Red tape, rising costs slow efforts to rebuild businesses burned after Floyd’s murder

Buildings burned all around Leeta Song’s family business in the nights after George Floyd’s murder. Arson and looting crippled the Lake Street commercial district, but Song hoped her neighbors would find a way to rebuild.

Five years later, the bounceback she hoped for has been slow. Empty lots still line the block next to her family’s Best Hair & Nail salon on Chicago Avenue, about a mile from where Floyd was killed by Minneapolis police.

Beyond the success stories and ongoing construction projects, business owners say steep costs, insurance hassles and a complex city permitting process have made it difficult to rebuild and restore what was lost.

“This corner right here, where we’re standing out behind the transit, used to be the furniture store,” Song said as she walked the neighborhood recently with a reporter. She pointed to another spot she said used to be an Asian food market.

“It’s like, five years of emptiness,” she said. “It could actually provide a business for somebody to actually support their family. It’s five years of not having a house that could support somebody that needs a place to live.”

‘Everything that I have’

Vacant lots and broken buildings line parts of Lake Street and other business districts in the Twin Cities that were damaged in the spasms of looting and fire-setting following Floyd’s murder on May 25, 2020.

After the destruction, Minneapolis made a list of more than 1,000 businesses damaged in the chaos. In many cases, the damage was superficial — graffiti, broken windows — but the city marked dozens of those places “destroyed.”

Nearly half of the 48 “destroyed” properties are now empty lots. A couple are still boarded up. Most are along Lake Street, plus a few on West Broadway in north Minneapolis.

Property owners say money problems sit at the root of why they couldn’t rebuild.

Insurance coverage for the destroyed buildings was spotty. Some owners had stopped paying their premiums during the pandemic when cash got tight. For others, the payout covered only the value of the building, not the cost of rebuilding it, which can be a lot higher.

At first, donations poured into the Twin Cities for rebuilding. The Lake Street Council, a local business advocacy group, raised $12 million for rebuilding along the corridor, and awarded it to hundreds of businesses. The Minneapolis Foundation raised more than $14 million more with donations from Target Corp., the Donaldson Foundation and Mortenson Construction. State, city and county funding totaled in the millions, too.

But local business owners and experts say the effort still fell far short of the total cost to rebuild, estimated at around $500 million.

“It costs a lot of money to go and just engage a general contractor and architect and engineer. Those numbers add up pretty fast,” said Kenneth Bush, a contractor who recently bought one of the empty lots on Lake Street after the prior owner couldn’t pull together the cash to build.

“Funding is the big deterrent for an emerging developer like myself, who doesn’t come from wealth,” said Bush, who paid about $200,000 for the land. He expects it to cost about $5 million to build apartments and retail space there.

He said he’s raised around $500,000 so far. He has grants from Hennepin County and local foundations and also got help through a Minneapolis program for new developers.

“This is the first project that I’ll own,” he said. “The only thing that I own is my home, you know. … This is everything that I have.”

1-story buildings, 2-story demands

The Minneapolis zoning code created its own set of challenges. The city’s 2040 plan to create more housing and high-density, walkable neighborhoods requires that new buildings along most of Lake Street and West Broadway be at least two stories high.

But some owners who lost one-story buildings didn’t have the money or the expertise to take on bigger projects, said Russ Adams with the Lake Street Council. Many hadn’t planned to be developers in the first place, let alone head up multistory projects.

“They weren't going to be able to follow that path,” Adams said. “That wasn’t their dream as an entrepreneur.”

City rules allow owners to rebuild at one story — but only if they start within the first six months after a building is destroyed.

Several one-story businesses did. They were mostly bigger companies, with deeper pockets — gas stations, pharmacy chains and fast-food franchises. Many smaller owners needed more time to figure out how and whether to rebuild.

Getting approvals takes time, especially for first-timers.

Flora Westbrooks owned a hair salon on West Broadway that burned down in the unrest. She bought the land and started planning to rebuild on the lot.

First, she signed up for a beginner developer class through the city of Minneapolis and learned about several steps that would take more time and money than she thought, including completing an environmental assessment and getting permits.

“It’s a lot of things that you have to go through,” Westbrooks said.

Donna Sanders works with local businesses at the West Broadway Business & Area Coalition. She said more money is what’s needed most but even then, the process is slow.

“I’ve always found that the city planners are helpful; it just takes a lot of time,” Sanders said. “It’s so technical. And when you’re dealing with a contractor or a business owner that probably doesn't know the ins and outs of that kind of thing, it can be very cumbersome.”

Jason Chavez, the Minneapolis City Council member who represents the 9th Ward where many of the Lake Street lots are located, said the city has staff on hand to help developers navigate the process.

