The creation of all types of housing (single-family, apartments, condos)—at affordable, market-rate, and high-end price points—has long been a policy objective for the City of Duluth. In Duluth’s 2023 State of the City address, then-Mayor Emily Larson stated that housing was a top priority for the city. Mayor Roger Reinert lists “Housing across all income levels” as one of his administration’s “key initiatives.”
The 2025 Maxfield Housing Study showed a demand for thousands of new units by 2030, which would help the City of Duluth combat low vacancy rates and increasing costs for all housing types. The need for housing has repeatedly been cited as a source of hardship for many local residents and as a roadblock for economic development and growth. Duluth officials have emphasized that government action is needed to address barriers to the development of new permanent housing, through the use of housing trust funds, zoning modernization, and financial tools (like tax increment financing subsidies and tax abatements).
Despite the city’s stated priorities, a review of recent development projects reveals that the city administration’s own actions often prevent the creation of permanent housing. The Monitor here highlights three particular projects which failed to deliver the number of housing units they promised Duluth taxpayers in 2025.
Lakeview Tower—333 E. Superior Street
According to the 2018 Lakeview Tower development agreement with the city, the developer agreed to create “not less than 190” units of market-rate residential apartments in the Lakeview Tower building, in exchange for a $6.2 million tax increment financing (TIF) subsidy. In 2022, due to “increased costs of material and labor,” the city increased the project’s TIF subsidy to $7.5 million.
In March of 2025, the developer asked the city for permission to redesignate the use of 34 units (out of the project’s total proposed 210 units) to “extended-stay, mid-term rentals … for Essentia employees [who are] relocating [and] needing somewhere to stay.” The developer explained that the 34 extended-stay units and the 176 remaining apartment units would be owned by separate entities.
As the Monitor reported back in April, city code does not have a classification for “extended-stay” or “mid-term” rentals; these terms are nothing more than marketing jargon. Residential units in Duluth can either be classified as long-term rentals (for stays of 30 days or more) or vacation rentals (for stays of less than 30 days). Under their proposed amendment, the developer was essentially asking the city if they could convert 34 long-term rental units into 34 vacation rentals. If approved, the developer would only be required to create 176 long-term rental units—approximately 7 percent fewer than the 190 units the city had been promised when the developer secured their hefty TIF subsidy.
While vacation rentals often provide property owners with a more lucrative income stream than long-term rentals, they fail to help the city resolve its ongoing housing shortage.
When the Duluth Economic Development Authority (DEDA) approved the amendment to the development agreement on March 26, 2025, they made history: This was the first time the city had ever subsidized vacation rentals. Moreover, the DEDA board did not opt to reduce the project’s $7.5 million TIF subsidy to coincide with the reduced number of long-term housing units which would now be delivered under the amended agreement.
DEDA commissioners did not appear to fully comprehend the amendment they had just approved. During the meeting, DEDA Executive Director Tricia Hobbs (who supported amending the agreement) failed to clarify that “mid-term” and “extended-stay” rentals could no longer be considered permanent long-term rental units.
When the Monitor reported this, DEDA commissioner and City Councilor Arik Forsman expressed surprise and stated that he did not support using TIF subsidies to develop vacation rentals. He told the Monitor, “I am working with city staff … to update policies to ensure no vacation dwelling units would be eligible for public investment through TIF … Commissioners [Roz] Randorf, [Janet] Kennedy, and I are now working with staff and Lakeview on how this all pertains to their project.”
At the subsequent DEDA meeting, on April 23, 2025, the board discussed the amended development agreement. Commissioner Randorf continued to show confusion about the nature of the 34 units, repeatedly asking Director Hobbs to confirm that they would be used for “30-, 60-, or 90-day long-term rentals,” as opposed to vacation-rental stays, which cannot exceed 30 days. Hobbs stated the units could only be leased for terms of less than 30 days. She added that staff was “working with [the developer] to see if … we can get those units to something more than 30 days … If not, building code will require them to have [a vacation rental] license.”
On Dec. 2, 2025, the city informed the Monitor that Lakeview Tower now planned to operate the 34 units as a hotel, rather than vacation rentals. While this decision might save the developer money on vacation rental permits, it does nothing to address the loss of permanent residential units.
Result
Subsidy: $7.5 million
Promised housing units: 190
Housing units delivered: 176
New hotel units: 34
Cause: Misleading representations by staff and developer resulted in change to development agreement.
