Request for Developer The Historic Duluth National Guard Armory

Prepared by

The Armory Arts & Music Center

Duluth, Minnesota

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The Project at a Glance Rehabilitation & New Construction The Armory Arts & Music Center 501(c)(3) non-profit seeks a developer to spearhead a student housing development that will include rehabilitation of the Historic Duluth National Guard Armory (107,000ft2), built in 1915, and new construction (110,262ft2) on

the “Perkins” lot immediately adjacent. The development will cover an entire city block on the eastern edge of downtown Duluth, overlooking scenic parkland and Lake Superior. The AAMC has completed a significant amount of pre-development work that all indicates a great business opportunity for the right developer.

A Financial Analysis by a national tax credit expert created a plan that includes 100 units with 316 beds, including higher rent units in the historic structure. A recently completed Market Study conducted by a leading student housing research firm showed very strong demand for student housing—with 83% of students indicating

they would consider living at this site and only a 1.4% vacancy rate among student housing complexes in the area. The study also showed the rents proposed for the project would be between 88% and 97% of market-driven rents in the area—making them a great value to students and their parents.

Student Housing Overview

Armory New “Annex”

Total Project

Size (ft2) 33,177 76,082 109,259 Units 36 64 100 Beds 60 256 316

Parking - - 182

Arts & Music Overview Total Size 36,804 (Armory Building Only) Operated By Armory Arts & Music Center Functions Performance Venue, Music

Education, Café w/ food & beverage

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Student Housing A Natural Fit The Armory’s location makes it a natural fit for student housing. The property is located less than two miles from both the University of Minnesota Duluth and the College of St. Scholastica and just over 3 miles from Lake Superior College. The Armory is located on a bus line that would allow for quick and hassle-free access to campus. According to university officials, due to the lack of on-campus parking, most students walk, ride a bicycle, or ride the bus—which is free for students. School Distance Enrollment University of Minnesota Duluth 1.33 miles 11,336 College of St. Scholastica 1.69 miles 3,593 Lake Superior College 3.00 miles 4,343

The Armory’s location would make it the only significant student housing facility located in a truly urban setting that is close to their school and the unique places that make Duluth special.

Community Amenities Students would have a grocery, pharmacy, restaurants, and other retailers within a one-minute walk. They would be a quick walk or bike to the culture and nightlife of Canal Park and the

rest of Downtown Duluth. Students would be directly across from Leif Ericson Park, the Rose Garden, and the Lakewalk—a popular jogging, biking, and rollerblading trail that follows Lake Superior all the way to the Aerial Lift Bridge. Also unique would be the picturesque lake views. The Armory would provide students a housing alternative that closely aligns with the reasons they chose to study in Duluth.

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A Plan for Student Housing The AAMC Brings great Resources The AAMC owns the historic Duluth National Guard Armory. The building is eligible for the National Register of Historic Places and therefore Federal Historic Preservation Tax Credits which could amount to as much as 20% of the qualified rehabilitation expenses for the Armory’s restoration. The property also sits in a neighborhood eligible for New Market Tax Credits. The AAMC has been successful in securing several grants that have been used to fund significant amounts of pre-development work. The group has also already secured a $250,000 Save America’s Treasures Grant from the National Park Service to be used towards the restoration of the Drill Hall Floor.

Financial Feasibility Analysis Tetrault & Associates (Washington D.C.) National Historic Preservation Development Consultants Tetrault & Associates intensely studied the property and created a detailed financial model for student housing in the Armory. This analysis created a profitable business model for a housing complex and outlined the costs of such a development. This Financial Feasibility Assessment will provide a developer a great jumping off point in the planning of a student housing facility.

Market Study: An Analysis of Student Housing The Danter Company (Columbus, OH) Once it was determined that student housing could work in the Armory the AAMC set out to determine the potential demand for student housing in the building. National Real Estate Research Expert The Danter Company was hired to assess the market for student housing in Duluth. This comprehensive Market Study found very strong demand for student housing in this area of Duluth and laid out very specific conditions for such a development to thrive. According to the Market Study: “Since 1990, only 7 apartment properties have been constructed in the Site EMA, which is another illustration of the lack of apartment supply in the market area. These 7 properties contain a combined total of 662 units with an extremely low vacancy rate of 1.4%.” With these two detailed studies complete the AAMC feels they have cleared a path for a developer to immediately lead a profitable development.

