Kozy defenders ordered to post $140,000 in legal battle

Eric Ringsred and his fellow preservationists will be required to put up $140,000 as they continue their fight to save downtown Duluth's Pastoret Terrace.

Judge Eric Hylden this week granted the Duluth Economic Development Authority's request to impose the security as a condition of a previous order requiring emergency repairs to prevent further deterioration at the fire-damaged property.

The requirement comes with a 30-day deadline, which, if not met, could imperil the preservationists' efforts to stave off the wrecking ball.

Hylden in January ordered DEDA, the building's owner, to erect a bracing system to prevent a collapse of the building's First Street East facade. It's the first in a series of steps being considered to comply with a Minnesota Court of Appeals mandate to maintain the historic property while litigation continues.

DEDA, which argues that there is no viable path to renovate the property after a series of fires dating back to 2010, contended that Ringsred and a group known as Respect Starts Here should be required to post the funds with the court, ensuring that DEDA could be reimbursed if it ultimately prevails in the lawsuit.

But Ringsred, who long owned the building before losing it to tax forfeiture, and his backers have continued their efforts to protect the 1887 Oliver Traphagen-designed building that housed luxury townhomes before being converted into the Kozy Bar and Apartments.

PREVIOUSLY: Court says Duluth's Kozy should be left standing but judge should consider requiring plaintiffs to post bond The case has been remanded back to district court.
The building's defenders argued it was improper to order a bond, saying there was no reason to believe the injunction against demolition was improperly ordered and claiming a chilling effect on their ability to sue under a law that allows citizens to seek protection of historic structures.

Hylden did not initially address the bond request in his January order, but was forced to reconsider after the case was remanded back to him by the appeals court for a second time in July.

"The security is designed to protect a party against costs if it turns out the injunction is improvidently granted," Hylden wrote in an order dated Monday and made public Thursday. "Defendants obtained actual cost estimates for the initial work under the phased approach, which is most conservative from a cost standpoint.

"It is appropriate that plaintiffs provide security, either in the form of a bond or by depositing the amount in court, as they have done with prior security requirements in this case. This initial amount of $140,229 will ensure that defendants are protected as this case progresses."

Ringsred and company were previously able post two bonds totaling $100,000 — one keeping in place the injunction against demolition and the other protecting DEDA against rising construction costs while the preservationists successfully appealed a decision that would have allowed the structure to come down.

Hylden made clear in this week's order that much still remains to be decided in the lawsuit that has lingered for nearly four years. The immediate work, involving the facade bracing, is just one of three phases of a plan to stabilize and remove debris from the structure, which was most recently engulfed in flames Nov. 1.

The second and third phases, if ordered by the court, could steeply accelerate the upfront costs for both DEDA and the preservationists, who would likely need to follow suit by posting matching funds. DEDA has set aside $325,000 in its 2022 budget as a placeholder for potential court-ordered costs.

SEE ALSO: Kozy, aircraft maintenance base weigh on Duluth Economic Development Authority bottom line The authority anticipates continued losses.
The multi-phased strategy is intended to shore up the building enough to allow engineers a better look inside to assess the viability of potential repair and renovation. And Hylden said forgoing a security "would have tied the court's hands, predetermining the issue."

"The court wants to make clear that it has not decided the merits of the issue on remand," the judge wrote. "That can still go either way."

Miles Ringsred, an attorney representing the plaintiffs, did not immediately return a phone call. City officials declined to comment.