REQUEST FOR PROPOSALS
RFP # 16D-3
Development of Pastoret Terrace Property
ISSUE DATE: November 3, 2016
PROPOSALS DUE January 4, 2017
SUBMIT TO
Duluth Economic Development Authority
ATTN: Heather Rand, Executive Director
DULUTH CITY HALL, ROOM 402
411 WEST 1ST STREET
DULUTH, MN 55802
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TABLE OF CONTENTS
SECTION I- PROPERTY INFORMATION
Page 3
SECTION II- PROCESS INFORMATION
Page 7
SECTION III- PROPOSAL REQUIREMENTS & EVALUATION
Page 9
APPENDIX A- PROPOSAL COVER SHEET
Page 11
PROPOSAL CHECKLIST
Page 12
APPENDIX B- FIGURES
Page 13
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I
PROPERTY INFORMATION
I-1.
Purpose & Project Overview. The purpose of this two-part request for proposals
(RFP) is to invite developers to submit proposals for the development of Duluth Economic
Development Authority (“DEDA”)-owned real property, “Pastoret Terrace”, located in
Downtown Duluth at 109 North 2nd Ave East (see Appendix B, Figures 1 & 2). The
process is discussed in greater detail in section II-1 below.
I-2.
Background About Duluth, Minnesota
The city of Duluth stretches 26 miles long, from the mouth of the Saint Louis River estuary,
along the river and up the western shore of Lake Superior, the world’s largest freshwater
lake. The Duluth metropolitan area consists of approximately 280,000 people; the city of
Duluth has a population of over 86,000. Duluth hosts over 3.5 million tourists each year
who travel from around the world to experience the history, natural beauty and growing
sense of energy and optimism the city displays.
Duluth enjoys a nationally renowned array of recreational opportunities; in 2014 Duluth
was voted the “Best Town in America” by Outside Magazine
[http://www.outsideonline.com/1922786/best-towns-tournament-2014-results].
With over 11,000 acres of green space, 178 miles of trails for hikers, bicyclists, and
cross country skiers, and the ongoing construction of the 100 mile Duluth Traverse trail,
soon to be one of the world’s largest urban mountain biking systems, Duluth offers
enthusiasts a variety of outdoor-recreational opportunities for every season.
Additionally, Duluth is experiencing a
surge in developments and private
investments.
Maurice’s $70 million
corporate headquarters in the heart of
downtown was completed this year along
with
a
$30
million
waterfront
redevelopment
project
with
the
construction of the Pier B Resort and
Silo’s
Restaurant.
Mixed-use
developments such as Kenwood Village
(United Properties) and Endi (Harbor
Bay) are scheduled for completion within
the next six months offering market rate
Photo courtesy of Brett Groehler/UMD
apartments.
The NorShor Theatre,
located just one block away from the Pastoret Terrace property, is undergoing a $30.5
million renovation by Sherman Associates and will be completed by the end of 2017.
Duluth continues to experience a tremendous demand for housing. The overall housing
vacancy rate for Duluth is 3.3%, while the Downtown/Central Hillside vacancy rate is even
greater at 1.6% signifying the need for additional options to relieve the current housing
shortage (Housing Indicator Report, City of Duluth Community Planning 2015, see full
housing reports below).
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Housing Indicator Report, City of Duluth Community Planning (2015)
http://www.duluthmn.gov/community-planning/planning-library/
Workforce Housing Needs Study, Maxfield Research (2014)
http://www.duluthmn.gov/business-development/housing-summit/
Duluth’s East Downtown, where the Pastoret Terrace
property is located, is a prime location for development
and workforce housing since Essentia Health, the
City’s largest employer, (14,000 total employees in 4
states, 6,800 of which are in Duluth) and St. Lukes
(2,700 total employees) are both headquartered within
walking distance of the site. The Property is also just
one block uphill from Superior Street (downtown’s
main street) which hosts many amenities in East
Downtown (known as the Historic Arts and Theatre
District) such as restaurants, brew-pubs, hotels,
theatres and retail establishments. Furthermore, the
City of Duluth intends to make a major investment to
reconstruct Superior Street in the near future which will
enhance the infrastructure and aesthetics of
Downtown for decades to come.
Photo courtesy of Howie Blog
The Pastoret Terrace property is also located directly across the street from the City
owned Clayton, Jackson, McGhie Memorial. This space memorializes a dark chapter of
Duluth history which must never be forgotten. More information on the Clayton, Jackson,
McGhie Memorial can be found at
http://www.claytonjacksonmcghie.org/?page_id=122
Photo courtesy of Zenith City
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I-3.
