BUZZ Blog: Will Ringsred use NorShor money to buy more downtown property?
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What would you do with $2.6 million?
Pretty soon Eric Ringsred gets to answer that very question. One of the things he's going to consider: using the money to buy more downtown property.
"There is a tax savings if you turn it over to similar properties," he said. "It's definitely something we're talking about."
In other words: he can delay having to pay capital gain taxes, according to 1st District councilor and banker Todd Fedora (why I'm quoting him -- I was too lazy to call up another banker/financial person), if he files a Section 10-31 exchange, or a "like-kind exchange" if he buys similar properties. What's meant by similar? Obviously he's not going to find another theater, but Fedora believes Ringsred could buy another multi-tenant office building or a commercial real-estate to qualify for the exchange.
It also, Fedora believes, doesn't have to be historic property, but he suggested I call someone else who was more seasoned with this. But good golly, this is just a blog post.
And at any rate, Ringsred said he hasn't given too much thought as to what he might buy, if he does it at all.
"Why worry about it until the sale goes through," he said.
Still, if he is looking to buy downtown property, Candace Renalls did a great story showing how much is being redone in that area, and it seems like not much is left to buy ... except the old Gardner Hotel building, the one tucked behind the Tech Village on Lake Avenue, and is sitting empty despite being bought and gutted by the Zeppa Foundation a couple years ago with the hopes it would "jump start Duluth's art scene" according to an old DNT story (below).
That obviously didn't happen, so what's going on with the Gardner building now? Not much, said Tony Cuneo, At Large city councilor and director of policy and planning for Zeppa.
"We're kicking ideas around and would like to see it put to good use," Cuneo said. "It would be a dream location for student housing/young professional at affordable rates in or around the downtown."
But he indicated that's a long, long way from happening.
Has Ringsred contacted him about buying the building?
"No," he said.
But I wouldn't be surprised if Ringsred at least considers that building. It was bought, according to city assessor records, in 2007 for $515,000, and is now valued at $408,000 (though we all know after the NorShor that city assessor values don't mean much)(I kid! I kid!)
The old story:
The Gardner Hotel building at 12 Lake Ave. N. is about to be transformed by a new owner intent upon jump- starting Duluth's art scene.
The A.H. Zeppa Family Foundation purchased the structure this week. The building, which was built in 1890, is the last vestige of Duluth's original downtown in a block now dominated by the Technology Village and a city-owned parking ramp.
The building will be put to mixed use, but fostering public appreciation of the arts will be a primary part of its mission, said Don Ness , policy director for the Zeppa Foundation.
"We want to make space available for some kind of an all-ages music and art venue," Ness said.
Ness said the foundation imagines something similar to the Twin Ports Music and Arts Collective, designed to serve as an incubator for musicians and other artists. Called the MAC, it operated out of a Duluth building at 22 N. First Ave. W. until its closure in January 2005 for lack of support.
Ness said the foundation is ready to dedicate space for a similar venture.
"If our vision is going to work, it needs to be supported by a grassroots organization with public buy-in and strong participation by the arts community," Ness said.
Ness said that the basement or the ground-level floor of the building could be set aside as a space for the arts.
"With the loss of the MAC and the NorShor Theatre as local music venues, there has been a void of places where people can perform more experimental, less commercial work," he said.
Ness proposed creating an intimate performance space that can comfortably accommodate crowds ranging from 20 to 200 people.
The top level will be remodeled as residential space. Uses for the remainder of the four-floor Gardner still are being explored.
Ness said the foundation aims to move forward aggressively with plans for an all-ages art space. "We'd like to have that open and ready to go by this fall," he said.
Center City Housing Corp., which operated the Gardner as a 42-unit sliding-rent apartment building for people on the brink of homelessness for almost 20 years, should be out of the building completely by the end of this week.
Rick Klun, Center City's executive director, said most of the Gardner's tenants relocated to the New San Marco apartment building, 230 W. Third St., which was built to replace the Gardner. The newly finished building contains 40 efficiency apartments for people fending off homelessness, plus living quarters for 30 chronic alcoholics, located in a separate wing.
"The Gardner had outlived its usefulness [as an apartment building]," said Gary Olson, CEO of the Center for Alcohol and Drug Treatment and former executive director of Center City Housing.
He cited several building deficiencies, including the lack of an elevator, cramped rooms and units with shared kitchen and bath facilities that were difficult to maintain.
Olson said the Gardner served the community well, providing a vital source of stop-gap housing. He helped negotiate the purchase of the building from then-owner Ferris Alexander in the 1980s and also spearheaded its 1988 renovation.
Olson recalled how the former hotel had fallen into disrepair. It was closed for almost a decade before Center City came along.
"The building was full of pigeons," he said. "It was run-down and blighted."
The building again needs attention, and Olson applauded the Zeppa Foundation's plan to breathe new life into it.
"It needs some work, but it is a fine building and its location is superb," Olson said.
Kier Johnson, the Zeppa Foundation's executive director, declined to discuss the Gardner Hotel 's price tag. The foundation purchased the structure from Junta LLC. That investment group, which includes Duluth businessman David Orman, bought the building in July 2006 for $400,000, according to records on file in the Duluth City Assessor's office. For tax purposes, the building and property have an estimated market value of $423,900.