Coveted prairie grasslands, dense woods and quiet lakeshore in northeast Orono are now slated to be subdivided into high-end homes.

Doug Dayton, the grandson of Dayton’s department store founder George D. Dayton and the company executive credited with launching Target, bought the 93-acre estate 50 years ago. When he died in 2013, his widow, Wendy Dayton, vowed it wouldn’t be sold to developers, but to someone who would preserve property her husband had restored.

New state rules have jeopardized her initial plans, however, and nearly half of the property is now slated to be developed, with preliminary plan approval expected by the Orono City Council on Monday.

The 2013 law change, tucked into a broader state tax package, restricted county assessors from reducing the value of a property enrolled in a conservation easement, with a few exceptions. That meant a landowner with a perpetual conservation easement wouldn’t see a dip in property taxes.

“It was a pretty dramatic move and would have a significant impact and unintended consequences,” said Kris Larson of the Minnesota Land Trust. “That has made a few landowners say, ‘that’s not for me.’ ”

In Orono, the law change has already affected the fate of Dayton’s land. Wendy Dayton, the aunt of Gov. Mark Dayton, had planned last year for an 83-acre conservation easement with the Minnesota Land Trust. A year later, that’s changed, with Dayton planning to sell the land to a developer, who is still working with the Minnesota Land Trust on preservation of some of the land while subdividing nearly half of it for 11 houses.

Before the law change, it was up to local assessors to determine what impact a conservation easement had on the value of the land. According to the Minnesota Land Trust, there are more than 12,000 landowners who have agreed to conservation easements in which they are paid for restrictions that prevent the land from being developed.

One of the bill’s authors said then that the change would make the property tax burden more fair, preventing landowners from “double-dipping” by getting a reduction in property taxes and money from the conservation easement.

Environmental groups countered that it penalized private land conservation, wouldn’t give property owners their true market value and would stifle land preservation in Minnesota — the only state in the country to pass such a law. They sought unsuccessfully to repeal it in 2014 and plan to try again in 2016.

A tranquil location

Dayton’s property is one of Orono’s biggest remaining parcels of open land, located north of Wayzata on Mooney Lake, which includes parts of Plymouth, Medina and Orono. The small, shallow lake is private and quiet, dotted with about 50 homes of some of the Twin Cities’ most prominent families — from the Daytons to the MacMillans of Cargill fame. Even Denny Hecker once lived there.

A neighbor of the Daytons, Peter Rechelbacher, whose father started Aveda, is president of the local lake association that works to restore and protect the lake. Years ago, he said, he was interested in buying the Dayton property, but the state law change was one of the deterrents to moving forward.

“With the law change, it made it very restrictive,” he said. “Financially, it’s not feasible for an individual.”

When word leaked that the property was coming to market, developers pounced. It hit the market last year for $5.9 million, far less than it would be worth as a redevelopment project. The land has a 6,600-square-foot, six-bedroom house tucked into the side of a hill overlooking more than 1,600 feet of shoreline. Nearby, Doug Dayton restored fields to what they may have looked like before it was farmland, cultivating nearly 40 acres of grasslands and trails through a basswood-maple forest.

Contentious proposal

Now, developer George Stickney’s Mooney Lake Preserve plans call for leaving nearly 50 of the 90 acres undeveloped in two outlots. Most of the rest of the land would be developed into 11 3-acre lots, some of which will have rules to protect wetlands and trees.

Stickney and Dayton both declined interview requests. But the city says that the developer could have gotten at least 30 homes on the property and choose instead to preserve some of it. If the city gives final approval in August, construction could start this fall.

“I think the big concern is the lake quality,” said Wendy Lundsgaard, a resident on the lake. “The runoff from these homes — what is that going to do to the quality?”

The project has been contentious among city leaders, too, with a debate over what’s more important — preserving the prairie Doug Dayton restored or the mature forest? Initial plans were revised, moving one lot from the woods to the prairie. In June, the Planning Commission recommended approval and the City Council agreed July 13 in a 4-1 vote to draft a resolution for preliminary plat approval, which will be voted on this Monday.

“It’s just so sad; that property is so special. It’s a shame it’s become this,” Mooney Lake resident Anne Healy Shapiro said. “We’ll never get this back … this is one of the most beautiful spots in the whole state.”

 

Staff writer Jim Buchta contributed to this report.