AAMC Assets Value Notes Armory Building

$3,894,710 Estimated Value

Preservation Tax Credits

$2,136,232 Estimated Value: 20% of Armory Rehab

Save America’s Treasures Grant

$250,000 Restoration of Drill Hall Floor

Other Grants $177,000 Pre-Development

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Duluth

The Zenith City of the Unsalted Sea The Historic Duluth Armory sits on an entire city block on the eastern edge of downtown Duluth, Minnesota and overlooks scenic parkland on the shores of Lake Superior. Duluth, the western-most port of the Great Lakes, is known for its natural beauty, historic architecture, bustling shipping port, and booming tourism industry. Duluth is known as the “Air Conditioned City” because of its comfortable summers and is a winter wonderland for outdoor enthusiasts. Its location makes it the gateway to gorgeous North Shore of Lake Superior and the wildly popular Boundary Waters Canoe Area located near the Canadian border.

Duluth was constructed at a time of great prosperity—at the time of the Armory’s construction in 1915 the city was home to more millionaires per capita than any city in the nation. An abundance of natural resources and natural beauty led to the creation of a grand city that remains today a unique place to live, work, play, study, and visit.

Duluth Stats

Population (City of Duluth) 86,000 Population (Duluth MSA) 275,000 Annual Tourists 3,500,000

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The Armory Plaza District Ripe for Redevelopment The Armory Plaza District sits at the Eastern edge of Downtown Duluth and is considered the one of the highest potential areas in the region. The district offers great views of scenic Lake Superior, beautiful park space, bustling urban retailers, and is in close proximity to three growing colleges.

Gorgeous Parkspace Leif Ericson Park and the Duluth Rose Garden sit across Bob Dylan Way from the Armory. This gorgeous park draws significant amounts of traffic from both tourists and locals who come to picnic and take photographs in the beautiful setting.

Bustling Retail Significant traffic is created by the Plaza Shopping Center that sits across 13th Avenue East from the Armory. The Plaza is home to the only grocery store near Duluth’s core and offers a wide variety of retailers such as a pharmacy, a bank, restaurants, and specialty retailers.

District Partner Labovitz Enterprises, the owner of the Plaza Shopping Center, have partnered with the AAMC to form the Armory Plaza Development Association. Labovitz Enterprises has also secured the “Perkins” site adjacent to the Armory where the new construction of a student housing tower is planned.

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The Armory Story

A Place of Great Inspiration

The Historic Duluth Armory was built in 1915 at roughly five times the average cost of other Armories of that era. From its opening the Armory served as a military training facility for the Minnesota National Guard and the Minnesota Naval Militia. The building also played an important role as the cultural and entertainment hub of the Duluth region. Some of the most famous Americans of the 20th Century appeared at the Armory—Harry Truman, Louis Armstrong, Johnny Cash, Bob Hope, and Liberace, to name a few.

125th Infantry Members of the 125th Infantry trained at the Armory, digging foxholes on the Drill Hall floor, before going off to see more combat than any other unit in World War II. Members of the 125th—who call themselves “The Survivors”—still meet for lunch each month and have been involved in the restoration of the Armory.

Albert Woolson In 1956 the Armory played host to a significant event in our nations history; the funeral of Duluthian Albert Woolson, who died at age 109, which drew attention from across the country, as Woolson was the last remaining soldier from the Union Army.

Buddy Holly and Duluth-Native Bob Dylan Perhaps the most well known event in the building’s history came in January 1959 as Buddy Holly & Friends brought their Winter Dance Party tour to the Armory. In the

crowd that night was Duluth-native Robert Zimmerman. Holly perished just three nights later in the infamous plane crash “the day the music died”. It was a formative event for Zimmerman who the world has come to know as America’s Greatest Songwriter—Bob Dylan. Dylan spoke of the significance of seeing Holly at the Armory while accepting the 1998 Grammy Award for Album of the Year.

