5/9/2006 by Paul Lundgren

Sam Cave still wants to develop Lighthouse Point in Two Harbors. The city’s planning and zoning commission and city council still appear to be opposed. A citizens group still is pushing for the city to buy Cave’s property. And no one seems ready to compromise any time soon.

Cave, president of Ed Cave & Sons, Inc., of Roseville, has presented several different development plans for Lighthouse Point since he bought property there more than three years ago. His current plan includes two projects: One, a hotel, stretches the definition; the other is a conventional condominium concept.

Cave said his hotel project would offer “fractional ownership” to buyers who would own their units for 13-week increments. The project would include eight buildings, each with 20 units. Cave said the units will sell for about $500,000(which in most cases would be divided among four owners). He would not disclose construction costs; he said a bid process is underway.

Cave recently submitted, for the third time, a conditional use permit application for his hotel project. The city returned his first two applications, deeming them incomplete.

At the April 24 Two Harbors city council meeting, city attorney Steve Overom clarified that Cave’s permit request has never been rejected.

The city is reviewing his third application to determine if it is complete. The application will advance to the planning and zoning commission, unless it is again determined to be incomplete.

“We are treating this matter very seriously,” Overom said at the meeting. “This is a major project for the city. We are proceeding in accordance with state law.”

At the same time, the council is considering a proposal to clarify its hotel definition to specifically prohibit fractional ownership and prevent Cave’s plan from moving forward. Cave intends to build the hotel on 21 acres zoned as parks and recreation, which allows for hotel construction with conditional use.

“Our intention is to sell the rooms,” Cave said. “It’ll essentially be a condominium.”

He said the city’s process for clarifying its definition of hotel is a direct attempt to stop his development.

“It looks like a reaction to our application,” he said. “There’s nothing in the definition of hotel that says people can’t own the room — unless they change the definition.”

Cave’s other development plan was rejected by the planning and zoning commission and city council last fall. Cave has filed a lawsuit against the city of Two Harbors alleging the council violated the city’s comprehensive plan when it refused to grant his request to rezone portions of his Lighthouse Point land from industrial to mixed-use waterfront.

He’s asking the court to require the zoning change to allow his $20-million classic condominium project to move forward. That project would involve 42 units facing Burlington Bay. Cave said he wants to sell the units to full-time residents for between $300,000 and $550,000 each.

Krech Ojard & Associates, headquartered in Duluth, drew the site designs for the projects. KKE Architects of Minneapolis has designed the buildings.

“Are we going to have some development in downtown Two Harbors?” Cave asked. “It’s pretty drab right now. A lot of people would say it needs a pickup. This could do it.”

Barb Ankrum, representing Ed Cave & Sons, spoke at the April 24 council meeting about the conditional use permit application and the Lighthouse Point hotel development. Cave was not in attendance.

“You have the authority to make it better,” Ankrum told the council after passing out plans for the project. “You will write the conditions for this development. We have to do what you want. We want you to take charge,” she said.

“Real estate taxes at $10,000 per unit per year will be $1.6 million

every year, forever, that you can use for things like streets. For the economy of Two Harbors, there is no doubt this is a very good thing.”

In 2003, Cave offered to sell his Lighthouse Point land to the city for $1.8 million. In an interview following the council meeting he wouldn’t say whether he’d reconsider selling the land, adding he doubts the city and the citizen’s group, Save Lighthouse Point, are legitimate buyers.

“Telling people they have the resources to buy it is, I think, dishonest,” he said.

Micky McGilligan, a representative of Save Lighthouse Point, said the group met with Cave last winter and he was “all gung-ho to be a willing seller.” But his asking price had gone up to $5.7 million.

“That was the last figure we’ve heard,” McGilligan said, noting that it was based on an appraisal that presumed development would be permitted on the point. “Our argument is that that’s an invalid appraisal.”

Save Lighthouse Point has received several grants since 2003 to buy Cave’s land, but McGilligan said the largest have either expired or will expire soon. The group has used a $4,000 grant from the Great Lakes Aquatic Habitat Network and Fund to hire a local organizer and attorney.

“We are still working on trying to get the city to buy the land,” McGilligan said. “We are not doing any fundraising right now because we haven’t got a willing seller or a willing buyer, but we are continuing to organize as a group.”

Cave bought about 156 acres of land in and around Two Harbors from the Duluth, Missabe and Iron Range Railway at the end of 2002. He has since acquired another 109 acres in two other land purchases and sold about 30 acres to the Minnesota Department of Natural Resources.

As a result, he owns about 40 acres at Lighthouse Point, 18 acres downtown, 14 acres near the junction of Scenic 61 and the Highway 61 expressway and 163 acres at Pork City Hill (he’s renamed it Port City Hill) on the western edge of town.

The Lighthouse Point land had been considered by citizens to be a public park, and the city had been in negotiations for years to buy it from the railroad before Cave sealed his deal. The land includes the Sonju walking trails, which were built in the 1990s and are frequently used by residents and visitors.

Cave has filed other lawsuits against the city. One charges the city contaminated some of his Lighthouse Point property, south of the water plant and east of the wastewater treatment plant. Tar and asphalt was allegedly spilled when the city operated a coal-fired electricity plant and an asphalt plant there several decades ago.

Another is not related to Lighthouse Point. Cave said the city wants to memorialize city ownership of parcels of land it has been leasing from him.

Overom and city administrator Lee Klein both declined to comment on Cave’s lawsuits. Overom said during the council meeting that George Hoff, an attorney with the League of Minnesota Cities, will handle the two lawsuits related to Lighthouse Point.

William M. Burns, a partner in the Hanft Fride Duluth law firm, is representing Cave.

Two Harbors Mayor Robin Glaser did not return a telephone request for an interview.

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