A swanky new development, including a hotel, restaurant, banquet facilities and a marina, soon could be coming to Duluth’s waterfront.
On Wednesday evening, the Duluth Economic Development Authority signed off on plans to sell 3.7 acres of prime land next to the former Lafarge cement terminal to a group of local investors doing business as Pier B Holding LLC. The price tag? $650,000.
But that’s only part of the deal that’s been approved by DEDA to help the prospective $29.1 million hotel development become a reality. The authority also unanimously voted in favor of a tax-increment financing package that could provide about
$3.4 million in support for the project. Tax-increment financing is a form of subsidy that uses a portion of the new taxes generated by a project to cover certain development costs.
Both the land sale and the tax-
increment financing package still need the Duluth City Council’s blessing before an agreement between Pier B Holding and DEDA can be finalized. That vote probably will come June 23.
Pier B already owns the Lafarge terminal property. Assuming the deal with DEDA comes together as planned, the combined size of the hotel site will be 7.4 acres.
The project calls for a 140-room resort hotel, a 220-seat banquet hall, a 150-seat restaurant, a marina for guests visiting by boat, a pool, a rooftop patio and a bridge providing a connection between the hotel property and neighboring Bayfront Park. Sandy Hoff, one of the principal partners in Pier B, said restaurant will be something along the lines of Lord Fletcher’s on Lake Minnetonka or the eateries that front San Antonio’s River Walk.
Large timbers salvaged from the Clyde Iron site in Lincoln Park will be incorporated into the new hotel. Businessman Alex Giuliani, who spearheaded the Clyde Iron redevelopment, also is a partner in Pier B Holding LLC.
A $1 million sliding bridge between the hotel and Bayfront Park to the east should allow for the extension of the Baywalk.
“We are just an incremental step in what could be a much larger development to the west,” Hoff said.
“Someone took the initiative to start redeveloping Canal Park, and look what a success we now have down there. The same kind of thing can happen here,” Giuliani said, predicting that interest in more bayfront development will only grow.
“It’s fun to be able to dream what more could be down there, where people can still see a real working harbor,” he said.
DEDA owns additional undeveloped land directly west of the proposed hotel.
When completed, the hotel development, with an estimated annual payroll of $1.9 million, is expected to provide the equivalent of 50 full-time jobs on an ongoing basis. The developers have agreed that those jobs will pay a wage of not less than $10.24 per hour.
Jim Mayer, a senior vice president for Dougherty Funding LLC, a Minneapolis-based firm that specializes in finance for the hospitality industry, said that given the cost of shoring up the seawall of the pier which will accommodate the future hotel, as well as other needed improvements, the project would not be feasible without tax-increment financing.
“But for the proposed tax-increment financing package, we would not be in a position to move forward with this loan,” Mayer told members of the Duluth City Council last week.
A DEDA staff report asserted that 82.5 percent of the project’s cost will be borne by investors with the help of private financing. The rest of the tab will be covered by various state cleanup grants worth nearly $2 million in conjunction with the proposed tax-increment financing package.
Hoff said that original plans had a price tag of about $150 million, but they had to be scaled back considerably because of site limitations and lenders’ conservative leanings in the wake of the recent recession.
DEDA Commissioner John Heino praised Hoff, Giuliani and their team of local investors.
“I congratulate you on your tenacity through all the different changes that had to be made,” he said.
Heino described the more modest plan for the development that emerged as a good fit for the site.
“I feel very confident this will be a shining beacon for years to come,” he said.
If the City Council approves DEDA’s actions in support of the hotel project, Giuliani said efforts to shore up the seawall on the site could begin in August. He said construction is expected to take 12-14 months from start to finish, meaning the hotel could be ready for business by late 2015.
