Canal Park West?

A look at the DW & PR line today

On July 16, 2009, the Spirit Mountain board of directors heard the first public presentation of a potential development to the south and west of Spirit Mountain that would be known as River Walk West. Encompassing 91 acres on both sides of Grand Avenue, River Walk West could potentially include single-family housing, apartments, villas, condominiums, a ski lodge, retail stores, townhomes, hotels, restaurants, a community interpretive center and a winery.

Developer Brad Johnson, representing the Spirit Valley Land Company, was careful to stress to the board that he and his group were not yet actively engaged in developing anything. Rather, they were focused on assembling the necessary land. Though they had been purchasing private property in the area since 1993, there were still a number of publicly owned parcels that they wanted for their plan.

“Originally, I did try to start the development process,” Johnson added in a later telephone conversation, “but people just would never believe it would ever happen if the land wasn’t under one control….A development [occurs] once you have land control.”

Some of the public parcels are located along the old railroad bed of the Duluth Winnipeg & Pacific Railway, which traverses the hillside above and roughly parallel to Grand Avenue. These parcels are defined in blue on the map in Illustration No. 1. The city purchased this land in 1984, when the railroad was decommissioned, for possible use as a trail. The property is held in a so-called “fee ownership” status, which means that the city owns it outright and can do with it as it pleases.

Illustration No. 1 (Double-click to Enlarge)

Today, the old railroad bed is a trail, though an unmaintained, partially washed-out one. Developers hope to turn it into an access road into the site, and replace the existing trail with a trail elsewhere on the property.

Another look at the DW & PR line today

The rest of the public parcels desired by developers were given to the city by the state in the early 1970s, to be held for possible use by Spirit Mountain. This land is “free conveyed” land (defined in red on the map), which means it cannot be used for anything other than Spirit Mountain-related purposes. In order for developers to acquire the property, the Spirit Mountain board would have to direct the city to convey the land back to the state. The state could then sell the land to the Duluth Housing and Redevelopment Authority, and the HRA could sell the land to the developers.

Another, perhaps more daunting, hurdle for developers is the federal Land and Water Conservation Fund, or LAWCON. LAWCON is a federal grant program that aims to preserve valuable natural areas for outdoor recreation. Since its creation in 1964, the LAWCON fund has granted $3.6 billion to a myriad of projects in every U.S. state and territory.

Looking north into LAWCON territory

According to Tim Howard, Supervisor of Real Property for the city of Duluth, “The city of Duluth received many LAWCON grants over the years, most of those in the 1970s. When the city agreed to accept the dollars from the LAWCON fund, along with the receipt of those dollars the city entered into a grant agreement with LAWCON, which states basically that the city would not convert any of the lands within the boundary to…non-recreational uses.”

The boundary, in the case of Spirit Mountain, is the DW & PR rail line. Property the city owns above the rail line is subject to LAWCON restrictions. As these restrictions are intended to be permanent, converting the land to other uses would be difficult. The only way the city could sell it to developers would be if the city first got permission from the National Park Service, then identified and purchased an equal amount of “property that it did not already own and dedicated that new property for outdoor recreation purposes, as replacement for any property removed or expunged from the LAWCON map,” says Howard.

In every case—fee ownership, free conveyed, LAWCON or otherwise—any action taken with city-owned property would have to be approved by the Planning Commission and an 8/9 vote of the city council.

Johnson and the Spirit Valley Land Company are selling River Walk West as a “green” development. When the subject of the Superior Hiking Trail, which skirts the northern edge of the developers’ property, came up, Johnson said, “For whatever we’re thinking about doing, trails are just good. They’re good for business, they’re good for people. The concept, when we say urban resort, is ‘soft recreation.’ It’s kayaking, it’s oriented toward trails, it’s oriented toward biking.”

Of the 91 acres needed for the project, Johnson told the board that about one-third would remain as undeveloped greenspace, “just because that’s the right thing to do.”

Johnson estimated that River Walk West would take about ten years to build in its entirety, and would eventually grow into a $50- to $100 million project. He further estimated that the property would generate between $500,000 and $2 million in property taxes annually. Currently, the parcel generates about $20,000 in property taxes.

When I asked, Johnson acknowledged that much of what he envisioned for the project today could be quite different by the time it came to fruition. As a developer, he found himself in the position of having to sell the project and make predictions without knowing all the variables. “I have to kind of say, I think this is what could happen there. It’s called the vision.”

“What happens in these deals is once you’ve got the land sort of under control, then you spend some money chasing down potential businesses that could move there. And that takes a year. And then you come back and you start putting a plan together, not based upon, you know, ‘I’d like to do this, I’d like to do that,’ but reality. And it’s just a very long process.”

Would the city be asked to participate financially? When I asked this, Johnson launched into a discussion of “amenities” that the city maintained and controlled, but which generated little revenue for the city, such as roads. The upshot of his remarks, as I understood them, was that developers might—indeed, probably would—ask the city to help them build access roads into the site, with the understanding that such an investment by the city would result in more property tax collections.

Looking south toward the St. Louis River

It bears mentioning, of course, that such an investment would also result in higher construction and maintenance costs for the city.

For now, River Walk West appears to be in a holding pattern. Johnson is unsure how the LAWCON requirements may affect the project. “We have to go back to the drawing board and see if it makes any sense for us to pursue that.” The city, according to Tim Howard, will focus its immediate efforts on assembling property outside the LAWCON boundaries.

What seems probable is that something will happen, eventually. Developers already own most of the property they need below Grand Avenue, and much of what they need above Grand. On several occasions, Johnson cited the statistic that Duluth got 3.5 million visitors annually. He felt that if more of those visitors could be convinced to spend their money in West Duluth, that would only be good for the city. “You got amenities that people, you know, turn left to go to Canal Park, and they just keep going up to the North Shore, and perhaps one percent of the tourists turn right [to West Duluth]. What happens if we got ten percent?”