NorShor Deal Near

The historic NorShor Theater has been closed since September 2010.  The Duluth Economic development Agency (DEDA) purchased the theater and the adjacent Temple Opera House office building in May of 2010 for $2.6 million dollars. Former owner Eric Ringsred had leased it out as a strip club, aggravating community leaders. Duluth Mayor Don Ness  stated “The NorShor can and should be the crown jewel of our downtown waterfront district.”  The city had hoped to acquire funding for complete renovations through the state bonding bill, but the current economic climate made that less than feasible. The city also intended to operate it on a low key basis in the interim via a temporary operating agreement with the Duluth Playhouse; but the theater ran afoul of the Americans with Disabilities Act, and was soon forced to close.

Two months ago the city of Duluth announced that they would seek a private / public partnership to renovate the NorShor.  Recently, the Reader asked Mayor Ness what the status of the effort was.

Ness replied that two firms had responded to Duluth’s Request for Qualifications (RFQ). Request for Qualifications is a term used in this case in a manner similar to a Request for Proposal (RFP).  Duluth sent RFQ’s to most major Duluth and Twin Cities developers. Ness expressed surprise that “nobody had been following up” and asking about the matter. The Reader then checked with other sources and discovered that the companies which have responded were Sherman  Associates, and the Ryan Companies US.

Sherman Associates is headed by George Sherman, who is based out of Minneapolis. Sherman is a very experienced operator, and owns a variety of properties in the Duluth area including the Green Mill building, the Subway building, the Hell’s Kitchen building and the Sheraton Hotel. Sherman also has developed or rehabilitated thousands of housing units in the Twin Cities market. Minneapolis St Paul Business Journal gave Sherman a lifetime achievement award and claimed that he “has developed about two billion worth of real estate... and he still owns most of it”.

The other bidder is Ryan Companies US. Ryan is a major design construction firm based in Minneapolis; with roots dating back to 1938 in Hibbing. (Their website states “The first project they built was Bill Toivala’s house on Wisconsin Street in Hibbing for $4,500”)  They have operations in six states. Ryan’s RFQ includes the fact that they’ve renovated two historic theaters in the past.

The Reader has learned details of Sherman’s proposal. Sherman would buy the NorShor Theater and the Temple Opera House from the city; for a sum not yet negotiated, but not likely to be substantial. Sherman would then renovate the theater at his own expense; aided only by whatever tax credi ts, or historic preservation grants that may be available. One of the Reader’s sources indicated that Sherman anticipates the project costing in the 16 to 18 million dollar range by completion.  Sherman’s projections are significantly higher than the six million dollar renovation expense the city has previously quoted. Upon completion, Sherman would turn over day to day operations to the Duluth Playhouse; which would operate the facility for a period of six years. At the end of that time, Sherman would sign the NorShor back over to the city for a nominal sum such as a dollar. As the city has previously expressed a willingness to split off ownership of Temple Opera House, it seems likely that Sherman would retain ownership of the office building.

Less is known about the Ryan proposal; the Reader contacted Brian Hanson, Director of Business & Community Development for the city; (as well as DEDA Executive Director) to learn more.  Hanson was unwilling to share details of either RFQ; other than to confirm the bidders identities.  Hanson stated that Duluth has received the information from the two companies, and was at this time “doing our due diligence as to negotiating the best possible deal for the city”. Hanson also stated that he was optimistic “that an agreement should be announced before the end of 2011”.