'Nowhere to move to': Duluth residents face tight housing market as Essentia buys their homes, plans parking ramp

Up a flight of wooden stairs lined with hand-painted bottles, inside the door at the top, a small dog named Maggie Mae happily greets every visitor to the apartment.

Inside, the apartment’s walls are filled with homemade paintings. Bins of art materials are tucked in a corner, and natural light streams across colorful furniture.

This is where Maggie Mae’s owner, Debra Johnson Robnik, has lived for three years. Before living in the apartment, she experienced an abusive domestic relationship and homelessness. She said she was lucky to find a space she loves and expected to spend the rest of her life here.

But as developments in Duluth’s medical district move forward, this isn’t likely.

“I don't know where I'm going to end up,” she said.

Her home is in one of the five residential properties located on the 300 block of East First Street that may be demolished to make way for a parking ramp, which would serve Duluth’s developing medical district . Millions of dollars in funding — a majority private — are being pumped into the district to build new hospital structures, update facilities and improve infrastructure.

Some say the projects will open up more land for development and spur further housing projects. While others say the immediate loss of housing will add stress to Duluth's tight housing market. Some who may eventually have to leave their homes fear they have nowhere to go.

Essentia Health purchased the residential properties , which house 19 units, because it identified the area as an ideal location for a parking ramp that could connect to the health system's new Vision Northland facility.

It hired a new property manager to oversee the two duplexes, one triplex and two small apartment buildings until a final plan is complete, said Mark Hayward , senior vice president of operations at Essentia.

“These are strategic purchases for Essentia for the long term, given their proximity to our new Vision Northland project,” Hayward said.

Vision Northland is Essentia’s $800 million private investment that will pay for a new hospital tower and related infrastructure and financing. This private funding won’t be used for the parking ramp.

Instead, a law passed during the last legislative session reimburses up to $36.4 million in public funding to the entity that develops a parking ramp on the west side of the district. The ramp could have up to 1,400 new spaces for medical district visitors and the public. Essentia anticipates finalizing and receiving approval for the ramp's plans in the next two months.

As Essentia proceeds with developing it, the hospital system hired a local law firm to work with tenants to find new homes and communicate updates to them, according to a spokesperson. Information about possible financial compensation wasn’t shared to protect tenant privacy.

The tenants know they eventually have to leave, but the timeline is uncertain.

Johnson Robnik uses a Section 8 voucher to supplement her rent, which she said limits what housing she can consider. And with Duluth’s tight housing market, she said she’s scared she won’t find a place by the time she has to leave.

“Honestly, I cry. I'm really sad. But I'm mostly angry. Very angry. So what helps is, I just avoid it. I push that thought out of my head — then it's going to be OK,” she said.

Samuel Studelska, 31, has rented a room in one of the units that Essentia purchased for about a year and a half. He works as a bartender downtown and started saving money to find a new place once he learned he would eventually need to move.

He said replacing viable housing with a parking ramp doesn’t make sense, as Duluth is experiencing a lack of affordable housing and there are empty lots nearby.

“I’m kind of bummed that Essentia is going to tear down my house … because there’s empty city blocks,” he said.

Studelska doesn’t know where he’s going to live yet, but said it has to be affordable.

But that might be difficult. Duluth is experiencing a shortage of affordable housing, as well as growing wait lists for public housing and public housing vouchers.

A recently released housing survey shows the extent of Duluth’s housing shortage . Rent has steadily increased over the past decade, and the waiting list for public housing increased by nearly 500 people last year, according to the Housing Indicator Report. Meaning, more than 2,200 people are on a waiting list for affordable housing in the city.

Duluth Mayor Emily Larson said she's confident in Essentia's ability to work with the tenants to find other housing.

"Having the net loss of affordable housing is not an option for this community. So I think Essentia likely has a few choices that they need to make … about how they want to partner with either nonprofit organizations, the city or other housing providers to be a part of the housing solution, as the public is co-invested in their expansion."

Razing housing is common when a neighborhood develops, said Ed Goetz, who researches affordable housing and displacement. He is director of the Center for Urban and Regional Affairs at the University of Minnesota.

Low-cost housing tends to be a less preferred use of land in a city, he said. "It's easy to kind of quote-unquote, 'sacrifice,' that type of land use when pursuing development or redevelopment."

There's no guarantee that future, indirect housing will follow developments, Goetz said. If housing does follow, it will likely be market-rate units.

A 15-story apartment building has already been planned for East Superior Street in downtown. The $75 million project is slated to bring 204 rental units and ground-floor retail space. One of its developers said last year that they're keeping affordable housing in mind, but didn't have specifics on pricing.

Mayor Larson has supported both expanding Duluth's housing market and growing the medical district. She said although there may be challenges in the short term, such as losing housing, the overall impact of the development will meet the needs of the medical district and community.

"There's going to be some really difficult junctures until we get there," she said. "And there's not a lot we can always do in the interim, except communicate, hold people together, keep focused and keep our eye on that end. And then also be very clear on what our expectations and values are as a community, and I think we are doing that."

The city anticipates reaching an agreement with Essentia to partner on building the ramp, according to a city spokesperson. The City Council has to approve state funding before Essentia could receive it, and the ramp would also need approval from the planning commission.

Essentia is planning to bring the development agreement forward at upcoming City Council meetings, with a goal to have it finished by the time Vision Northland is complete, Hayward said. When complete, the ramp will be publicly owned and operated by the city.

Leilanie Varado loves her apartment's large backyard. Here, she tosses chunks of old bread to pigeons and squirrels that come scrambling when she steps outside.

She has been living in her home for almost four years and said it's a safe environment for her. When lawyers for Essentia contacted her about having to leave, she said it was difficult to process all of the information because she has a brain injury. She received help from her caseworker to manage it, but said she's still fearful.

"I'm really scared … because I don't think anybody likes change, especially with my mental health status," she said.

Varado and others in the purchased units, like Johnson Robnik, said they're unsure where they'll end up in the coming months.

"I don't have nowhere to move to," Varado said. "You're not going to find a place like this."