A trial that began Tuesday could decide the fate of the Pastoret Terrace Building, formerly home to the Kozy Bar, as well as the adjoining Paul Robeson Ballroom, 125-129 E. First St.
Attorney Miles Ringsred, representing his father, Eric, the former owner of the buildings, cited the Minnesota Environmental Resources Act in his defense of the buildings, saying that it treats historic structures as a public resource and vests citizens of the state with the authority to protect them.
In a bench trial before Judge Eric Hylden, Miles Ringsred said the authors of that act had demonstrated "the foresight to prevent the destruction of resources that once gone can never be restored."
But Assistant City Attorney Elizabeth Sellers defended the decision of the Duluth Economic Development Authority to authorize the proposed demolition of the blighted buildings, which have been condemned for human habitation since 2010, when a fire damaged the property.
She noted that DEDA had sought proposals to redevelop the buildings with an eye toward preservation.
"They looked for options that would give this corner hope," Sellers said.
She suggested the decision to tear down the building was made only after a request for proposals failed to turn up a suitable plan.
"They looked for alternatives, but none was viable. None was prudent," Sellers said.
One of the rejected plans came from a team led by Mike Conlan, former director of the city's planning department and DEDA, working in conjunction with Pastoret LLC..
During testimony Monday, Conlan said he had successfully lined up about $4 million in state and federal historic tax credits to support his proposed project. He noted that the Pastoret, which was built in 1887, was designed by Oliver Traphagen, who he described as "the most significant architect in Duluth's history."
Conlan's plan would have restored the integrity of the building's original Romanesque exterior, removing the concrete-block addition that was constructed in 1924 to accommodate a bar. But the interior of the building would be gutted.
Originally the Pastoret Terrace was built to provide six luxury townhomes, but it was later divided into about 50 low-cost boarding rooms. Conlan proposed to build a brick addition fronting the alley behind the Robeson Ballroom to accommodate a total of 40 studio apartment units combined with the existing structure.
Besides using historic tax credits, the project also would rely on low-income housing credits that Conlan had twice before unsuccessfully sought from the Minnesota Housing Finance Agency.
But Keith Hamre, Duluth's director of planning and economic development, contends the type of low-cost housing Conlan proposes would be a poor choice for the neighborhood. He noted that Duluth's Central Hillside neighborhood already has a disproportionate share of income- or rent-restricted housing with 1,050 such units in place as of 2015 and about 65 percent of those units located within the five-block area around the Pastoret.
Hamre pointed out that the median household income of neighborhood residents in 2015 was $21,280 - about half the median income for the city as a whole. He said the city aims to distribute low-income housing more evenly throughout the city, instead of continuing to concentrate it in an area already dense with residents experiencing poverty.
As for Conlan's plan to finance the project, Hamre faulted it for the absence of private developer equity and for the uncertainty of its funding sources.
But Miles Ringsred questioned why DEDA officials never asked for further detail, instead walking away from the prospect of $4 million in historic preservation tax credits that could be used to assist with the renovation of the building.
"The financial feasibility did not provide enough detail for us to warrant going any further," said Hamre of the proposal.
Ringsred also questioned whether DEDA had given sufficient consideration to its obligation under the Minnesota Environmental Resources Act to treat preservation of the historic property as "a paramount concern."
The trial will continue Wednesday and is slated to wrap up by Thursday.