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Kozy supporters unable to raise $140,000 bond

A deadline passed without payment from backers of the fire-damaged property, but the building won't immediately meet the wrecking ball.

File: Kozy July 2021.jpg
Pastoret Terrace sits behind chain link fence July 26, 2021, in Duluth. A legal battle has been raging since April 2018 over the future of the fire-damaged building that long housed the Kozy Bar and Apartments. Steve Kuchera / File / Duluth News Tribune

The litigants hoping to save downtown Duluth's Pastoret Terrace have been unable to come up with a $140,000 bond ordered by a court in October.

The 30-day deadline from Judge Eric Hylden passed last week without payment from the building's former owner, Eric Ringsred, and a group of fellow preservationists known as Respect Starts Here.

The failure to post the security does not immediately clear the way for demolition, as an injunction still remains in place. But it does appear to at least temporarily give the Duluth Economic Development Authority relief from a court-ordered obligation to undertake emergency repairs on the structure.

"It's still an ongoing thing," attorney Miles Ringsred said of the fundraising effort. "But we have not had success yet."

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

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The 1887 Oliver Traphagen-designed building at First Street and Second Avenue East, which housed luxury townhomes long before becoming the Kozy Bar and Apartments, has been beset by a series of fires dating back to 2010. DEDA acquired the property after Eric Ringsred, who lacked fire insurance, lost it to tax forfeiture in 2015.

A back-and-forth legal battle initially saw DEDA prevail in its argument that the historic structure was beyond repair, but a Minnesota Court of Appeals ruling in August 2020 sent the case back to district court for further review.

FILE: Kozy LHB report 4
A 2020 photograph in LHB’s report shows the fire-damaged and collapsed roofs of Pastoret Terrace's front townhome sections. Contributed / LHB

Hylden was in the process of seeking additional information and expert opinions from the parties when another major fire struck on Nov. 1, 2020, further jeopardizing the building's structural integrity and prompting DEDA to renew its bid for immediate demolition.

But with an appellate court mandate that the property be maintained pending further proceedings, the judge adopted a phased approach aimed at stabilizing the structure, carefully removing debris and allowing engineers a better look inside.

The first phase, coming with an estimated price tag of $140,229, would involve bracing the building's First Street facade to prevent an outward collapse.

PREVIOUSLY: Judge orders Duluth to undertake work on Kozy building The first of several possible phases involves erecting exterior support for the facade, which is said to be at risk of "sudden collapse."
DEDA, after appealing that ruling, failed to get the injunction lifted but succeeded in asking Hylden to require the preservationists to post a matching bond. The security would be held by the court and could later reimburse DEDA if the agency ultimately prevails in the lawsuit.

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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.

But the costs could quickly escalate for the plaintiffs if they want to continue the fight, as they would likely be asked to post matching funds for the proposed second and third phases of repairs. DEDA has set aside $325,000 in its 2022 budget as a placeholder for potential court-ordered costs.

FILE: Kozy fire 2020
Duluth firefighters battle the Nov. 1, 2020, blaze at Pastoret Terrace, formerly home to the Kozy Bar and Apartments. Steve Kuchera / File / Duluth News Tribune

While disappointed that the court-ordered maintenance doesn't appear poised to occur without the posting of the bond, Miles Ringsred said he believes the building will be able to endure another Duluth winter.

"It's a difficult situation," he said. "Our concern even before (last year's) fire was having them put up some security cameras and just do the bare minimum of maintaining the property. That was our concern back then and it is still a concern now. But, from the standpoint of our structural engineers, we believe it's a pretty hardy property. The walls are still standing."

Hylden made clear in his order last month that he still hasn't decided the case on the merits, noting that "can still go either way."

As the court conducted a full trial with testimony from numerous witnesses in April 2019, Miles Ringsred said he expects both sides will simply need to supplement the record with new expert reports based on the current state of the property.

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Duluth city officials declined to provide any comment on the building's status or their next steps in litigation.

Hylden has scheduled a motion hearing for Dec. 20.

Defamation suit dismissed

Meanwhile, another judge has thrown out the remaining claims in a separate suit filed by Eric Ringsred against Duluth and former City Attorney Gunnar Johnson.

The suit claimed Johnson made defamatory statements to reporters in describing the condition of the Kozy building, as well as Ringsred's history of litigation and efforts to preserve historic buildings in the city.

Judge David Johnson last month granted the city's motion for summary judgment, noting that Johnson left office since the case was initiated and that Ringsred failed to take the required action under court rules to continue the case against his successor.

The case was initiated last year and had previously been significantly narrowed by Judge Shaun Floerke, who threw out a number of additional claims that also included the News Tribune and reporter Peter Passi as defendants.

FILE: Eric Ringsred
Eric Ringsred, former owner of the Pastoret Terrace building, speaks during an interview at the Duluth News Tribune office on Oct. 9, 2019. Clint Austin / File / Duluth News Tribune

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