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How The Depot Saved Downtown Minneapolis
A 1997 photo showing the parking lots around the Milwaukee Road Depot, lower right. (Photo from Minneapolis Department of Economic Development)

How The Depot Saved Downtown Minneapolis

The Depot not only became the centerpiece of a successful development, it helped transform a neighborhood and create a crucial connection between downtown and the Mississippi Riverfront.

Two photographs tell the story of one of Minneapolis’ most striking physical transformations.
 
The first, taken 21 years ago, features an empty but historic rail terminal and a remnant of what had once been a row of freight houses — structures overwhelmed in the photo by acres and acres of parked cars, filling what had once been a busy rail yard.
 
The second photo, taken in 2018, demonstrates what’s happened in the two decades since. Of those 16-plus acres shown in the first picture, only one small parcel is not yet developed, though it will be soon.
 
“This makes it look a lot cleaner,” said Minneapolis developer Gary Holmes when shown the 1997 photo of what he inherited when he decided to take on the redevelopment of the Milwaukee Road Depot.
 
At the time, the building was on the National Register of Historic Places. It was also a wreck, inside and out. The adjacent train shed was mostly roofless. The ground was polluted with the jetsam of all of those engines and railcars. And the neighborhood wasn’t exactly safe and inviting.
 
“You’d have to have a crack in the head to really think you could get anything going down here.” Holmes said. “But I was a contrarian. I’d do the opposite of what everybody else was doing.”
 
That contrarian bet paid off. For Holmes, but also for the city. The Depot not only became the centerpiece of a complex with two hotels, an event space, and a 650-space parking ramp, it helped transform a sea of parking lots into a mix of different uses that now includes coffee shops, apartments, condos, offices, a music center,  a theater complex — all while forming a crucial connection between downtown and the Mississippi Riverfront.
 
Or as Holmes says: “It was a pain in the ass, but it was a good project.”
 

The city's best hope

In his history of Minneapolis, Iric Nathanson wrote that “for years, a parade of wheeler-dealers had tried but failed to revitalize the historic depot ….” Among the ideas for the area: a farmers market, an agricultural trade center, a world market, a world trade center, a history museum, and a supermarket, said Ann Calvert, a principal project coordinator for the city’s department of Community Planning and Economic Development.
 
Indeed, the economic history of The Depot property in downtown Minneapolis — bound by Washington Avenue, Third Avenue, Second Street, and Fifth Avenue — was not encouraging for a would-be developer. Linda Mack, the longtime architecture writer for the Star Tribune, said that by the 1990s, the property had been sitting empty for almost 30 years. “On the riverfront itself there had been some revitalization, redevelopment, both housing and recreational park space,” said Mack, who currently serves on the Minneapolis Heritage Preservation Commission. “But just imagine this big, dark and decaying structure on 3rd and Washington Avenues.”


A 1997 photo showing the parking lots around the Milwaukee Road Depot. (Photo by Minneapolis Department of Economic Development) 

A March 2018 photo showing the development of the last twenty years. (Photo by Bill Kelley/MinnPost)

Still, one person was determined to reclaim the acreage between downtown and the river: Sharon Sayles Belton, who served as Minneapolis mayor from 1994 to 2001.
 
“She came to St. Paul unannounced,” Holmes recalled of a mid-1990s meeting with Sayles Belton at his office. “She said ‘I want you to buy the Depot and fix it up.’ I told her, ‘I don’t want to do that, Sharon.’
 
“I always thought, ‘Gee, what planet was she on,’ but she had this idea of basically what’s happened here,” he said.
 
Minneapolis had bought the land for a few million dollars from the Resolution Trust Corporation, which had the assignment of trying to sell assets of failed savings and loans after the goverment's bailout of the industry. The city had already done much of the environmental remediation and had even lined up some tenants, including an ice skating concern that wanted rink space downtown, and a chain restaurant. And it could offer some tax increment financing.
 
But it needed a developer willing to take it on in return for being able to develop the empty land between Washington and 2nd Avenue. Holmes, a Minneapolis native who had experience developing suburban-style hotels as well as industrial parks and multifamily housing, was the city’s best hope.
 

A critical project

By the mid-1990s, Minneapolis had already lost most of its railroad history, including the Great Northern terminal on Hennepin Avenue. That put even more pressure on preserving the Milwaukee Road Depot, a Renaissance Revival building that was approaching its 100th year.  
 
According to Larry Millett’s architectural history of Minneapolis, Chicago architect Charles Frost not only designed The Depot but the Twin Cities other remaining railroad palace, St. Paul’s Union Depot. He also designed the Great Northern terminal.
 
The Milwaukee Road Depot opened in 1899 to handle passenger trains from the Chicago, Milwaukee, St. Paul and Pacific Railroad, the Soo Line, and the Rock Island Railroad. The building’s clock tower was modeled on the Giralda in Seville, Spain, with an ornate pinnacle that was damaged by wind in 1941, “leaving the tower with the unsatisfactory flat top it retains to this day,” Millett notes.  Millett wrote the train sheds are among just a handful of examples remaining the United States.
 
The Depot was closed in 1971 amid the Milwaukee Road’s financial collapse, whereafter it sat empty and deteriorating, save some use of the upper floors as office space. It was placed on the national historic register in 1978 and on the local protected list in 1979. Unlike many historic structures, both the exterior and interior of the depot are covered by the historic designation, which means the regulations apply to restorations inside or out.
 
