The document proposes a mixed-use development called 501 Flats in the North Loop neighborhood of Minneapolis. The development aims to provide housing and retail space to support growth in the area while achieving LEED Silver certification. It will follow various design guidelines to ensure compatibility with the historic warehouse district. A pro forma budget projects the development will have a positive cash flow within 11 years and achieve a 14% internal rate of return, above the desired 10% threshold.

1. 501 FLATS
501 Washington Ave. N.
Minneapolis, MN 55401
An urban loft and mixed use
development proposal for the North
Loop in Minneapolis.

2. GOALS OF 501 FLATS
• FIRST AND FOREMOST WE AIM TO ACHIEVE THE HIGHEST AND BEST USE OF EACH
PROJECT WE TAKE ON
• LEED SILVER CERTIFIED BUILDING
• MINIMAL ENVIRONMENTAL DAMAGE
• FIT INTO THE FOLD OF THE NEIGHBORHOOD
• DESIGN GUIDELINES TAKEN FROM THE NORTH LOOP NEIGHBORHOOD
• WAREHOUSE DISTRICT NORTH LOOP NEIGHBORHOOD DESIGN GUIDELINES
• NORTH LOOP SMALL AREA PLAN: UPDATE TO THE DOWNTOWN EAST/
NORTH LOOP MASTER PLAN
• MINNEAPOLIS WAREHOUSE DISTRICT DESIGN GUIDELINES
• METROPOLITAN COUNCIL 30 YEAR PLAN
• 501 FLATS AIMS TO PROVIDE THE NORTH LOOP NEIGHBORHOOD WITH
HOUSING AND RETAIL SPACE NECESSARY TO MAINTAIN AND CONTINUE
GROWTH IN THE AREA

3. LEED SILVER
LEED SILVER IS THE SECOND LEVEL OUT OF FOUR LEVELS OF THOSE CREATED BY
LEADERSHIP IN ENERGY & ENVIRONMENTAL DESIGN. IT REQUIRES BETWEEN 50-59
POINTS. THEY CAN BE EARNED IN THE FOLLOWING CATEGORIES:
• INTEGRATIVE PROCESS
• LOCATION & TRANSPORTATION
• MATERIALS & RESOURCES
• WATER EFFICIENCY
• ENERGY & ATMOSHPERE
• SUSTAINABLE SITES
• INDOOR ENVIRONMENTAL QUALITY
• INNOVATION
• REGIONAL PRIORITY CREDITS
OUR PLAN:
• HIGH EFFICIENCY APPLIANCES & HVAC
• LOW IMPACT CONSTRUCTION
• LOCATION
• NEAR GROCERY STORE, PARKS, & RECREATION
• HIGH WALK/BIKE SCORE LOCATION WITH PUBLIC TRANSPORTATION

4. SITE LOCATION IN NORTH LOOP
NEIGHBORHOOD

5. 501 WASHINGTON AVE N.
CURRENT CONDITIONS
(8)
EMPTY LOT SITE FOR THE
501 FLATS DEVELOPMENT.
ADJACENT SITE (CUZZY’S)
WILL POSSIBLY BE BOUGHT
WITH A SEPARATE
PROJECT FOR SMALL
PARKING. WAREHOUSE
BEHIND SITE WILL BE PHASE
2 OF THE 501 FLATS
DEVELOPMENT.

6. OTHER VIEWS OF 501 WASHINGTON
AVE. N. SITE

7. DESIGN GUIDELINES
Guiding Principles of the Design Guidelines
The following guiding principles were developed collectively by the public who participated in the planning process.
Mission: Protect the Integrity of the Warehouse Historic District
1. Collective Impression. The character of the district is created by the collective impression of numerous elements that
date from the period of significance, 1865 to
1930. In addition to buildings, these elements include railway corridors, streets, alleys, retaining walls, loading docks, signs,
structures and other features.
2. Industrial Heritage. The historic character of the district is largely based in its historic industrial uses. Alterations in the
district should reflect this industrial heritage, while allowing for the livability improvements necessary to support a growing
urban neighborhood.
3. Compatible Design. New construction in the district shall be compatible with the historic district. Compatibility is the
ability of different components, whether similar or dissimilar, to function together and stand together without disharmony
or conflict. New structures shall be true to themselves and not replicate existing structures.
4. Distinctive Features. Distinctive features, finishes, materials, spaces, construction techniques or examples of
craftsmanship that characterize a property shall be preserved, and alterations to such features shall be avoided.
5. Compatible Infrastructure. The introduction of infrastructure including plantings, trees and amenities shall be
thoughtfully integrated with the fabric of the district and preserve the relationships between the buildings and historical
landscape features of the district.
6. Clear Purpose and Application. The guidance offered by the design guidelines will be clear enough to provide a
reasonable assurance of review expectations, while allowing for creativity in design. (5)