Building and Property Details. The Pastoret Terrace property consists of:



One, 14,000 square foot parcel (100 feet wide by 140 feet deep)
One, 20,000 square foot structure (former apartments, bar, and ballroom)
The property goes from the South-East
corner of East 1st Street and 2nd Ave
East to the alley and takes up
approximately 25% of the entire lower
block. To the West of the property is a
surface parking lot which takes up
approximately 60% of the lower block
and the remainder is occupied by a
3,000 square foot single story
commercial building. While DEDA owns
only the Pastoret Terrace property, the
remaining property owners on the block
may be amenable to a block long
development (see Appendix B, Figure
3 for adjoining property owners contact
information). The entire lower block is
approximately 400 feet wide by 140 feet
deep while the entire block is
approximately 400 feet wide by 300
feet deep.
The Pastoret Terrace building was
constructed in 1886 by Michael
Pastoret. It was originally 6 luxury
town homes in the heart of downtown.
Over the years, the town homes were
divided into more and more
apartments and by 2009 there were 50
units in the building as well as a tavern
(Kozy Bar – est. 1960) on the lower
level. In 2010, the entire building
suffered a fire that has left the building
vacant of its tenants since that event.
The property became tax-forfeit in
2016 at which time DEDA acquired
the property from St. Louis County.
Photo courtesy of UMD Duluth Kathryn A. Martin Library
Archives and Special Collections
6
Photo courtesy of 2016 LHB Assessment Report
I-5.
The Pastoret Terrace had a building
assessment performed by LHB in
June 2016. The report contains the
architectural and structural condition
of the building and provides both
approximate
rehabilitation
and
complete
redevelopment
costs.
Similarly, a Phase I Environmental
Study has also been completed by
Barr Engineering in August 2016.
Both of these full reports are
available at www.dulutheda.org and
are the responsibility of the Proposer
to review.
Development Opportunities. There are three distinct development opportunities
for the existing Pastoret Terrace property which reflect DEDA’s preference for
developments which contain a housing element:
1. Historic renovation of Pastoret Terrace building to housing or mixed use
development
2. Demolition of Pastoret Terrace and new construction of housing or mixed use
development
3. Historic renovation or demolition and new construction of housing or mixed-use
development for the entire lower and/or upper block
Developers may submit a proposal for more than one of these distinct scenarios if they
so choose. DEDA will also consider other proposed development of the property which,
in DEDA’s judgement, offer benefits of equal or greater value to the community within
Duluth’s Comprehensive Land Use Plan concepts.
The Pastoret Terrace building has significant historical value thus the preservation of all
or part of the existing structure would be a positive factor to be weighed into the selection
process (see Section III-2).
Development proposals which include the “larger site” are encouraged to increase the
density and economic impact of this site. There are three concept-examples for the
existing site that involve a combination of housing, commercial space, and parking
structures (see Appendix B, Figures 5-7). While these three concepts are offered,
proposals in no way need to limit themselves to these examples.
I-6.
Property Zoning & Uses. Pastoret Terrace is currently zoned as F-8 Downtown
Mix. This Form District zoning allows for Main Street Building III, Corridor Building III, or
an Iconic Building as defined in the City of Duluth’s Unified Development Code (see
Appendix B, Figure 4 for examples). The F-8 District currently allows for up to 15 stories
of development with the building being required to be adjacent to the sidewalk.
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II
PROCESS INFORMATION
II-1. Process Overview. Due to the high-profile nature of this property and its potential
for development, the DEDA has decided on a two-part RFP process. Part One of the
RFP-process provides developers the opportunity to submit development concepts and
initial project designs (“Proposals”) for Pastoret Terrace.
DEDA will assemble a review panel (Panel) for this RFP process. The Panel will review
all Part One Proposals and will select those proposals that, in the view of the Panel, offer
the greatest benefit to the community and are practically and financially feasible. Those
Proposers may then be invited to participate in Part Two of the RFP process and will
require further documentation that provides greater depth and specificity. DEDA
anticipates posting the RFP-Part Two in accordance with the schedule outlined in I-2
below.