Steve Cramer, a City Council member from 1984 to 1993 who later became director of the Minneapolis Community Development Agency, recalled that the city had stepped in with money to try to save some of the city’s most prominent historic assets along the river. The Depot was one of those assets, but saving it was not a no-brainer, at least politically. At the time, public money had already been used to buy the Washburn A Mill, which had been damaged by fire in 1991, and the former Grain Belt Brewery complex in Northeast Minneapolis.
 
While those structures are revered today, many back then thought the city’s action to be folly. Cramer, who had run for mayor in 1993, recalls another candidate that year, Richard Jefferson, summarizing some people’s frustration: “The city bought a train station with no trains, a mill with no grain and a brewery with no beer.”
 
But Cramer said the city had to play a role, despite the criticism. “Those kinds of acquisitions have the potential of being politically charged, and you get nicked for having done it,” he said. “But boy, if you don’t, you just don’t move the ball forward.”
 
Sayles Belton won the 1993 mayoral election, of course, and the city moved ahead with its attempts to recover its riverfront from the industrial uses that had dominated for decades. The Whitney Hotel, in a onetime mill, had already opened, as had the Ceresota and the Crown Roller Mill. The Stone Arch Bridge reopened for pedestrians and cyclists in 1994, and West River Parkway would be completed in 1998.
 
But a big piece was still missing. “Clearly The Depot was an important project in and of itself,” Calvert said. “But on a more global basis, when that property was sitting there empty, vacant — with this big question mark over its head — it not only meant that property wasn’t being developed but it had a dampening effect on the whole area around it.”
 
Sayles Belton was not available to be interviewed for this article, but in a 2008 oral history conducted by Mack, the former mayor spoke about her persistence in pursuing the project, and in getting Holmes and his CSM Corp. involved. “I needed the project to occur, because that project … was the big opportunity to bring a hotel and recreation down to the central riverfront area,” Sayles Belton told Mack. “In my opinion, anything that was north of Washington Avenue was going to help strengthen the riverfront, that little edge between the (central business district) and the river.
 
“The Milwaukee Depot was critical, in my opinion, to us continuing to make some progress. And I still believe that to this day.”
 
Mack agrees: “That was the crucial moment, both the city finally buying the property and then recruiting [Holmes]. I would give Sharon credit for that.”
 

Extensive and expensive

Holmes’ office today looks directly at The Depot, offering him a view of the project that resulted from his first urban venture. After getting his business established, he had considered trying to buy the land at auction. He saw it as a place where he could do an urban project without having to tear down a lot of buildings.
 
“We were building hotels across the country from coast to coast and thought, if we could find another site down here somewhere, we could build a suburban building at a cheaper price and not have it in downtown core, but you’d still get some of the downtown business,” he said.
 
He’d get his chance, but only after the auction was canceled and the city purchased the whole thing, and after Sayles Belton made her visit to his office in St. Paul to press him to get involved.
 
Holmes liked historic buildings and began researching railroad history and visiting adaptive reuse projects involving depots around the country. But the project was still a massive challenge, needing renovations that were extensive and expensive. “It was home to every pigeon in a five-state area and to numerous homeless people,” Holmes recalled. “There were caverns and caves underground and we were finding people all the time.”
 
The damaged ceilings had to be restored by workers laying on their backs atop scaffolding, “a Michelangelo thing,” he says. The marble floors were restored, but even today they still retain worn areas created by passengers waiting in line at ticket booths.

Minneapolis developer Gary Holmes spearheaded the redevelopment of the Milwaukee Road Depot. (Photo by Velocity Public Affairs)
 
“We ended up cobbling together not your typical kind of craftsmen,” said Holmes. “These were people who just had a love for what they were doing. Ultimately we were able to put together the group to restore it to its finest and it was done the way historically it had been done. It blew everybody’s mind when they saw it.”
 
As challenging as finding a use for The Depot was, it was even more difficult to find one for the train sheds. The city had been in talks with a skating rink operator who was going to build two ice rinks, end-to-end, but they dropped out. Holmes continued with the idea, anyway, though he eventually settled on one rink plus an event space for weddings, banquets and conventions. (NFL Commissioner Roger Goodell held his official Super Bowl tailgate party there; it also hosted the victory party for the Philadelphia Eagles.)
 
When the skating rink opened, there was a ceremony that included Holmes and Sayles Belton skating arm-in-arm across the ice. Holmes loved the rink and enjoyed watching kids and families use it. He said he would sometimes bring friends down after hours and skate with just the Washington Avenue streetlights for illumination.
 
But the rink never made money and would have needed millions in upgrades to continue. It was shut down in March of 2017. Holmes and CSM have received city approvals to convert that part of the complex into additional event space. The project will also close in the part of the shed now used for parking, and construction will start as soon as building permits are received.
 
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All that comes a year after Holmes’ CSM Corp. added a floor to The Depot’s Renaissance Minneapolis Hotel and closed in a waterslide between it and the Residence Inn to create additional rooms. All together, the complex now has 466 rooms.
 
So was the project a money-maker?  
 
“Gary Holmes is a very successful developer and I think it did OK in the early years but it benefited from his ability to play the long game with a real estate asset and make further improvements,” Cramer said.
 
“It certainly paid off for the developers, but at the time you wouldn’t know it would be the case,” Mack said of The Depot and the surrounding projects closer to the river that were developed around the same time. “This was a very blighted area and it took some leaps of faith that have paid off wonderfully as we see when we walk through the area.”
 
Said Holmes: “I went into it not for the money but as an asset for the city. It makes money — but not for the money I put into it.”