Clyde Iron Works developer had lien filed against property when city gave him loanThe developer of the Clyde Iron Works project had a $779,000 lien listed against his property in Lincoln Park when the Duluth Economic Development Authority approved a $500,000 loan for him last week.
By: Brandon Stahl, Duluth News Tribune
The developer of the Clyde Iron Works project had a $779,000 lien listed against his property in Lincoln Park when the Duluth Economic Development Authority approved a $500,000 loan for him last week.
Alex Giuliani said he paid off the lien on Friday and that none of the DEDA money was used in the payment, noting that he hasn’t been given the loan money yet and doesn’t know at this point if he’ll accept it.
“I paid (the lien) out of my own pocket,” he said. “There is not a story here.”
Property records show the lien was put on the Clyde Iron works property in October 2008 by Kraus Anderson Construction. A civil suit filed during the summer of 2008 by Kraus Anderson claims that the bill was for remediation, labor, construction and materials for the Clyde Iron and Heritage Hockey Center site from July 2007 to 2008 at a total estimated cost of $4.1 million.
Court documents said an agreement between Giuliani and Kraus called for Giuliani to pay $525,000 of the lien in November 2008, which he did, but that the remainder was not paid, and he owed Kraus Anderson an additional $402,000.
No other court documents were filed in the case after May 2009, and no property records indicated that, as of Thursday, Giuliani had paid his debt to Kraus Anderson.
Paul Loraas, Giuliani’s attorney, provided documents to the News Tribune on Friday afternoon that showed the lien was paid that day.
DEDA commissioners said they were not told about the lien when they voted to give Giuliani the loan, but suggested they would have approved the deal regardless.
“I’d like to know more about it,” said DEDA president John Heino, who also is CEO of Como Oil. “But I think we had a situation where anybody’s who’s seen what’s happening at the Clyde Iron site would be impressed with what’s happening there, and Mr. Giuliani’s leadership and investments have made that possible.”
Giuliani requested a bridge loan from DEDA to keep his hotel project at the Clyde Iron site moving forward, he told commissioners April 21. Under the terms of the agreement with DEDA, Giuliani has to pay interest only on the loan until he acquires financing on the project. He told DEDA that he did not have a loan commitment to develop the hotel, but he expressed confidence that he would be able to find the needed financing.
DEDA commissioners approved the loan 5-2.
The contract indirectly forbids Giuliani from using DEDA money to pay back the loan, said DEDA executive director Brian Hanson and Community Development director Keith Hamre. They said the loan money has not yet been given to Giuliani, but they expected he would receive it next week.
Both Hamre and Hanson said they were aware of the lien at the time the loan proposal was presented to DEDA.
Assistant city attorney Bob Asleson, who drafted the contract, said there is nothing in DEDA’s contract with Giuliani that would prevent Giuliani from using the DEDA money to pay off the lien.
He said the loan was intended as short-term financing for Giuliani to pay for his operations until he received financing for the hotel, “at which time DEDA would be paid off.”
Giuliani said he plans to use the DEDA money to buy furniture and equipment for the restaurant “to make sure we have a successful opening.”
“We’ve seen there are additional things we want to incorporate,” he said.
While the opening of the restaurant has been pushed back several times, Giuliani denied that those delays are due to financial problems. “There are no financial difficulties,” he said. “None.”
He said he expects the restaurant to open in mid-May,
“It’s always a moving target. It’s an unbelievably large moving target,” he said. “It’s one of the largest projects Duluth has seen by one private individual, and we want to make sure it’s done right. There are no delays.”
Giuliani also said that the DEDA money would not be used to pay $18,000 he owes in delinquent property taxes, which records show date back to 2008.
“That’s just part of having a $24 million thing,” he said. “I’ve created hundreds of construction jobs. I’ve created $25 million a year in economic development for this city with the [Heritage Hockey] arenas. I can keep going on and on. [I] cleaned up the brown field sites, made it safe in Lincoln Park, and all by myself.”