Sunday, December 28, 2008

The Minneapolis Fed

Under strange and unexpected circumstances I met a VP from the Federal Reserve Bank of Minneapolis two days after Christmas, and I asked him why the Fed Bank of Minneapolis had abandoned the building it had built in the 1970s. The building had received praise for its unique architecture. The feature that attracted the most attention was its use of the principle of a suspension bridge to support the structure. Despite its striking architecture, the Fed occupied the building for less than thirty years before moving to a new facility.

He said that although the building looked great, it was not people friendly. For example, the corridors were on the outside along the windows, so there were no offices with windows except for those of the top officials. Further, the building was long and narrow (like a bridge), which did not give it a good flow for people.

There were also some serious design problems with the building. It had used asbestos as insulation for the steel beams, but the windows were not watertight. (I think the suspension bridge architecture had something to do with this.) Asbestos insulation is not supposed to get wet, but this did. So after twenty years, the Fed was faced with a choice, to build a new building or to renovate the old one. The estimated cost of each was roughly the same, but the risk of the renovation option was larger because of the possibility of serious cost overruns.

The Fed sold the building and the entire city lot for a mere $500,000. However, the appraised value of the property was negative $15 million, so the Fed did pretty well in disposing of the property.

The buyer totally renovated the building, gutting the interior down to the I-beams. The process may have bankrupted the original buyer--my source was not sure. Then the developer widened the tower so that the suspension bridge construction is no longer visible from the front of the building.

The 1970 building was designed with the assumption that checks would soon be obsolete, but they continued. The newer building was designed with the assumption that people would continue to write checks, and checks are now a rapidly declining way of making payments.

I checked the Internet to see how much of this account I could verify. I found that what Wikipedia has is consistent with it.


Roger Sweeny said...

Should that read, and checks are NOW a rapidly declining way of making payments"?

Dessert Survivor said...

"Should that read, and checks are NOW a rapidly declining way of making payments"?"

Yes--I made the correction. Thanks.