Two stalled Duluth housing projects move ahead

DULUTH — Two blighted construction sites in the city’s downtown and Lincoln Park business districts will soon see improvement, with planned housing and retail projects finally moving forward.

A developer razed a motel, restaurant and small grocery store downtown for a 15-story complex dubbed the Lakeview three years ago. It created a hole between the Sheraton Duluth Hotel and the new Essentia Health-St. Mary’s hospital. The insides of cleaved motel rooms could be seen from Superior Street, left in place to support an adjacent alley.

Work stopped on a 45-unit affordable housing project in Lincoln Park after financing fell through several months ago, and the unfinished building was left open to the elements.

But earlier this month, Landmark Development broke ground on the $87 million downtown high-rise at 333 E. Superior St., expected to further remake the skyline on the east side of downtown. City officials say work is expected to commence on the $12 million Lincoln Park building, Urbane 218, this spring.

Both developers dealt with spiking interest rates and inflation after the pandemic and needed time to secure financing, said Chad Ronchetti, the city’s director of planning and economic development.

“But it’s super exciting to have a tower crane in our downtown and see that investment progress,” he said, at a time when the city struggles through a housing crisis.

Both projects have tax increment financing (TIF) agreements with the city: Lakeview for $7.5 million and Urbane for $1 million. The developers will get that amount in property tax revenue over a set period to help pay for construction.

Urbane also received nearly $800,000 in federal pandemic aid funneled through the city. The city has allowed several amendments to its agreement with Landmark and has increased its TIF amount. Merge was also given extra time.

Landmark CEO Bob Dunn said he never considered the 210-unit primarily market rate project stalled. The company also managed development of the Essentia hospital, and its focus was on completing that major project, he said, while also dealing with rising interest rates.

“We were bullish on this from the very beginning of our work with Essentia,” Dunn said, the project fitting with the company’s focus of developing near civic anchors, such as a major medical center. “The first night there we walked Superior Street and said, ‘If this (corridor) gets a little bit of traction, it could be one of the great success stories in America in terms of urban development.’ And we feel even more strongly about that today.”

Landmark also developed U.S. Bank Stadium and has been involved with Mayo Clinic’s Destination Medical Center.

Plans for the high-rise include a restaurant — potentially with a rooftop bar and terraces overlooking Lake Superior — a coffee shop, wellness spa and clothing stores. Landmark hopes to seize on the opportunity to offer unobstructed lake views, Dunn said. It is expected to be ready for tenants by fall 2025 and has already generated interest from Twin Cities residents wanting a second home in Duluth and young, urban professionals and empty-nesters already living in the city.

Merge Urban Development Group is behind the Lincoln Park project at 2001 W. Superior St. Representatives of the company didn’t return messages for this story.

It sits on the site of the former Seaway Hotel, destroyed by fire several years ago. Because it was exposed for so long, the city required a structural assessment, Ronchetti said. No major issues were found. He gave Merge credit for sticking with the project and said he was confident it would be completed. The Iowa-based developer is also planning an 80-unit affordable apartment building in West Duluth.

City Councilor Arik Forsman was on the council that first approved the Lakeview project in 2018.

With the effects of the pandemic, he wasn’t confident it would get built and grew weary of the multiple agreement amendments that came before the council, he said. But Forsman talked to the owner of a pub near the construction site before the last vote, who told him he stayed open partly in hopes it would be built.

“It hit me right in the face,” Forsman said. “There are so many small businesses depending on development like this in our downtown.”