By Peter Passi
The developer hopes to restart work soon on the Lincoln Park Apartment Building despite a temporary setback.
The construction of an apartment building with 45 units on the site where the Seaway Hotel was formerly located, known as the Esmond Building has been stalled for the last couple of months.
The city, as the Merge Urban Development Group struggles to bring the project back to life, has ordered that the building unfinished at 2011, W. Superior St. undergo a structural assessment, which is scheduled for Tuesday.
Chad Ronchetti is the director of Duluth’s Planning and Economic Development division. He said that the building had been left outside in the elements when it wasn’t enclosed. Nor were materials left on site intended to be exposed to the elements. The building official decided that a structural testing was necessary to ensure the safety of all residents.
We do not have any policy or requirements regarding mold. “It is up to the property owner to do anything to avoid any mold issues,” said he.
A development agreement stipulated that the Urbane 218 building was due to be finished by the end this year. Ronchetti stated that Merge representatives had not requested a delay in the deadline.
Ronchetti stated that “that said, as a City, we did contact the Developer proactively in order to remind him that the construction deadline was approaching soon, but to also let them know the likelihood of any Public Body authorizing a delay of this completion date is unlikely, given the status of the Project.” They decided, therefore, to delay formally requesting an extension until the project had recommenced.
The News Tribune did not receive a response from Merge on either Friday or Monday when they asked for an update regarding the Urbane 218 Project.
Kraus-Anderson Construction Co. ceased construction on the site by mid-August.
Dan Markham said that the Duluth construction office’s director of operations, Dan Markham was in the position of working with subcontractors and looking after their financial best interests as well as his own.
Markham explained that at the moment, they can only wait for their owner to confirm where they stand with financing. Then, we will move forward once this is confirmed.
As of Monday, no mechanic’s lien had been filed on the property. However, contractors can file financial claims up to 120 calendar days after their last day of work.
Markham, the Markham of Urbane 218 said that it was likely to have needed an extension even before this recent delay.
Markham says his team is eager to complete the project.
He said, “We are committed.” We’re still working with the developer and fully expect that the project will be finished and occupied by 2024.
Ronchetti said that the city had not made any threats to stop its financial support of the project. This support includes almost $1.8 million of tax-increment funding — an amount that has been increased by $700,000.000 to assist the developer with increasing construction costs. At that time, the estimated price for this development was $12 million. This is $2.75 millions more than an initial estimate.
The tax-increment finance is a type of subsidy whereby new property taxes generated by an investment are used to pay for certain project costs.
Ronchetti stated that it was in the interest of the entire community that the project be completed. He noted that an apartment building that is only half built does not benefit anyone.
The Urbane 218 project will be dedicated exclusively to affordable housing. Nine units are priced at 60% of area median income (AMI), 27 units at 70% AMI, and nine other units available for 80% AMI.
Merge is also moving ahead with a second project in Duluth. A 80-unit apartment complex proposed for 3401 Grand Ave. next to the Wheeler Athletic Complex. The Residence will be a new development that offers units at affordable rents for those earning between 60% and 80% of area median income.
This project will also receive substantial public funding, including $3.5 million of tax-increment finance, as well as another $4,000,000 in pandemic relief funds Duluth received through the American Rescue Plan Act.
Gary Anderson, 1st district City Councilor asked City Administrator Noah Schuchman on Monday whether Merge is still a reliable and trustworthy partner.
Anderson stated that he wanted to see Urbane 218 succeed, as well as Merge bring more affordable housing desperately needed to Duluth. However, he questioned whether or not it would be wise to spend additional tax money with the developer. “Are you confident, both the city and our planning department, that financial structures will allow that project to move forward?”
Schuchman replied: “I believe that is a reasonable question, and we will be keeping an eye on it as the first property settles and we begin to consider the second project.”
Anderson stated that the city is required to spend all ARPA money by 2026, or else risk forfeiture. We are really on a schedule. “I trust that the staff will keep an eye on it,” said he.
Schuchman assures Anderson that Ronchetti and he have talked about the necessity of contingency plans “for any funds that have been allocated for affordable housing, to ensure that we do not end up in a position where we have to return any money.”
Ronchetti is confident that Merge can complete both Urbane 218 and the Urbane 218 project.
He said: “I’m extremely optimistic that this matter will be resolved, and we’ll have 45 beautiful apartments that are affordable in an area of Duluth that is undergoing a neighborhood redevelopment.”
The story was updated on Oct. 30, 3:56 pm and 9 PM, with the comments of Gary Anderson, City Councilor for Duluth’s 1st district, and Noah Schuchman, Duluth city administrator. The original post was made at 2:14 pm on October 30.
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