Delays in the completion of the Garfield Square apartment building are forcing the Duluth Housing and Redevelopment Authority to seek extensions on loans it obtained to provide continued housing for some of the city's residents who otherwise would stand at greatest peril of becoming homeless.
The loans were provided to the HRA to help purchase and fix up the Seaway Hotel - now renamed the Esmond Building - which had fallen into disrepair and was nearly forced to close in 2012, potentially putting about 70 residents on the street.
The Seaway, located at 2001 W. Superior St., provided low-rent housing for some of Duluth's hardest-to-house tenants.
Under the HRA's guidance, the renamed Esmond Building has been improved, and its life as an apartment building has been extended.
But Center City Housing aims to provide a long-term home for the Esmond's residents with its construction of Garfield Square, a new 50-unit apartment building now going up at the northeast corner of West Superior Street and Garfield Avenue and West Superior Street.
The timeline for the $13.4 million project has slipped a bit, however, due to harsh weather.
"After a horrendous winter, where we lost over 30 days of construction time, the guys are working really hard now. We've got great and large crews out there, and the work they're doing is really coming along fast," said Center City's Executive Director Rick Klun, who now expects the building to be completed by Oct. 1.
Garfield Square should be able to welcome its first tenants shortly thereafter.
"Once they hand the building over to us, it will probably take us two weeks to get the furniture in, to get the computers hooked up, the telephones hooked up and all that kind of stuff. Then we can start moving folks in," Klun said.
As residents of the Esmond relocate to Garfield Square, the HRA will be able to look at how to revitalize the emptied-out building.
The HRA has issued a request for qualifications by June 17, as it seeks to partner with a suitable developer at the Esmond.
"We're hoping to procure an Opportunity Zone investor, and hopefully bring Opportunity Zone money to the Esmond Building to be able to redevelop it," said HRA Executive Director Jill Keppers, referring to a federal program that offers tax incentives to developers who tackle projects in designated lower-income areas.
Keppers envisions some sort of commercial use of the Esmond's first floor, with the upper two floors redeveloped into affordable housing suitable for people who earn 80 percent or less of the state or area median income, at least until 2024, per the requirements of the Minnesota Housing and Finance Administration, which provided the Duluth HRA with mortgage assistance.
"So we'll be looking at socially conscious Opportunity Zone investors who are willing to really dig into a neighborhood that's being revitalized," she said.
DEDA provided the HRA with a $230,000 loan for the Esmond, and the Greater Minnesota Housing Fund provided another $90,000 in financing. Keppers said the latter entity contacted her recently to inform her that the loan was about to come due in July. A GMHF representative said the state would extend the term of the loan only if DEDA did the same.
The Esmond has continued to be a drain on the Duluth HRA's finances, Keppers said.
"It has never cash-flowed. It has always been upside-down financially," she said.
This fiscal year alone, the HRA expects the Esmond to require $267,000 in local subsidies, but Keppers said the authority has no other alternative to keep the building's residents housed until Garfield Square is completed.
Klun noted it has taken a unique team effort to meet the housing needs of low-income and high-need renters.
"To quote Hillary Clinton: 'It takes a village.' It truly does," he said. "It's been a big job, but people are really all pulling in the same direction to get this building built and get folks in a nice new home."
About 55 people now are housed at the Esmond, according to Keppers.
"We're working closely with Center City to make sure no one is displaced," she said.
Keppers remains optimistic the Esmond can attract new investment.
"I really hope the Esmond will end up being the shining star of Lincoln Park when all is said and done and that it will really contribute to the revitalization of that neighborhood," she said.