Excelsior's plans to build first hotel on Lake Minnetonka draws critics

Just yards from the Lake Minnetonka shoreline, a grassy empty plot is slated to become the lake's first hotel in nearly half a century.

It's a landmark project, and as one of the largest and tallest buildings there, it's also feeding a debate over whether it will make the historic town more of a destination in the Twin Cities or forever change the face of a small town fiercely proud of preserving its past.

Tension is growing as plans for the four-story boutique hotel proceed, prompting a fourth Heritage Preservation Commission member to offer her resignation on Thursday in protest. While supporters say the hotel will boost tourism and revenue, critics fear it threatens Excelsior's quintessential small-town character, and would set a precedent for larger buildings.

"You wouldn't want to see an Ikea superstore in Grand Marais," said Excelsior attorney Mark Kelly, a vocal critic. "It's in the interest of the state of Minnesota ... as small cities increasingly are going to be under this stress. Maybe this should be preserved."

Like Stillwater and other small towns, Excelsior has built its image as a quaint throwback to the past. Although it has only 2,400 residents in its one square mile, it's considered the downtown for 20,000 residents in nearby lake towns and has been a Twin Cities destination since the 1880s, when city folk flocked there for the legendary amusement parks and grand hotels.

Now, as Excelsior continues to revitalize its downtown and drum up tourism — with the controversial hotel and new attractions such as pedicabs starting next month — it's started a classic small-town debate about its future: how to preserve what longtime residents have grown to love while still increasing tourism and revenue.

"That's what Excelsior is facing. How do you stay relevant and move it forward without losing your historic past?" Mayor Mark Gaylord said. "There's a balance we need to strike."

The city rejected Hennepin County's plan for a contemporary modern glass and steel library like ones in Plymouth or Maplewood after outcry it didn't fit in, and revised it with a brick exterior to better fit the town's norm.

Now the debate is playing out largely between the Heritage Preservation Commission and the City Council — which overwhelmingly supports the $12 million hotel. Like a lot of metro cities' historic commissions, Excelsior's regulates the small historic district through such measures as height restrictions or recommended paint colors. It denied the hotel design twice, saying it was too large, too tall and out of character for Excelsior.

"It's like bringing a pony into the dog kennel," said commission member Steve Finch.

Usually the City Council agrees with the commission's decisions — until now. The council, which has the ultimate authority, overturned the commission's denial in February, giving the hotel the green light.

"It's unprecedented," said Tim Caron, the commission's adviser.

"This was, I'm hoping, an unusual decision," said Caron, whose wife, Jennifer, is on the City Council. "If we keep building larger and larger buildings, are we still going to be the place people come for? Big suburban development can be found anywhere."

At more than 50 feet tall, the hotel would exceed the city's 35-foot height rule. But architect Neil Weber said design standards don't account for something like a hotel. "We're dealing with a use that's new to the city," he said. "It's a whole different building type."

The small boutique hotel will be independently owned and would be an economic catalyst, he said, drawing guests to the town's stores and restaurants. Gaylord added that it could create jobs and reduce taxes for local residents, and that a vocal minority of residents oppose it. "It's all about controlled and thoughtful growth," he said.

While some feel it will set a precedent for taller buildings, City Manager Kristi Luger said that isn't likely. There are few open sites, and any other building type wouldn't justify the height. "It's such a unique project," she said of the hotel.

Anything in that prominent of a spot — by the lake and off the town's main street — would have stirred debate, she added. "There's a lot of politics at play," she said. "We really looked at it and we're making the best decision right now. No one can predict the future."

But four feasibility studies indicate there's a market for a hotel, Weber said. The allegation that it could become condos is a myth, he said.

Other critics say the council approved the hotel to get tax-increment financing, which could exceed $1 million. Luger said TIF didn't motivate the approval, but was "icing on the cake" and could fund port and water treatment upgrades by the lake instead of city taxpayers having to pay that bill.

The hotel is expected to get final approval this summer. But the fallout probably isn't over.

"I didn't move to live in the middle of a carnival," Finch said. "Is it just a play place for the richer residents on the periphery? More and more, it's divorced from us living here."

The controversy has prompted the City Council to re-examine design standards, starting last week. On Thursday, Judy Mueller said she was the fourth of seven commissioners to leave. "The town has a completely different feel than when I moved here," said Mueller, who's lived there since 1967.

"This is what everyone is trying to copy," he said of Excelsior's downtown, pointing to cities like Maple Grove's Arbor Lakes area.

"We have the real thing."

Kelly Smith • 612-673-4141 Twitter: @kellystrib