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Agency considers Duluth businessman's proposal for Kozy

Litigation over the Pastoret Terrace property has again been placed on hold while Rod Raymond pursues a last-ditch effort to preserve the 135-year-old building.

Person walking by the Kozy building.
A pedestrian walks by Pastoret Terrace on June 28. Duluth developer Rod Raymond hopes to renovate the fire-gutted building.
Steve Kuchera / 2022 file / Duluth News Tribune
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DULUTH — Judge Eric Hylden was slated to receive an update Monday from the attorneys who have spent nearly five years sparring over the future of Pastoret Terrace, the historic but badly fire-damaged downtown building best known in recent years as the Kozy Bar and Apartments.

Instead, the litigation will remain on hold for at least a few more months as the parties have agreed to give city staff time to work with a developer who has expressed interest in spearheading a broader First Street revitalization plan.

Court filings indicate Duluth businessman Rod Raymond was the only party to come forward with a plan in response to a recent request for proposals issued by the Duluth Economic Development Authority.

Rod Raymond dares to dream of a rejuvenated East First Street, with a restored Pastoret serving as a catalyst for reinvestment in the area.

Raymond first outlined his vision to the News Tribune in July, describing 21 short-term rental units that would capitalize on the rapidly expanding Essentia Health footprint and serve as a catalyst for redevelopment in the Historic Arts and Theater District.

Raymond said Monday that he was recently notified by city and DEDA staff that the proposal would not be accepted "as it is." But he did receive an invitation to meet with staff and "discuss other options."

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"I'm just on a wait-and-see program," Raymond said. "First Street needs an injection. I don't know that it's going to fix itself or that there's any kind of philanthropic, really high-level, Bill Gates kind-of person that's going to come in and do it. We've got businesses that are proximal to that space and we want to see that it gets tidied up. I'm looking at the big picture."

Designed by renowned Duluth architect Oliver Traphagen, Pastoret Terrace was originally constructed in 1887 as six luxury townhouses at the corner of First Street and Second Avenue East. It was later divided into roughly 50 smaller, affordable housing units, and a bar was added to the front.

The Pastoret Terrace building, circa 1887.
The Pastoret Terrace building, circa 1887.
File / Duluth News Tribune

But the Pastoret, and adjoining Paul Robeson Ballroom, have been beset by a number of fires since 2010, rendering it uninhabitable. The building's former owner, Eric Ringsred, who lacked fire insurance and lost the property tax forfeiture, filed suit in early 2018 with a group of fellow preservationists known as Respect Starts Here in a bid to fend off demolition.

The back-and-forth litigation has already resulted in one trial and three appeals. And while DEDA, the current property owner, was ordered to shore up the building and prevent its further deterioration, the property has largely remained untouched as the plaintiffs were unable to come up with a $140,000 bond ordered by the court.

Miles Ringsred, an attorney for the preservationists, acknowledged that the latest delay will result in the building being exposed to the elements of yet another harsh Duluth winter. But Raymond's proposal may offer the best hope of saving the building.

"This is probably the last time we'll agree to kick the this can a little further down the road," Miles Ringsred said. "Time is not in the preservation of this property's favor. But knowing the success that Rod has had, and the vision and excitement he has behind this — it seems like there's a lot of interest in revitalizing that area, given the big money that's going into the old Central (High School) building and all the amazing work that's been done down on Superior Street. So I think, hopefully, something can materialize. But, again, it can't be indefinite."

Raymond has experience restoring Old City Hall , the former Carlson Bookstore and Endion Station — giving historic buildings new life in the hospitality industry.

Preservationists can only watch, as they were were unable to raise sufficient funds to protect the structure.

While the Kozy building has garnered the most attention, Raymond's larger vision includes gaining the support of the city and other developers to fix up the fire-damaged Pawn Duluth building across First Street, tear down a dilapidated building that formerly housed an antique shop, find new life for the Wabasha Bookstore and bring in additional apartments to the area.

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The fire started around 2:05 a.m. Friday.

Comparing the concept to the revitalization of the Lincoln Park Craft District, Raymond said he hopes to attract restaurants and coffee shops to the area, while possibly converting the Paul Robeson Ballroom into a fitness center and wedding venue. The Duluth Playhouse already plans to move in across the street at 201 E. First St.

Courtney Laine Self is moving from New York to join what she calls a "special" organization. In a major moment of transition, the Playhouse has also bought the former Encounter skate park building to use — for now — for storage.

"The easy answer, always, is to tear down the old buildings," Raymond said. "The complicated answer is to come up with some really creative solutions, some financing, some different ways to make it happen. There are probably a lot smarter and better developers who could do a hell of a lot better job than me. But no one else is doing it, so I'm here to give it a shot."

Raymond said he couldn't place a dollar figure on the Kozy plan, saying there are too many unknowns at this stage. The roof has largely collapsed and some areas of the building have remained completely off limits, even to emergency workers and structural engineers.

Developer Rod Raymond talks.
Rod Raymond, pictured at the Oliver Inn at the old Duluth City Hall, hopes to restore the fire-gutted Pastoret Terrace building, which housed the Kozy Bar and Apartments.
Clint Austin / 2021 file / Duluth News Tribune

Raymond said his plan calls for the city to retain ownership, at least for the time being, and it would require financial assistance to bring a contractor in to brace the walls and carefully remove debris with a crane, allowing a better look at the condition of the foundation and other components. He said he's already brought in a mason who determined that the 135-year-old brick walls remain in solid condition.

Even with historic tax credits and tax-increment financing, Raymond acknowledged the project would come with a large price tag and may not result in profits for some 15-20 years. Some might view it as a Hail Mary, but Raymond considers the plan "reasonable."

"I'm trying to do some good here," he said. "I'm not here to make $1 million on this thing. The better idea for me is to go put up a vinyl-sided Kwik Trip somewhere. I'm sunsetting my career and this is kind of the last thing I want to do. I just think this is an idea that is worth at least looking at one more time. What can the smartest people on the planet, or right here in Duluth, do knowing that this historic building is the last cool thing in that neighborhood?"

FILE: Kozy roof
Even with a snow cover, an aerial view of the Pastoret Terrace building Nov. 16, 2020, reveals extensive damage to the roof of the former home to the Kozy Bar and Apartments.
Steve Kuchera / File / Duluth News Tribune

An earlier pitch by Raymond to convert the Pastoret into a market-rate efficiency apartment building was one of three proposals rejected by DEDA in 2017. He said he has not received specific feedback on his new bid, anticipating a meeting with officials after Thanksgiving.

If Raymond can't strike a deal with DEDA, it will likely fall on Judge Hylden to again determine whether the building can come down. The plaintiffs have contended that its status as a contributing structure to a historic district precludes demolition, while the city has argued that the building is a blight on the neighborhood and damaged beyond the realm of historic preservation.

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A city spokeswoman declined to comment on the case or the discussions with Raymond, citing the ongoing litigation. But Assistant City Attorney Elizabeth Sellers Tabor requested that delay in Monday's scheduled court appearance.

"(DEDA) has reviewed in depth the one proposal it received in response and, recently, initiated discussions with the the proposer to explore a path forward," she wrote. "In short, material facts are still in flux."

Hylden was to oversee a trial in either January or March, having already postponed the proceeding from July to allow time for DEDA to issue a new request for proposals. He did not immediately schedule a new trial date, but set a status conference for Feb. 6.

Tom Olsen has covered crime and courts for the Duluth News Tribune since 2013. He is a graduate of the University of Minnesota Duluth and a lifelong resident of the city. Readers can contact Olsen at 218-723-5333 or tolsen@duluthnews.com.
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