Floor LLC allowed Alliance to satisfy each of its goals.
Alliance and its attorneys at Stinson were not the only parties who made this project successful. The buyer and its team at Fredrickson & Byron were integral to working a deal that preserved the tax credit financing while still making the purchase price feasible and in everyone's best interest. The lenders, including Old National Bank, US Bank, and the Local Initiatives Support Corporation, made extraordinary efforts to maintain Alliance's goals and achieve a deal to the benefit of all.
Under the ownership and leadership of Ground Floor, the building’s buyer, the building will serve its original purpose of driving commercial development in the neighborhood. Tenants critical to the local community now have a stable landlord and are able to invest more in the building. The lenders have a new financially-stable borrower and have preserved their tax credit financing deals. The mechanic's lien holders were paid fair settlements and released their liens.
Key Team Players in this award-winning transaction case
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