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Sale of former Nettleton Elementary School in Duluth is in the works

United Properties wants to purchase the former Nettleton Elementary School property in Duluth to create senior housing. Bob King / rking@duluthnews.com

A Minneapolis-based developer aiming for its second Duluth project plans to buy the former Nettleton Elementary School property.

Contingent on a feasibility study, United Properties hopes to create senior housing with the intention to work with the existing building and invest at least $10 million.

"We like the area and we think there is a need for multi-family housing there," said Rick McKelvey, vice president of development for United Properties.

The company is behind Kenwood Village, the $21 million, four-story mixed-use project expected to open early this year with retail and 83 market-rate apartments at the corner of Kenwood Avenue and Arrowhead Road.

Nettleton, located in the Central Hillside at 108 E. Sixth St., is listed for $480,000, but McKelvey wouldn't disclose the agreed-upon purchase price. A purchase agreement between United and the Duluth school district has not yet been signed.

Nettleton has been empty since 2013, closed as part of the district's $315 million long-range building plan, or Red Plan. A deal with developer Sherman Associates, who agreed to purchase the building in 2013, fell through last summer. Many Rivers Montessori has also offered to buy the building several times, offers that haven't been considered because of a longstanding Duluth School Board policy that says district property won't be sold to K-12 competition.

Sherman Associates had agreed to pay $370,000, and Many Rivers' final offer was $500,000.

Plans for the building include between 50 and 60 housing units for independent senior living, McKelvey said, although until the feasibility study is done it's too soon to tell whether it's possible to use the existing building. But the school, with its lake views, "good bones" and brick and newer windows, seems poised for redevelopment, he said. United Properties has had a good experience working with the city of Duluth on the Kenwood project, he said, noting, "when you find a city that's willing to work with you, we try to reciprocate" and do another project. Pending the sale, work could start next fall or in the spring of 2018.

City planning director Keith Hamre said the proposed housing is "a great re-use of the building."

The city needs senior housing, he said, and many residents ask for such housing near the neighborhoods they are coming from, and not "up by the mall." They want to be close to downtown and what it offers, he said, and this kind of housing also frees up single-family housing stock for people in the workforce, also a city need.

Site zoning has already been changed to mixed-use neighborhood, a process undertaken by Sherman Associates, paving the way for a speedier process for United Properties.

The school district has been in talks with the developer for a few months, said Doug Hasler, its business services manager.

"We felt like they had a good plan for the development of that building in a way that would be beneficial to the community in addition to being advantageous to the school district," he said.

He hopes to have an agreement signed and a resolution before the board for its late February meeting.

The two-story, red-brick Nettleton sits on more than three acres and was built in 1905. It has two additions, constructed in 1945 and 1987. It's too soon to know whether the company might seek local financial support for the project, McKelvey said.

If the deal goes through, the only former schools remaining to be sold post-Red Plan are Central High School and Rockridge Elementary. Hasler said there has been no recent activity for either building, other than discussion with the city and county on marketing the more valuable Central property.

There has been talk that Rockridge might still be of use to the district, by providing more space pending further expansion by the state of free pre-kindergarten, as one example. Hasler said no decision has been made on whether to keep Rockridge.

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