The Part Two Proposals will be required to include the information requested in Section
III-3 below. The Panel will review the Part Two Proposals based on their physical and
financial viability and the extent to which they meet the needs for the long-term
development of the East First Street neighborhood and Duluth’s Downtown in general
and provide the greatest benefit to the City and the surrounding area. Based upon the
results of the RFP-Part Two review, the DEDA will consider an Option Agreement or
Development Agreement with the developer of the highest-rated Proposal.
II-2. Calendar of Events. The DEDA will make every effort to adhere to the following
schedule:
Tentative Dates:
RFP-I Release Date
November 3, 2016
Deadline to Submit Questions (see II-5)
December 16, 2016
RFP-I Submissions Due
4 p.m. January 4, 2017
Review Panel Selection of Finalists
January 2017
RFP-II Release Date
February 2017
RFP-II Submissions Due
April 2017
Review Panel Selection
May 2017
DEDA Consideration of Agreement
June 2017
II-3. Type of Contract. Should this RFP process result in the sale of the Pastoret
Terrace property, all terms and conditions of the property conveyance will be outlined in,
and governed by, a Development Agreement as approved by the DEDA.
II-4. Rejection of Proposals. DEDA reserves the right, in its sole and complete
discretion, to reject any and all proposals or cancel the request for proposals, at any time
prior to the time an Option agreement is fully executed, when it is in its best interests.
DEDA is not liable for any costs the Proposer incurs in preparation and submission of its
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proposal, participating in the RFP process or in anticipation of executing an Option
agreement.
II-5. Questions & Answers. Any questions regarding this RFP-Part One must be
submitted by e-mail to the DEDA Office at [email protected] no later than the date
indicated on the Calendar of Events (December 16, 2016). Answers to the questions will
be posted as an Addendum to the RFP as found at www.dulutheda.org.
II-6. Addenda to the RFP. If the DEDA deems it necessary to revise any of this RFP
before the proposal response date, the DEDA will post an addendum to its website
(www.dulutheda.org). It is the Proposer’s responsibility to periodically check the website
for any new information.
II-7. Proposal & Response Date. To be considered for review, seven (7) hard copies
of the Proposal, using the outline provided in Section III, must arrive at the DEDA office
on or before the time and date specified in the RFP Calendar of Events. DEDA will not
accept proposals via email or facsimile transmission. No late Proposals will be
considered. Each proposal page should be numbered for ease of reference.
All materials submitted in response to this RFP will become property of the DEDA and
will become public record after the evaluation process is completed and a Development
Agreement is executed and approved by DEDA.
II-8. Signatures. An official authorized to bind the Proposal to its provisions must sign
the Proposal. If the official signs the Proposal Cover Sheet (Appendix A to this RFP) and
the Proposal Cover Sheet is attached to the Proposal, this requirement will be met. For
this RFP, the proposal must remain valid until an Option or Development Agreement is
fully executed.
II-9. Conflict of Interest. A conflict of interest exists if a proposer has any interest that
would actually conflict, or has the appearance of conflicting, in any manner or degree with
the performance of work on the project. Either certify: (i) that your company is unaware
of any potential conflict of interest, or (ii) indicate the potential conflict(s) and the nature
of such conflict. If there are potential conflicts, identify the municipalities, developers, and
other public or private entities with whom your company is currently, or have been,
employed and which may be affected.
II-10. Notification of Selection. Entities whose Proposals are not selected to
participate in the RFP—Part Two will be notified in writing.
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III
PROPOSAL REQUIREMENTS & EVALUATION
III-1. Documentation. Part One Proposals must include the following detail and
documentation:
A) Site Plan
i.
Conceptual-level architectural renditions of the proposed project,
including design/location of any improvements within a site plan.
B) Projected Economic Impact
Estimates for the following items:
i. Total job creation
ii. Total increase in tax base
iii. Total project cost
iv. Total project square footage
v. Total number and type of housing units
vi. Proposed financing structure
vii. Project’s impact or stimulus on future devlopment along First
Street and connections to Superior Street
C) Qualifications & Experience
i.
Specific examples of prior projects successfully completed that are
similar in nature to the proposed development.
ii. Resumes of Proposal team-members, including any members of
firms that Proposer plans to partner with for this project.
III-2. Evaluation. The Panel will evaluate submittals based on the following factors:
A) Creative and Effective Use of Property
(i) Maximizing the site’s development potential and contributing to
the vibrancy of the Duluth Downtown area with a well-designed
development project
(ii) Potential for mixed-use development and/or residential use
component (either ownership or rental housing).
