Duluth Chamber seeks outside perspective on downtown development – Duluth News Tribune

DULUTH — In order to sustain the workforce necessary to support Duluth’s top industries in health care, manufacturing and aviation, it’s no surprise that more housing is needed.

Businesses like Cirrus Aircraft, Essentia Health, St. Luke’s hospital, Altec Industries, and others have called on local leadership to address the need for additional housing to attract and retain the growing workforce.

Area colleges and trade schools that partner with these industries face similar challenges while trying to attract and train more students to fill local workforce needs.

According to Daniel Fanning, the Duluth Area Chamber of Commerce vice president of strategy and policy, developers recognize the opportunities and timeliness, and know the solution is more housing of all types.

“We know there is a need for more affordable housing, and the city, HRA, LISC and other partners are working that,” Fanning said. “There is also a need for workforce and market rate housing, and even higher-end luxury housing. While we hear a desire for more single-family homes, we know those are a bit more complicated to complete right now given current rates, returns and even availability of land — especially downtown, but they’re still possible and we’ll keep pushing for those, too, but at this point, any new housing options would be beneficial.”

In his policy and advocacy email update on Nov. 22, Fanning wrote: “Throughout the community, we are seeing new buildings going up and existing buildings being repurposed. This includes commercial and retail, as well as much-needed housing of all types.”

Take, for example, the recent downtown development completed by Roer Companies at the Cove Apartments on the corner of Lake Avenue and East First Street. The company specializes in real estate development and property management.

“Right above us in the chamber office, Roer is in the process of completing the beautiful Cove Apartments. They’re fairly new to Duluth and have been great to work with,” Fanning said.

Roers reinvented the 1910 Builders Exchange property and adjoining Interstate Auto building into 48-units with studio, one-, and two-bedroom apartments including five affordable units. Phase 1 of the Cove Apartments opened in fall 2020 and reached 100% occupancy within 45 days. Phase 2 (connected via an adjoining skyway) opened in fall 2022 with 38 new units.

While the investments of other local developers is one piece of the solution, a more aggressive approach is required to meet the rate at which housing is in demand, Fanning indicated in his update.

“Both for the sake our existing businesses who need workforce housing and taxpayers/businesses who need tax relief, we need more development as soon as possible,” Fanning wrote. “Those of us who own a home/property recently received our proposed tax statements for the new year and many of us continue to see drastic increases at all levels that we know simply are not sustainable. These significant tax increases hurt taxpayers, hurt local businesses, could force some out of the area and likely prevent some developers from investing even more in the area — becoming a Catch-22.”

Fanning referenced the longstanding narrative around Duluth being a difficult place to do business and development, an issue the chamber has focused on resolving with the city over the past several years.

“The pandemic was a setback, but momentum is again building around streamlining the progress. There’s support and buy-in from the city and a real willingness to want to help move things along, while also still maintaining a responsible process and high standards. That’s why we are excited to see some of this renewed interest from the outside, it gives us an opportunity to demonstrate some of these recent changes, walk the walk and replace that old, tired narrative with a new narrative about Duluth being a great place to invest,” Fanning wrote.

To support the chamber’s ongoing efforts to engage and recruit developers from outside the area, Fanning traveled to Fargo, North Dakota, last week to meet with the Kilbourne Group.

According to Fanning, the Fargo-based real estate developer has experience with its downtown historical redevelopment and mixed-use infill projects that parallel the type of development the chamber envisions being successful in Duluth, specifically in the downtown and Lincoln Park areas.

“They had an exciting initial visit to Duluth a couple months ago and Chamber President Matt Baumgartner was able to start a strong connection with them and our chamber, which has only grown since. They see the historic opportunities here, as well as the challenges, and realize that Duluth is facing a pivotal moment and want to be part of our success,” Fanning wrote in the update. “To be clear, we don’t want to be Fargo or anywhere else except the most successful version of Duluth we can be. However, there are absolutely things we can and should learn from Fargo and other communities facing similar issues that we face in Duluth.”

Future visits are planned between the chamber and Kilbourne Group within the coming weeks to keep the ball rolling, Fanning said. No official plans or agreements have yet been set in stone between the two entities; however, Fanning assured there is a high level of interest on the chamber’s end.

“Yes, Kilbourne Group is the developer I met with in Fargo, but there are others interested in and even some currently working in Duluth,” Fanning said.

He anticipates a decision on partnering with a developer will be made by spring 2023. The Kilbourne Group was not immediately available for comment.