State putting $8.5 million toward new downtown Duluth parking ramp, office tower

• AtWater Building

An architect’s rendering of the proposed office building for 425 W. Superior St. that will be constructed by the AtWater Group. (Image courtsey of Krech Ojard)
• News conference

In a press conference Thursday afternoon, Duluth Mayor Don Ness celebrates the news that the Duluth Corporate Tower Project has received the state funding it needs for the project to go ahead. Joining him are (from left) David Ross, president of the Duluth Chamber of Commerce, city Councilor Jennifer Julsrud and Kristi Stokes, president of the Greater Downtown Council. (Bob King / News Tribune)

Talk about it

A proposed office tower in downtown Duluth took a step closer to becoming a reality after Gov. Mark Dayton announced this morning that the state of Minnesota will contribute $8.5 million toward the project.

Supporters, including Duluth Mayor Don Ness, say the project will help revitalize western downtown. Developers promise a major tenant to anchor the new 15-story building, and have said it will bring 200 new jobs to Duluth and not just rearrange existing jobs into new space.

The tower, which will be built along Superior Street and Fifth Avenue West, is expected to hold up to 1,000 people, city officials said. The anchor tenant will be announced at a “public celebration’’ of the project set for 11:45 Friday at the site.

Groundbreaking for the tower will be in Spring 2013, with construction expected to be finished by 2016.

The project is expected to create an average of 150 construction jobs over the three year construction period, Ness said Thursday morning as he was flanked by city and county officials and building trade union leaders at a noon press conference at city hall to announce the project. Ness called the $60 million AtWater contribution the largest single private investment in downtown Duluth history.

“With that support (from the state) we can say with confidence that the $80 million Duluth corporate tower is a reality,’’ the mayor said.

Dayton announced the Duluth project as one of the winning statewide projects from a list pared down over the summer by the Department to Employment and Economic Development. The winners are getting a cut of $47.5 million that the 2012 Legislature set aside to pay for projects expected to spur private economic development and create jobs.

The total office tower projects is expected to cost about $80 million, with developers AtWater Group LLC, originally asking for $20 million in public money to make the project work. The city had sought $10 million for the state, but Dayton pared it down by $1.5 million.

Ness said the $1.5 million not included by the state was to offer space to University of Minnesota Duluth offices. DEED officials said that didn’t fit the economic development requirements and so dropped that element of the project.

The city will now have to front an equal $8.5 million for the parking ramp project that also includes public utilities and skywalk access for the new tower, Ness said.

The city’s share of the project will come from revenue bonds issued by the city and from creation of a Tax Increment Finance District for the tower and ramp. Duluth would own the 600-car ramp and receive the revenue from parking to pay back the bonds.

Rob West of the AtWater Group said the state’s investment marked “a great day to celebrate a terrific public private investment.” Ness said the project would not have happened, or been smaller in scope, without the state’s contribution.

The parking ramp was near the top of the list of finalists submitted by DEED to the governor recently. City officials said the tower project had by far the best private-to-public investment ratio of any project seeking state money.

AtWater Group LLC is a division of Twin Ports based Reuben Johnson & Son, Inc. The company also owns Building Logic, Charter Films, Fraser Shipyards, Johnson Materials Company, Lake Assault Boats, Northern Engineering Company and Viant Crane

The other statewide grant recipients included:

* St. Paul: $25 million for the St. Paul Regional Ballpark where the Saints will play.

* Wadena: $4.2 million for a public health and wellness facility.

* Litchfield: $2.3 million for wastewater infrastructure improvements.

* Twin Cities: $2 million for the Southwest Light Rail Transit Line.

* Redwood/Renville Solid Waste: $1.9 million for a material recovery facility.

* Lonsdale: $1.5 million for street and utilities improvements for a new business park.

* Hector: $1.1 million for wastewater system improvements.

* Hutchinson: $763,750 for small business incubator.

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