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The Armory Arts & Music Center

A Grand Amenity The title to the building states that the project must include arts space. The AAMC has selected the historic venue spaces located on the non-lake-view side of the building, architecturally separated with a separate back entrance. It is the same space that cannot be divided in order to qualify for millions in Historic Preservation Tax Credits. The developer will rehabilitate the entire Armory, working with the AAMC to achieve a Vanilla Box status for the venue and associated spaces. The AAMC space will be self-sufficient and operate independently through sales from food, beverage, gift shop, and venue events, plus grants and endowments. The AAMC has developed a strong plan for their portion of the building. Some of the key components include… The Drill Hall Restoration of the Historic Drill Hall as a multi-purpose venue. The AAMC has created a business model for this space that will return it to its full glory as a mid-sized concert, entertainment, and community venue. Music Education The group is working with the Music Resource Center of Charlottesville, VA and Cincinnati, OH on plans to open an affiliated music education program at the Armory. For over 15 years the MRC has provided teens the opportunity to find a positive creative outlet through music education, recording, and performance. Armory Music Café The AAMC is currently working with the University of Minnesota Duluth’s Center for Economic Development on a business plan for a café within the Armory. In addition to drawing traffic to the building this space would provide sustainable means for the AAMC to create income by providing food and beverage to Drill Hall events. Tribute Space The great history of the Armory will draw Buddy Holly and Bob Dylan fans from all over the world and give students the feeling they are living in a place that truly matters. Tribute space is planned for the Military legends that trained at the Armory, entertainment legends that graced the Drill Hall stage, and a special tribute to the momentous Winter Dance Party concert where a young Buddy Holly, in his last days, passed the torch to a teenaged Duluth-native who has changed the world with his music—Bob Dylan.

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Request For Developer The Perfect Fit Saving and restoring the Armory has been a labor of love for the volunteers of the Armory Arts & Music Center for several years. The group understands the best way to see their dreams become reality is to work with an established real estate developer who will handle the complexity of the redevelopment and the student housing component while the AAMC turns its attention to the non-profit component. Finding the right developer will be key to the success of the project.

Project Requirements The AAMC requires the project include the following…

• Respectful Adaptive Re-Use of the Armory • Sympathetic New Construction • Student Housing Facility partially housed in

the Armory • AAMC space for arts & music in the Armory

building

Desired Developer Characteristics The Ideal Developer Will Have…

• Expertise in Historic Preservation and Adaptive Re-Use

• Expertise in Student Housing • Experience Working in Smaller Cities like Duluth • Should a developer lack experience in Student Housing or Historic Preservation the

AAMC has experts available to consult on the project

The Developer Must… • Be willing to work with the complexity of this mixed-use development • View the arts & music component as a positive amenity for the rest of the project

STRUCTURE The most consistently recommended structure for the project has been a partnership between the developer of student housing and the Armory Arts and Music Center non-profit within an LLC—as this structure leverages the maximum tax credits under a for-profit development, and also allows for non-profit fundraising and other grants towards the restoration and sustainability of the non-profit space. However, the AAMC is open to any structure that greatest benefits the project.

AAMC Pledge The AAMC understands that a project of this magnitude will require a developer to use their own creativity and expertise to create a profitable business model. Within the parameters listed above the AAMC will give the developer the latitude to run the project as they see fit.

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Further Information Available Upon Request If you have an interest in learning more about the project please, the following documents are available to get you up to speed…

“The Armory Story” DVD Nate DeMars & The Armory Arts & Music Center

Market Study: “An analysis of Student Housing in Duluth, MN” The Danter Company Columbus, OH

Financial feasibility Assessment Tetrault & Associates Washington, D.C.

Armory Plaza district Mixed-use Plan Armory Plaza Development Association & LHB Architects

East Downtown, Hillside, and Waterfront charrette University of Miami School of Architecture

Contact Susan Phillips, President Armory Arts & Music Center 1626 London Road #779 Duluth, MN 55812 Work Phone: (218) 728-0363 Mobile Phone: (218) 343-9651 Email Address sphillips@selectleaders.com www.facebook.com/DuluthArmory www.armorycenter.org Rick Ball Executive Director Duluth Housing and Redevelopment Authority (HRA) 22 East Second Street Duluth, Minnesota 55816 Work Phone: (218) 529-6300 **Co-Sponsors of Armory Student Housing Market Study** Pam Kramer Senior Program Director Local Initiatives Support Council (LISC) 202 West Superior Street, Suite 401 Duluth, Minnesota 55802 (218) 727-7761 **Co-Sponsors of Armory Plaza District Mixed-Use Plan**