8. DESIGN GUIDELINES
• LAND USE: DEVELOP A CRITICAL MASS OF ACTIVITY WITH A COMPACT MIX OF
USES.
• COMMUNITY CONTEXT: DEFINE THE NORTH LOOP NIEGHBORHOOD AS AN
IDENTIFIABLE DISTRICT WITHIN THE CITY OF MINNEAPOLIS AND THE TWIN CITIES
REGION
COMPONENTS OF GOOD DESIGN:
• CIRCULATION
• OPEN SPACE
• HISTORIC PRESERVATION
• ARCHITECTURE
• FAÇADE TREATMENTS
• GROUNDLEVEL EXPRESSION
• BUILDING MATERIALS
(3)

9. (3)
MOVEMENT AND CORRIDORS IN THE
NORTH LOOP

10. CIRCULATION

11. CURRENT STREET
CONDITIONS
HISTORIC BRICK/
COBBLESTONE STREET PARCEL
HISTORIC PRESERVATION

12. Current Conditions of the North Loop
Neighborhood

13. ARCHITECTURE
• FAÇADE TREATMENTS
• GROUNDLEVEL EXPRESSION
• BUILDING MATERIALS

14. 501 FLATS MODEL

15. Current Neighborhood
Residential
Development Projects.
1. Pacific Flats
2. The Reserve
3. Intl. Harvester Metro
Homes
4. SOHO
5. Herschel Lofts
6. 730 Lofts
7. Twins Stadium
8. Two Twenty Two
(3)
DEVELOPMENT TRENDS IN THE
NORTH LOOP

16. (7)
GROWTH TRENDS IN THE NORTH
LOOP IN THE PAST DECADE

17. 501 FLATS BUDGET
WHAT DO ALL THESE NUMBERS MEAN?
• OUR PROJECT IS PROFITABLE
• IT TAKES INVESTORS AND DEDICATED
DEVELOPERS UP FRONT IN ORDER TO
SUCCEED
• LET US INVESTIGATE FURTHER…
(10)*Assumptions of interest rates and percentages based on this source

18. 501 FLATS BUDGET: SIMPLIFIED
Financing VALUES 501 FLATS
Purchase Price (plus closing costs) 250000 $250,000
Demolition $3,000 $3,000
Tenant Improvement Allowance for Retail/Office @ $25/SF $8,000 $8,000
Soft Costs (@2.5%) 2.5% $6,525
Total Acquisition Costs $267,525
Construction Loan 11,500,000.0 $11,500,000
Down Payment -250,000 $(250,000)
Debt $(10,982,475)
Income
Net Rent: Residential $614,250 $614,250
Vacancy Factor @ 2% -2% $(12,285)
Net Rent: Commercial 80,000 $80,000
Vacancy Factor @ 5% -5% $(4,000)
Tenant Contributions 6,000 $6,000
Other Income $6,000.00 $6,000
Operating Expenses $(133,946.00) $(133,946)
Total Monthly NOI $46,334.92
Total Annual NOI $556,019
Debt Service
Interest Rate 4.00%
Term 30
Total Monthly Debt Service $(55,421)
Total Annual Debt Service $(665,046)
Cash Flow / year $(9,086)
Cash Flow / Year
Return on Equity 4%
Cap Rate 4.7%
THE PURCHASING COST WITH
DEMOLITION UP FRONT IS
RELATIVELY LOW:
• NO EXISTING STRUCTURES ON
SITE AND A SMALLER LOT IN
NORTH LOOP
• THE PROPERTY WILL MAKE
MONEY, BUT APPROXIMATELY 10
YEARS BEFORE REAL RESULTS: A
NORMAL AMOUNT IN
DEVELOPMENT PROPERTIES
• THE RETURN ON EQUITY IS
ESTIMATED AT 4%. TYPICALLY
INVESTORS LIKE TO SEE FOUR
TIMES THEY INVESTED OVER 30
YEARS. THIS PRO FORMA DŒS
NOT ACCOUNT FOR GRANTS
AND TAX BREAKS.

