Opponents of Duluth hotel must pay $1.6 million to pause construction

DULUTH - A group of neighbors opposing a Duluth hotel development must post a $1.6 million bond if they want their request to pause construction honored by the City Council.

The Duluth City Council on Monday night approved a hold on work for a hotel near the Miller Hill Mall after opposition from neighbors wanting more environmental review, but said a bond was necessary to cover potential losses to the Iowa-based developer.

The group has appealed a previous City Council decision saying an Environmental Assessment Worksheet [EAW] isn't necessary. The case will be heard by the Minnesota Court of Appeals, and the group must post the bond by July 10.

Becca Mulenburg, who filed the appeal, said a pause of the project — a planned 100-room hotel near Miller Creek, which is an impaired trout stream — was necessary while the EAW issue was decided. If a review is done after construction begins, she said, the landscape will have already been altered by cleared land and other changes.

"We just want this project done right," Mulenburg said, noting the group could not afford such a high bond amount.

If the court decides in favor of the hotel developer, the developer would get that money for losses it incurred from stopped work. An attorney for Kinseth Hospitality Cos. offered the total at the council meeting, saying it would cover a minimum of its losses.

"The direct damages to Kinseth not being able to start this construction season are definite and quantifiable," said Mark Pilon, an attorney for the company.

Councilor Gary Anderson said he supported a hold on the project.

Without it, he said, Kinseth will begin construction "and there could be damage to the land that cannot be repaired. At the same time ... we have a responsibility to be respectful of the investment and potential loss to the developer."

The council vote was unanimous.

Jill Crawford-Nichols, who lives near the planned hotel and is part of the group making the appeal, declined to comment on their next move.

"The city of Duluth has just made it clear that if any citizen appeals their decisions to a higher court, it has the risk of coming with a massive price tag," Crawford-Nichols said. "The councilors seemed surprisingly comfortable with attaching this $1.6 million anchor to their constituents, and we speculate their hope is that we pull our appeal against the council from the state's docket."

City administration has said potential effects of hotel construction, such as warm-water runoff, would be controlled through provisions in the city zoning review and building permit process. The city's Planning Commission initially opted to require the EAW, and the developer appealed that decision to the City Council. In May, the council reversed the commission's decision to require the review, prompting the neighbors' appeal to state court.

The company has said it will go forward with its plans even if required to do the review.