Duluth Economic Business Authority creating jobs in local businesses

Mayor Don Ness has been working closely with the DEDA. Photo Credit: Michael Novitzki With a cityscape dominated by the antique architecture of century-old buildings, many of Duluth’s citizens prioritize the preservation of its unique and historic urban backdrop Many well-known businesses operate out of old buildings left over from the city’s “boom” era of the early 1900s. In the past few years, several new local entrepreneurs have done their part to keep recycling history in this way, and the local government is currently working to make sure the tradition doesn’t die anytime soon.

Last year the state legislature passed a bill allowing the allocation of non-committed tax revenue to private businesses for projects that have a positive effect on their community as a whole.

Since this legislation Mayor Don Ness has been working closely with the Duluth Economic Development Authority (DEDA) to turn these funds into loans and tax breaks for new or expanding local businesses, with an ultimate goal of creating jobs in the community.

Though economic growth was stated as one of the primary objectives of the legislation, the qualification criteria for projects allowed to receive these funds has been designed to accommodate the other community goal of historic preservation. They also offer tax breaks to projects involving the use of antique buildings.

Local entrepreneur Alex Giuliani is the relatively new owner of Clyde Industrial Park. Though he seems like a man whose sentimental ties to history overshadow his desire to be a restaurant owner, this pioneer of the historic preservation trend recently invested in a $28 million renovation of the 36,000 square foot former heavy machinery factory Clyde Iron Works, turning it into an entertainment facility which includes a restaurant, performance venue, and two hockey rinks.

“It was more just feelings I had that I didn’t want the buildings to get torn down because you usually can’t replicate what was there,” he said, “I bought it from a trust out in California and there were several bidders who wanted to tear it down, but the owners of the trust didn’t really see eye-to-eye with them on that, which is why they ended up selling it to me.”

Local DSGW consultant John Erickson was the architect hired for the renovation of Clyde Industrial Park.  When asked about the feasibility of future such developments he agreed that there was some risk and sacrifice involved and said, “I think a project like that requires the right personality.”

DEDA is currently working on finding other such personalities with  Bid 2011, which is a project meant to draw business proposals from local entrepreneurs for evaluation.The proposal guidelines state that allocations must go toward private businesses, create jobs, require a minimum investment of $500,000 and involve construction either in the form of building or renovating. In light of this project Giuliani is currently reworking a development stage hotel idea; as he noted the tax breaks were not available during the Clyde project.

DEDA Executive Director Brian Hanson explained, “We wanted to do big projects that could make a real difference and not just be dropping twenty five or fifty thousand dollars here and there.”

Of the eleven businesses that submitted proposals, five will be approved including construction and expansion projects for Hawks Boots, Duluth Minerals, Moline Manufacturing, Just Take Action Inc. and the Miller-Dwan Foundation’s Amberwing Facility.

Like Clyde Iron Works, West Duluth furniture company Hawks Boots is another ahead-of-the-game company trying to take advantage of a late opportunity.  Already using the artfully modernized production facility which was once the abandoned Polaris Vault building its owners hope to take advantage of the public funding to soon clean up and redevelop the polluted U.S. Steel Superfund site on Stryker Bay for expansion.

Hawks Boots representative Kate Lindello mentioned that the renovation was in keeping with the environmental message the company and its subsidiaries send through their products. When asked about the comparison to buying or leasing a new building, architect David Salmela who was consulted on that renovation project said, “It’s something that was a little more expensive, but will end up being a greater asset and making the business more unique.”

The purpose of Bid 2011 is to create feasibility were there previously was none; making relatively risky investment more attractive to otherwise cautious business owners.

“We’re helping them with the cost of that renovation,” said Hanson, “It costs more to do that.”

As optimistic as the project sounds, Duluth City Council member and DEDA commissioner Todd Fedora brought up an alternative standpoint during the last DEDA meeting in March when he cited the costly and slow-moving renovation of the Norshor Theatre calling it, “a money pit of epic proportion,” and saying that the council “rushed into it without doing their homework.”

Fedora also mentioned that he had been contacted by several business owners who were upset about the idea of a public entity subsidizing competitors.

Despite these proposed shortcomings, those board members in favor of the new funding argue that there are no subsidies as all loans will be paid back in full.

DEDA’s official position is that the extensive feasibility studies that have been done for each proposed project show that the potential economic benefits will outweigh the risks.

LakeVoice Semester Farewell

Duluth’s young professional population dwindles as college students leave after graduation