Historic Buildings Join Forces for Funding

Posted at: 10/16/2013 5:24 PM | Updated at: 10/16/2013 6:08 PM
By: Travis Dill

Developers working on the former Kozy Bar and the old St. Louis County Jail in Duluth hope an alliance can draw city funding for 80 units of affordable housing.

The Kozy Bar and Apartments burned down nearly three years ago leaving dozens of people without a home. New plans would replace the subsidized housing that was destroyed with 40 workforce apartments according to developer Mike Conlan.

“This is going to be affordable housing, but not special programs for people that need supportive housing. It's people that have a job in the downtown area,” Conlan said.

Only 7 blocks away the old St. Louis County Jail has been empty for 20 years, and Blue Limit LLC has been working for three years redevelop the building. Developer Grant Carlson said combining 40 rental units in the jail with those at the Kozy site means a better chance at financing among other benefits.

“Combining efforts we're approaching that 80 unit threshold that really makes things a lot easier both on the underwriting standpoint, the construction standpoint and once the buildings are open there can be some combined efforts towards marketing and management of the facilities,” Carlson said.

The developers said the Kozy site would hold efficiency apartments and the jail has space for some 1 and 2 bedroom units. Both buildings can take advantage of historic tax credits, but developers said the projects need over $1 million to round out state and private investment. The total cost of both projects is $12.8 million.

“We're about 90 percent as far as the funding that's been secured so we're looking to close the gap with this final amount of bonding,” Conlan said.

He said that bonding would come from Duluth's Housing and Redevelopment Authority, but the developers will first approach city councilors with their ideas in coming months.

The developers said they will push for a $3-5 million bonding fund so that other housing projects in the city could get funding as well.

The developers said bonding from the HRA could have an impact on taxpayers, but housing is desperately needed in the city. The developers cited a 1 percent vacancy rate in Duluth's rental market.

For now the buildings will wait empty until the bonding is discussed by city leaders. Carlson said some city funding allowed his company to stabilize the jail from deteriorating due to harsh winters. However, Conlan said the former Kozy building is waiting on that same city funding to prevent serious damage to his building this winter.

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