This summer, the tenants of Gateway Tower in downtown Duluth felt the wear and tear on their apartment building when it lost hot water for more than a week, beginning on Independence Day.
Residents of the assistance-based housing property were sponge bathing to get by.
The 14-floor tower on the 600 block of West Superior Street features 154 apartments - about a dozen studios, and the rest one-bedroom. Denied earlier this month of the Minnesota Housing Finance Agency’s partial funding of a $17 million renovation and addition, it will enter into a year of adjustment in 2015. In December, Sherman Associates will exit as the property manager, meaning the tower will be under new management as it goes uncertainly into the future.
“It’s an aging building that needs some repairs and improvements,” said Duluth HRA Executive Director Rick Ball, whose agency has supplied financial support for capital improvements in recent years.
Sources for this story say the Gateway Tower has had to adjust to what has been a more recent 20 percent drop in occupancy from its decades-long heyday, after its original construction in 1964.
“We’ve been working closely with them,” Ball said. “We provided some financing to prevent foreclosure a couple years ago. We made a loan to assist with both financial issues as well as some immediate improvements that needed to occur.”
There was a time the Gateway Tower was a superior living facility for senior citizens on low incomes. The building’s population shifted as anti-discrimination rights broadened to include younger people and people with disabilities.
A growing list of alternatives for assistance-based housing has made things tougher on the building.
“The assisted consumers have choices,” said Patrick Contardo, chairman of the board for the nonprofit Gateway Tower Inc., the three-church board that has sponsored the facility from the beginning. “Gateway isn’t the first choice they’re going to have, so vacancies go up.”
Vacancies have meant difficulties with cash flow - an opposing force when it comes to making necessary improvements. With the help of a developer in One Roof Community Housing, the Gateway Tower will take another crack at MHFA’s low-interest loans and tax credit equity in 2015.
“It isn’t at risk of falling down, but it needs to be improved soon,” said One Roof Executive Director Jeff Corey, whose organization looked to buy the building until Gateway Tower Inc. said it planned to continue its ownership. “We can’t overhaul it without an infusion of capital. We’ll have more time to be able to work the project with Minnesota Housing Finance Agency this time.”
The MHFA will meet with One Roof and the Duluth HRA in December to debrief them on the failed first attempt at financing. Ball and Corey consider this a step in a positive direction.
Meanwhile, Sherman Associates is leaving and another property manager is coming onboard. Contardo declined to reveal the new property manager until after the tower’s residents have been informed.
“Their plate is full,” Contardo said of Sherman Associates. “They’re getting out of managing other people’s properties and just managing their own.”
Sherman Associates received more than $5 million in MHRA funding in 2014 for its proposed development of the former Nettleton Elementary School into 50 apartment units in the Central Hillside. Sherman Associates is the developer behind the Sheraton Duluth Hotel and the proposed NorShor Theatre renovation.
Minus necessary funding, the Gateway Tower will be forced to wait for its makeover. Contardo noted the churches’ ongoing commitment to the tower.
St. Paul’s Episcopal, First Lutheran and First United Methodist churches converged on the idea in 1964, when original developer Roger Bowman, who was a member of St. Paul’s, proposed it. The churches bought the property that was once bowery territory from the federal Department of Housing and Urban Development. Bowman Properties and then Sherman Associates have been the tower’s only property managers.
Gateway Tower Inc. has governed the property for years with minimal intervention, according to Contardo.
“The churches still feel responsible for the property,” Contardo said. “I truly believe in the mission that we as community members be involved to see that everybody is served properly. And the fact is, there is still a tremendous need in our community. My fellow board members feel the same way.”
There are nine members of the Gateway Tower Inc. board, with six considered active, Contardo said.
Contardo said other, newer apartments with more space and updated features may have captured consumers’ attentions, but that the Gateway hasn’t seen the end of its usefulness.
“I hope not,” Contardo said. “It’s a viable building that still serves a need.”
