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Appeals court scrutinizes Kozy demolition order

A three-judge panel of the Minnesota Court of Appeals questioned whether the city of Duluth performed due diligence on proposals to renovate the historic downtown building.

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An aerial view of the Pastoret Terrace in Duluth. Eric Ringsred, an emergency room physician and local preservationist, previously owned the buildings but lost them through tax forfeiture. (2018 file / News Tribune)
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The city of Duluth's plan to demolish the former Kozy Bar and Apartments came under scrutiny from a panel of judges Tuesday.

The Minnesota Court of Appeals, hearing a challenge from the building's former owner, Eric Ringsred, questioned whether the city had met its legal obligations under the Minnesota Environmental Rights Act.

Sixth Judicial District Judge Eric Hylden ruled last October that the fire-ravaged Pastoret Terrace and Paul Robeson Ballroom buildings could be torn down , citing extensive damage and the lack of any "feasible and prudent option for historic renovation.""

But Ringsred, who lost the property in 2015 after he failed to pay taxes, contends that the Duluth Economic Development Authority, the building's current owner, refused to consider at least two proposals to renovate the property with affordable or market-rate housing.

His son and attorney, Miles Ringsred, blasted Hylden's ruling in an oral argument before the appeals court.

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"The district court's opinion is littered with factual errors, abuses of discretion and misapplication of the law," Miles Ringsred said. "The district court gives every inference in favor of DEDA's position and, in some instances, goes far beyond and outside the record to reconcile and justify DEDA's excuses for rejecting alternatives, to the extent that DEDA could very well have authored the opinion themselves."

Pastoret Terrace.jpg
Pastoret Terrace (file / News Tribune)

The three judges repeatedly pressed Assistant Duluth City Attorney Elizabeth Sellers on the matter.

Senior Judge Heidi Schellhas noted that economic considerations alone cannot justify a decision to tear down a historic property, with Minnesota Supreme Court precedent requiring "truly unusual factors that are not economically related."

Schellhas said DEDA took ownership of the structure in October 2016 knowing it was on the National Register of Historic Places, describing it as "very odd" that the agency selected demolition as one of three proposals to consider from the outset.

Two housing proposals, the judge noted, were later rejected, with DEDA commenting that they would bring low job creation, no commercial development and little increase to the tax base.

"All three of those are entirely economic considerations," Schellhas said.

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Sellers contended that DEDA spent several years looking at renovation options, putting historical preservation at the forefront with the 1887 Oliver Traphagen-designed building.

Kozy building in 1887
The Pastoret Terrace in 1887. (File / News Tribune)

But she said none of the proposals were considered viable, with developers lacking experience or resources to carry out the project, Housing and Urban Development regulations preventing low-income housing at the Kozy's location and market-rate housing unlikely to be an attractive option for the building's small units.

"Neither of these proposers, nor anybody else, has come forward who is willing to put their own skin in the game," Sellers said. "Which, in DEDA's experience, shows that the developers themselves have limited, if any, confidence in the proposals that they're putting forward."

Judge Matthew Johnson questioned whether DEDA was too quick to dismiss those bids.

"Why would the city not at least give one of these a try?" he asked. "I mean, what's to lose? … What's the worst thing that could happen, and why would that be worse than demolishing a historic resource?"

Sellers contemplated a scenario in which a renovation project is started and left uncompleted, adding several additional years to its "ongoing blighting influence on the neighborhood." She noted the building has already been condemned for habitation since 2010.

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"The building continues to attract crime (and) continues to be a magnet for solid waste," Sellers argued. "It's an attractive nuisance, and it has a negative effect on the community health, welfare and safety."

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Eric Ringsred, former owner of the Kozy Bar building, is pictured in 2019. (File / News Tribune)

Ringsred's appeal faults the district court for failing to recognize feasible alternatives to demolition, shifting the burden of proof onto Ringsred and ignoring the city's long-standing "animosity" for Ringsred and his preservation efforts, among other claims.

The appeals court has 90 days to issue its decision.

It's not the only case the city faces from Ringsred, an emergency room doctor who has frequently litigated issues involving historic downtown Duluth buildings. He recently served a defamation lawsuit on both the city and News Tribune , alleging a decades-long "conspiracy" to undermine his preservation interests and damage his professional reputation.

The city brought that case to court earlier this month, indicating it would seek dismissal of the suit on unspecified grounds. News Tribune Publisher Neal Ronquist said he expects a separate motion to be filed by the newspaper.

Tom Olsen has covered crime and courts for the Duluth News Tribune since 2013. He is a graduate of the University of Minnesota Duluth and a lifelong resident of the city. Readers can contact Olsen at 218-723-5333 or tolsen@duluthnews.com.
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