Coming soon: Solem renovations

The new owners of the Hotel Solem building in downtown Cloquet can begin pulling building permits now, after the Cloquet City Council unanimously passed a slew of resolutions that will help fund its transformation into modern apartments.

They also got a blessing from David Guckenberg, the grandson of Hans and Lucy Solem, who built the new hotel at 915 Cloquet Ave. more than 100 years ago.

"A lot of memories in that hotel," said Guckenberg, briefly addressing the council at the start of the meeting. "Anyway, something good is going to be done with that hotel, which is good for the city, good for the downtown, good for everybody."

On Tuesday, councilors took action to create a tax increment financing district, which will funnel close to $534,000 back to the developers for up to 26 years after the nearly $4 million project is completed. A development agreement outlines the terms of the agreement between the city - which acquired the building through condemnation - and the developers, Craig Jouppi and Chad Scott, owners of C&C Holdings of Cloquet.

Jouppi and Scott will pay $1 for the building.

"We'll take that dollar before you change your mind," said city administrator Tim Peterson, provoking laughs.

A big job

Scott said the building needs an enormous amount of work to bring to life their plans for an 18-unit market-rate apartment building with modern amenities and an elevator.

"This project is kind of on the edge of 'tear it down or try to save it.' From an engineering standpoint, there's a lot of problems," he said. "But the foundation is strong ... and we really liked the building."

He explained that he and his partner are uniquely qualified for the project, as they also own an engineering firm (AMI Consulting Engineers) as well as a construction company. They have extensive experience developing similar brownfield properties in Duluth and Superior.

"We're able to tackle a project like this that comes with a lot of structural repairs and design," Scott said. They have inspected the building from top to bottom using drone and 3D imagery. "[But] as we open this building up, we know we'll find more."

Even removing garbage, "old food" and items left behind by previous tenants will be a big task. Then they plan to tear the building down to its studs and start rebuilding.

"We've got to correct years of improper maintenance to this building, and overall neglect," Scott said. "Even some of the repairs that were made in the past were not done correctly. And they still caused other things to continue to degrade, that east wall being one of the major ones."

Then there's contaminated materials - asbestos, mercury and lead, for example - that must be removed. And the basement is also contaminated.

"The building basement has had water in it for many, many years, so there's lots of mold and rot in that basement that we have to address," Scott said.

Changing the building from what the developer called "a boarding house" style - with separate rooms but shared bathrooms and kitchens - will involve the addition of a lot of structural beams. Then there's upgrading HVAC, plumbing and other utilities, plus adding an elevator.

A storied history

Hans Andreas Jacobsen Solem was one of the first Cloquet businessmen to undertake permanent rebuilding after the 1918 fires, helping the city rise from the ashes with his investment.

Six months after fire burned down most of Cloquet, the former proprietor of the Oswald boarding house began construction in February 1919 on a new hotel building on the former site of the Sons of Norway Lodge. The new brick hotel - offering 32 rooms and two street-level storefronts - was completed in June 1919.

"This half of the hotel was built with wooden beams as steel was not available due to World War I," a document in the Carlton County Historical Society archives detailed.

Four years later, Solem began work to add another 24 rooms, including eight with private baths and another two storefronts adding up to 100 feet of frontage along Cloquet Avenue.

"My grandfather ran the hotel, and my grandmother ran the cafe," David Guckenberg said.

Guckenberg wasn't the only person with familial memories of the hotel at the council meeting. Mayor Roger Maki revealed that his grandmother, who immigrated to Minnesota at the age of 16, worked as a waitress at Hotel Solem. She met his grandfather, a lumberjack, there.

By the turn of the century, things had changed. The building had been converted into 50 efficiency apartments for low-

income residents, according to a story in the Star Tribune written about the "landmark Cloquet hotel" after a fire damaged the upper floors.

There would be no more apartment tenants, and damage from that fire was never repaired. The lower floor, however, became home to the Mexico Lindo restaurant and then Pedro's Grill and Cantina from 2006 to 2021, when Pedro's moved to its current location two blocks away.

Questions and concerns

City councilors had questions about the project, but also expressed excitement.

At-large councilor and EDA member Lara Wilkinson said she worried that the city would end up leveling the building when they took action to take it from the absentee owners who weren't taking care of it.

"To be able to support this kind of development and retain this structure that is so unique in our community and honor the history is, frankly, a gift to our community," she said. "I want to thank everybody who's involved."

A nearby business had raised the issue of parking at a planning commission hearing on the Hotel Solem project. City planner and zoning administrator Al Cottingham said they were looking at maybe 30 spots for 18 apartments, but the municipal parking lot (behind the Nelson funeral home) has approximately 100 stalls available on a first-come, first-served basis. There are also about five spaces in a spot north of the building.

When the neighbor expressed concerns about tenants parking on Cloquet Avenue, Cottingham said C&C plans to have stickers in tenants' vehicles, and they would enforce rules about staying off Cloquet Avenue and impacting other businesses.

The planning commission unanimously recommended the council approve a conditional use permit for the project, which also happened Tuesday.

Ward 2 councilor Kerry Kolodge asked Scott if they would purchase other property north of the building if it became available. Scott said they would be interested in opportunities to open up more parking.

Ward 3 councilor Iris Keller asked if they planned to keep the same name for the building.

"Our plan is to keep the name the same," Scott said, adding they found out the original hotel sign is still available. They plan to purchase and hang the sign back on the building.

"I'm a history buff myself," Scott said. "We want to keep the signs and the placards and everything."

"That makes me very happy," Keller said.

Financing

In addition to more than half a million in TIF money over 26 years, the Cloquet Economic Development Authority has agreed to loan C&C Holdings $936,000 at 2-percent interest over 20 years.

Community development director Holly Hansen also announced Tuesday that the city received a $87,659 Minnesota Department of Employment and Economic Development grant. The funds will pay for half the costs of cleaning up asbestos and mold in the building. The TIF money provides matching funds for the state grant.

The city's financial advisor, Todd Hagen, said the project ticked all the boxes for using TIF money for a redevelopment district, according to state law. Tax increment financing returns the difference in the base value of the property (currently $8,100) and the improved value, which they expect will approach $2.5 million when it's complete.

The building owners will get a return of property taxes on the difference between those two numbers (nearly all the taxes paid to the county) until they reach the agreed $534,000 in TIF funds, Hagen explained.

"They only get what they give," Hagen said, referring to what the owners will pay for property taxes.

Hagen called it a unique building and project, and praised the developers and community development director Hansen for the work they did to pull together the funding.

"It takes a lot more to do a project like this ... there can be great reward, but there's lots of risks," Hagen said.