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City, real estate agent shed light on Duluth Central High School developer back out

Published: Mar. 8, 2022 at 5:54 PM CST
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DULUTH, MN. (CBS 3 Duluth) - The City of Duluth and the commercial realtor for the former Duluth Central High School property are shedding some light on the situation after a Twin Cities-based developer backed out buying hilltop property.

RELATED: Saturday Properties will not move forward with Duluth Central High School purchase

In a statement Monday night, the developer, Saturday Properties, blamed their decision on rising construction costs, market conditions, and city expectations that they say created too many barriers for the project.

“Saturday Properties informed Follmer Realty that we no longer see a path forward to redevelop the site of the Duluth Central High School. Rising construction costs, market conditions, and city expectations create too many barriers to ensure the success of housing on this site. We will continue to pursue other opportunities in Duluth. This in no way impacts our redevelopment of Historic Old Central,”

Saturday Properties

The Duluth School district had already agreed to sell them part of the 52 acres for about $7.4-million.

The City of Duluth responded to the apparent barriers and expectations in a statement.

“The City of Duluth has done everything we can to facilitate and support this development on behalf of the community. All that said, the City is not able to exempt the project from legal requirements in statute, code or ordinance associated with the size or scope of the project. The City remains supportive of the overall intent to redevelop the Old Central High School site and is committed to assisting ISD709 and a developer as future plans and real estate agreements between those parties are discussed.”

Noah Schuchman, City of Duluth Chief Administrative Officer

Greg Follmer with Follmer Commercial Real Estate has been marketing the ISD 709′s land for the last three years.

He said they have had many interested in the property, but the biggest hurdle is finding someone with the financial capacity to develop it.

Follmer said he was confident Saturday Properties was that developer, but as conversations went on, he says there were hurdles with rising costs along with needed financial assistance they wanted from city taxes.

“We are a very far distance from a competitive market, so construction costs, then you look at the amount of construction in this market. That, plus constraints placed on any buyer that comes in and says I want a TIF district. The city then says if you are going to come in and take some of our money, we’re going to place some requirements on those uses. In other words, we would like to see some affordable housing,” said Greg Follmer.

Saturday Properties released plans in February about what they were planning to do with the site.

They illustrated more than 440 housing units comprised of apartments and townhouses. None indicated to be low-income or affordable housing options.

Follmer said while this is a disappointment for the site, he is confident they will be able to find a new developer for the property soon.

The district still plans to start developing their new transportation and facilities site on the land, including demolishing the old school building.

Follmer said once the school’s demolition is complete, it will be shovel-ready and make it more appealing to buyers.

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