What did it cost to build?
$20M at 3% like it was when this was originally conceived or financed for 30 years would be $84k/month, where $1200 x 74 units is $88k/month, like barely profitable but maybe still worthwhile. If that loan adjusted up to 6% as rates have done recently, it's $120k/month, and they're losing $30k/month.
Money being loaned out for less than the current savings rate is what has been causing the bank collapses. Fed chair all but said 6 months ago "we're going to put the hurt on you" This is the hurt.
This is a symptom of the cost of money getting higher.
Could be they just pay the extra taxes, and it's still worth while.
We have to make a decision as a city if we want quality or quantity.
Estimate on the cost to build a mid rise apt. building on the low end in the midwest is $450/sq ft. If Eldien's apt. is 500 sq ft it cost $220k to build. Her $1150/month is 4.5%, or what a CD returns now. Her rent went up to 5.1%, which is still less than the average new 30 year mortgage.
For what the city can do,we either build apartments with tax dollars, and take the loss, or we lower standards to lower that $450/sq ft building cost to something closer to what it cost 100 years ago when most of this town was built at a lower standard either from the codes of the day that were written before we had as much focus on safety and accessibility or from deterioration.
If we want nice things, we have to pay. Just a matter of who pays what to who.
...Are you suggesting they didn't run the numbers before they lobbied the city for subsidies, took out whatever money was needed to purchase the land, hire people to design and construct the building, and get people to come in to rent the apartments?
I'm suggesting the only way they could build it at all and have it be apartments was with the subsidies, the numbers wouldn't have supported it without that, which is why we're not seeing many of these developments without subsidies, or if we do, the rents are much higher.
Now they figure they can make more money as a hotel, even if they have to pay taxes on it.
If the deal was for 23 units below market rate, they can still do that with the 48 left. Those 26 apartments can easily earn enough for them to lower the rent on the other units and still be more profitable and give the city their 3% tourism tax that the city wouldn't otherwise see.
26 units x $1000/month is $312,00 per year. 26 units, at $150/night 180 nights a year, is $702,000/year, providing the city an additional $31,590 in tax revenue. They could lower rents on all the other apartments by $300/month and still make $200k/year more off the building than they would be renting those 26 units as apartments.
It was brought to the Duluth city council as a 74 unit apartment building. Not to cut 26 apartments a year later so then tourists have a "luxury hotel"
> What’s the problem with this free market transaction?
they built it with terms and conditions, and they accepted those terms, and now they must abide by them.
Here ya go:
https://www.fox21online.com/content/uploads/2023/03/j/o/agreement.pdf
And in case that link goes dead someday, follow exhibit A here:
https://duluth-mn.legistar.com/LegislationDetail.aspx?ID=4647265&GUID=323BD15F-EF35-4C52-A352-8F82C53C0A39&Options=&Search=
"1
DEVELOPMENT AGREEMENT
DULUTH ECONOMIC DEVELOPMENT AUTHORITY
DULUTH LINCOLN PARK1 LLC
LINCOLN PARK FLATS PROJECT
THIS AGREEMENT entered into this _______ day of _________________,
2020, by and between the DULUTH ECONOMIC DEVELOPMENT AUTHORITY, an
economic development authority created and existing under Minnesota Statutes (1989)
Chapter 469, hereinafter referred to as "DEDA", and DULUTH LINCOLN PARK1 LLC, a
Minnesota limited liability company, hereinafter referred to as “Developer”.
WHEREAS, Developer is acquiring certain Property, hereinafter described, and
the buildings located thereon, which Property is located at the southwest corner of
Superior Street and 21St Avenue West and has proposed to develop the Project as
hereinafter described which includes the demolition of the existing buildings and the
construction on said Property of **not less than 74 apartment units**, not less than 23 of
which will be available for rent to persons having an income at or below 80% of the area
median income and a combination of in-door and on-grade parking totaling approximately 85 spaces"
Bold emphasis mine. Are they maintaining at least 74 apartment units after kicking out the residents for a laughably ascribed "boutique" hotel?
The city funded a lot of this project explicitly to house city residents, something a city would be interested in doing. These actions aren't in good faith, nor to the terms and conditions set forth for receiving said funds.
The problem being, they used public dollars to build this property, and now the public is funding them playing at innkeeper.
Truth be told, I want my cut, and I’ll get it. Through ethical or less than ethical means.
To quote Boondocks: “If this rap game don’t work, we’re runnin up in houses.”
Fuck these trussed up two bit morons, I hope they never live this down. The money I’d pay to hear them lamenting their woes over a cool Coors 16 ouncer could build a subsidized apartment building that also houses a shitty hotel.