19. 501 FLATS BUDGET: BROKEN DOWN
PRO FORMA (Page 3 of 5)
AFTER-TAX CASH FLOW ANALYSIS
DETERMINING TAXES YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 YR 11
=========== =========== =========== =========== =========== =========== =========== =========== =========== =========== ===========
Cash Flow (102,814) (101,924) (105,651) (92,145) (78,249) (63,948) (49,227) (34,072) (18,468) (2,397) 14,157
- Depreciation Expense 549,788 549,788 549,788 549,788 549,788 355,927 355,927 355,927 355,927 355,927 355,927
- Amortization of Fees 7,755 7,755 7,755 7,755 7,755 7,755 7,755 7,755 7,755 7,755 7,755
- Accrued Interest 0 0 0 0 0 0 0 0 0 0 0
+ Amortization of Principal 198,833 206,786 215,058 223,660 232,607 241,911 251,587 261,651 272,117 283,002 294,322
+ Funded Reserves 0 0 0 0 0 0 0 0 0 0 0
= Earnings (Loss) Before Tax (461,524) (452,681) (448,136) (426,028) (403,185) (185,719) (161,322) (136,103) (110,033) (83,077) (55,203)
x Tax Rate 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00%
___________ ____________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
= Tax Incurred (Saved) (161,533) (158,438) (156,848) (149,110) (141,115) (65,002) (56,463) (47,636) (38,511) (29,077) (19,321)
Cash Flow (102,814) (101,924) (105,651) (92,145) (78,249) (63,948) (49,227) (34,072) (18,468) (2,397) 14,157
- Tax Incurred (+ Saved) (161,533) (158,438) (156,848) (149,110) (141,115) (65,002) (56,463) (47,636) (38,511) (29,077) (19,321)
___________ ____________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Cash Flow After-tax 58,719 56,514 51,197 56,964 62,866 1,054 7,236 13,564 20,044 26,680 33,478
After-tax Benefits Analysis
Cash Flow (102,814) (101,924) (105,651) (92,145) (78,249) (63,948) (49,227) (34,072) (18,468) (2,397) 14,157
- Taxes (161,533) (158,438) (156,848) (149,110) (141,115) (65,002) (56,463) (47,636) (38,511) (29,077) (19,321)
+ RTC 0
+ LIHTC 35,465 35,465 35,465 35,465 35,465 35,465 35,465 35,465 35,465 35,465
+ Net Sales Proceeds 0 0 0 0 0 0 0 0 0 0 0
__________________________________ ______________ ___________ ____________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
Net Cash Flow After-tax 94,184 91,978 86,661 92,429 98,330 36,518 42,700 49,028 55,508 62,145 33,478
Ltd. Partners 500,000 93,242 91,059 85,795 91,505 97,347 36,153 42,273 48,538 54,953 61,523 33,144
IRR Equity 670,321
Desired IRR 10.00%
Actual IRR 14.34%
WE SEE A POSITIVE
CASH FLOW IN YEAR 11IRR: INTERNAL RATE OF RETURN – IT CAN BE THOUGHT OF AS THE RATE OF
GROWTH A PROJECT IS EXPECTED TO GENERATE. THE HIGHER THE IRR, THE
MORE DESIRABLE THE PROJECT. AS WE CAN SEE THE DESIRED IRR IS 10% AND
WE ARE EXPECTING ABOUT A 14.5%

20. SOURCES
1. Northloop.org
2. City of Minneapolis Zoning Code
3. “Warehouse District North Loop Neighborhood Design Guidelines”. northloop.org/
developers. October 2006. Warehouse District North Loop Neighborhood
Association. PDF/Web. March 2014.
4. “North Loop Small Area Plan: Update to the Downtown East/North Loop Master
Plan”. northloop.org/developers. 16 April, 2010. City of Minneapolis: Department of
Community Planning and Economic Development. PDF/Web. March 2014
5. “Minneapolis Warehouse District Design Guidelines”. northloop.org/developers. 2
March, 2010. City of Minneapolis: Department of Community Planning and Economic
Development. PDF/Web. March 2014
6. U.S. Department of Housing and Urban Development; portal.hud.gov/hudportal/HUD
7. “Minneapolis Neighborhood Profile: North Loop”. http://www.mncompass.org/. PDF/
erb. 26 April, 2014.
8. Google Maps: 501 Washington Avenue N. google.com/maps/. 29 April, 2014.
9. Ivestopedia.com
10. Pat Connelly’s “URBS 3500: Real Estate: Real Numbers”