Incline Village Developer responds to Duluth letter admitting to some breaches

DULUTH, Minn. – The lawyer for Luzy Ostreicher, the leader of Chester Creek View, LLC, sent two letters responding to the City of Duluth concerns about their development.

Renderings of Incline Village

On June 2, 2025 the Duluth Economic Development Authority (DEDA) sent a letter titled “NOTICE OF BREACH” to Ostreicher.

Ostreicher’s companies STC Building, LLC, Chester Creek View, LLC, and Incline Plaza Development, LLC are planning and building a development called “Incline Village” which would be on the site of the the old Central High School.

William Burns, Ostreicher’s attorney, sent two letters dated June 10, 2025 letter to Duluth Assistant City Attorney Amanda Morgan.

One letter was a bullet point response to the DEDA “Notice of Breach” letter, the other letter from Burns attempted to add more context to the issues.

After it’s introduction paragraph the Burns’ context letter said, “The Central High School site was vacant and undeveloped for an extended period of time nearly one and a half decades. Many developers looked at it and none were able to put together a plan that offered any hope of development.”  There was no specific explanation of why this point was included.

The Burns letter offering more context also said the Incline Development had lost a large equity investor.  Due to the loss of the large equity investor, the development would move forward, “using a more conventional approach with pre-sales of condominiums in the initial 70 unit project.”  The Burns context letter then says DEDA’s “Notice of Breach” letter, “has made that (pre-sale) approach much less likely to be successful than had been envisioned. Alternatives are being developed.”

The Burns letter continued to claim DEDA, “undermined/scuttled any ability to conduct presales by suggesting the development was in disarray, the monies were not available, creditors were unpaid, and the developer in default.”

The Burns context letter ended by stating, “We propose a reengagement of the City and Incline to move forward with a public private partnership to the significant benefit of the City.”

The DEDA “Notice of Breach” letter noted eight items of what they considered to be material breach in the agreement between DEDA agreement and the developer.

Burn’s responded for his client.

The DEDA letter claimed, “the previously submitted information on detailed sources and uses of funds no longer accurately reflects the Developer’s sources of funds”.  Burn wrote the developer admitted they have changed their sources of funds since the information was originally produced and given to DEDA.

The DEDA letter also stated, “Developer failed to enter into a Minimum Assessment Agreement for the First Project.” Burns wrote agreeing with the premise but said it was due to a “disagreement between the City and the County.”  Burns continued to write there is an approved version of the Minimum Assessment Agreement which is, “in the process of one tweak and then execution.”

The next breach mentioned was the “Developer failed to provide copies of loan commitments, financing commitments or evidence of equity contribution.”  Burns’s letter responded by saying the developer’s equity investor, “advised that what it had submitted had been successful with multiple other communities on other occasions and could not be supplemented.”

DEDA’s letter also said the developer failed to “commence construction” on a specific dates, even after having four waivers of the deadline.  The developer was supposed to start on October 15, 2024.  The company’s response via Burns said the claim of default “is not fully accurate”.  Burns wrote the developer’s bank could not get a “SWIFT MT760” and it has slowed their progress.  A “SWIFT MT760” is a way for banks via an international banking system to send, receive and request credit.  Burns said the developer’s bank claimed they would be able to get “SWIFT MT760” but their bank failed to get access to this system.

The next breach of notice claim started, “earth work on site ceased today and that Developer fails to maintain the Property is a neat, orderly condition.” The Burns letter did not dispute those facts specifically.  The Burns letter continued to say DEDA’s claim “seems unusual and surely inappropriate when the work on the site had ceased the same date as your letter was released to the public.”

DEDA claims next said “Chester Creek View LLC is not qualified to do business in the State of Minnesota.”  FOX21 had checked with the Secretary of State’s office when the DEDA letter was revealed.  At that point Chester Creek View LLC was not registered as a business in Minnesota.   The June 10, 2025 letter from Bruns agreed that they did not have a business entity in Minnesota saying the claim is “technically correct.”  The letter continue, ” Chester Creek View is not currently active in any way with respect to the Incline project and its role in the agreement is only technical and required by the historic timing. Nonetheless we’ll spend the time to create that qualification. That qualification to do business in Minnesota is not statutorily required because Chester Creek View has no employees here and is not actively doing business.”

The seventh breach mentioned was the developer had not paid taxes.  The Burns letter stated, “There are some unpaid taxes.”  Burns say the taxes are not being paid was because of what the developer sees as a valuation error on the property.  The Burns letter says they have taken the valuation dispute to the to the State of Minnesota Tax Court.  It continues saying, “a petition filed there in the tax court for reduction of the taxes on this property, there reassignment and reclassification is pending.”

The last claim of default said, “Developer is in default of its obligations under its construction contracts for the Project.”  The Burns letter responded by writing, “The developer and the contractor have a dispute which will hopefully be resolved over the next month or two.”