City staff have been working with a firm interested in one day redeveloping the Northwest Iron Parking Lot in Canal Park "for commercial and multi-level parking purposes," according to a resolution heading to the Duluth Economic Development Authority on Wednesday.

STAR NW LLC, managed by Grandma's Restaurant Chief Financial Officer Kristine Barnes, owns about two-thirds of the 204-stall public parking lot near Grandma's Saloon and Grill.

Meanwhile, the city of Duluth owns the northern third of the same lot near the Dewitt-Seitz Building.

"We know there's contamination down there," said Brian Daugherty, president of Grandma's Restaurant Co.. "It was capped, I want to say, around '86 or '87. And it was done in coordination with the MPCA (Minnesota Pollution Control Agency) with some minimal information about what's down there."

"So, we applied for this grant to do what you would call a deep dive into understanding the amount of pollution we'd be dealing with," he said.

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On Wednesday, DEDA commissioners will be asked to authorize city staff to accept a $50,000 grant from the Minnesota Department of Employment and Economic Development to further investigate the site and develop a remedial action plan. If DEDA takes the state money, it will be expected to provide at least $12,500 of its own funds as a local match.

Some smaller-scale testing has already been conducted within the past year, noted Chris Fleege, Duluth's director of planning and economic development.

"So, this will further quantify what it looks like," he said, adding that more detailed data could position the city to apply for additional grants yet this fall to help cover the cost of remediating any contamination problems on the property, which was formerly home to a salvage yard.

"That's why there's a little bit of a sense of urgency to try to get this work done, so we can apply for the cleanup funds," he said

Daugherty described the pending test work as "strictly due diligence."

"There are no master plans for development on the property, other than to understand what we would be dealing with underneath there," he said.

Fleege, too, described any plans for the site as speculative and preliminary at this time.

"Quite frankly, we don't know exactly what we would want to do with the site. We just knew that there were contaminants there," he said.

But Fleege said any development of the property would need to address lost parking space, which can be precious in Canal Park, especially during the summer months.

"I'd say parking is certainly an issue, and even the movement of traffic down there can be very congested when we're not in the COVID world," he said. "So, I do think there's going to be a lot of public engagement with whatever that ultimate use is down there."

Daugherty recalled a 1985 waterfront plan developed by the city that called for a parking ramp on the same site now being discussed.

"So, 45 years ago they were saying: 'We're going to need a big parking structure down here when this is developed.' That idea has been floating in the air for a long time," he said.

Regardless of location, Daugherty considers the prospective value of a sizable Canal Park parking structure indisputable.

"Wherever a parking ramp went in down here, it would be an absolute catalyst for development, in my opinion," he said.

If redevelopment of the property is deemed feasible, Daugherty said a number of options could be on the table.

"It is a great opportunity for mixed development, because the right mix of development is what keeps Canal Park interesting and vibrant and viable," he said.

With one-third of the site publicly owned, Fleege said: "I think we're open to some type of development there. But it would have to be thoughtful and really include the needs of the broader area. "