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Duluth Council OKs $230K Loan for Seaway Hotel Purchase

Updated: 03/10/2014 11:45 PM
Created: 03/10/2014 10:40 PM WDIO.com
By: Alan Hoglund
ahoglund@wdio.com

A Duluth City Council decision made Monday night could open the door to revitalization in the Lincoln Park Business District.

They voted 8-1 to approve a loan allowing the Housing and Redevelopment Authority to buy the Seaway Hotel.

The $230,000 loan is from the Duluth Economic Development Authority. Once the HRA buys the building, hundreds of thousands of dollars from the state will be used to make repairs, resulting in about 70 rehabilitated low-income units, according to city council documents.

Eddie James Smith, an on-and-off Seaway resident for 14 years, told Eyewitness News needs help. "Needs it in the Seaway in a bad way," he said.

The building, located on the 2000 block of West Superior Street, was even condemned when it needed emergency repairs following flooding in the summer of 2012. The city lifted the order a few months later and gave the owner a year to make other changes, including finding professional property management.

It never happened, but it could soon. Hiring a professional property manager is part of the loan agreement, city council documents say. The agreement also requires the HRA to change the name of the building within 90 days of the sale.

Smith said "if we change the name and give it a facelift, maybe it will uplift the whole business area. It will change the area. That is what we're hoping."

Smith said change is a big need. He told us the Seaway has a bad reputation, and that within the last few days someone busted out windows in several cars with bricks.

Most city councilors agree that fixing the Seaway is the place to start the change Smith wants so bad. They heard words of support from several members of the community ahead of their vote.

Dale Lewis, the president of Park State Bank, said "in a small business district like Lincoln Park, it will act as a catalyst for rehab and redevelopment around the district."

Jay Fosle, the only councilor to vote no, said "I really don't agree that it's the governments job to buy any dilapidated building within the City of Duluth."

He also raised concerns about whether DEDA would get its money back.

According to DEDA's Chris Eng, it will happen in two ways. He told Eyewitness News that any money made beyond the cost of operation will go to paying off the loan. He also said when the HRA sells the property, they'll split every dollar over the $230,000 purchase price 50/50.

However, that's many months or years into the future. Eng said it's possible the whole sale will fall through. He said the HRA has already secured grant money from the state for repairs, but they want operating help as well. If the HRA doesn't get it, Eng said they may back out of the project.

But there's optimism among many residents at the Seaway. Smith wants crime reduced, and the area revitalized. He said fixing the building as the first step. 

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