Future of $330M Hopkins housing development uncertain amid developer’s financial woes

A $330 million real estate development in Hopkins is in limbo after its developer failed to get financing, and now it may get booted from the project.

The city of Hopkins and the Minnehaha Creek Watershed District awarded the project, which features over 800 housing units, to Alatus in July 2021.

Alatus, led by Twin Cities developer Bob Lux, completed in December 2023 the first phase, a 116-unit apartment building.

But because of “untenable” increases in interest rates and financing costs, Minneapolis-based Alatus has not been able to move forward, the company said in a court filing. Nor has it been able to consummate an $11.25 million land purchase agreement with the watershed district.

Now, the district has declared Alatus in default of the land agreement, terminating it from the project.

The district owns the roughly 13-acre development site at 325 Blake Road in Hopkins. It declared Alatus in default of the land purchase agreement after the developer failed to pay up by Nov. 1.

The watershed district terminated the sale agreement this spring.

The watershed district’s actions “will delay the project by years — and possibly destroy it — all while wasting millions of taxpayer dollars,” the suit claims.

The Blake Road project, which sits on a long-vacant industrial site, is critical for both the city and the watershed district.

It would provide Hopkins with 833 housing units, including the already built Chorus Apartments affordable housing complex; 112 senior co-op units; 33 townhomes; and 9,000 square feet of commercial space.

For the watershed district, the Blake Road project is part of a larger effort within the 100-acre Minnehaha Greenway in St. Louis Park and Hopkins to connect, restore and improve water quality in Minnehaha Creek.

Under a three-way development agreement that also includes the city, the watershed district doesn’t have authority to terminate Alatus from the project, the suit says. Alatus claims the district breached its contract, including by trying to remove it from the project without a joint vote with the city of Hopkins.

James Wisker, the watershed district’s administrator, said Alatus’ purchase agreement for the land has been extended four times.

“They just haven’t been able to meet their contractual obligations to the watershed district. They have been in default for five months and have not been able to remedy,” Wisker said. “Exercising all this patience with Alatus has delayed our work.”

He said that while there is a development agreement between Alatus, the district and the city, the land purchase agreement is with Alatus and the district alone, so the district isn’t acting unilaterally.

Hopkins officials declined to comment.

Becker said Alatus named the city as a defendant because it is a “necessary party,” meaning its interests are critical to resolving issues before the court.

In a Jan. 30 letter to the watershed district, Hopkins Mayor Patrick Hanlon said the city has “confidence” in Alatus, calling the developer a “solid partner.”

The letter, which Alatus submitted to court, addressed the watershed district’s directive to “evaluate alternative pathways” for the project.

“Alatus’ vision is still the most compelling development vision the city has seen, and the city’s commitment of Tax Increment Financing (TIF) is to Alatus for this vision and this vision only,” the city’s letter said.

Hopkins awarded Alatus $31.7 million in TIF financing, which utilizes new property tax revenue from a project to help pay for that project’s costs. Alatus used $5.29 million of its TIF allocation to build the Chorus Apartments, which is fully occupied.

Wisker said the watershed district will move forward in tandem with the city.