Hopes for a new state park on Lake Vermilion are not dead yet, at least in the minds of some unlikely supporters.

Shawn Murphy, an insurance agent from the Twin Cities, has taken up the cause and he and a small group of like-minded friends are working to keep the idea alive. Murphy, who owns no property on Lake Vermilion and never considered himself a conservationist before now, said he was intrigued by the proposal when first announced a little over two years ago and has followed the project ever since.

Gov. Tim Pawlenty proposed the idea in July 2007, but the plan required the state to purchase approximately 2,500 acres of undeveloped property on Vermilion’s east end from US Steel. While the company initially expressed a willingness to sell, purchase talks between the company and the state broke down late last year when the two parties couldn’t agree on a selling price. Company officials have since stated that they intend to develop the area as high-end lakeshore. That project, known as Three Bays on Lake Vermilion, has been approved by St. Louis County and US Steel officials say they plan to start initial construction this spring.

Murphy says that would be a shame and that’s why he’s working to find a solution. He and a group of supporters have organized under the banner of The Park Society and have been meeting with DNR officials, conservation groups, and legislators in recent weeks, looking for alternatives that could convince US Steel steel to sell all or a portion of its Vermilion property for the park. Murphy is hoping that a private fundraising effort could bridge the gap between the $14 million the state can legally pay for the property and the $20 million that US Steel is reportedly seeking.

In the meantime, Murphy said he plans to urge legislators to withstand to urge to spend the $20 million the Legislature allotted for the park in 2008 on other things. That could prove a challenge in a biennium when the state is facing huge financial problems, but Murphy notes this may be a one-time opportunity to maintain a spectacular piece of Minnesota’s natural heritage for future generations.

Economics may work in favor of park

While the economic downturn has ripped gaping holes in state budgets, it has also slashed demand for lake property on Vermilion and elsewhere, and that could play a role in any decision on the ultimate use of the property owned by US Steel. Despite the company’s claim that it plans to pursue its Three Bays development, the dramatic fall in land sales on the lake suggest it could be many years before US Steel could realize any financial benefit should it opt to pursue its development plans. The Three Bays project includes just over 60 lakeshore lots, making it one of the largest proposed developments on the lake in years. The project is being proposed at a time, however, when the number of available properties on Lake Vermilion is as high as it’s ever been and demand is down sharply from the pace of a few years ago.

As of this week, nearly 180 properties were for sale on Lake Vermilion through the area’s multiple listing service, and local land broker Steve Abrahamson said at least some additional properties are likely for sale outside the MLS system.

Despite the high number of available properties, few sales have been reported. Of more than 80 undeveloped parcels currently for sale on Lake Vermilion, just three sold over the past year, according to Abrahamson. There was more demand for improved parcels, with 28 selling in the past year, but Abrahamson said that’s half the pace of a few years ago.

And there’s little evidence that property on the lake’s remote east end is in particularly high demand. According to Abrahamson, a six-acre lot, adjacent to the US Steel property, that he tried to sell is now off the market for lack of interest.

“I think it’s going to be a long term shakeout,” said Abrahamson, who noted that it took several years after the savings and loan crisis of the 1980s for Vermilion’s real estate market to recover. “In my opinion, based on 19 years of experience, it could be seven to nine years before the market recovers,” he said.

Abrahamson, who is the mayor of Tower and is a supporter of the park, said US Steel is likely to be disappointed by sales should it actually move ahead with its Three Bays plan. “They’d be crazy to develop it right now,” he said. “You’d have lots sitting there for years on end.”

Murphy said he’s heard similar arguments and is hopeful that US Steel won’t pursue the full project it has outlined, which could open up room for future negotiation. “The question is, how can we compromise with them so they can have a partial development and still maintain some land for a state park?”