Northshore development heats up

Lake Superior’s North Shore is cherished by residents and visitors alike. They love its endless birch groves and pine stands, rocky shoreline and gorgeous views. Most of all, they love the lake.

The area is a potential gold mine for development, except for one fundamental problem: Too much development on the North Shore will compromise the very reasons people love it. How much is too much likely will be argued for generations to come. Right now it’s a hotly debated issue.

Beaver Bay

Opposition to some proposed projects has been “quite intense and not necessarily justifiable,” said Patty Payne, owner of BayView Realty in Beaver Bay. “People want to leave the North Shore in a natural state, and guess what? That’s not gonna happen,” she said.

The latest evidence is Kings Landing, a townhome and condominium project four miles south of Beaver Bay. John Webb, a St. Paul developer, had planned to build 82 housing units at a cost of about $40 million. After listening to community sentiment, Webb decided last month to downsize the development.

His new plan calls for 40 units, with 28 to be built on the shore side of Highway 61. Webb estimates project costs at about $20 million and said he expects some units will sell for as much as $1 million. Construction should take about two years, if the project moves forward as planned, he said.

Though the property at Kings Landing is zoned resort/commercial, the development has “still been a real issue with the neighbors,” Payne said. “There’s a lot of opposition to projects like this.”

Kings Landing’s initial 18-unit phase has been approved by the Lake County Planning Commission, and Webb expects the other 22 units will get the go-ahead.

“Technically, we’re allowed four (units) per acre and we’re now going for less than two per acre,” he said. Plans for a lodge, convention center and swimming pool have been axed from the original concept.

Building a pedestrian tunnel under the highway to connect the two sides of the development remains in the plan. Webb said he will seek a grant for about half of the $300,000 tunnel project. “We still think that’s a big safety issue, even though there’s only going to be 12 home-sites” on the uphill side of Highway 61, he said.

Webb has invited the neighbors on both sides of the development to work with him in planning the project so “there’s nothing that offends them or causes them any problems. It will be very environmentally friendly,” he said.

The plan to extend Beaver Bay’s sewer system to Kings Landing has been dropped, Webb said. Instead, he’s seeking a sewer sub-system, probably on county land.

Beaver Bay soon will increase its sewer system capacity to accommodate another new development. WindSong Cottages, a 26-unit housing project led by St. Paul developer Charles Schulz, will use a tax abatement to finance the sewer project. Those funds will be recaptured from taxes on some of the WindSong units.

Roger Pulkrabek, a Minneapolis real estate broker working with WindSong, said he expects the first of three construction phases on the cottages to start before the end of October. The initial eight units should be available in early 2003, selling for about $300,000 each. The entire 26 units should be built by fall 2005.

“The biggest hurdle we had to overcome was to get the necessary agreement so we could do the improvement on Beaver Bay’s sewer system,” Pulkrabek said.

“This project will about double the capacity of Beaver Bay’s sewer system. Beaver Bay can get about twice as big. We didn’t just expand it enough to cover our 26 units. We made it big enough for some years into the future.”

Cook and Lake counties

A vast majority of the land in Cook and Lake counties is owned by government. Most is part of the Superior National Forest. Along the shore, numerous state parks like Gooseberry, Palisade Head and Tettegouche dot the map. The available land upon which to build, live and/or conduct business is limited. Inadequate wastewater systems is a problem almost everywhere along the shore.

The scarce supply of buildable sites and the sheer beauty of the area are enough to keep property values rising rapidly, even though development options often are limited and subject to the tight scrutiny of each community and government agency with jurisdiction.

Payne of BayView Realty said real estate prices along the North Shore are rapidly escalating, with a big jump in the past year.

“Lake Superior shoreline has been on the average of $850 to $1,000 per (front) foot over the course of the past year or so,” she said. “This year there are properties on the market that far exceed that.”

As Roger Reinert, a salesman for Edina Realty’s Duluth office, put it: “If you offer land for sale in that corridor — between (Highway) 61 and the shore — it’s going to get attention.”

One factor boosting prices near Duluth along the lake is a sewer line extension under construction from Lester River to Knife River. Reinert said the project has “spiked some activity” in land sales there.

“We’ve also seen some people that are in the speculation game, thinking they’ll buy land, hold onto it until the sewer is in place and then turn it around,” he said. “With the stock market these days, that’s a legitimate investment option.”

The sewer line extension was needed because Western Lake Superior Sanitary District (WLSSD) inspections of septic, trench and mound systems on the North Shore during the 1990s found 40 percent to 80 percent failure rates. Also, a significant percentage of drinking water samples were found contaminated with wastewater. Because the North Shore’s bedrock and clay provide poor soil absorption for on-site systems, they become saturated. Sewage finds its way into groundwater, streams and eventually the lake.