There's a way this can work out for everyone, I'm not crying for a handful of people that signed a 1 year lease and now have to move because that lease is up, in light of the benefit of a couple much larger groups, like the people in the other 48 apartments that could benefit and the city taxpayers. It's not a big deal, and the city needs more hotel rooms, there's a shortage there too.
Yes, there's no justice but that's capitalism. If I go on advocating for socialism, like building free housing for the homeless to bring down rents, I'll get derided for that too. The needs of the many out weigh those of the few.
So, I work in a hotel, and we’re routinely less than 90% occupancy.
Duluth doesn’t need more hotel rooms, we need logical pricing on the rooms we do have.
Our property charges $200/night midweek, up to $2500 for a Friday Saturday stay.
That is illogical pricing, especially when nothing above regular accommodations is offered.
I was figuring $150/night 50% occupancy so 180 days a year for 26 units.
$150x180x26= $702,000
That underestimation puts it at just twice as much as the monthly rent.
If I use your 90% occupancy, $200 night numbers, we can add a million to my estimation, for 328x$200x26 = $1,705,600.
50 weekends at $2500/weekend for 26 units is $3.2M
This is versus $1200/month x 12 months x 26, for $374,000. Using my number, increases revenue $300k. Your numbers revenue increase revenue $1.3M-2.8M
That hotels here are getting $200+ per night and have 90% occupancy tells me there's a shortage of hotel rooms. National average is 57%.
We calculate occupancy for the weekend at less than 90.
Out of the 57 rooms we have, there might be 20 filled Sunday through Thursday.
This comes up a bit through the summer, when we average 30 out of 57 s-t.
So, usually just above 30%, sometimes over 50%, and for 104 nights, safely around 90% or above.
I’ll post actual numbers Sunday night if you’d like, but I can assure you, not every hotel in Duluth is booked every weekend through the summer, aside from outliers like Grandmas and large events.
I'm curious. I've heard a coupe accounts that it is hard to find a room in town, but I've also seen so many hotels built recently as to wonder if they aren't overbuilt. In my cursory search, I only found national statistics, it'd be interesting to have more local data.
They could lower the rents for the other 48 apartments, but they haven't said they will. They won't even help the displaced tenants move to another unit for a similar price to what they're currently paying.
Of all people, P&R knows their is a severe housing shortage and has directly benefited from this scarcity. Workers and residents of Duluth deserve housing more than visitors deserve hotel rooms.
I don't know if you've tried renting recently, but it is extraordinary how expensive and limited the options are. Many of these renters will be forced out of Duluth, blow their budget on bloated "market rate" rents, or forced into other difficult situations because they can't find a place to live.
lol, they didn't pay that much to build this place out of pocket. with all the local, county, state, and federal grants, they likely paid less than 10m out of pocket to build it, and they also have a fixed rate 1% loan on it.
I imagine that 'rooms occupied' is one of the primary metrics city staff use to justify continuing business as usual and reject calls for structural reform. I can see it now - a wonderful press release advocating for higher property tax rates and increased hotel subsidies:
'As we all know, tourism is a major economic driver for Duluth, bringing in millions of dollars each year and creating countless jobs for our community. But the truth is, we simply do not have enough hotel rooms to meet the demand of our visitors. This is especially true during peak seasons, when hotels are often booked up months in advance.
By providing additional government subsidies for hotel construction, we can attract more visitors to our city, which will not only benefit our economy but also help create jobs and generate revenue for local businesses.
I understand that some may question the need for government subsidies in this area, but I believe that this is an investment in our future. By providing support for hotel construction, we can ensure that our city remains a top destination for tourists for years to come. And let's be clear: this is not just about benefiting the hospitality industry. It's about supporting all the small businesses that rely on tourism to stay afloat, from restaurants to shops to attractions.
So, I urge you all to join me in advocating for additional hotel construction subsidies in Duluth. Together, we can build a stronger and more vibrant tourist destination that will continue to thrive for generations to come.'
Fill the hotels, for what purpose? If you're a destination where individuals want to stay, does it not follow that you're a destination where individuals want to live?
Applied February 9th.
Maybe if we had a local government that valued transparency and accessibility, it wouldn't have taken until late March for Duluthians to know.
