Rockridge School sale falls through

The sale of Duluth's Rockridge Elementary School has fallen through, just a week after district officials announced the collapse of a deal to sell the former Central High School property to another developer.

The developers who agreed to purchase Rockridge and Morgan Park school properties have terminated the Rockridge purchase, the school district announced in a news release this morning. (File / News Tribune)

The sale of Duluth’s Rockridge Elementary School has fallen through, just a week after district officials announced the collapse of a deal to sell the former Central High School property to another developer.
Aaron Schweiger and financial partner Augusta Housing Management Co. were set to buy both the Lakeside neighborhood’s Rockridge and western Duluth’s Morgan Park Middle School for $1.2 million, and now will renegotiate for just the Morgan Park property.
“After doing our due diligence, we estimate it would cost us roughly $3 million to build roads and run critical infrastructure through the property on top of other site preparation and construction costs,” Schweiger said Tuesday. “We’re not able to construct enough units on the property to make the project economically viable. The property is too expensive to develop.”
Schweiger pointed to proposed changes to the city’s Unified Development Code that would have limited the amount of housing he wanted to build.
In late June, the Duluth School Board approved an extension to Schweiger’s closing date as he worked to change plans to fall more closely in line with what the city and neighbors wanted, he said at the time. But the code changes, proposed by City Councilor Jennifer Julsrud, would mean reduced housing density - a change to the project that would make it unaffordable, Schweiger said.
Julsrud said the possible code changes, which would go to the city planning commission this summer, would affect the project only slightly.
The intent of the changes is to “prevent any developer in the city from cramming multi-unit townhomes on small lots,” she said, noting Rockridge would be the first of many “infill” sites throughout the city.
Currently, she said, duplexes can be stacked with only 40 feet of front footage per lot, and no public meetings or special permission is required aside from a permit. The city wants a mix of housing, she said, but wants it to be “reasonable.”
Schweiger’s plans first included 143 units on the site, then downsized to about 100, then 78. His most recent iteration, he said, was 66 units, including 30 inside the school building. Also included were eight-plexes and six-plexes on surrounding property.
“Every time we kept going back (to the city and Julsrud) they kept telling us the population density was too high,” he said.
The changes to the city code would make the density of townhouse development match the surrounding neighborhood in regard to lot sizes, said Keith Hamre, director of planning and construction services for the city. He noted that Schweiger’s latest plans were “fairly close” to fitting.
“We’re sorry to see the developer pull back,” he said. “At the end of the day, extending utilities and streets are expensive, and payback on those can be a challenge.”
Julsrud, a neighbor of the 17-acre school property, said she wants to see the school building reused and said she liked Schweiger’s plans for it. But other plans, she said, weren’t the best fit for the neighborhood - something she’d also heard from constituents.
School neighbor Mark Irving said Schweiger never met with the neighborhood about his plans; updates came through meetings with the city, he said, noting more communication from Schweiger could have led to different results. Most people in the area want single-family housing in the residential area that sits below Hawk Ridge, he said, as opposed to multiple rental units.
“The neighbors, like we’ve said all along, are just trying to go for responsible development,” Irving said.
Duluth School Board member Rosie Loeffler-Kemp had been working with Julsrud, Schweiger and the city on the development, she said. The lost sale was “unfortunate” but “it’s important that whatever is developed is done right,” she said.
With the majority of value in the Rockridge-Morgan Park deal coming from the former elementary school, that building - along with the $10 million Central property - make up the most expensive property left over from the district’s long-range building and consolidation plan. Neither sale had been figured into next year’s budget.
The property will go back on the market, and the district will follow up with others who were seriously considering it before an agreement was reached with Schweiger, said Kerry Leider, property and risk manager for the district.
The school building - which zoning calls for repurposing - would be good for senior housing, he said, and he expects it to be “snapped up.”
“Property sales fall through all the time,” Leider said. “But to have two of them fall through is disheartening. We were hopeful these buyers would close on these deals. But I still think it’s going to happen.”
Both schools have been empty for several years, although the Secondary Technical Center on the Central property was rented out for a period of time and maintenance staff have been housed on the site. The district continues to pay to maintain the properties.
The cost to develop also played a role in Harbor Bay Real Estate Advisors’ decision to back out of its agreement with the school district to buy the 77-acre Central property.
Schweiger said he’s still interested in building in Duluth, and some of the Central land is an option. He said he’ll look into buying a portion of the Central site, he said. It has been rezoned so the property can be sold in parcels.

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