Two Harbors’ city council is on course to make the last round of changes to its proposed Waterfront Action Plan on May 9.

When it affixes its final seal of approval, the council might recognize developer Sam Cave for his role in a process that’s produced the blueprint for a lakefront land-use transition in just five months. That’s lightning speed given that several prior efforts produced few visible changes on the Two Harbors waterfront since the last industrial uses ceased about 25 years ago.

During a rainy, snowy, mid-April tour of the harbor front, the Roseville, MN developer rattled off preparatory steps he’s engineered toward that transformation as the biggest landowner on Agate Bay.

“The city now has a sewer plant, (Lake) county got the trains (part of an historic waterfront display he’s deeded back), DNR (Minnesota Department of Natural Resources) is planning a boat launch and marina. And with the trail we’ve built on Lighthouse Point, the public is going to have access to every foot of lakefront in the town,” he said.

Any council recognition of Cave’s catalytic role, however, likely would produce more jeers than cheers. There’s been a steady stream of irate letters to newspapers trailing his every move on the waterfront since he shocked many in the community just 30 months ago.

In December 2002, Cave acquired a major chunk of the Two Harbors waterfront in a deal with the Duluth, Missabe & Iron Range Railway on the eve of its own sale to the Canadian National.

His purchase included a 157-acre adjacent parcel just south and west of the Two Harbors city limits with 300 feet of lake frontage. It’s roughly bounded by Old Highway 61 on the west and the former DM&IR iron ore docks that mark the city limits in the downtown. Cave wants to build as many as 280 single and multifamily units of high-end housing on the site he’s marketing as “Port City Hill.”

Cave has won a rezoning of the property from manufacturing to commercial-urban, and a tentative nod from the Lake County Planning Commission for a required conditional use permit he’ll need to develop the parcel. To get that permit, he still must address sewage treatment and access to his landlocked property. Cave must tie into a municipal sewage treatment system, most likely the Two Harbors plant. His Port City Hill project also is captive to the outcome of a lawsuit filed by an adjacent property owner against the county. Cave’s development needs access through that property.

So he’s turned his attention to the rest of the land he acquired from the railroad: an 80-acre tract that included virtually all the city’s downtown waterfront, the land under the municipal sewage treatment plant, the train exhibit and Lighthouse Point. Zoning and a long-closed garbage dump on Lighthouse Point reflect its once-sullied industrial past. But it has a pristine feel. A lighthouse has been converted into a bed & breakfast and local residents have long favored the Point and its rocky shoreline for hiking, picnics and the city’s best view of the lake.

Cave paid $3 million for the 80-acre tract, and has since sold about one-third of it, transferring control of the sewage treatment plant to the city and ownership of the waterfront train display to Lake County. The largest transfer involves 27 acres on the waterfront that Cave sold in 2004 for $3 million to the Minnesota Department of Natural Resources. The agency acquired 20 acres for the marina and seven acres for the boat launch it plans to build on the Agate Bay side of Lighthouse Point.

He’s also improved a walking trail that begins at the future site of the public marina and boat launch and skirts the entire circumference of Lighthouse Point. He’s negotiating with the city and DNR to sell a public easement or outright purchase of that lakewalk.

Cave has applied for a rezoning from “industrial” to “mixed use waterfront” classification and a conditional use permit to build condominiums on the Burlington Bay side of his remaining land on Lighthouse Point. He envisions three buildings, each with 14 units. He estimates project costs at $18 million. He also has proposed to build a restaurant-hotel adjacent to the planned marina and boat launch on land currently zoned “parks and recreation.” A hotel would require rezoning to “mixed use waterfront” and a conditional use permit, a step even Cave concedes likely isn’t in the cards.

The Waterfront Plan to be presented to city councilors for final changes on May 9 includes numerous recommendations, among them proposed zoning changes, for future land use on Agate Bay, and Lighthouse Point. Among them:

• Maintain the Two Harbors Lighthouse, operated as a bed & breakfast by the nonprofit Lake County Historical Society, as is currently managed.

• Require that the current view of Agate Bay and the Lighthouse from the downtown waterfront remain. Along with current zoning, this requirement poses another barrier to Cave’s preferred site for a hotel next to the planned marina and boat launch.

• Allow construction of a hotel or restaurant on an adjacent parcel as a conditional use under its “parks and recreation” zoning, subject to height restrictions.

• Require or acquire permanent public access for the gravel hiking trail circumnavigating Lighthouse Point that Cave has improved.

The Waterfront Plan also addresses future land use along Burlington Bay on the backside of Lighthouse Point, but much of that developable land already is zoned “mixed use waterfront” and major development conflicts aren’t so apparent in its future.

The overarching intent of the plan is to use the waterfront to revitalize an aging downtown business district and spur economic development that’s compatible with its unique environmental values. Cave thinks the restrictions it imposes on Lighthouse Point hotel development conflicts with the intent of the city’s 1999 comprehensive plan, which envisions hotel and restaurant development on the waterfront in a parklike setting.

But he recognizes it balances public input taking during the process that overwhelmingly opposed further commercialization of Lighthouse Point. Of 98 completed comment forms, 71 residents indicated a preference for “complete green space” there.

Cave said he’s ready to modify his developments to comply with land use restrictions in the final Waterfront Plan and any rezoning that follows.

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