DULUTH — A project that promises to bring more than 200 new market-priced homes to downtown could receive up to $7.5 million in tax funding.

On Wednesday, the Duluth Economic Development Authority voted 4-0 to increase its support for the Lakeview 333 apartment complex project by $1.3 million beyond the package of tax increases previously approved for the 15 storey building.

A rendering of the proposed 15-story apartment building at 333 E. Superior St., Duluth, that would replace the Voyageur Lakewalk Inn. Developers hope to attract a grocery store to the ground floor of the 204-unit complex. Contribution / Historical Development

Tax increment funding is a grant that uses a portion of new property taxes generated by a project to cover certain qualified development costs for a defined period, after which the taxes are paid in full to local government units. In the case of this particular project, the duration of the agreement would be for a maximum of 25 years.

While DEDA gave its approval to the revised development agreement on Wednesday, Duluth City Council is also expected to sign off on the deal before it becomes official.

Downtown apartment building seeks additional TIF funding
Portions of rooms from the former Voyageur Lakewalk Inn are still visible at 333 E. Superior St., seen Thursday, May 26, 2022, in Duluth.

Clint Austin / Duluth News Tribune

If the requested assistance is approved, construction of the new apartment building at 333 East Superior St. is expected to begin this year.

But even with the proposed aid package, the building’s prospects remain uncertain, said Chris Fleege, director of Duluth’s planning and economic development division.

“There’s still a gap that this developer is trying to fill. So even with this help, we’re not sure they’ll get there,” he said.

Downtown apartment building seeks additional TIF funding
A developer is looking to build a 15-story apartment building at 333 E. Superior St., seen Thursday, May 26, 2022, in Duluth.

Clint Austin / Duluth News Tribune

In a section of the resolution titled “Statement of Intent,” city staff observed, “The request for additional assistance is based on changes in project costs due to inflationary pressure on building materials. and labor markets.”

Fleege said the business is now expected to cost nearly $85 million.

When originally proposed in 2018, the expected cost of the project was approximately $70.4 million. At the time, developer Rob Robinson of Madison, Wis.-based Landmark Co. predicted that studio apartments in the tower would cost around $1,345 per month on average, with higher rents for larger units and those offering special views.

Downtown apartment building seeks additional TIF funding
Lots are being prepared for development at 333 E. Superior St., seen Thursday, May 26, 2022, in Duluth. A developer of a 15-story apartment building is seeking additional funding of $1.3 million in tax increases for the project due to rising construction costs.

Clint Austin / Duluth News Tribune

While the Lakeview complex is not intended to provide “affordable” low-cost housing, Fleege said it was introduced at a time when the city was providing support for all types of housing. Consequently, Duluth offered similar types of assistance similar to housing estates such as Kenwood Village, Endi, and Bluestone.

“We need housing at all levels,” Fleege said. “We need the market rate and affordable housing.”

The proposed 15-story building would have approximately 20,000 square feet of retail space on the ground floor, which the developer says could be an attractive location for a grocery store.

Downtown apartment building seeks additional TIF funding
333 E. Superior St. is across from the Essentia Vision Northland project seen Thursday, May 26, 2022 in Duluth.

Clint Austin / Duluth News Tribune

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Lakeview 333, a 15-story apartment building with commercial space on the ground floor, is to be built on the site of the former Voyageur Lakewalk Inn, 333 E. Superior St., Duluth.

Jed Carlson / File 2021 / Duluth News Tribune

The initial development agreement for the project was first signed in August 2019. But while the former Voyageur Lakewalk Inn, Hacienda Del Sol restaurant and First Oriental Grocery buildings were razed to make way for the development, it was repeatedly delayed. Wednesday marked the fifth amendment to the original development agreement.

Downtown apartment building seeks additional TIF funding
The neon sign of the former Voyageur Lakewalk Inn still stands at 333 E. Superior St., seen Thursday, May 26, 2022, in Duluth.

Clint Austin / Duluth News Tribune