Madison Equities tells tenants to vacate downtown St. Paul's Alliance Bank Center in two days

The financially troubled owner of downtown St. Paul's Alliance Bank Center notified tenants Monday it would shut off utilities in two days' time, sending businesses scrambling to find new spaces, orchestrate difficult moves and grapple with goodbyes to storefronts that served as home for years.

The 16-story property at 55 E. 5th St. is part of Madison Equities' portfolio — at one time, the largest in downtown — which has spiraled into a state of distress following the death of the company's founder, Jim Crockarell, more than a year ago.

In its message to tenants, Madison Equities said it can no longer sustain the costs of operating the largely vacant Alliance Bank Center. Its lender, Royal Credit Union, did not show interest in taking ownership of the building or providing additional funding, according to the note the Minnesota Star Tribune obtained.

Bob Wolf rushed to pack up his skyway-level hemp and organic shop Tuesday morning. A few doors down, jeweler Paul Hartquist fretted about the impossible task of trying to move heavy safes in a day's time. Pino Lipari Jr. told the lunch crowd to stay tuned for Pino's Pizzeria's re-opening in the nearby Town Square Tower.

"The whole building is up in arms right now," Wolf said. "We've all paid our rent up, even through COVID. To get a 48-hour notice to uproot your life? We need new insurance. We need new cable. We need new internet. That doesn't happen in two days."

The notice alarmed city officials, who quickly contacted Xcel Energy and District Energy of St. Paul, which agreed to keep the building's utilities on through the end of the month.

That news brought business owners relief. Like Pino's, many are already in talks to move to open space in Town Square. Mayor Melvin Carter told business owners the city is designating staff to help speed up any permitting or licensing needed in that process.

Questions about the fate of the building, however, still loom large. It remains unclear whether the major skyway artery would be able to remain open if the property is without heat or utilities.

"I don't have a plan for that," Carter said. "Today has been 100 percent focused on the tenants. There's a lot of questions to be answered as far as the building is concerned.

"All of our options at this point are sub-optimal, with probably the whole Madison Equities portfolio," the mayor continued. "But it gives a little bit of breathing room to have a little bit better conversations."

A letter from St. Paul's assistant fire chiefs expressed concerns about the building being left vacant with no protections or maintenance. The city has dealt with a bevy of problems following its condemnation of the Lowry Apartments, another downtown property Madison Equities formerly owned.

"If this occurs, there is a risk that the building may eventually be demolished, though this will take time," the letter said. "Due to potential hazards involved, it is essential that all crews remain vigilant and exercise caution when entering premises."

Deputy Mayor Jaime Tincher said while it might eventually make sense for developers to demolish a downtown building, it's too soon to know if that applies for each of the Madison Equities properties. Lenders have already taken over a few of the company's other downtown buildings, including the Empire Building and the Degree Apartments.

It was unclear how much of the Alliance Bank Center's 300,000 square feet of commercial space remained occupied Tuesday, though a sales brochure a year ago said the property was 44% full. In the time since, major tenants like Redpath and Alliance Bank moved to different buildings downtown, citing safety concerns.

Madison Equities has blamed downtown crime and homelessness for its woes. Its note to tenants said the landlord is "facing significant financial hardships due to the deteriorating condition of downtown St. Paul and the flight of tenants away from the Central Train Station," the troubled light-rail stop across the street.

Kelly Hadac, an attorney for Madison Equities, did not respond to a request for comment Tuesday. In mid-January, he emailed the city and an attorney for Royal Credit Union saying the company could not pay its utility bills, according to messages Carter's office provided. The lender's representative wrote back, saying it would not advance funds since such payments were the owner's obligation.

In response, Hadac wrote: "We understand. My client was just giving your client the opportunity to protect its collateral. … I would assume the city will now make decisions."

Carter said that frustrated him.

"This declaration that this should somehow be the one business that government is paying the utility bill on," Carter said. "I don't think it's debatable that there's been a severe, historic disinvestment in this building."

The mayor said he was grateful to hear several business owners say they planned to stay downtown. Lipari, whose father opened the skyway pizzeria 37 years ago, said he hopes the family business will be able to reopen in two months at a location closer to the downtown office crowd. They had six more months on their lease at the Alliance Bank Center.

"I got mad love for this city since I've been coming here since I was 13, when my dad opened," he said. "My sadness comes from the state of the city — to see it like this after it was thriving. That said, we're going to win no matter what."