The new line will transport wastewater to WLSSD’s treatment plant on Duluth’s waterfront. Residents between Highway 61 and Lake Superior in the extension area are obliged by state law to hook into the new system. It will serve more than 400 homes and businesses.

About half of the $13 million project is funded by a federal grant ($6 million) and by the U.S. Army Corps of Engineers ($500,000). The rest will come from property assessments and user fees.

Residents of the three government jurisdictions that make up the 13.9-mile sewer extension project area — the city of Duluth, Duluth Township and Lakewood Township — have been concerned throughout the process that its character will be destroyed.

The project area is dominated by two-acre lots, the minimum allowed with private septic systems.

The new line will bring in municipal utilities, changing zoning to allow smaller properties, potentially leading to a wave of new construction.

Kurt Soderberg, WLSSD executive director, said large-scale industrial or commercial development could be as environmentally significant as the failing septic systems.

“We had to address development concerns because we don’t have capacity for a huge new community or a huge new business that might develop along the North Shore,” he said. “It would increase the costs of the existing district customers and that wasn’t something that we were at all interested in.”

Duluth city and township

Duluth braced for the change this past summer by re-zoning properties affected by the line. The city council passed an ordinance increasing minimum lots to two acres, essentially maintaining the status quo after completion of the sewer extension, unless the city’s pending comprehensive plan changes that.

Duluth Township has had a moratorium on high-density commercial development between Highway 61 and the Lake Superior shoreline for more than two years. Wayne Dahlberg, zoning administrator for the township planning and zoning board, said the moratorium is not on construction but on “allowed uses by conditional-use request.”

“With the sewer line coming in, it would have virtually opened up the entire shore to that potential higher-intensity use,” Dahlberg said.

“We felt it was in our best interest to at least look at how much development we want there and where it might be.”

The clock is ticking, however, on the township’s moratorium. It expires in November.

Dahlberg said a new zoning ordinance should be in effect by the end of the year, but there likely will be a short period in which the township will be legally obligated to process conditional use permits until the new ordinance is in effect.

“We are in the midst of redoing our comprehensive land use plan,” he said. “We’re taking a whole new look at our zoning ordinance. We had some hard issues to work through. A lot of people would like to see growth, others would like to see nothing else happen. We’re trying to strike a balance between that.”

Pete Weidman, an engineering consultant for Ayres Associates who has worked with North Shore residents to design the sewer system, said many on the shoreline would like to see some development to increase the tax base.

“They’d like to see a little bit of something out there,” he said. “They just want to be able to control it. If you don’t stand up and watch and respond to some of these things, you’ll get driven over by the Wal-Marts and everybody else.”

Lakewood Township

Lakewood Township hasn’t done much to prepare for the sewer line, but only a small fraction of its land will be affected by the project. Residents are pushing for a limit on future retail developments, however, holding them to 5,000 square feet or less. The move is specifically targeted at stopping Wal-Mart from building there, though Wal-Mart has not yet announced a plan to locate in Lakewood.

The next area up the shore hoping for a sewer line is Knife River to Larsmont. Knife River has a collection system and a treatment plant, but there is concern whether the small, almost 20-year-old facility can be maintained. The Knife River-Larsmont Sanitary District wants to shut it down and is seeking funding to tap into the new Duluth-North Shore extension. The area would use the existing collection system to pump wastewater into the new pipeline.

Gov. Jesse Ventura vetoed legislative funding of the Larsmont to Two Harbors sewer extension earlier this year. Soderberg of WLSSD said the future of that project “appears quite uncertain because of the tremendous cost per home that’s involved.”

Lawmakers speak out

State Rep. Tom Bakk, DFL-Cook, said he wants to go back to the Legislature next session to restore funding for the Larsmont extension. “There’s a number of failing on-site sewer systems in that area and we need to deal with that,” he said. Bakk is seeking election in November as the DFL Senate District 6 candidate.

“I would be hopeful that the local zoning authorities would be very sensitive to the local concerns — that development happened in a way that didn’t diminish the part of the North Shore that we all love, the scenic beauty of it,” Bakk said.

His opponent, Independent Party candidate Tom Norman, said he hopes lessons can be learned from fast-growing communities like St. Cloud and the Twin Cities.

“There you’re getting a case of horrible sprawl,” he said. “I think a lot of people are concerned about losing the natural beauty that the North Shore has. I’m for moving the North Shore into the 21st century. We need to embrace change and cooperate with business owners. Community members need to cooperate to make sure they’ve got control over how we develop.”