City planners and the developer of lakeside housing in Prior Lake appear to have worked out a compromise over public trails through the neighborhood.

Golden Valley-based Terra Engineering is working through city approvals for Markley Lake Woods, a development that would put about a dozen of its 38 single-family homes on the northern shore of Markley Lake. The 23.5-acre site has been owned by Terra’s president, Peter Knaeble, for about 20 years.

The prospect of having a public trail at the back of those lakeside lots didn’t sit well with Knaeble.

“We thought it would be a negative,” he said. “It essentially would put the trail right through people’s back yards.”

The compromise is one that satisfies the community’s long-range goal of creating public trails linking neighborhoods and prospective homeowners’ desire for privacy.

The current plan for the development around Markley Lake calls for a sidewalk in front of the lakeside homes instead of a trail along the shoreline. Users wouldn’t be able to see the lake, but the sidewalk would connect them to other existing parks at the north and south ends of the new subdivision.

“The sidewalk would result in a safe way for people to make those connections,” said Katy Gehler, public works and natural resources director. “Otherwise, you’d have people walking in the street.”

Knaeble said he believes that’s a plan he can live with.

One challenge in putting the trail along the lake would have been finding a place for it outside the flood zone. Markley Lake is landlocked, and the lack of a natural outlet means its water level can rise in wet years.

Knaeble said putting the trail far enough from the lake to avoid flooding — most likely up on a slope closer to where the houses would be built — could have put the trail too near the homes.

Jeff Matzke, a planner for the city, said he doubted that a lakeside trail would be that disruptive to homeowners.

“This is a wooded area, and there are some sloping areas that go back from the housing pad locations. The trail would be down the hill, closer to the lake.”

Prior Lake’s comprehensive plan calls for a public trail around Markley Lake, but it doesn’t specify an exact location.

City planners had maintained that having the trail along the shoreline was consistent with the long-term goal of providing more public access to natural amenities throughout the community. Prior Lake is home to 14 lakes, as well as ponds and wetlands.

“More and more we’ve found the benefit of connecting people to lakes, affording them the opportunity to see and experience nature,” said City Manager Frank Boyles.

Boyles noted that subdivisions around some bodies of water, like Upper Prior Lake and Lower Prior Lake, don’t have public trails because they were developed before new land use guidelines were established.

“If we had it to do over again, we certainly would try to do that,” he said.

Newer developments, like those around Jeffers Pond, Rice Lake and Crystal Lake, do have public trails.

At the same time, Prior Lake doesn’t want to blunt the renewed interest in homebuilding by firms like Terra Engineering.

Single-family permits fell to about 60 in 2009 compared with more than 100 a year in the housing construction boom that preceded the recession. Homebuilding has begun to recover, with the city recording 134 permits last year, according to the Builders Association of the Twin Cities.

Boyles said the building activity has begun to draw down the city’s inventory of lots, creating more need for new developments like the one at Markley Lakes.

“You reach a point where you need to start making more lots,” he said.