Chavez said businesspeople are welcome to seek exceptions to the zoning code if it poses a challenge. The council has granted that permission to a few rebuilding projects, but Chavez said multi-story developments will make the neighborhood livelier.

“The point of the 2040 plan is to create more development, more housing in our city, which is something that we need more of on the Lake Street corridor. That can help not only bring residents to the Lake Street corridor but help the businesses,” he said.

‘If we could work together …’

Some developers with the financial means are buying multiple neighboring lots in Minneapolis and planning to build bigger, but negotiating those sales and planning those projects takes more time.

Near the intersection of Lake Street and Minnehaha, a developer bought a small empty lot in 2022; just this month, he bought a second lot next to it.

A few blocks away, Raymond He owns a lot that used to be a Domino’s Pizza. It has a few houses around it. He thinks the corner could be well-suited for an apartment building, although his lot by itself would be too small.

He wants another developer to buy his lot and the lots around him, but said his neighbors haven’t been offered a deal they want to take, so his lot sits empty while he weighs his options.

“If we could work together and sell our buildings together, with my empty lot, that is going to be a great value for the city,” He said.

Erik Hansen, the city’s director of community planning and economic development, said there’s not much Minneapolis can do to speed up the buying-and-selling process in those situations.

“We can be really nice and say please, but that’s about it,” Hansen said.

The city, meanwhile, is trying to discourage property owners from letting buildings sit empty. It raised fines for vacant and condemned buildings last year. Officials are also making grants available and offering less-experienced developers help navigating the process.

It’s been similarly challenging in St. Paul, where city staff logged 17 addresses of buildings destroyed following Floyd’s murder.

Seven of those lots remain vacant; one business on the list, Trend Bar, remains closed, although part of the building it used to occupy is still operating. The affected properties are all on University Avenue, with several clustered next to Allianz Field, where Minnesota United plays soccer.

Loons owner Bill McGuire bought those lots after several of the buildings on them were destroyed in 2020. He has plans for hotels, offices and housing on the block, but so far has just added a playground and a large loon sculpture.

At a community meeting earlier this year, he said raising money was challenging even for him.

“This is a terrible market,” he said “I don’t mean this (local) market, but I mean globally for financing, getting debt and finding investors in particular projects.”

The St. Paul City Council approved funding last year for small business grants along commercial corridors, including University Avenue.

“We’ve tried to be as supportive as we can by getting resources out to people who need them,” said Jimmy Loyd, who runs the city’s planning and economic development department.

The pandemic, he added, made it that much harder to plan as shopping patterns shifted — people ordering more online — and storefront businesses suffered.

‘Not an easy thing’

Assessing the building damage after the unrest, Minneapolis officials worried large, out-of-state developers would buy up the damaged properties on the cheap. Community members feared that would lead to gentrification.

“That, by and large, did not happen,” said Adams at the Lake Street Council.

Despite the barriers, there have been successes. Last year, the community development group Redesign Inc. reopened the historic Coliseum Building on Lake Street, which was damaged but not destroyed by fire in 2020. It’s now home to a restaurant and several small businesses.

Instead of going in as the sole developer, Redesign partnered with several local entrepreneurs, who co-own the building.

“They really wanted to be involved and have ownership, and not only over the process of development in their community, but also the actual building itself,” said Taylor Smrikárova, director of real estate development at Redesign. She said the organization heard the community’s pleas to keep the land locally owned.

Redesign owns another empty lot on Lake Street and an empty building a few blocks away. Smrikárova said the company is in the process of finding project partners to develop the Lake Street lot, which had been a U.S. Bank office until the building was damaged in the unrest.

Some individual businesspeople have also found their footing since 2020.

Abe Demmaj redeveloped his damaged furniture store on Lake Street, which sustained some fire damage and broken windows during the uprising. Now, it’s the Abyssinia Event Center, a three-story business incubator with space for weddings, performances and other gatherings.

New to development, Demmaj started by tapping into his home equity. That got him enough to secure a loan from a bank. He said it was a risky tactic, but he didn’t want to lose his property. Now, he’s helping develop other buildings along Lake Street, too.

“I’m a furniture sales guy,” he said. “In the late afternoon, I’m the delivery guy as well. So it was not an easy thing.”

Back on Chicago Avenue, a new restaurant recently moved into the same building as Leeta Song’s family salon, and a nonprofit is developing a cluster of lots across the street.

Song bought three lots next to her family’s salon last year. The Lake Street Council gave her a grant to knock down a vacant building. She plans to build a day care and affordable housing there eventually.

“It’s uplifting the community and bringing something new to the community,” she said. “It’s needed.”