Closing the deal the next step for state park at Lake Vermilion

St. Paul – Barring unforeseen circumstances, the state should
close on its newest state park in the coming weeks.

The state will pay $18 million to U.S. Steel, the company that
owns the 3,000 acres along Lake Vermilion in the northeastern part
of the state. That amount is more than 12 percent above the
appraised price of the land, but the state can consummate the deal
thanks to a provision in the recently passed bonding bill.

That provision removed a cap on how much over the appraised
value the state could pay for the land. Other legislation currently
being considered specifies that Lake Vermilion State Park must be
managed as one with the adjacent Soudan Underground Mine State
Park.

The same legislation increases the PILT payment for the lands
within the Soudan park.

Bob Meier, DNR assistant commissioner, said it’s rare for the
state to pay more than the appraised price for a piece of property.
He called acquisition of the land for the Vermilion park a “unique
situation,” and doesn’t believe it sets a precedent of paying more
than land is worth.

“Two generations from now, when my granddaughter is out there
looking at it, (she’ll say) ‘What a deal they got,’ ” Meier
said.

When the Legislature in 2008 approved $20 million in funds to
buy the park, it also included a stipulation the state not pay more
than 12 percent of the appraised value. As DNR_officials negotiated
with U.S. Steel, that provision became “restrictive,” Meier
said.

At one point, state officials – including Gov. Tim Pawlenty, who
championed the park – said negotiations with U.S. Steel were at an
impasse.

Last summer, a spokesman for U.S. Steel said discussions with
the state had ended and that the company would move ahead with
plans to develop the land.

The different ways the state and the company planned to use the
land made coming to a price agreement difficult, Meier said.

“We were looking at it from the perspective of preserving the
land, and they were looking at maximized development,” he said.
“The difference in values was one of the sticking points for
us.”

Last December, though, Pawlenty negotiated a purchase price with
U.S. Steel. At that point, the state’s inability to pay more than
12 percent of the appraised price of the land became the biggest
barrier.

Since that’s now been taken care of, “there is no legislation in
the way of creating the park,” said Judy Erickson, government
relations consultant for the Parks and Trails Council of Minnesota.
“The next step is for the DNR and governor to close the deal with
U.S. Steel.”

The DNR currently is going through all the aspects of a real
estate transaction, and closing won’t be for “many weeks,”
DNR_Commissioner Mark Holsten said this week.

However, he doesn’t see anything to prevent the deal from going
through.

While the focus now is on closing the deal, the agency will work
on park development plans.

“We’re going to try to have some limited trails developed in
there this fall,” Holsten said.

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