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City: Final NorShor funding is in place

Duluth Mayor Don Ness laughs after the NorShor Theatre’s marquee lights come on before he and developer George Sherman flipped the switch that was to signal the marquee’s lighting. (2013 file photo / News Tribune)

Duluth city officials said Monday that the last piece of funding is in place for the long-awaited restoration of downtown's NorShor Theatre to start by the end of the year.

The project to restore the theater as a performing-arts venue, now estimated to cost $29.6 million, will take about 20 months to complete, the city reported. Minneapolis-based Sherman Associates will manage the restoration.

It's been more than five years since the city purchased the historic theater on the 200 block of East Superior Street, and the theater has remained closed most of that time because of noncompliance with Americans with Disabilities Act standards. The restoration project has been delayed amid efforts to line up state bonding, grants and other financing.

"Finalization of the NorShor's complex funding has been a long time in coming, because we wanted to make sure we identified and secured every possible resource out there," David Montgomery, the city's chief administrative officer, said Monday in a news release.

Montgomery said no property tax money will be spent on the project.

"None of it takes money away from police protection, street repair or any other city services," he said.

Plans have called for the Duluth Economic Development Authority to transfer ownership of the NorShor to Sherman Associates, which signed on to the project in early 2012, for a negligible sum. After a few years of operation, ownership of the theater is expected to transfer to the Duluth Playhouse, which is to be the primary tenant and manager of the property.

The final agreement for the project will go before DEDA for approval on Sept. 23, and could go to the City Council for a vote on Sept. 28.

The City Council heard details of the financing at a Committee of the Whole meeting on Monday. Duluth City Councilor Joel Sipress said he was in favor of the project, but wants to make sure public tax dollars are protected.

The last part of the funding package, a $1.65 million federal New Markets Tax Credit through the national Local Initiatives Support Corporation, was finalized in recent days, the city reported. The project's financial breakdown as outlined by the city includes:

• $7.4 million in historic tax credits

• $7.1 million from the state of Minnesota

• $6.7 million in Sherman Associates equity and New Market Tax Credits

• $4.5 million in Duluth Playhouse fundraising and Store Front Loan

• $2.3 million from DEDA's purchase of the building

• $ 1.6 million in DEDA financing

In June, city officials said work on the building must begin this year — or some of the financing lined up for the project earlier might be placed in jeopardy. They also said project costs have increased as the price of materials has risen and tradespeople are in higher demand.

The venue dates back to the opening of the Orpheum vaudeville house in 1910. After extensive renovations it reopened as the NorShor, a movie theater, in 1941. It operated as a first-run movie theater until 1982, and later as a venue for live events including a strip club known as the NorShor Experience.

Plans call for the project to include a renovated 750-seat theater, a new stage, a connection to the skywalk system, an ADA-accessible elevator and new utilities.

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