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Minnesota land up for auction

Ever since the Blue Heron Bay project surfaced about six years ago, the 194-acre development on Dead Lake in Otter Tail County has faced turbulence.

An early plan called for 151 housing units, but under pressure from other property owners on the lake, developers eventually settled on 94 units, none of which have been built.

Now, the loan on the property has been foreclosed on and the land is being put up for auction.

Blue Heron Bay President Jim Erickson, who put construction on hold last summer, said economic conditions that have slowed housing sales and development across the country played a role in Blue Heron Bay's problems.

While his group has decided not to proceed with building, at some point conditions will improve and make development possible for someone else, Erickson said.

"As the housing market rebounds, we know it will first come to lake country," Erickson said.

The conditional use permit approved by Otter Tail County in 2006 is good for 10 years.

County officials were informed this spring that the bank holding the mortgage on the property had begun foreclosure proceedings.

Erickson said at the time that bad market conditions on lakefront property contributed to the loan's termination.

The property was on the market earlier this year for $5.9 million.

For the upcoming auction, the entire property is for sale by sealed bid, with a reserve price of $3.985 million.

Bids may also be placed on individuals parcels, which also carry reserve prices, according to Erickson.

Bids will be accepted by Sheldon Good & Co., a real estate services firm in Chicago, until Aug. 12.

Dead Lake, located about 80 miles southeast of Fargo, is Minnesota's largest natural environment lake.

"Undisturbed lakefront property is extremely rare, which makes this a wonderful opportunity to create a unique residential development," said Steven Good, chairman and CEO of Sheldon Good & Co.

When county officials approved plans for 138 housing units on Blue Heron Bay in 2003, it ignited a battle with residents in the area who argued the development was too big for the relatively shallow lake and that boat traffic would damage the lake's ecology.

Don Fondrick, a member of the board of the Dead Lake Association, said it is hard to know what the auction sale may mean for development.

"Nothing's happened so far, and that's good news," he said.

"If there's a new buyer, then maybe somebody's interested in listening to what we think and what state law thinks would be good stewardship of that land. That's been our crisis all along," he said.

More information about Blue Heron Bay and the auction can be found at

Readers can reach Forum reporter Dave Olson at (701) 241-5555