Questions Surround Redevelopment of Midtown Sheraton

A proposed 182-bed sobriety facility merits closer scrutiny

Photo by NPR, June, 2020.

Sanctuary Site

In June 2020, police evicted residents from the Midtown Sheraton Hotel at the request of its owner, Jay Patel. In the aftermath of the George Floyd uprising, the hotel had briefly served as a sanctuary for the homeless. Volunteers and residents attempted to create a decentralized, police-free living environment. But those efforts quickly collapsed under the weight of serious challenges. As the Minnesota Reformer reported, the eviction followed “several days of 911 calls and reports of gunfire, sex trafficking and drug dealing.”

The memory of that experiment in mutual aid still resonates in parts of the community. That sentiment may have influenced the Planning Commission’s recent approval of a proposal by International Management Limited Liability LLC—an entity owned by Patel—to convert the property into a 182-bed facility for individuals “actively pursuing sobriety,” as described in Finance & Commerce. What was previously a 136-room hotel would be converted to serve more residents. The proposed operating partner is a newly formed organization called Sobriety Inc.

A search for this organization led us to “Sobriety Inc. Com LLC,” formed in October 2024. Its website features AI-generated images and does not list any staff or leadership, and it appears unfinished. That absence of transparency is a concern, especially for an organization seeking to provide addiction services to vulnerable residents.

During the Planning Commission hearing (starts at minute 60), the proposal was presented by a representative from the law firm Larkin Hoffman. When asked by Commissioner Angela Conley whether Sobriety Inc. was a for-profit company, the representative appeared unsure. It was later confirmed that they are. The presenter also declined to name any additional organizations that might be involved in facility operations, stating only that the service provider could be “interchangeable.”

Larkin Hoffman was the advocate in a recent case involving an unlicensed facility in Brooklyn Center operated by Care Chexx. The firm defended the operator by suggesting the operation was functionally similar to a hotel. But there are meaningful differences. A medical facility housing 182 residents, many of whom may rely on Medicaid, must meet state requirements for licensed medical staff and clinical oversight. The risk of relapse increases substantially when those safeguards are missing.

When asked where future residents of the Midtown facility might come from—Hennepin County, local providers, or nearby hospitals—the developer claimed there was no formal relationship with any of those entities and that it was a coincidence they were near the hospital. Yet the proposal repeatedly cited proximity to Abbott Northwestern Hospital as a benefit. That contradiction, combined with the lack of operational transparency and unclear management structure, raises serious questions.

City leaders must proceed with caution. Minneapolis has no shortage of need for high-quality recovery services. But that does not absolve decision-makers from due diligence—particularly when for-profit operators with vague credentials seek to convert a former hotel into a high-capacity treatment facility in the heart of an already challenged neighborhood.

Site of former encampment in Ward 9. Photo by Terry White, July 2025.

Recouping Losses

The Sheraton property has lost significant value over the past decade. Purchased for $10 million by the Qatar-based Al Qamra group in 2016, it was sold for $8 million to International Management in 2020, before the COVID-19 pandemic. Its current estimated value is just $2.37 million.

According to Larkin Hoffman, the current owners have invested $4 million in the building over the last five years and plan to spend more converting it into a sober facility. If the facility moves forward as proposed—with 182 residents billed to Medicaid at hospital-level rates—it could offer a steady revenue stream that helps recoup losses on the property.

There is no question that Minneapolis needs more resources for those recovering from addiction. It’s possible that this facility could fill a real gap. But many Ward 9 residents may see it differently. The Planning Commission did request that the developers engage more directly with the surrounding community.

On a recent walk through Ward 9 with Dan Orban—who is challenging Council Member Jason Chavez for his seat—we heard a recurring theme: residents feel powerless in the face of persistent drug activity and violence. Several former Chavez supporters told us they would not vote for him again. They said their concerns have gone unheard: being woken by fights near known drug houses, seeing flower memorials on corners where teenagers have been shot, and struggling to prevent encampments from taking root on vacant lots.

They want a city council member who pays attention to the boarded-up storefronts that once housed immigrant-owned businesses. In that context, it’s fair to ask whether adding this facility will improve the neighborhood or deepen existing challenges. Larkin Hoffman says they chose this location to be “close to where their clients are.” That may be true. It’s across the street from Chicago Lake Liquors.

Jason Chavez speaking at Ward 9 convention. Photo by Taylor Dahlin, May, 2025.

State Laws Require Enforcement Assistance

The next stop for this project is the Business, Housing & Zoning Committee of the Minneapolis City Council. Before granting approval, we recommend that council members consider whether the city has adequate policy frameworks in place to govern who operates care facilities like this one.

Facilities of this type are licensed under Minnesota Statute Chapter 245G, through the Department of Human Services. But while the law enables these operations, it provides little direction to cities on what to do when providers fall short. Jessie Van Berkel’s reporting on Care Crossings—where operators increased profits while delivering substandard care, sometimes billing for services never rendered—is required reading for anyone evaluating this proposal.

The state has effectively opened the door to potential fraud. It licenses these facilities without offering cities guidance on restrictions they can impose, nor does it fund enforcement actions when providers violate the law. This regulatory void allows vulnerable residents to be exploited, while reputable providers are left to deal with the consequences. When organizations like NUWAY, a Minneapolis addiction services provider, are found to commit fraud, public confidence in all providers erodes.

Approving Conditional Use Permits for facilities of this scale demands sharper questions from the City Council. Who will oversee care? What experience do the operators have? What happens when things go wrong?

Walking through Ward 9, it is clear that Minneapolis needs more caregivers for those dealing with substance use disorder. But it’s equally clear that enforcement is lacking for properties known to be used for drug trafficking, and that homelessness, addiction, and mental illness are tightly intertwined.

The benefits of placing a for-profit recovery facility in this community—both for residents of the ward and for the individuals seeking sobriety—remain poorly defined. Helping people overcome addiction is difficult, serious work. It cannot be reduced to a real estate project. This project is far more than a hotel.

Residents of Ward 9 are still working to rebuild their neighborhoods. They deserve transparency, accountability, and a genuine voice in shaping what comes next.