Blue Heron property to be auctioned

By Tom Hintgen (Contact) | The Daily Journal

Published Wednesday, July 2, 2008

Blue Heron Bay will go on the auction block in August, six months after a bank began foreclosure proceedings on the proposed Dead Lake-area development.

Blue Heron Bay, a 194-acre peninsula, will be auctioned by sealed bid. Bids are being accepted through August 12 to Chicago-based Sheldon Good & Co.

The minimum sale price is listed at $3.98 million. In addition to making the entire property available to a single buyer, the parcel will also be offered in as many as nine separate parcels, ranging in size from 10-plus acres with 2,360 feet of shoreline to 36-plus acres with 2,137 feet of shoreline.

Blue Heron Bay Land Company reported in February that the bank holding a mortgage on its property near Dead Lake had commenced foreclosure proceedings. Under Minnesota law, BHB had a one-year redemption period in which to refinance the property or sell it to someone else.

If the aggregate amount of the parcels is higher than a bid for the entire property, the Dead Lake property will thus be sold in parcels. The reverse is true if a bid for the entire property were higher than the parcels aggregate.

“This is an effort of Blue Heron Bay to market the property in a different manner,” said Fergus Falls attorney Bob Russell. “If Blue Heron doesn’t find a buyer, it will redeem from the foreclosure sale.”

Blue Heron Bay president Jim Erickson of Minneapolis said the note is due in March of 2009.

“The general real estate market conditions which became evident last year impacted major lakeshore development projects throughout northern Minnesota,” Erickson said this morning. “We put further infrastructure investment and the sale of the Dead Lake home sites on hold last summer. That made sense.”

County commissioners approved the original cluster development in April 2003. Litigation and the Environmental Impact Statement (EIS) delayed the project.

In 2002, when first proposed, Blue Heron Bay was a 151 residential/commercial project. It later was reduced to a 94 housing unit cluster development.

By 2007, when Erickson received road construction plans, the market for lake homes was very different. That same year the Minnesota DNR purchased a 54-acre parcel on the east side of the property for just under $1.5 million, to add to the existing Dead Lake Wildlife Management Area.

Over the past several weeks, during the foreclosure process, Blue Heron Bay continued to talk to potential buyers and development partners who had an interest in the project for investment, personal use, family compound, corporate retreat, campground, recreation or public conservation purposes.

Spencer Schram, treasurer for the Dead Lake Association which represents other property owners, said the association closely monitored the foreclosure proceedings and other developments in recent weeks.

“The goal of our association always has been to protect the ecology and water quality at Dead Lake,” said Schram, who lives on the east side of Dead Lake. “I’ve met with Jim (Erickson) on different occasions. He knows the association’s desire to maintain the preservation of Dead Lake.”

That sentiment was seconded by Jocelyn Kerr who, with her husband Mark, operates Sunset Bay at Dead Lake.

“As business owners we had no problem with the Blue Heron Bay project, after it was reduced in size,” Kerr said. “In it’s original proposal, however, the population of this lake would have doubled. That would not have been good, since this is a shallow lake.”

Blue Heron Bay acquired its interest in the Dead Lake property from the R. Murray Partnership in October 2005. R. Murray held the original 254-acre property since the 1970s.