(iii) Historic preservation, creative re-use, or replication of historic
appearance
B) Projected Economic Impact [see III-1(B) above]
C) Developer’s Qualifications and Experience [see III-1(C) above]
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III-3. Part Two Proposal Documentation. Part Two Proposals will be required to
include the following detail and documentation:
A) Site Plan
i. Architectural plans for the entire development to level of
conceptual level as such term is used in the architectural
community including design/location of any improvements within a
site plan.
B) Projected Economic Impact
Estimates for the following items:
i.Total construction job creation
ii. Total permanent job creation
iii. Total increase in tax base
iv. Total cost of the project
v. Proposed sources and uses for all funds necessary to fund the
project
vi. Total number of housing units to be constructed and their type
and character, included anticipated cost to purchase if applicable
or cost to rent if applicble
vii. Total anticipated commercial space to be constructed with square
foootages
viii. Total anticipated office space to be constructed with square
footages
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APPENDIX A - PROPOSAL COVER SHEET
DEDA
RFP# 16D-3
Proposer Information:
Company Name
Mailing Address
Website
Principal Contact Person
Contact Person’s Phone Number
Contact Person’s E-Mail Address
Federal ID Number
Signature
Signature of authorized official. Signatory consents and agrees to adhere to the
terms outlined in this proposal:
Printed Name
Title
FAILURE TO COMPLETE, SIGN AND RETURN THIS FORM MAY RESULT IN THE
REJECTION OF THE PROPOSAL
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RFP 16D-3 Part One Proposal Checklist
Proposers shall include the following information
to meet the requirements of the part one RFP:
Signed Proposal Cover Sheet (Appendix A)
Site Plan (conceptual architectural renditions of the site)
Projected Economic Impact
Estimates for the following items:
i. Total job creation
ii. Total increase in tax base
iii. Total project cost
iv. Total project square footage
v. Total number and type of housing units
vi. Proposed financing structure
vii. Project’s impact or stimulus on future devlopment
along First Street and connections to Superior
Street
Proposal Team Qualifications and Experience
Acknowledgement of Addendum (if applicable)
Conflict of Interest Disclosure (if applicable)
7 hard copies of proposal delivered to 411 West First Street
(Room 402) Duluth, MN 55802 by 4:00 PM on 1/4/2017
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APPENDIX B
Figure-1
Property- Relative Location
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Figure-2
Property Overview
Encounter Youth Center
Center
Surface Parking
Parking Ramp
SITE DATA
County PID:
Legal Description:
Owner:
Contact:
Current Estimated Value:
Total Tax Liability (2016):
Lot Size:
Zoning:
Year Built:
Previous Use:
Population (5-mile radius):
Downtown Housing Vacancy:
010-0930-00270
DULUTH PROPER 1ST DIVISION
EAST 1ST STREET, LOTS 29 AND 31
DEDA
218-730-5310
$225,000
$4,222
100 ft x 140 ft
F-8 (Downtown Mix)
1886
Bar/Tavern
51,575
1.6%
15
Figure-3
Adjoining Property Owners
4
5
6
7
8
9
1
2
3
Parcel ID #
Parcel
Size (ft)
150 x 140
Owner
Contact
Phone Number
010-0930-00240
Map
Number
1
A&L/API Group
218-727-9556
010-0930-00170
2
100 x 140
A&L/API Group
010-0930-00175
3
50 x 140
010-0950-00870
010-0950-00850
010-0950-00830
4
5
6
50 x 140
100 x 140
100 x 140
Eric Ringsred
Nancy Norr
Ben Marsen
218-786-4000
218-355-3905
218-727-3109
010-0950-00820
7
50 x 140
Women’s Care
Center
Temple Corp Inc
Minnesota Power
Fraternal Order of
Owls
LJ Walsh Co
Tiffany
Hughes
Tiffany
Hughes
Jen Woodall
218-727-3602
010-0950-00790
8
33 x 70
010-0950-00740
9
67 x 140
Mark
Peterson
Dennis
Niskanen
Tiffany
Hughes
Dennis Niskanen
Trust
A&L/API Group
218-727-9556
218-623-7100
218-727-6709
218-727-9556
16
Figure-4
Zoning Map
Pastoret Terrace
F-8 (Downtown Mix)
Examples of F-8 Downtown Mix Buildings
17
Figure-5
Concept A
18
Figure-6
Concept B
19
Figure-7
Concept C