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Nearly $4M investment will rehab East Hillside apartment complex

The Brewery Creek Terrace will have 16 affordable housing units and five market-rate housing units. The renovation is part of a partnership of investments from Heirloom Property Management, One Roof Community Housing, Superior Choice Credit Union and Essentia Health.

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The East Hillside apartment building that burned Friday, Nov. 19, 2021, sits empty. In August, inspectors found 55 violations. Steve Kuchera / Duluth News Tribune
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DULUTH — One of the most vulnerable structures in Duluth is getting a new life through a partnership between several area groups. The currently condemned historic building at 621-633 E. Fourth St. in East Hillside will become Brewery Creek Terrace, thanks to funding from Heirloom Property Management, One Roof Community Housing, Superior Choice Credit Union and Essentia Health.

Brewery Creek Terrace will have 21 housing units, one less than the previous 22. The building will have 16 units of affordable housing available to households at or below 80% of area median income and five units of market-rate housing. The 1899 brownstone building across from Whole Foods Co-op was originally built as seven townhomes.

Heirloom President Mike Schraepfer said renovation construction is expected to take about nine months, and has tallied up a budget of about $3.8 million. Schrapfer bought the property from One Roof Community Housing as Portland Land Co., LLC for $419,000, according to St. Louis County property records.

The building, which caught fire in November 2021, had received correction orders for 55 violations found after an August 2021 inspection. Several units were condemned for habitation, but the building was said to be in generally good condition despite the outward appearance, according to a November 2021 story from the News Tribune . The rest of the building was condemned after the fire due to lack of utilities.

The property was purchased in 2016 by One Roof Community Housing for $490,000, according to St. Louis County Auditor records. One Roof also bought the rest of the block, which included the former Last Chance Liquor and auto lube shop buildings.

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Jeff Corey, One Roof’s executive director, said after evaluating the plans to redevelop the entire block and tear down the apartment building, it became apparent the apartment building was too expensive to include in the plans. One Roof will continue with plans to redevelop the rest of the block, where the liquor store and auto lube shop were, to create the 52-unit Brewery Creek Apartments.

The city of Duluth was unusually successful in garnering state support for affordable housing projects this year.

"We were left owning this building that we did not quite know what to do with," Corey said during a news conference in front of the building Friday morning.

Superior Choice Credit Union provided a $2.4 million first mortgage for the project. One Roof and Essentia Health made an $897,000 participation loan in second position to help accommodate the renovation of the apartment building. Essentia funded $690,000, with One Roof covering the remaining balance.

"This evolved over a few years and it was a long time coming," Schraepfer said. "The partnerships have evolved and it's really exciting to finally get it over the finish line and start work on it. It's a big part of our mission as a company in town to improve the community we're a part of and this is a big way that we get to do that."

The brownstone was listed as number eight on the Duluth Preservation Alliance's 2021 list of the 10 most endangered places in the city.

"I think it's important for us to acknowledge today that a building like this, while it's been a challenge for the community and a challenge for the people that live there for a long, long time, it also served a purpose," Corey said. "And that purpose was, frankly, to give people that don't have any choices of where to live a place to live. Until we figure out, as a society and a community, how to provide enough housing, we'll continue to have problems like this building because there are folks that don't have many choices."

The Brewery Creek Terrace is a passion project for Schraepfer, who donated Heirloom's entire profit margin to bring the project to fruition.

“This project is fraught with challenges and is incredibly risky for a developer,” he said.

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Essentia CEO Dr. David Herman said Essentia is proud to be a partner on the project, which is just blocks from Essentia's downtown Duluth campus, because safe housing makes a healthy difference in people's lives. Essentia has previously contributed $1.4 million to the Brewery Creek Apartments.

Tim Foster, Superior Choice Credit Union CEO and president, said the credit union has been involved in the project since the early planning stages, and has been happy to help revitalize the block.

"I'm excited to be here today, but I think I'll speak for us all and say we're probably more excited to just drive by here one day and see families living in Mike's vision," Foster said.

Laura Butterbrodt covers health for the Duluth News Tribune. She has a bachelor of arts in journalism from South Dakota State University and has been working as a reporter in Minnesota and South Dakota since 2014.
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