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First Reading: Vermilion in the balance

Published (4/11/2008)
By Nick Busse
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Gov. Tim Pawlenty has asked the Legislature to provide funding for a new state park on Lake Vermilion, pictured here, located near Tower in northeast Minnesota. (Photo courtesy of the Minnesota Department of Natural Resources)

When the opportunity arose last summer to turn a 3,000-acre tract of land along the rocky shores of Lake Vermilion into Minnesota’s first new state park in 25 years, so much about the idea seemed perfect: a sprawling, undeveloped property located on a major lake in Northeastern Minnesota, accessible via a major highway and abutting an existing park, and all for sale by a single owner.

According to Courtland Nelson, the parks and recreation director for the Department of Natural Resources, it’s the kind of once-in-a-lifetime deal that won’t come again.

“This is probably the last chance for this kind of an opportunity,” he said.

Not only would the park provide guaranteed public access to what Nelson calls a “quintessential Minnesota lake;” it would also rescue a swath of mostly pristine wilderness from the ongoing real estate rush that’s turning northern Minnesota into a patchwork of housing developments.

The opportunity may be short-lived. U.S. Steel, which owns the Lake Vermilion property, wants a deal by July. If one isn’t reached, the company will move forward with plans to turn the land into a nest for approximately 150 high-end homes. And despite Gov. Tim Pawlenty’s strong support, the park plans have, so far, run into one roadblock after another.

Negotiations between U.S. Steel and the DNR have failed to settle on a price for the land, and the Legislature, which needs to authorize funding for the project before it adjourns this year, has been stifled by an economic downturn and political conflicts. The fate of the Lake Vermilion State Park hinges on whether lawmakers can come up with enough money and political support to rescue the project before the session’s May 19 constitutional adjournment deadline.

The lands currently owned by U.S. Steel are situated adjacent the Soudan Underground Mine State Park. Unless a deal is reached with the state, U.S. Steel plans to turn the area into a residential subdivision. (Photo courtesy of the Minnesota Department of Natural Resources

Funding problems

The most immediate problem facing the proposed park is how to fund it. Pawlenty wants to use the Environment and Natural Resources Trust Fund, which derives money from state lottery proceeds. But the Legislative-Citizen Commission on Minnesota Resources, which controls the fund, unanimously rejected the idea.

“We had many hours of thorough discussion on it when it was first proposed,” said Rep. Kathy Tingelstad (R-Andover), who co-chairs the commission. “It was pretty overwhelming that we just did not see that it was appropriate.”

Tingelstad said she supports the Vermilion park proposal, but would rather not use the trust fund, which is traditionally used for cash projects rather than bonding.

“I think the original proposal … would’ve taken about half of our funding for the next 20 years to cover the debt service,” she said. “Those are dollars that we look to for research projects and other good work around the state.”

The LCCMR’s annual funding bill — HF2745/SF2492, sponsored by Rep. Jean Wagenius (DFL-Mpls) and Sen. Ellen Anderson (DFL-St. Paul) — includes no money for Vermilion. Although it could still change before it gets to the House floor, Tingelstad said it’s unlikely.

That leaves bonding as the most likely funding mechanism for the park. But, the chance to include it in the bonding law has already come and gone. A $17.5 million appropriation for the park was included in the House’s version of the bonding bill, but was removed by a conference committee.

But for park supporters, there’s still hope. Before signing the bonding law, Pawlenty axed $208 million worth of projects, bringing the bill’s final price tag down to $717 million in general obligation bonding — more than $100 million less than the latest target he gave the Legislature. The size of the cuts have left many to speculate on whether the move was intended to encourage a second bonding bill that would include the Vermilion funding.

“The governor did leave $108 million sort of on the credit card,” Tingelstad said. “People are talking about potentially sending the Central Corridor $70 million through as another bonding bill and perhaps Vermilion could be with that.”

Local objections

Even if a second bonding bill takes shape in the coming weeks, Vermilion will have to clear another significant hurdle: the reluctance of local leaders to give up 3,000 acres of taxable land.

In St. Louis County, where the park would be located, more than 60 percent of the land is already publicly owned — which means the county draws property tax revenue from less than 40 percent of the total land within its borders. County officials don’t want to lose any more land that could provide potential new tax revenue, and they’re proposing a controversial solution to the problem: a land swap with the state.

“We need to have an offset, so that as this land is taken off the tax rolls … we have other lands that are owned by the state that will then be put on the tax rolls. That way we don’t further damage those taxpayers in those communities,” said Rep. David Dill (DFL-Crane Lake), who represents the area.

Dill spoke at a March 11 meeting of the House Environment and Natural Resources Committee. At that hearing, his bill, HF3433, which would authorize the establishment of the park, stalled on a tie vote over a provision that would have required the state to hand over school trust lands to the county in exchange for authorizing the park. Dill said it would only be fair, considering that the private development proposed on the land would be more valuable to the county than the park.

“Let’s get real,” Dill told committee members. “I’ll take the 150 homes of multi-million dollar valuations with the people coming in jets and turboprops and buying jet fuel and spending money and buying snowmobiles and all that over the park.”

The bill now awaits action by the House Finance Committee, but it is unclear on what will happen next. Dill is currently in talks with Sen. Tom Bakk (DFL-Cook), the sponsor of a companion bill, SF3076, on how to move forward on the issue. That bill awaits action by the Senate E-12 Education Budget Division.

Holding out hope

There are some critics who say the proposed Lake Vermilion State Park shouldn’t be funded at all. They argue that the extensive backlog of maintenance and repairs needed on current state parks and trails should be given priority over new park projects. Courtland Nelson understands their argument, but sees it differently.

“There isn’t a time when all bills are paid, when all developments are completed, and so now you have the opportunity to look to the future,” he said.

To Nelson, the opportunity is simply too good to pass up. The Vermilion park would be located next to the existing Soudan Underground Mine State Park, which means the DNR would have existing infrastructure and facilities to build from.

“That’s a wonderful running start for us on the whole process,” Nelson said, adding that if things go according to plan, the park could be open for day-use activities beginning as early as 2010.

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