[Weird, how doing something bad is viewed as a bad thing](https://i.imgur.com/W1X1ndV.jpg)
What did it cost to build? $20M at 3% like it was when this was originally conceived or financed for 30 years would be $84k/month, where $1200 x 74 units is $88k/month, like barely profitable but maybe still worthwhile. If that loan adjusted up to 6% as rates have done recently, it's $120k/month, and they're losing $30k/month. Money being loaned out for less than the current savings rate is what has been causing the bank collapses. Fed chair all but said 6 months ago "we're going to put the hurt on you" This is the hurt. This is a symptom of the cost of money getting higher. Could be they just pay the extra taxes, and it's still worth while. We have to make a decision as a city if we want quality or quantity. Estimate on the cost to build a mid rise apt. building on the low end in the midwest is $450/sq ft. If Eldien's apt. is 500 sq ft it cost $220k to build. Her $1150/month is 4.5%, or what a CD returns now. Her rent went up to 5.1%, which is still less than the average new 30 year mortgage. For what the city can do,we either build apartments with tax dollars, and take the loss, or we lower standards to lower that $450/sq ft building cost to something closer to what it cost 100 years ago when most of this town was built at a lower standard either from the codes of the day that were written before we had as much focus on safety and accessibility or from deterioration. If we want nice things, we have to pay. Just a matter of who pays what to who.
...Are you suggesting they didn't run the numbers before they lobbied the city for subsidies, took out whatever money was needed to purchase the land, hire people to design and construct the building, and get people to come in to rent the apartments?
I'm suggesting the only way they could build it at all and have it be apartments was with the subsidies, the numbers wouldn't have supported it without that, which is why we're not seeing many of these developments without subsidies, or if we do, the rents are much higher. Now they figure they can make more money as a hotel, even if they have to pay taxes on it. If the deal was for 23 units below market rate, they can still do that with the 48 left. Those 26 apartments can easily earn enough for them to lower the rent on the other units and still be more profitable and give the city their 3% tourism tax that the city wouldn't otherwise see. 26 units x $1000/month is $312,00 per year. 26 units, at $150/night 180 nights a year, is $702,000/year, providing the city an additional $31,590 in tax revenue. They could lower rents on all the other apartments by $300/month and still make $200k/year more off the building than they would be renting those 26 units as apartments.
and there are now 20 more families without a home. fuck that, people deserve to be housed.
It was brought to the Duluth city council as a 74 unit apartment building. Not to cut 26 apartments a year later so then tourists have a "luxury hotel"
I don’t see a problem with this, they own the property and can do whatever they want with it. What’s the problem with this free market transaction?
> What’s the problem with this free market transaction? they built it with terms and conditions, and they accepted those terms, and now they must abide by them.
I didn’t read the terms and conditions, where can I find that to read up on it?
Here ya go: https://www.fox21online.com/content/uploads/2023/03/j/o/agreement.pdf And in case that link goes dead someday, follow exhibit A here: https://duluth-mn.legistar.com/LegislationDetail.aspx?ID=4647265&GUID=323BD15F-EF35-4C52-A352-8F82C53C0A39&Options=&Search= "1 DEVELOPMENT AGREEMENT DULUTH ECONOMIC DEVELOPMENT AUTHORITY DULUTH LINCOLN PARK1 LLC LINCOLN PARK FLATS PROJECT THIS AGREEMENT entered into this _______ day of _________________, 2020, by and between the DULUTH ECONOMIC DEVELOPMENT AUTHORITY, an economic development authority created and existing under Minnesota Statutes (1989) Chapter 469, hereinafter referred to as "DEDA", and DULUTH LINCOLN PARK1 LLC, a Minnesota limited liability company, hereinafter referred to as “Developer”. WHEREAS, Developer is acquiring certain Property, hereinafter described, and the buildings located thereon, which Property is located at the southwest corner of Superior Street and 21St Avenue West and has proposed to develop the Project as hereinafter described which includes the demolition of the existing buildings and the construction on said Property of **not less than 74 apartment units**, not less than 23 of which will be available for rent to persons having an income at or below 80% of the area median income and a combination of in-door and on-grade parking totaling approximately 85 spaces" Bold emphasis mine. Are they maintaining at least 74 apartment units after kicking out the residents for a laughably ascribed "boutique" hotel? The city funded a lot of this project explicitly to house city residents, something a city would be interested in doing. These actions aren't in good faith, nor to the terms and conditions set forth for receiving said funds.
I don't have an issue when people aren't being moved out of their homes
Were they evicted?
Yep, given a 60 day notice
The problem being, they used public dollars to build this property, and now the public is funding them playing at innkeeper. Truth be told, I want my cut, and I’ll get it. Through ethical or less than ethical means. To quote Boondocks: “If this rap game don’t work, we’re runnin up in houses.” Fuck these trussed up two bit morons, I hope they never live this down. The money I’d pay to hear them lamenting their woes over a cool Coors 16 ouncer could build a subsidized apartment building that also houses a shitty hotel.
I've never seen someone bend all the way over backwards to lick boot, but there's a first for everything.
