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Rent to rise on Duluth old City Hall block

DULUTH -- Starting June 1, most of the retail tenants on Duluth's old City Hall block downtown will start paying higher rent.

The new rental rates will be evaluated after six months, said Duluth Economic Development Manager Chris McGahee, who recommended the interim rates during Monday's Duluth City Council work session.

The council designated its fourth Monday of the month meeting as a work session to discuss city issues in depth. The meeting on the second Monday will continue to be a regular session. Both are open to the public.

McGahee said the additional revenue generated by the rent increases will help pay for maintenance and repairs to the aging buildings. The council authorized McGahee to send out rent increase notices to tenants.

The old City Hall block is bound by Main Street, West Lawrenceville Street, Abbotts Bridge Road (Ga. Highway 120) and Hill Street.

Rent increases will range from $100 to $400 a month. The rent for three of the eight tenants will remain the same.

Old City Hall block tenants will be paying 68 cents to $4.66 a square foot to rent space compared to $10 to $13 a square foot for privately owned buildings on Main Street and $23 a square foot for new downtown retail space, according to McGahee.

The council informally agreed to ask a roofing contractor to assess roof leaks and estimate repair costs. Of particular concern is determining if the badly leaking roof at Wallace Reid Portraits and the Duluth Art Gallery is repairable and affordable, McGahee said. Some of the buildings also have electrical and other problems, he said.

The city has been acting as a landlord to the tenants after purchasing properties on the block. The buildings were slated to be torn down to make way for development of a $23 million downtown mixed-use complex that has been put on hold due to the economic recession.

Tenants have been operating on the basis they might have to vacate upon 60 days notice. Some have improved and repaired the buildings on their own.

"There is some value to having activity in those buildings and spending a reasonable amount to keep that activity going," said Councilwoman Marsha Bomar. If the city can keep the buildings usable and occupied, it keeps the downtown viable, she said.

But if the buildings are unsafe, Councilman Doug Mundrick said, "the city has a moral obligation to kick out the tenants and tear down the buildings or repair them. And that becomes a cost issue."

"I don't want Duluth to be known as 'slumlord city,'" he said.

To provide some stability to residents and merchants, McGahee recommended that the city come up with a one-, three- and five-year plan for utilizing the block. He also proposed that the tenants be offered six-month, 12-month or 24-month leases.

Bomar suggested that the block be included in a forthcoming update of the city's downtown plan.

The council agreed to provide more flexibility on dates for rental of the Town Green and amphitheater for private events and increase allowable attendance, which had been capped at 500.

Jennifer Freeman, representing the Duluth Fine Arts League, was granted permission for DFAL to spearhead the Living Memorial project. Because it will honor living veterans, police officers, firefighters and emergency services personnel, Freeman proposed that the name be changed to the Living Honorarium.

Proposals from several companies to provide waste disposal services to the city were reviewed by Mundrick. The council is expected to select a provider at its April 12 regular meeting.

City Manager Phil McLemore presented updates on ongoing city projects.