When Nancy Edwards bought her parents' Lake Minnetonka cottage eight years ago, she thought she'd live there for the rest of her life.

Now she's wondering how she can stay for even the next few years. She can barely afford the property taxes.

In 2007, assessors put the market value of Edwards' narrow lakeshore lot at an eye-popping $910,000 -- though the value of her aging home was just $1,000. Her property taxes have increased by double-digit percentages every year since 2004, culminating this fall with a notice that her proposed 2009 taxes would jump more than 27 percent, from $6,443 to $8,190.

Edwards, 64, says that would eat up almost all of her Social Security benefits, which she began receiving early. Divorced, she also makes a modest income working part-time as a psychotherapist.

"This is an enchanted place, a family heirloom," she said last week, sitting in a living room that looks out over a panoramic view of the frozen lake. "I do not want to be forced into a townhouse. Once you live on water, you can never leave it."

Edwards' dilemma is shared by other longtime residents of the state's lake shores, especially those who bought land when it was far less expensive and those who retired on fixed incomes. They never anticipated the last decade's rapid run-up in property values -- or the rise in property taxes that can quickly consume Social Security and pension income.

While in many parts of Hennepin County 2009 property taxes are holding stable or only inching up, lakeshore property is an exception. Continuing demand for shoreline property means that assessed values are rising even in a flat real estate market.

"They don't make lakeshore anymore," said Bill Effertz, assistant assessor for Hennepin County.

In some cases, the impact of rising land values has increased because of the phase-out of limited market value, which capped tax increases for some homeowners despite escalating property values. The program will be gone for taxes payable in 2010.

Demand for shoreline

Carroll Gabriel, 76, has lived on Lake Independence in Maple Plain since he was 13, when his parents bought the land he still lives on. In 1945, Gabriel said, living on the lake wasn't special, except that "it meant that you didn't have to water the cows in the summertime." He and his wife, Marlaine, raised a family on the lake. Over the years he has sold some land and given plots to his children, who live next door.

Two years ago, a nearby lot sold for $500,000. Gabriel's property value -- he has 650 feet of shoreline and lives in a 100-year-old farmhouse -- shot up to $1.4 million. When the Gabriels complained about the valuation to city officials, it was knocked down to $922,000, with all but $50,000 of that in the land.

Next year, the Gabriels' property taxes are slated to go up another 10.5 percent, from $10,776 to $11,904. For now, Gabriel said, he and his wife are sitting tight.

"It's a million-dollar view, but you can't eat dirt," Gabriel said. "We'd like to keep it for our children, but last year we looked around for a different place. We thought this was ridiculous. ...

"With our children next door and our grandkids, too, we're close-knit. How much is it worth it to live here? I guess we can take it for a while."

Sally Kitzman, too, would like to hang onto her Lake Independence lot for her daughter. A widow, Kitzman, 78, bought two lake lots with her husband in 1968, paying about $15,000. By 2007, the market value was $632,000.

Next year, the taxes on the two lots will increase 34.5 percent, to $6,322. That would consume about 45 percent of what Kitzman said is her annual income from Social Security and her deceased husband's small pension.

"I'm on energy assistance as it is," Kitzman said. "If I didn't have my daughter [who helps her pay the taxes], I wouldn't be able to stay here."

She loves the wooded lot, the cardinals she sees at the bird feeder and her simple home. A neighbor walks the newspaper from her mailbox to her door each day and clears her steps and driveway of snow.

"I won't sell," Kitzman said. "I love it here. It's my little house, and I would never leave it."

Some relief available

Several programs offer seniors help with increasing property taxes, said Hennepin County Assessor Tom May. People whose incomes are low compared with their tax burden can get property tax refunds. Another state program offers a refund for homeowners whose taxes increase more than 12 percent if that tax is not due to new construction.

And the state's senior tax deferral program allows people age 65 and older with annual incomes of $60,000 or less to defer property taxes if they have lived in their home at least 15 years and meet other requirements. The program, essentially a low-interest loan from the state, requires those taxes to be paid when the home is sold, transferred to a new owner or no longer qualifies as homesteaded.

Only 171 Minnesotans enrolled in the program for 2009, 88 of them in Hennepin County. May said the low number may be linked to reluctance to have liens placed on property.

May said he understands the dilemma for property-rich seniors, but he said assessors must base assessments on market values and sales trends. He said homeowners have to decide what's important to them.

"There are seniors in large homes where they raised a family; they want to stay there, and the taxes are high for one person in the house. It's a choice."

Edwards' parents lived in the Lake Minnetonka home for 45 years. They expanded and modernized the circa-1900 lake cottage. Memories of Edwards' parents are everywhere. Her mother, irritated at the pink stone surrounding the fireplace, stained it beige and brown. Her woodworking father built bookcases and laid new wood floors.

Edwards has photos of her kids when they were small, hovering in wonderment over a stringer of enormous northern pike. Now her children are grown, and Edwards has eight grandchildren. And they, too, love the lake.

To make ends meet as she faces a tax bill that soon will approach $700 a month, Edwards drives a 12-year-old Oldsmobile and keeps her winter thermostat at 60 degrees.

Once a year for the past four years, the same couple has rung Edwards' doorbell to ask if her house is for sale. Edwards doesn't know their names -- the conversation never gets beyond her "no." And she intends to keep it that way.

"When you wake up in bed, all you see is water and treetops," Edwards said. "I'm leaving here feet first. "

Mary Jane Smetanka • 612-673-7380