BUZZ Blog: DEDA once rejected paying $1.1 million for Temple Opera, NorShor buildings
Peter Passi and Brandon Stahl cover issues related to the city of Duluth. Follow BUZZ on Twitter.
Not to go all News Tribune Attic on you, but I stumbled across this old story about the Duluth Economic Development Authority rejecting a proposal in 2001 to pay $1.1 million to buy the Temple Opera, NorShor and NorShor annex buildings -- the same ones that the city will spend $2.6 million on.
While Mayor Ness was a city councilor back then, I checked and he was NOT on DEDA on that time -- it was a mix of councilors and private citizens. And he wasn't part of that mix.
DEDA WON'T BUY NORSHOR PURCHASE OF BRIDGEMAN-RUSSELL BUILDING GETS THE GO-AHEAD
Duluth News-Tribune (MN) - Saturday, March 24, 2001
Author: Peter Passi/News Tribune staff writer
The Duluth Economic Development Authority said no to the NorShor Theatre and yes to the Bridgeman-Russell building Friday night.
DEDA had delayed acting on two proposals to purchase the historic downtown buildings at its meeting Tuesday, asking city staff for more information on the long-term plans for the properties and what it would cost in the short run to bring the buildings up to code.
After a three-day recess, DEDA members remained unconvinced about the wisdom of the most expensive transaction -- spending $1.155 million to acquire the Temple Opera building, the NorShor Theatre and the NorShor Annex from Eric and Debbie Ringsred. A loan worth $31,196.74 also would have been forgiven as part of the deal.
However, DEDA did approve the less expensive purchase of the Bridgeman-Russell building for $330,000.
The deal still needs to win the approval of the Duluth City Council before it can proceed. Councilors will take up the matter Monday.
Mike Conlan, director of Duluth's planning and development department, provided DEDA members with information about income and operating costs at the Temple Opera building and memos from the fire marshal regarding a sprinkler system recently installed in the NorShor complex. But he said he had not yet managed to obtain a building inspector's report on the property.
It was a situation that made DEDA member Dale Lewis uncomfortable. ``To not have that report here is really having a big blank check that we're being asked to sign,' she said.
Conlan said it appeared the buildings would not require substantial improvements to comply with city codes, but other DEDA members were equally uneasy about acting with the information they had in hand.
DEDA president and City Council member Ken Hogg said, ``When I look at the idea of putting together a plan involving public money to restore that whole area and to preserve and enhance the potentialities of that area, it's very exciting.
``My problem is that the way this has been presented so far. It's a heart-throb idea, but there's nothing there to see it works economically -- that it makes sense.'
Lewis said she needed a clearer plan and posed a tough rhetorical question: ``So you're asking us to spend over $1 million on this property, and then we can decide what to do with it, or whether to do anything with it?'
Conlan defended the plan to intervene to help restore and redevelop what he considers some strategically important historic buildings. ``We've determined that our community needs to make a strong statement about the value of historic preservation downtown.'
Patty Edwards, a DEDA member and City Council member, expressed concerns that city ownership of the NorShor could change its character. ``The people running it now know what they're doing,' she said. ``I hate to say it, but we're not really hip here.'
DEDA members voted 7-0 not to purchase the NorShor complex, including the Temple Opera building.
But they unanimously agreed to spend $330,000 for the Bridgeman-Russell building, at 10-16 W. First St. Lewis abstained from voting, citing a potential conflict of interest.
The deal involves two parts -- as the building's facade actually spans two structures owned by separate parties.
DEDA already had voted in favor of paying $95,000 for the west structure, owned by the estate of Harry Davis. On Friday, members OK'd a plan to pay another $235,000 to Elliott Bayly for the east half. Bayly bought the east half of the building in 1995 out of tax forfeiture for $11,000.
The building had been owned by Ferris Alexander, whose buildings were seized by the U.S. government in 1990 after his federal racketeering and obscenities conviction.
``I had been trying to buy the building since the 1980s,' Bayly said. ``It's a great building. I bought it to save it.'
Bayly spent more than $200,000 for a new roof, floor joists and other repairs since buying the building.
About a month ago, Bayly was approached by a real estate agent who offered him $60,000 for the property.
``I told him that I couldn't sell it for less than I had into it,' Bayly said Friday.
The agent, who was acting for the city, then offered $235,000 for his half of the building.
``I had no idea the city was the buyer until I read it in the newspaper,' he said.
City officials agreed to buy the west half of the building for $95,000.
Davis, who died in May 2000, bought the west half of the building for $149,000 in November 1998, according to city assessor records.
Both sides of the building are largely gutted and will require massive renovation, but Conlan said the west side is in the roughest shape.
If the City Council approves, DEDA will use money from its Downtown Tax-Increment District No. 2 to pay for the building acquisitions.
If all goes according to DEDA plans, the deal will be cemented just before a change in state law takes effect. As of April 1, DEDA will be able to use tax-increment resources from the district only to retire existing debts.
Even with the Bridgeman-Russell acquisition, City Finance Director Todd Torvinen said the tax-increment finance district could be retired by 2006 -- about four years in advance of the originally established 2010 repayment date.
Conlan told DEDA members Tuesday that they may need to consider offering the Bridgeman-Russell building to private developers at a deep discount. ``The purchase price may be as little as a dollar, because of the cost to renovate this building, particularly the west side.'
He pointed to the former Phoenix Building, at 327 W. Superior St., as an example. When a fire gutted it, DEDA intervened, investing $1.59 million to raze the burnt structure and erect a new building in its place. The building, now home to Gold's Gym, was later sold to a developer for $209,000.
``Sometimes we need to be willing to take a loss in order to make redevelopment possible,' Conlan said.
Staff writer Baird Helgeson contributed to this story.