Agency considering Duluth businessman’s proposal for Kozy – Duluth News Tribune

DULUTH — Judge Eric Hylden was scheduled to get an update Monday from the attorneys who spent nearly five years arguing over the future of Pastoret Terrace, the historic but badly damaged downtown building best known as the Kozy Bar in recent years and Apartments was known.

Instead, the litigation is on hold for at least a few more months as the parties have agreed to give city employees time to work with a developer who has expressed interest in moving forward with a broader First Street revitalization plan.

Court records show that Duluth businessman Rod Raymond was the only party to come up with a plan in response to a recent call for proposals issued by the Duluth Economic Development Agency.

Raymond first outlined his vision to the News Tribune in July, detailing 21 short-term rental units that would benefit from Essentia Health’s rapidly growing presence and serve as a catalyst for redevelopment in the historic arts and theater district.

Raymond said Monday he was recently informed by city officials and DEDA that the proposal would not be accepted “as is”. But he received an invitation to meet with staff and “discuss other options.”

“I’m just on a wait and see program,” Raymond said. “First Street needs an injection. I don’t know if it will fix itself or if there is some kind of philanthropic, really senior Bill Gates person that comes in and does it. We have businesses that are near this space and we want to see it cleaned up. I look at the big picture.”

Pastoret Terrace was designed by renowned Duluth architect Oliver Traphagen and originally constructed in 1887 as six luxurious townhouses on the corner of First Street and Second Avenue East. It was later divided into about 50 smaller, affordable units and fitted with a bar at the front.

The Pastoret Terrace building, c.1887.
The Pastoret Terrace building, c.1887.

File/Duluth News Tribune

But the Pastoret and adjacent Paul Robeson Ballroom have been ravaged by a series of fires since 2010, rendering it uninhabitable. The building’s previous owner, Eric Ringsred, who had no fire insurance and lost the property tax forfeiture, filed suit with a conservation group called Respect Starts Here in early 2018 to stall the demolition.

The back and forth of the litigation has already resulted in one trial and three appeals. And while DEDA, the current property owner, was ordered to shore up the building and prevent its further deterioration, the property remained largely untouched as plaintiffs were unable to post a $140,000 court-ordered bail .

Miles Ringsred, an attorney for the preservationists, acknowledged that the recent delay will leave the building exposed to the elements of another harsh Duluth winter. But Raymond’s suggestion offers perhaps the best hope of saving the building.

“This is probably the last time we agree to kick that can a little further down the road,” said Miles Ringsred. “Time is not in favor of preserving this property. But knowing the success Rod has had and the vision and excitement he has behind it – it seems like there is a lot of interest in reviving this area with the big money flowing into old Central ( High School) building and all the amazing work that was being done down on Superior Street. So I think that hopefully something can come about. But again, it cannot be indefinitely.

Raymond has experience restoring Old City Hall, the former Carlson Bookstore and Endion Station – and has breathed new life into historic hospitality buildings.

While the Kozy Building has garnered most of the attention, Raymond’s larger vision involves enlisting the support of the city and other developers to repair the fire-damaged Pawn Duluth Building across First Street, a derelict building demolish what used to be an antique shop, find new life for the Wabasha Bookstore and bring additional housing to the area.

Raymond compared the concept to revitalizing the Lincoln Park Craft District and said he hopes to attract restaurants and cafes to the area and potentially convert the Paul Robeson Ballroom into a fitness center and wedding venue. The Duluth Playhouse is already planning to move across the street at 201 E. First St.

“The easy answer is always to demolish the old buildings,” Raymond said. “The complicated answer is to find some really creative solutions, some funding, some different ways to go about it. There are probably a lot smarter and better developers who could do a heck of a lot better job than me. But nobody else is doing it, so I’m here to try.”

Raymond said he couldn’t put a dollar value on the Kozy plan because there were too many unknowns at this point. The roof has largely collapsed and some areas of the building are completely off-limits even to rescue workers and structural engineers.

Developer Rod Raymond speaks.
Rod Raymond, pictured at the Oliver Inn in Duluth’s old City Hall, is hoping to restore the fire-damaged Pastoret Terrace building, which housed the Kozy Bar and Apartments.

Clint Austin / File 2021 / Duluth News Tribune

Raymond said his plan called for the city to retain ownership, at least for now, and it would require financial backing to bring in a contractor to shore up the walls and carefully remove debris with a crane to provide a better view of the condition the foundation and other components. He said he’s already called in a bricklayer who found the 135-year-old brick walls remain in solid condition.

Even with historical tax credits and tax-boost funding, Raymond acknowledged the project would come with a high price tag and potentially be unprofitable for 15 to 20 years. Some might see it as Hail Mary, but Raymond thinks the plan is “sound.”

“I’m trying to do something good here,” he said. “I’m not here to make $1 million on this thing. The better idea for me is to put up a vinyl-sided Kwik Trip somewhere. I’m retiring and that’s pretty much the last thing I want to do. I just think this is an idea worth at least considering again. What can the smartest people on the planet, or here in Duluth, do knowing that this historic building is the last cool thing in this neighborhood?”

FILE: Kozy roof
Even with snow cover, an aerial view of the Pastoret Terrace building on November 16, 2020 shows extensive roof damage to the former home of the Kozy Bar and Apartments.

Steve Kuchera/Files/Duluth News Tribune

A previous proposal by Raymond to convert the Pastoret into a market-efficient dwelling was one of three proposals rejected by DEDA in 2017. He said he hasn’t received any specific feedback on his new offering and expects to meet with officials after Thanksgiving.

If Raymond can’t reach an agreement with DEDA, it will likely fall to Judge Hylden to decide again whether the building can fall. Plaintiffs have claimed that its status as a contributing structure to a historic district precludes demolition, while the city has argued that the building is a disgrace to the neighborhood and has been damaged beyond the scope of historic preservation.

A city spokeswoman declined to comment on the case or discussions with Raymond, citing the ongoing litigation. But Assistant District Attorney Elizabeth Sellers Tabor requested that delay in Monday’s scheduled court appearance.

“(DEDA) has closely examined the one proposal it received in response and recently entered into discussions with the proposer to explore a way forward,” she wrote. “In short, material facts are still in flux.”

Hylden was due to oversee a process in either January or March, having already postponed the process to July to give DEDA time to issue a new call for proposals. He did not immediately set a new hearing date, but scheduled a status conference for February 6th.



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