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The NorShor Theater deal which the Reader reported on November 10th continues to move forward. Duluth Economic Development Agency (DEDA) board member John Heino confirmed that he anticipates the proposal will be on the agenda for the next DEDA meeting, currently scheduled for Wednesday, December 14th.
To recap the previous story: The NorShor has been closed since September 2010. 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.
Three months ago the city of Duluth announced that they would seek a private / public partnership to renovate the NorShor. Mayor Ness told the Reader that two firms had responded to Duluth’s Request for Qualifications (RFQ). The Reader then discovered that the companies involved were Sherman Associates, and the Ryan Companies US. The city has chosen to move forward with Sherman.
Sherman Associates is headed by Minneapolis based George Sherman. Sherman is an experienced developer, and owns a variety of properties in the Duluth area; including the Sheraton Hotel. Sherman also has developed thousands of housing units in the Twin Cities area. 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 Reader has learned that Sherman will buy the NorShor Theater and the Temple Opera House from the city (pending DEDA approval); for a nominal sum. Sherman will then renovate the theater at his own expense; aided by tax credits, and possibly historic preservation grants. One of the Reader’s sources indicated that Sherman anticipates the project costing in the 16 to 18 million dollar range. Sherman’s projections are significantly higher than the six million dollar renovation expense the city has previously quoted. The balcony stage will be removed, opening up the balcony to the main floor. Upon completion, Sherman will turn over day to day operations to the Duluth Playhouse; which has reportedly already agreed to operate the facility. After taking accelerated depreciation for seven years, (the earlier version of this story stated six years) Sherman will 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 will retain ownership of the office building.
Prior to our earlier story, the Reader contacted Brian Hanson, Director of Business & Community Development for the city; (as well as DEDA Executive Director). Hanson was unwilling to share details; other than to confirm the bidders identities. Hanson stated that Duluth was “doing our due diligence as to negotiating the best possible deal for the city”. Hanson also said that he was optimistic “that an agreement should be announced before the end of 2011”. Hanson had not returned a call for comment by deadline for this story.