It appears the way is clear for Gateway Tower in Duluth to be sold at a sheriff's auction on Friday.
The Duluth Housing and Redevelopment Authority had sought authority from the City Council to offer bridge financing to the current owners of the rent-controlled senior high-rise rather than see it sold through foreclosure.
But Rick Ball, executive director of the Duluth HRA, told the council Monday that it probably would not need to take up the issue again until January -- probably well after Gateway Tower will have changed hands. Authorization from the council would take longer than Gateway's foreclosure timeline will allow.
Dan Maddy, an attorney for the HRA, said Gateway residents probably have little to fear from a change of ownership. Any successful buyer would need to pledge to abide by continued rent controls for another 20 years. The winning bidder also will be on the hook for about $450,000 in HRA-mandated repairs to the facility.
Regardless of Gateway Tower's fate, Ball wants the council to authorize the HRA to help finance housing in the future. He said the agency actually had this authority until the beginning of this year, when it disappeared because of a sunset clause.
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This time around, however, Ball is seeking authority that won't expire.
Councilor Kerry Gauthier said he'd prefer to see a sunset clause again in any resolution authorizing the HRA to issue loans or bond for projects.
"I think it's good for the council to periodically review these kinds of things," he said.
Ball warned that such an approach would risk a repeat of the Gateway Tower experience, where the HRA was not able to respond with sufficient speed to offer assistance to a project.
Dave Montgomery, Duluth's chief administrative officer, said the city administration supports the HRA's request, calling the financing authority "a tool to push some projects over the top that might not otherwise occur." He characterized the HRA's work as a high priority.
"Housing is a big need in our city, and that's why we're very supportive of this," Montgomery said.
Even Councilor Todd Fedora, who expressed frustration with the HRA's earlier request for quick authorization to help with Gateway Tower, indicated that he was now open to extending financing capacities to the agency.
