Despite a dearth of walleyes, hints of a resort resurgence at Lake Mille Lacs

When the walleye population and the economy nose-dived simultaneously, Lake Mille Lacs was left, well, reeling.

But as anglers head out for Memorial Day weekend and the unofficial start of summer resort season, there are hints that the second-largest lake within state boundaries might be poised for a revival on its southern shore just 90 miles north of the Twin Cities.

Izatys, one of the most storied resorts on the Big Lake dating to 1922, went belly-up just as the recession struck in 2007. Today, the old resort has a new owner and is in the chaotic finishing touches of a $2.5 million renovation, with updates to 28 hotel rooms and a new boardwalk-style dock. A spruced-up golf clubhouse and ballroom are slated to reopen next month.

Nine miles clockwise from Izatys, demolition is wrapping up at Eddy's, where the Mille Lacs Band of Ojibwe is pouring $10 million into a new 64-room resort, 70-seat restaurant and marina scheduled to be completed in November.

"The lake is going through a rebirth," said Joe Nayquonabe Jr., a commissioner of corporate affairs for the Mille Lacs Band. "It just needs some new amenities as it broadens from strictly a fishing lake."

As walleye numbers dwindled to historic lows in recent years, the Minnesota Department of Natural Resources and the tribal band, which have managed the lake together since 1997, kicked up a controversy by overhauling the rules. They banned night fishing, narrowed the size of keeper walleyes (between 18 and 20 inches) and reduced the daily walleye limits from six to four and then to two — prompting a lawsuit this spring.

Those changes, coupled with back-to-back springs of late melting of lake ice, added up to only 13 percent occupancy among the 154 beds during the walleye opener May 10 at Appeldoorn's Sunset Bay Resort on the southeastern shore of Mille Lacs. Last year, you could drive on the lake at the opener. This time, there was plenty of open water for fishing, but people were hesitant to book rooms after last year's problems and the new restrictions.

"You either adjust or go out of business," said Paul Waldowski, Appeldoorn's manager, who made a diversify pitch to owners Chuck and Marilyn Appeldoorn, who live in Florida.

"They decided to roll the dice," Waldowski said. "And it's a gamble."

The Appeldoorns spent $215,000 to buy the 15-room Northland Inn in nearby Wahkon, renaming it the Spirit Lake Inn and Sweets, complete with a store selling old-fashioned hard candy and Bridgeman's ice cream that will open soon.

They're doubling capacity at their Spirit Lake Steakhouse in Wahkon, with a new patio bar. And they're expanding the event center at Sunset Bay Resort, where they've booked more than 20 weddings for this summer and fall.

Throw in some corporate sales meetings and family reunions, and it's not just walleyes anymore on Mille Lacs.

At Izatys, first-time resort owner Paul Fink said: "You have to be more than a one-trick pony."

For decades, Izatys was one of those iconic Minnesota resorts. The nearly 500-acre spread opened in the 1920s and has hosted two governors' fishing openers, myriad golf tournaments, two vice presidents, celebrities, astronauts and families. Then the 2007 recession hit. The bank took the resort back from heavily leveraged owners. New managers were hired before Izatys shut down in late 2012.

Enter Fink, an Eagan businessman who was working in Milaca as the CEO of a firm that manufactures medical devices. He was living in one of the venerable resort's 140 privately owned townhouses when he decided to pump some new life into it.

"My business experience was completely unrelated to the hospitality industry," he said. "And, at 58, I'm old enough to know better."

He purchased Izatys' 78-slip marina, 28-room hotel, clubhouse and golf course last May. Only the golf course was open last summer.

With pallets of bricks and shingles and the swimming pool still drained, he admits it looks like chaos, "but things are happening fast right now as we start hiring and put on the finishing touches.

"There are always hiccups along the way, but I think the economy is coming back, and we've seen a huge amount of interest," Fink said. "It's a good opportunity and a good location — only an hour's drive from the northern-tier suburbs."

The tribal development arm of the Mille Lacs Band is equally optimistic. In 2002, the tribe bought Eddy's, which dates to the 1960s, and closed it in September for demolition. The buildings were razed this spring, and the band is investing at least $10 million in a posh new 64-room resort, restaurant and marina.

The plan includes adding eight private two- and three-bedroom lakefront cabins. The renovation will include moving a parking lot away from the water to preserve the lakeshore and maximize views.

It's the band's latest foray into the hospitality business as it tries to diversify revenues from its gambling pillars: Grand Casinos and hotels at Mille Lacs and Hinckley. The band recently announced it was purchasing two downtown St. Paul hotels.

Nayquonabe said walleye fishing has long been Mille Lacs' calling card, but he thinks that will change as the lake becomes a more all-around family destination.

"By helping boost tourism in east-central Minnesota, we think it will be a win-win for the Mille Lacs Band and the entire tourism industry," he said. "We are making a significant investment in the renovation of this lake resort because we strongly believe in the future of the lake."

Curt Brown • 612-673-4767