Duluth's last vacant commercial waterfront lot could see new life

DULUTH — Duluth's last piece of commercial waterfront has stood vacant for more than three decades, its seawall collapsing into the harbor, and a massive cement slab and contaminated soils the only relics of the site's industrial past.

Lot D, the 12-acre brownfield site on Railroad Street sits between a bulk salt packaging plant and the Pier B hotel — a short walk to Bayfront Festival Park. Owned by the Duluth Economic Development Authority, the city of Duluth's planning and development arm, it last served as a manufacturing and cold storage site for frozen food magnate Jeno Paulucci.

Now, a Wayzata-based developer is attempting to revive the site with plans that mesh with two city priorities: boosting housing and economic development. Apartments, townhomes, a distillery and public waterfront space are all likely options, and a key part of the vision is the property's place in linking tourism hub Canal Park to blossoming Lincoln Park by trail. But first, Inland Development Partners and the city of Duluth must overcome a $22 million roadblock.

The eroding dock walls, a 1-acre, 6-foot-tall concrete slab with timber pilings that descend 60 feet underground, and contaminated soil all must be addressed before the site can be developed — expensive problems that have kept Lot D empty all these years.

"This is a tough site," said Inland's Steve Schwanke, but it's the kind of project the developer gravitates toward. "It allows us to take a site that, frankly, isn't all that attractive, but could become a premier site in the city."

Inland has a pre-development agreement with the city to explore feasibility, which includes environmental and traffic studies, while the city seeks redevelopment and cleanup grants to pay for seawall reconstruction, removal of the slab, soil remediation and other improvements. Some grant money will likely hinge on the promise of job creation, among other requirements. Schwanke recently toured the site with representatives of the Minnesota Department of Employment and Economic Development.

"It's a heavy lift in many regards, but there's lots of support for it," he said.

Inland, whose metro projects include the Parker Station Flats, a housing project in Robbinsdale, initially plans between 500 and 700 housing units, both apartments and townhomes. Schwanke said there is also interest from the University of Minnesota Duluth's Large Lakes Observatory and from the brewing and distilling industries. The company would sell land for some of those projects, Schwanke said, but all told, it could total $200 million in investments. By summer, Inland will likely know whether plans are possible.

Successful development of Lot D would be crossing a major item off the city's to-do list. The property is the last available along the harbor zoned for mixed use, allowing things like housing and tourism-related businesses.

In the city's vision for the site, the Baywalk that runs from Canal Park along the harbor to Pier B would cross over the adjacent slip to Lot D and wrap around, bringing walkers to the Cross City Trail that leads to Lincoln Park.

"The level of connectivity here is off the charts," said Adam Fulton, deputy director of planning and development for Duluth.

There's been no intuitive way to connect the two areas sans vehicle, and with Duluth's outdoor popularity and growing climate refuge reputation, that is important, said Matt Baumgartner, president of the Duluth Area Chamber of Commerce.

Lot D separates Duluth's commercial and industrial waterfronts. The Duluth Seaway Port Authority is supportive of Inland's plans and has been involved in talks about it, wanting to ensure the potential project is sensitive to neighbor Compass Minerals, the salt packaging plant, said Deb DeLuca, the port authority's executive director.

"Ships, trucks and trains operate there and it can have day and night operations," DeLuca said, sometimes noisy and dusty from the salt. "What we don't want is a scenario to unfold where future commercial users end up unhappy with the realities of a development abutting an active industrial salt shipping dock."

Duluth's waterfront tourism industry and working port have co-existed for decades, but when the city formed in the late 1800s, harbor swamps and bogs were filled to help create a freight hub, and warehouses and docks lined the port, including where Lot D sits. Structures were built on the site in the mid-1900s, including a passenger terminal, a telephone company, and oil and cold-storage warehouses. Eventually one of Lot D's slips was filled and a building for Gamble Robinson food wholesaler and Paulucci's manufacturing was all that remained. The slip next to Lot D, once contaminated, was already cleaned as part of St. Louis River Area of Concern work.

Inland isn't the first company with interest in Lot D. Local developers Sandy Hoff and Alex Giuliani, who were behind the $30 million neighboring Pier B brownfield project, came close to a development in 2017.

Apartments, a parking ramp and retail were planned, but at the time, market rate apartments rented for much less than now, Hoff said, and "we couldn't make the numbers work" considering costs to prepare the site, without "significant help from the state."

"The areas needing sheet-piling (seawall) were about $3,000 a foot; just tremendously expensive," Hoff said, noting the human-made piers industry was built upon were often filled with whatever was nearby. "We suspect there are lots of interesting things buried underground at that site."

With a rental market more favorable for developers today, Hoff said he hopes Inland is successful.

"We are cheering them on and stand ready to help," he said.