A lawsuit has further clouded the already uncertain future of the former Kozy Bar & Apartments building in downtown Duluth.
Paul King, a previous owner of the fire-damaged building, has filed suit against St. Louis County and the Duluth Economic Development Authority, alleging that the seizure and sale of the property last year was unlawful.
The building, located at the corner of First Street and Second Avenue East, went into tax forfeiture and was sold by the county to DEDA in July. At the time, taxes and penalties dating back to 2011 totaled more than $26,000 on the property.
Temple Corp., which is operated by Eric Ringsred, was responsible for the unpaid tax bill. Temple bought the building, also known as Pastoret Terrace, on a contract for deed from from King, doing business as Copasetic Inc., in 2006, after King suffered a debilitating stroke.
Pastoret Terrace was condemned for habitation after a fire in 2010 and has lingered in a damaged state since, although Temple Corp. did invest about $80,000 to shore up the building's fire-damaged roof.
King still held partial claim to the tax-forfeited property, as Temple had not yet fulfilled the terms of its contract for deed, and he offered to repurchase it, but those efforts were rebuffed by the county, which instead sold it to DEDA for redevelopment.
King's attorney, Elizabeth Royal, said her client suffered cognitive damage as a result of his stroke and had been unaware of the delinquent taxes. She contends the county failed to provide King with proper notice of developments prior to disposing of the property.
In his answer to King's suit, however, Assistant County Attorney Nick Campanario wrote: "St. Louis County denies that King was entitled to notice of expiration of redemption by certified mail in connection with the forfeiture of Pastoret Terrace" and asserts that such notice was sent Copasetic.
Royal said notice was sent to an inactive post office box King had not used for more than 5 years and to an outdated address for Copasetic Inc., so her client was never informed until after the property had been seized.
She said the county hadn't done enough to serve her client with notice.
"It has to be meaningful service. It can't just be going through the motions, when you know that the service is not going to be successful. And they knew that Mr. King was suffering from a stroke," Royal said.
Duluth City Attorney Gunnar Johnson suggested the lawsuit is a misdirection of blame.
"Mr. King sold the property to Eric Ringsred, and part of the deal was Eric was supposed to pay the taxes, but he didn't pay the taxes. From a 10,000-foot level, I'd say Mr. King's beef is really with Eric Ringsred and not necessarily with the city. Nevertheless, we're in litigation, and we'll see how that works out," he said.
Royal contends her client has been mistreated.
"We believe it's a constitutional violation of the takings clause, just to take property and not pay for it," she said.
Royal said King wants to see the 130-year-old Pastoret Terrace restored.
"This is a historically protected building, and my client is very interested in preserving the historical character of the building," she said.
Royal suggested that Pastoret Terrace is suffering from neglect under DEDA's ownership.
"The roof is leaking, and they're not taking any steps to preserve that property and not have it go further down," she said.
King has filed a lis pendens notice on the property to make it known that the title for Pastoret Terrace is in dispute.
DEDA issued a request for proposals for the property in October of last year and received three proposals in January, which all were rejected.
As a result, the effect of the lis pendens and the suit have been negligible, Johnson said.
"Right now there isn't an active proposal out there that this is somehow slowing down," he said.
"I don't think the litigation is causing us big problems at this time. It certainly doesn't make things any easier, but it's not really the issue at this time. Right now, it's trying to find the right developer, the right project and then to put the pieces in place to accommodate that project, and we haven't gotten there yet," Johnson said.
Johnson suggested the uncertainty about whether the historic building can cost-effectively be restored or will need to be torn down are perhaps the greatest obstacles confronting DEDA.
"The lis pendens and the litigation is certainly a hurdle, but I wouldn't say it's the biggest one right now," he said.
A scheduling hearing for the case is slated for Wednesday at the St. Louis County Courthouse. Royal said King intends to pursue the case until he prevails or exhausts his legal options.
"We're very hopeful that the Minnesota District Court will give Mr. King his property back. But if that doesn't happen, we will continue this fight in federal court," she said.
Johnson said the city is eager to see the blighted corner developed and returned to productive use.
"Obviously the Kozy has been an issue of great discussion for a long, long time, and this thing isn't going to get resolved right away. So we'll be patient, but we're working to move forward as quickly as possible," he said.
"There isn't an imminent development project right now, but we want to make sure that we clear the tables so that when that does come, we can move forward and capitalize on those opportunities."