How St. Paul's Keg and Case lost its glory
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St. Paul's Keg and Case Market was the darling of the Twin Cities food scene five years ago. Now it's 70% vacant and its owners are facing a potential foreclosure.
Why it matters: Keg & Case was at the forefront of a wave of modern food halls that opened in the Twin Cities.
What happened: The pandemic wiped out most of the 27 tenants in the building, including In Bloom, the anchor restaurant by the owners of Revival. Today, there are just nine.
- Two years ago, the market was working on deals with several restaurants, but many of them never opened.
What they did: A year ago, the city of St. Paul awarded the ownership group of the market, led by Craig Cohen, a $1.2 million grant using federal COVID relief funds aimed at helping tourism businesses that attract more than 40,000 people annually.
Yes, but: On April 18, less than a year later, MidWestOne Bank of South St. Paul sued Keg and Case for defaulting on its loans, which have $5.4 million in outstanding debt.
- MidWestOne said in the lawsuit it wants to foreclose on the property and sell it for redevelopment.
The intrigue: The people Cohen hired to work on the project said they were close to a breakthrough that would have refilled Keg and Case. Cohen last August brought in longtime St. Paul real estate vet Julie Bauch as CEO of the market and she hired former St. Paul Port Authority president Lee Krueger to lease it.
Between the lines: Krueger and Bauch told Axios they were nearing leases with three restaurant tenants, including El Sazon Tacos & More, the buzzed about Eagan eatery that would have served as an anchor.
- "We were pretty far along and ready to sign the lease," El Sazon's broker, Alex Brown, told Axios. "And then the news hit (about the lawsuit) and we kind of pulled out."
- El Sazon is instead planning a South Minneapolis location.
- Bauch and Krueger's contracts were terminated weeks before the lawsuit, they said.
What they're saying: Both Bauch and Krueger were heartbroken when they lost their contracts. They said they wanted to present to MidWestOne Bank to show their progress and business plan, but Cohen asked that they not approach the bank. And it's not clear to them how much of an effort he made to do so.
- They said they also presented Cohen with a list of several established local developers who wanted to buy the market, but he never did anything with the list.
The other side: Cohen said in a statement that the market did all it could to survive the “lasting impacts” from the pandemic, but he didn't address the potential tenants, whether he told the bank about them or the potential buyers.
- An attorney for MidWestOne declined to comment.
Meanwhile, the city won’t get back the $1 million it shelled out to the market owners.
How it works: The grant program reimbursed businesses for debt service payments, insurance expenses, payroll, utilities, contract services and routine operating expenses.
Yes, but: Bauch said often times it took the city months to make the reimbursements, which added to the financial stress.
The latest: The market remains open, but Cohen and the ownership group have not yet responded to the lawsuit.
The bottom line: If the building goes on the market — either by Cohen or the bank selling it, it should have plenty of interest, Bauch and Krueger said.
- "Everybody loves the building," Bauch said. "We wanted to return it to its former glory. We were so close."