Leech Lake
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| Ten years ago, when Jerry and Sandy Emery bought Big Rock Resort on Leech Lake, their contract for deed required that they run it as a resort for at least seven years.
In 2004, the Emerys were ready to sell and wanted to include the same stipulation. But now, they couldn't find anyone who would agree to run Big Rock as a resort, even for one year beyond the sale. "We didn't want the resort to be split up and terminated as a resort," Jerry explains. Big Rock Resort has been in business for over 60 years. "We were concerned, because we knew how important the resort was to our guests and to the community; and to us, personally." Now, thanks to major changes to Cass County's zoning ordinance, changes that Jerry had a hand in crafting, the Emerys can profit from their resort property, yet run it as a resort. |
Lakeshore prices soar; resorts decline
Before this, the Emerys could see the trend. When resort owners sold (perhaps to retire), the resort often was bought by a developer and went out of business. Soaring land values meant there was no way the resort could be sold as a resort. No one could charge enough rent for cabins to make payments based on current land values.
So the resort would be platted off, cabins demolished, and lots sold to owners who would build private lake homes. Or some cabins might be removed to meet current setback and density regulations, but the property still would be divided up and sold.
Either way, the result was the same. There were new owners who used their lake homes a few weekends or a few weeks each summer. But because there were fewer resorts with cabins to rent, fewer tourists were coming to the area for vacations of one, two, three weeks or more.
Economic impacts
Gradually, as the constant flow of tourists and their money into the community declined, the economic impact was felt on businesses in the Leech Lake area and elsewhere.
According to a University of Minnesota study, each resort cabin generates six times more income to the community than does a privately-owned cabin. The average cabin owner uses it 30 days a year.
In 2004, Emery approached the Leech Lake Area Chamber of Commerce about forming a group of area chambers to look at ways to preserve tourism. The result was the Cass County Tourism Preservation Task Force, with Jerry as chair. (Terry Holloway of Pine Ridge Resort in Longville is the current chair.)
"When the Task Force first started, Cass County Environmental Services Department (ESD) Director Paul Fairbanks (now county planner) said that if we were concerned about county ordinances, we should provide input for the ordinance review process."
The Task Force and ESD conferred, negotiated and developed several new standards.
Ordinance changes help resorts survive
Three major changes were agreed upon.
The first allows existing resort buildings (cabins, outbuildings, etc.) to be replaced at the same site with units of the same size. Whether a cabin is damaged or destroyed by fire or storm or just needs to be modernized, the resort owner can do so. That wasn't allowed before, even if the cause was a natural disaster, if the unit's location didn't meet current standards.
In the second, ESD changed the allowable density for resorts in the first tier off the lake, from 6 to 12 percent. Now, 12 percent of the useable area in the first tier can be occupied by buildings, rather than 6 percent. "Lots of resorts were already exceeding the 6 percent density," Jerry noted.
Since there now is extra density in the first tier, owners of cabins can make additions of up to 200 square feet. These additions must meet setback requirements.
With the third change, Cass would allow multiple ownership of resort for the first times.
"You can still be a resort but have individual ownership of individual cabins," Emery elaborated. "But the cabins must primarily be available for rent."
"Primarily" means more than half the season. With Big Rock's 20-week season, a cabin owner can use it up to eight weeks, leaving it available for rent 12 weeks.
Big Rock is the first
Big Rock Resort is the first in Cass County to utilize the commercial common interest community model.
New cabin owners will pay a maintenance and operation fee up front to cover the cost of running the resort. All revenue from cabin rental goes back to the owners, meaning they benefit from the resort's success.
The Emerys have stipulated that guests who've come to Big Rock for two years or more may continue to rent the same cabin for the same time slot for five years. They hope that, after five years, the new cabin owners will recognize the value of the reservations and continue the practice.
"People who've been our customers tell us they appreciate this, instead of just terminating the resort," Jerry related.
Eventually Big Rock's owners will form an association and a board of directors.
Marty and Mary Andreason have been hired as managers. Assistant manager Ray Phillipi is starting his ninth year working at the resort. For now, the Emerys are serving as the "association" until lots and cabins are sold.
Big Rock is in the last stages of recording the plat. When that is done, the Emerys will offer cabins and mobile home lots for sale.
They have purchase reservations from former resort guests for about one-third of the mobile homes and one-third of the cabins.
"These are people who are seriously interested in buying. Beyond that, the rest of the property will be marketed by a local real estate firm," Jerry said.
County's perspective
Cass County historically has very strong ties to the resort industry, says current ESD Director John Sumption. "In this case, we wanted to help if we could, and this seemed a logical way to do it."
At the time, ESD was revising its planned unit development (PUD) standards; resorts were then considered PUDs.
"The Tourism Preservation Task Force asked us consider changing things they felt were partly responsible for putting Ma and Pa resorts out of business; things like zoning regulations," Sumption recalled. "We said, 'What do you suggest?' "
The Task Force presented proposals, and the two sides negotiated and tweaked. A new standard was adopted that made resorts a commercial use in a water-oriented district.
Then they looked at options for second-party ownership of resorts. "In today's business climate, resorters wanted to have this ownership option. Again, we said we might consider it, if the resort remained a resort," Sumption said.
Using Big Rock as its test case, the Planning Commission developed current standards.
ESD did have some concerns. With resorts allowed higher density than residential developments, ESD didn't want someone to use the benefits; then later, turn the resort into a residential development.
If a resort ceased to operate as a resort that held a state resort license, it might have to remove cabins to reduce the density.
"It's clearly intended that these places stay as resorts to take advantage of these benefits," Sumption stated. "We hope this will have a positive impact, allow resorts to sell some interest, yet stay in business."
Others can follow Big Rock's plan
Emery admits this was an expensive process, more so than if he'd sold outright. Now other resorters have a pattern to follow, and it will cost them considerably less. But the concept isn't for everyone. It's not for folks who want to come to their own cabins for the whole summer.
"It's designed for those who come up two or three times a year, maybe more. Now they can own that cabin at an affordable price and build equity." Many other resort owners from throughout Cass County participated in the monthly meetings that led to the groundbreaking regulations. They were assisted by ESD staff, county commissioners and state legislators. District 4 Sen. Carrie Ruud and District 4-B Rep. Larry Howes also attended Task Force meetings.
Emery says that most of Cass County's new resort ordinances have been incorporated into the Department of Natural Resources' recently-completed voluntary regulations for resorts.
Interest, positive outlook
This spring the Minnesota Resort Association held a conference on multiple ownerships, attended by more than 100 people. The Leech Lake Area Chamber of Commerce and local business owners' responses have all been positive.
"People are saying they hope more resorts try this," Jerry related. Sumption said he has heard interest expressed by a couple of other resorts. Emery's also upbeat about the long-range outlook for Leech Lake; he and Sandy are building their new home at the resort.
"With the new walleye stocking program and cormorant control, I'm looking forward to a better future.
"And people still want to buy lake property!"