Tim and Jennifer Caron's house in Excelsior is historic in at least two ways: It's the former home of the late Jimmy Hutmaker, the legendary "Mr. Jimmy" who (many believe) was immortalized by the Rolling Stones, and it's on the local list of historic homes.

The Carons bought the house in 2004 from Hutmaker, who put it up for sale as a potential teardown. But instead of demolishing the century-old house, the couple renovated and expanded it while maintaining its architectural style, including its original windows and doors. When they sit out on their front porch, said Jennifer Caron, a City Council member, "People stop and say, 'I love your house.' "

If only all home construction in Excelsior were as warmly received. City officials are facing a thorny challenge: how to give homeowners the freedom to build what they'd like without changing their neighborhoods' quaint lakeside vibe.

"How do we retain our property values, how do we retain our charm, how do we maintain the peace in town?" said Jules Macaluso-Harrison, who sits on the city's Planning Commission.

Teardowns are unpopular in many communities, but Excelsior's unique character cranks up the tension. The Lake Minnetonka city, smaller than a square mile, was a resort town at the turn of the 20th century. It's got a housing stock sprinkled with century-old summer cottages as well as homes from every era since. Many houses are set on yards that tend to run small and often lack garages, and offer views of the lake or the Commons, a large lakeside park.

But cottages, however picturesque, don't satisfy the modern penchant for spacious dwellings. An influx of affluent residents has changed the dynamic in Excelsior, as the percentage of residents with household incomes over $200,000 has gone from 4% to about 11% in the past decade. That's reflected in the desire for upscale residential property.

In 1990, the median value of an Excelsior house was just slightly higher than that of Hennepin County or the metro area as a whole — around $200,000 in dollars adjusted for inflation. Since then, Excelsior's home values have shot up well beyond those of both the county and the metro; according to data from the Census Bureau and the Metropolitan Council, the median value of an Excelsior home is about $463,000, roughly double the medians in Hennepin and the metro area as a whole. That hike is pricing out home buyers in lower income brackets.

And while longtime Excelsior residents cherish the vintage look of their older neighborhoods, "It's not easy to tell someone who just came in and paid $500,000 for a lot that you don't get to build exactly what you want," Macaluso-Harrison said.

City officials are looking for a balance that satisfies residents on both sides, allowing people the freedom to enlarge or rebuild their homes while maintaining the local character and keeping neighbors on friendly terms. Rules prohibiting a mix of architectural styles are not being considered.

Build new or renovate?

Macaluso-Harrison freely acknowledged that some houses in town are neglected and "quite frankly should be remodeled or at least brought up to code or torn down." The biggest problem with new construction, she said, "is mass and scale and bulk."

Since 2013, more than 35 houses in Excelsior — about 7% of the city's single-family homes — have been torn down and replaced. Last year, the City Council lifted a moratorium on new residential development only after passing ordinances that limit the scale of new construction.

When some worried that the ordinances weren't restrictive enough, the council assigned a task force to study how to revitalize the city's residential neighborhoods while preserving their character.

In May the task force presented several possible strategies, ranging from establishing guidelines to setting stricter limits on buildings' scale, shape and setback, to creating a review board — ideally including a professional consultant — to approve plans for new construction. The Planning Commission recently approved a new board.

City Planner Emily Becker said some prefer that the board judge projects according to an objective set of standards, while others advocate a case-by-case approach to avoid "cookie cutter" homes and ensure flexibility in a city where yards and houses vary widely in size and shape. Many prefer some combination of the two.

"I'm of the belief, and I think others are, that even if you have such a board you also have to have ordinances" that set size limits, said City Council Member Dale Kurschner.

The council is expected to act on the various options within the next couple months. In the meantime, it has passed an interim ordinance requiring long exterior walls to contain offsets, such as porches, so that neighbors don't look out onto unbroken spans of siding. It also requires attached garages to have windows and echo the house's architectural features.

Amid all the wrangling over heights and footprints and setbacks lies one deceptively simple approach, Macaluso-Harrison said: people who are building a house going over to talk to their new neighbors. Even if they don't reach full agreement, having a conversation can help minimize hard feelings.

"We don't want to become a litigious city. We don't want to have people fight. We want people to be able to live together," Macaluso-Harrison said.

Happy endings are possible. Hutmaker was so pleased with how the Carons renovated his former home that he presented the couple with the house's original antique key.