The development of a large student-housing project in the heart of Dinkytown is underway, but local business owners are worried about the project’s effects on the area’s already strained parking situation.

The Minneapolis Planning Commission approved plans in late August to replace the University Technology Enterprise Center with a 326-unit housing complex. All UTEC tenants must vacate the building by the end of November, with construction set to begin in early 2013.

At last month’s planning hearing, representatives for Kafe 421, Loring Pasta Bar and the Varsity Theater voiced their objections to the proposal. They said losing UTEC’s large pay lot will cripple their businesses.

City officials said this issue is systematic of a larger parking problem in Dinkytown.

“There’s not a shortage of surface parking lots,” Planning Commissioner Gary Schiff said at last month’s meeting. “What there’s a shortage of is shared parking.”

Schiff said he hopes to see businesses work with the Marcy-Holmes Neighborhood Association and the city to create a long-term parking solution.

A large footprint

The still unnamed complex will include a central courtyard and plaza, a grocery store and two retail spaces, according to a report prepared by the planning department.

The building will use a large underground parking structure with 426 parking spaces and another 23 spaces at ground level. At least 415 of these spaces have been allocated for residents.

The development, managed by GEM Realty Capital Inc., will take over the entire UTEC property, including its 237-space parking lot.

‘Dropping a battleship next to Dinkytown’

Some area businesses, especially those that rely on customers from outside the University of Minnesota community, are outraged by the loss of the lot.

James Sander testified to the planning commission on behalf of his wife’s Dinkytown restaurant Kafe 421.

“I use the analogy of dropping a battleship next to Dinkytown because that’s essentially what they’re doing,” Sander said.

Sander said Kafe 421 stands to lose a significant amount of business without the lot and that he can’t rely on business from students living in the new housing.

“We have lots of mature people coming from the suburbs, and lots of them come in walkers and wheelchairs and whatnot, so parking is always an issue in Dinkytown,” he said.

An attorney for Loring Pasta Bar and the Varsity Theater also testified that both businesses had an agreement with the owner of UTEC to use the lot for event parking.

Jamie Radich, the sales and events manager of both businesses, said Loring has similar agreements with “at least four” churches, apartment complexes and other lots. He said he’s exploring more agreements to make up for the spaces lost with UTEC.

Reaching a compromise

In response to concerns from businesses and the Marcy-Holmes association, GEM is exploring options to increase public parking in the development.

Gretchen Camp, associate partner at the architecture firm that designed the complex, said the developer is applying for a parking variance that would decrease the requirement for residential parking in the building. This change could allow for 75 public parking spaces on the site.

This compromise would still halve the amount of public parking on the site. City planner Kimberly Holien said her office is planning a study of the area to devise a better solution to Dinkytown’s parking dilemma.

“There is maybe a more holistic parking problem within Dinkytown,” Holien said. “But it’s not something that can be solved with one development.”

A district-wide problem

According to Haila Maze, a Minneapolis city planner, these types of arrangements aren’t unusual in Dinkytown. Because businesses aren’t required to provide their own parking, they often form loose contracts to share privately owned lots.

“Just because no parking is required doesn’t mean no parking is needed,” Maze said.

Pat and Susan Duffy, co-owners of Duffy’s Dinkytown Pizza, own a 50-space lot across from the UTEC site. They said their lot is rarely full but expect it to be busier after construction begins.

Bill Marker, co-owner of Chilly Billy’s Frozen Yogurt, said he’s hesitant to advertise his business. With limited parking, he said, there’s no point in attracting customers from outside the University area.

The University owns a large surface lot behind Chilly Billy’s. Marker said he has reached out to the University about sharing the lot.

“Put some meters in there,” he said. “It’s just wasted space after five o’ clock and on weekends.”

Dinkytown Business Association President Skott Johnson said it’s possible to share parking with the University, but the process is slow.

“You don’t just call the U and say ‘We’d like to use some parking.’ It’ll go through 100 departments,” he said. “It’s a good idea, but it’s not going to be the quick route.”