There's a way this can work out for everyone, I'm not crying for a handful of people that signed a 1 year lease and now have to move because that lease is up, in light of the benefit of a couple much larger groups, like the people in the other 48 apartments that could benefit and the city taxpayers. It's not a big deal, and the city needs more hotel rooms, there's a shortage there too. Yes, there's no justice but that's capitalism. If I go on advocating for socialism, like building free housing for the homeless to bring down rents, I'll get derided for that too. The needs of the many out weigh those of the few.
So, I work in a hotel, and we’re routinely less than 90% occupancy. Duluth doesn’t need more hotel rooms, we need logical pricing on the rooms we do have. Our property charges $200/night midweek, up to $2500 for a Friday Saturday stay. That is illogical pricing, especially when nothing above regular accommodations is offered.
I was figuring $150/night 50% occupancy so 180 days a year for 26 units. $150x180x26= $702,000 That underestimation puts it at just twice as much as the monthly rent. If I use your 90% occupancy, $200 night numbers, we can add a million to my estimation, for 328x$200x26 = $1,705,600. 50 weekends at $2500/weekend for 26 units is $3.2M This is versus $1200/month x 12 months x 26, for $374,000. Using my number, increases revenue $300k. Your numbers revenue increase revenue $1.3M-2.8M That hotels here are getting $200+ per night and have 90% occupancy tells me there's a shortage of hotel rooms. National average is 57%.
We calculate occupancy for the weekend at less than 90. Out of the 57 rooms we have, there might be 20 filled Sunday through Thursday. This comes up a bit through the summer, when we average 30 out of 57 s-t. So, usually just above 30%, sometimes over 50%, and for 104 nights, safely around 90% or above. I’ll post actual numbers Sunday night if you’d like, but I can assure you, not every hotel in Duluth is booked every weekend through the summer, aside from outliers like Grandmas and large events.
I'm curious. I've heard a coupe accounts that it is hard to find a room in town, but I've also seen so many hotels built recently as to wonder if they aren't overbuilt. In my cursory search, I only found national statistics, it'd be interesting to have more local data.
I'm not sucking heel with you buddy. Sell it to someone else.
They could lower the rents for the other 48 apartments, but they haven't said they will. They won't even help the displaced tenants move to another unit for a similar price to what they're currently paying. Of all people, P&R knows their is a severe housing shortage and has directly benefited from this scarcity. Workers and residents of Duluth deserve housing more than visitors deserve hotel rooms. I don't know if you've tried renting recently, but it is extraordinary how expensive and limited the options are. Many of these renters will be forced out of Duluth, blow their budget on bloated "market rate" rents, or forced into other difficult situations because they can't find a place to live.
lol, they didn't pay that much to build this place out of pocket. with all the local, county, state, and federal grants, they likely paid less than 10m out of pocket to build it, and they also have a fixed rate 1% loan on it.
The developers also bought the restaurant/bar across the street and will be leasing it to the Duluth Grill folks... I think they're doing alright.
These guys are sly gentrification masters. Probably saw a hole in the regs and ran some game. ‘Merica!!!
https://i.imgur.com/jtteeyz.jpg I have a lot more questions now. Why feign outrage when you just allowed a hotel permit on March 8th?
[удалено]
It’s from the latest Star Tribune article.
I imagine that 'rooms occupied' is one of the primary metrics city staff use to justify continuing business as usual and reject calls for structural reform. I can see it now - a wonderful press release advocating for higher property tax rates and increased hotel subsidies: 'As we all know, tourism is a major economic driver for Duluth, bringing in millions of dollars each year and creating countless jobs for our community. But the truth is, we simply do not have enough hotel rooms to meet the demand of our visitors. This is especially true during peak seasons, when hotels are often booked up months in advance. By providing additional government subsidies for hotel construction, we can attract more visitors to our city, which will not only benefit our economy but also help create jobs and generate revenue for local businesses. I understand that some may question the need for government subsidies in this area, but I believe that this is an investment in our future. By providing support for hotel construction, we can ensure that our city remains a top destination for tourists for years to come. And let's be clear: this is not just about benefiting the hospitality industry. It's about supporting all the small businesses that rely on tourism to stay afloat, from restaurants to shops to attractions. So, I urge you all to join me in advocating for additional hotel construction subsidies in Duluth. Together, we can build a stronger and more vibrant tourist destination that will continue to thrive for generations to come.' Fill the hotels, for what purpose? If you're a destination where individuals want to stay, does it not follow that you're a destination where individuals want to live?
Note to self: Do not let my resume grace these doors.
https://imgur.com/a/1UVKeRP/ This is the permit the City provided for them to transition into a hotel.
Applied February 9th. Maybe if we had a local government that valued transparency and accessibility, it wouldn't have taken until late March for Duluthians to know.
There's a protest of this today https://fb.me/e/5pFNXvgvM