So, what’s happening now with the Sears complex?

by Ed Felien

Will the City of Minneapolis and Marquette Bank foreclose on Ray Harris and take over the Sears complex? The $6.2 million mortgage on the buildings held by Marquette Bank is due March 31. The $2.2 million mortgage on the land held by the City is due at the same time.
The City complains Harris has never showed them his books on this property. He has not agreed to the City's timetable or conditions. He has not signed tenants, though there has been considerable support from private and public sources. The one tenant he inherited he has alienated, sued and tried to evict. He has not put any of his own money into rehabilitating the property. He fought with the City over when the parking ramps should be built.
To its credit, the City has not put any money into the project except the $2.2 million for the land. This money is secured by the land, so the City can't lose anything, except time.
While the building remains vacant and boarded it continues to depress property values and self esteem in the surrounding neighborhoods.
Also, the City fears it is losing the expansive wave of the economy, and it will be much harder to attract tenants and investors in a recession.
Although Harris claims he has not taken any development fees, there are considerable mechanic's liens against the property. Contractors who did work for a prospective tenant (a dot-com that went broke in the latest Nasdaq meltdown) have claims against the building for $900,000. A former architect has filed a lien. Wreckers have not been paid and have filed liens. There could be some duplication between contractors and subcontractors, so the total could be as high as $4 million or as low as $2 million in liens against the property. It is not clear if those debts will be assumed by Harris or (if he is foreclosed upon) whether those debts will remain against the property.
His one tenant, Minnesota Diversified Industries (MDI), sued him to get the roof fixed. Harris counter-sued and lost. The court ordered him to fix the roof starting in May and finishing by August. MDI is not paying rent at this time. They are putting the money in an escrow account so they can fix the roof themselves if Harris defaults. It's a very large roof, probably one of the biggest in the state, about 5 acres.
This could, finally, be the end of the line for Harris. This time he may have run out of time, money and friends downtown.