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Lafarge developer says project financing is nearly complete

Developer Sandy Hoff had good news Tuesday for a gathering of Duluth Area Chamber of Commerce members. The $32 million Pier B Project that would transform the former Lafarge Cement plant site into a waterfront resort and hotel is close to getting...

Developer Sandy Hoff
Developer Sandy Hoff speaks during the Duluth Area Chamber of Commerce luncheon Tuesday, Sept. 10, 2013, at Clyde Iron Works in Lincoln Park. (Bob King / rking@duluthnews.com)

Developer Sandy Hoff had good news Tuesday for a gathering of Duluth Area Chamber of Commerce members.

The $32 million Pier B Project that would transform the former Lafarge Cement plant site into a waterfront resort and hotel is close to getting the needed financing.

"We've made progress," Hoff said.

Hoff declined to get specific about the pending bank financing that's needed to get the development built. But after years of talking and planning, construction could start during the first half of 2014, he said.

"It's very possible," Hoff said. "We're very confident."

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The bank loan will supplement the project's private investment and nearly $2 million in grants. A tax increment financing district also is in the works for the site just west of Bayfront Festival Park that will cover infrastructure costs.

Construction of what is now being called The Silos of Pier B, a resort hotel, is expected to take 12 to 15 months.

The project, grand in scale and laden with challenges, includes filling in a slip and turning the 100-foot-tall former cement silos into retail, hotel, a restaurant or condominiums.

But current plans are not to tackle those concrete silos just yet.

"At a cost of $250 to $300 per square foot, that's more than $100 per square foot more than we can afford," Hoff said. "The plan is to keep them and possibly use them later."

Plans now call for a nine-story, 140-room upscale hotel with a restaurant and a 10,000-square-foot event center, along with a slip for boaters to dock, a boardwalk, parking lot and a pedestrian trestle bridge connecting the development to Bayfront Festival Park. The land is owned by the Duluth Economic Development Authority and a group of investors, including Hoff and project partner Alex Giuliani.

But before construction can begin, its 2,000 feet of shoreline will need to be stabilized. The 7-acre site also needs to be cleaned up, though a $1 million state grant DEDA received will pay for that.

Hoff said the development will be unlike anything else in Duluth.

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"The waterfront on three sides will give it a different feel," he said. "It will be more of a resort feel (than other Duluth hotels). Families can ride kayaks and canoes from there."

The chamber group that filled Clyde Iron Works' event center seemed believers.

"I've known Sandy as a friend and developer in the community for several years," said Roger Wedin, the chamber's director of public policy and education. "With the work they've done and the (agency) partners they're working with, I have a lot of confidence that it will happen."

Financial realities, however, have caused the project to drop some of its original concepts, including underground parking, condominiums in the first phase of construction and delaying the adaptive reuse of the storage silos to a possible phase two.

Some pointed to redevelopment of Clyde Iron Works and the construction of the adjacent Heritage Sports Center, which Giuliani turned into reality. They said he could do it again.

"I think it'll happen if they're that close to the financial part," said Lee Brodin, a manager of nearby Motel 6. "I'd hate to see it get this close and go dead in the water."

But he had concerns about whether the Pier B hotel would be sustainable in the winter months when the bay is frozen, boats are dry-docked and motels average 40 percent occupancy.

"Summer's OK, but will it be sustainable for them in the winter?" he asked.

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Hoff is confident it will, because the project includes winter amenities. Besides tennis and basketball courts in the event center, the slip along the boardwalk will be made shallow in winter to allow it to freeze.

"We will have broomball, ice skating and outdoor winter activities that will promote winter," he said.

But Hoff acknowledged there are still major hurdles to cross before they get to groundbreaking.

"Financing is close but not 100 percent guaranteed," he said.

And because of its waterfront location, they need to continue to work with federal, state and local agencies to make it happen.

"We have a lot of folks we need to keep happy," Hoff said.

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