It took the better part of a decade for the West Seventh/Fort Road Federation to get a sizable portion of the century-old Jacob Schmidt Brewery into the hands of a development partner willing to save it from likely demolition and breathe new life into the storied Rathskeller office building. It took just weeks for the federation, a city of St. Paul-backed community organization, to lose its lease in the Rathskeller.

Meg Duhr, president of the federation — one of the city’s 17 neighborhood district councils — has been spending her nights and weekends packing boxes. On Monday evening, Duhr loaded filing cabinets onto a wheeled dolly. With executive director Julia McColley out on maternity leave, Duhr — who pulls no salary as president — has taken it upon herself to move the organization from the 1935 German beer hall building into new quarters in the second-floor parish office of nearby St. Stanislaus Church.

Some board members recently objected to the idea of relocating the nonprofit into the upstairs level of a religious institution, but the rent was free.

“This is purely a volunteer effort at this point,” Duhr said, during a break from her regular full-time job. “It’s just frustrating, because we have so many other issues we should be working on. There’s the Riverview transit corridor and pedestrian issues. Instead, we’re trying to find space where we could have an office, and moving mini-fridges. But I think St. Stan’s is going to be a really good fit.”

Suzanne Zahorski, from left, Meg Duhr and Seth Smiglewski load a filing cabinet onto a small trailer outside the West 7th/Fort Road Federation office, located in the Rathskeller building in St. Paul, on Monday, Aug. 5, 2024. The federation has to relocate as quickly as possible after a new owner bought the building the group currently resides in. (Devanie Andre / Pioneer Press)

Rent too costly

Earlier this year Wilson Molina and the Molina Group acquired the Rathskeller from a Texas-based holding company that had purchased the building at a foreclosure auction.

Duhr said Molina, the Rathskeller’s new owner, quoted her community nonprofit a monthly lease of about $1,700 monthly which the federation could not afford.

Reached by phone on Monday, Molina, who is based in Minneapolis, said he has been renegotiating leases with all of the Rathskeller building’s tenants. Several tenants, including a hair salon, the ROK music lounge and the federation, are packing up. Molina said an Asian restaurant that he believed will offer fusion cuisine will move into the ROK space. An existing commercial bakery also plans to stay in place.

“We’re getting new tenants in and renewing leases from the previous tenants who are there,” Molina said. “I think it will be a big switch. … We’ll see if we have a commitment. If not, we’re evicting them.”

Saved from likely demolition

Board members with the federation previously hoped their lease would protect them from a price hike, as they’re roughly five years into a 10-year lease agreement. Their arrangement with original Rathskeller developer Craig Cohen guaranteed them free rent until the year 2029 — or so they thought. An attorney dug into the mechanics of the deal and found they had no legal protection against higher rent.

Meg Duhr, middle, President of West 7th/Fort Road Federation, Maggie Rock, left, 1st Vice President of the group, and Hayden Kilkenny, right, Area 2 Coordinator, pack up the conference room in the Rathskeller building in St. Paul on Monday, Aug. 5, 2024. The federation is relocating their offices after a new owner bought the building. (Devanie Andre / Pioneer Press)

In 2011, the St. Paul Housing and Redevelopment Authority — the city’s land-owning arm — provided the federation with $1.9 million to buy the Rathskeller building and the adjacent Keg House property, likely saving it from demolition. The federation then sold the Keg House property to Schmidt Keg House Holdings in 2014 for $550,000, and the proceeds were deposited into an escrow fund to be used toward the building’s redevelopment. The federation later used the funds to replace the building’s roof and remove lead-based paint, asbestos and polluted soils.

Roughly $2 million of city, HRA, Metropolitan Council and state Department of Employment and Economic Development funds soon followed. The federation returned the Rathskeller building to the HRA in 2015 to reduce holding costs, but remained involved in maintenance and pre-development work.

In December 2015, the HRA board expanded a nearby tax increment financing district associated with the old Koch-Mobil petroleum tank farm site near the future Victoria Park. The district, which effectively borrows money from future tax proceeds generated within its own borders to fund site improvements, produced $1.4 million in a “pay-as-you-go” TIF loan to the federation.

All the while, the federation looked for commercial tenants to move into the Rathskeller, which hosts multiple office spaces above its distinctive basement beer hall. That’s when Cohen arrived around 2017 as the managing partner of Rathskeller Renaissance LLC. He had previously acquired and renovated three buildings along West Seventh Street. In addition to the Rathskeller and the Keg House, he acquired from the federation the West Seventh Street building that is now home to the White Squirrel bar and performance stage.

Every corner of the West 7th/Fort Road Federation office is boxed up as the organization moves its office from the Rathskeller building in St. Paul to St. Stanislaus Church on Monday, Aug. 5, 2024. (Devanie Andre / Pioneer Press)

Keg and Case — and the beginning of the end

Cohen quickly drew a flurry of commercial tenants, debuting the Keg and Case food hall in 2018 following some $10 million in improvements. The 168-year-old keg house’s 22,000 square feet of commercial space was outfitted with 23 vending stations, from a 14-foot-tall mushroom farm to a glass-encased bee hive, an artisan pickle booth, an upscale restaurant and eventually Clutch Brewing on its mezzanine level.

From the start, some called the Keg and Case set-up too pricey for the neighborhood. Two sit-down restaurants, the southern-themed In Bloom and the Woodfired Cantina, closed in succession. Clutch Brewing called it quits at the end of 2023, by which time most other food vendors were long gone.

Cohen, of St. Paul, filed for personal bankruptcy protection in April.

MidWestBank One took title to the Keg and Case deed last October, but it was unclear on Monday if it was on the market. The neighboring Rathskeller building was sold at a sheriff’s auction in May 2023, with a one-year redemption period ending mid-May of this year. On May 13, the Rathskeller title transferred to JTS Capital, a Texas-based asset acquisition and management company. The Rathskeller was then quickly acquired that same month by Molina and the Molina Investment Group, which talked up the possibility at the time of installing a Brazilian steakhouse.

Since then, several Rathskeller office tenants have been unable to reach agreement on new leasing arrangements with Molina.

Mike Jacobson, who ran Bad Penny Pinball since last fall, also lost his space at Rathskeller when his rent — which he said had been $900 a month — went to $1,500.

Duhr noted the irony of the federation having to depart the building.

“We’re getting kicked out of a building that would not exist if not for the federation,” Duhr said. “The federation really led the way to keep the building from demolition, and to coordinate with the Heritage Preservation Commission to restore the space to how it was when it was a functioning office and Rathskeller for the Schmidt Brewery.”

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