Dec. 20, 2012 --The Duluth Economic Development Authority received updates on three ambitious projects Wednesday and agreed to push back timelines for all of them.

DEDA commissioners listened to status reports involving a waterfront hotel at the site of the former Lafarge Cement terminal, the restoration of the NorShor Theatre and the redevelopment of the Lange Motors/Carlson used bookstore building at 206 E. Superior St.

Swanky hotel

Local developers Sandy Hoff and Alex Giuliani unveiled revamped plans for a nine-story hotel on property next to the old Lafarge Cement terminal. The project would involve land already owned by a group of local investors, including Hoff and Giuliani, as well as property owned by DEDA.

The development group had hoped to secure funding for the project and return to DEDA with a detailed project agreement before the end of this year in hopes of exercising an option to purchase additional land it needs for the project from the authority, but on Wednesday Hoff asked that the deadline for a development agreement be pushed back until June 30.

Hoff described plans for "a 140-room upscale resort/hotel," complete with a restaurant, bar and a 250-person banquet facility.

John Gerzina, a principal partner with DSGW Architects, said the design of the hotel was inspired in part by Duluth ore docks. He said it will capitalize on unrivaled views of the harbor and Aerial Lift Bridge.

"Two-thirds of the hotel rooms focus out onto the water," he said. "We tried very hard to maximize that exposure and minimize those rooms that face out into the hillside. So the building kind of has this bent floor plan that reaches around the corner of the slip."

While original conceptual plans had called for underground parking on the site, Hoff said it wasn't cost-effective, and surface parking is now part of the design.

Original plans also had called for the redevelopment of concrete storage silos into condominiums and hotel rooms. But Gerzina said: "As we got into it, it became very apparent there were just too many unknowns with four silos that are 100 years old sitting on top of pilings that we weren't sure what was going on."

Hoff interjected: "The silos will be part of Phase II construction. They could be an expansion of retail, the hotel or condominiums. It's not that they can't be used, it's just that it wasn't cost-effective in the first phase of the project."

Although DEDA granted the project a six-month extension to finalize its plans and commit them to a development agreement, Hoff said he hopes to have the document drafted in January. He aims to have financing lined up by February, setting the stage for major construction to begin in the first half of the coming year, with DEDA's blessing.

"We are making progress on financing," Hoff said. "We are working with a number of financial institutions. It's clearly a challenging environment to secure financing for a project."

He said the development has been scaled back to reflect the tough realities of financing such a large endeavor.

"We've been retooling the project to get the cost under control," Hoff said.

Another key to advancing the project was putting together a competent and respected management team. Hoff said he believes he has located a solid partner in Steve Olson, president and CEO of Leisure Hotels & Resorts, whom he introduced to DEDA on Wednesday.

Olson said he is "very optimistic" about the project, noting: "The numbers are compelling, and the market is strong."

He said his Kansas-based firm has managed similar-scale projects in the past and typically commits to only eight developments per year. Olson said the Lafarge redevelopment project made the cut for 2013 because of the unique opportunities it presents.

NorShor Theatre

DEDA also granted a 120-day extension to Sherman Associates, which is working to redevelop the NorShor Theatre in Duluth's Old Downtown neighborhood.

The project received a boost earlier this week when the National Trust Community Investment Corp. announced that it would provide $10 million in New Market Tax Credits to help restore the theater.

But Brian Gorecki, a representative for Sherman, said the project is still waiting on word of its application for another $10 million in federal tax credits. The so-called fiscal cliff has thrown a new degree of uncertainty into the availability of funding for the program.

Gorecki said he's also waiting to learn if a request for $4.95 million in bonding money for the project will prove successful when the Minnesota Legislature reconvenes in January.

While DEDA voted 6-1 to grant Sherman's request for an extension, city Councilor Jay Fosle explained his dissent, especially in light of the additional bonding money being requested.

"I personally don't want any more taxpayer dollars going into this," he said.

Bookstore to brewery

Rod Raymond and Tim Nelson plan to redevelop the former Carlson Bookstore building into a brewery complex, including a bakery and other businesses, but they will need more time to tackle the job. The project had received a $350,000 Building In Duluth Grant that was to be used to help with improvements to the bookstore building as well as the restoration of the Old City Hall Building, which Raymond and Nelson own across the street. That structure is now home to a new bar and restaurant called Tycoons.

Bill Burns, an attorney representing Nelson and Raymond, said the Old City Hall project is now complete, but it came in over budget. After settling those bills, the partners are now turning their attention to the Carlson building, which they aim to complete work on by July 2014. Initial plans had called for the job to be done in 2013.

The new brewery complex is expected to employ at least 20 people.

After Chris Eng, DEDA's executive director, advised commissioners that they had authority to grant the requested extension, commissioners unanimously agreed to provide it.

The Building In Duluth grants were authorized by the state and enabled the city to use some excess tax-increment money to jump-start the local economy by helping local developers move forward with new building projects.

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(c)2012 the Duluth News Tribune (Duluth, Minn.)

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