Force on Fifth—424 W. Superior Street
Titanium Partners initially proposed renovating the former Ordean building for residential/commercial use; their Force on Fifth project promised to create between 30-35 new residential units for Duluth. To support the project, the city agreed to sell the adjacent, publicly-owned Ordean Plaza to Titanium Partners at a steep discount. The property, which was appraised at $270,000, was sold to Titanium Partners for $27,500, with the understanding that the discount was being offered because the developer intended to create permanent residential housing for the city.
The Ordean Plaza purchase agreement, which was approved by DEDA on Oct. 25, 2023, reads as follows:
To fulfill the economic development purposes of the sale of the Real Property, Buyer agrees to invest no less than $2,000,000 in the renovation of the adjacent Ordean Building located at 424 West Superior St. for residential and commercial uses.
To date, Titanium Partners has not fulfilled the “residential” part of this commitment. In 2025, when the project opened its doors for business, the 30-35 residential housing units had somehow morphed into a fancy new hotel.
Unfortunately, the city never memorialized Titanium Partners’ promise to provide long-term housing in a development agreement for the Ordean Building itself. The city’s belief that housing would be built relied on a single sentence in the purchase agreement for the adjacent Ordean Plaza, and on the developer’s repeated public promises—which we have now learned were anything but dependable.
When the Monitor asked the city if they considered Titanium Partners to be in breach of the purchase agreement by not providing residential housing, Public Information Officer Kelli Latuska responded by telling us that Force on Fifth did have residential housing. In an Oct. 29 email, Latuska wrote: “People are able to negotiate leases for up to one year at the Force on Fifth. The City defines residential as anything under the regular long-term rental permit, which is 30 days or more.”
This is incorrect, as the Monitor has confirmed with the city’s Life Safety Office that none of the Force on Fifth units currently have long-term rental licenses. This means that the city and/or the developer is now lying to Duluth taxpayers, in lieu of correcting their oversight.
Despite excitedly praising the developer for promising us 35 new permanent residential units in 2023 and 2024, city leaders have been eerily silent about the nonexistent residential units since the hotel opened last year.
Result
Subsidy: $242,500 discount on Ordean Plaza sale price
Promised Housing Units: 35
Housing Units Delivered: 0
New Hotel Units: 35
Cause: City failed to establish a development agreement for the Ordean Building and refuses to enforce the “residential” stipulation in the Ordean Plaza purchase agreement.
Urbane 218—2011 W. Superior St.
In 2021, Iowa-based Merge Urban Development Group signed a development agreement with DEDA, committing to construct at least 40 affordable apartment units in Duluth, in exchange for a $1.085 million TIF subsidy. The following year, the Duluth Housing and Redevelopment Authority (HRA) donated the land for the project, located at the site of the old Seaway Hotel.
In October of 2022, DEDA raised the TIF subsidy to $1.8 million and committed an additional $800,000 in federal pandemic relief funds to the project. The project also received a $1 million low-interest Housing Trust Fund Loan.
Construction for the development began in early 2023. However, workers were pulled off the site in September of 2023 due to unpaid invoices, leaving piles of building materials and a plywood building shell, all exposed to the elements.
Merge resumed their project construction in 2024. On Feb. 1, 2024, as reported in the Duluth News Tribune, DEDA’s then-director, Chad Ronchetti, said that “staff had required Merge to demonstrate that it had acquired sufficient financing to see the project through to completion, and that the developer had done so to his satisfaction.”
Nevertheless, Merge continued to miss project deadlines, and DEDA granted the developer another extension in January of 2025. At that time, Director Tricia Hobbs told the DEDA board that staff had obtained “a corporate guarantee, a personal guarantee, [and] proof of a loan [from the developer].” Ms. Hobbs added, “We have those on file, and did a thorough review.” The board set a new completion deadline for late October.
The Urbane 218 project, unfortunately, was still incomplete at the end of October.
On Dec. 18, 2025, the city issued a second Breach of Contract Notice to the developer—for missing the October deadline and for additional unpaid contractor bills.
Because the building construction hasn’t been completed, it is not currently certified for occupancy. How the developer intends to cure the breach is unknown.
If the city had required the developer to prove they had the financial resources for the project before approving subsidies, 40 new units of affordable housing may have been available by now for Duluth renters.
Result
Subsidy: $2.6 million plus $1 million low-interest loan
Promised residential units: 40
Units delivered: 0 (as of Jan. 14, 2026)
Cause: City failed to confirm developer had financial resources available to complete the project in a timely manner.
The Monitor will continue to provide updates on subsidized housing projects as they develop.
