“ We want to get clarity. Once it is finished and all of the adjacent property owners sign it, the deed can be recorded. County Attorney Tim Scannell ”
The “Tip of the Trail,” a 5.6- acre parcel of land at the end of the Gunflint Trail, has been the center of controversy for more than a decade, and disagreement over the property continues with a court date scheduled for June 8, 2010 to determine whether title concerns should terminate the current contract for sale.
The scenic resort on Lake Saganaga was first a news topic as canoe outfitter Jeff Drew fought unsuccessfully to retain his lease with the US Forest Service for use of the land in 1997. Drew’s father held the lease on the property from 1987 to 1992 and Jeff Drew had the lease until 1997. When it was time to renew the five-year lease, the Forest Service instead decided to pursue a land exchange. The Forest Service and Cook County embarked on a complicated land exchange, trading 480 acres of land the county owned within the Boundary Waters Canoe Area Wilderness (BWCAW) for the Tip of the Trail property, gaining ownership in 2004. Preparation to sell the land led to the discovery that the Lake Saganaga boat landing was encroaching on the Tip of the Trail property. Surveyor Sam Parker was hired to clarify the boundaries, but in September 2004, he told Cook County commissioners that it was too complicated to resolve with a simple survey. Parker recommended that the county hire Title Attorney Dick Swanson, who serves as the county’s examiner of titles.
Two county employees, now retired—Land Commissioner Ted Mershon and County Attorney Bill Hennessy—agreed, noting that to correctly survey the Tip of the Trail property, the entire peninsula would have to be included. Hennessy noted that giving property owners notice, holding public meetings and possibly going to court to resolve differences, could take years. Hennessy recommended that the county instead begin the process of a “proceedings subsequent” to define the property boundaries.
ProVal LLC purchases
for $701,000
Despite the survey concerns, the county decided to proceed with the sale of the land, and on October 31, 2005, the Tip of the Trail went up for auction with a minimum value of $606,900, determined by Land Commissioner Mershon. Former leaseholder Jeff Drew was among the people bidding on the parcel, offering $610,000. He was outbid by Deb Mark, owner of Seagull Outfitters, who went to $700,000. Mike Prom and Michael Valentini of ProVal, LLC topped Mark’s bid with an offer of $701,000. ProVal was required to pay 10% down on the property, as well as a surcharge to the state of Minnesota of $18,000. ProVal, a company representing 13 investors, received an auditor’s certificate of sale.
Shortly after the sale, ProVal made the first payment on the property of $136,000. Valentini said after a few months of waiting for the boundary issues to be resolved he and Prom realized that the deed would not be immediately forthcoming and they asked if they could have their money back.
Auditor Braidy Powers said the county agreed to refund the first payment, but not the down payment. “We thought this was going to be a short term,” said Powers.
Valentini said he also thought it would be handled quickly. He said, “At that time, they said there is a little problem with the paperwork—in a few weeks, we’d have it.”
But weeks turned into months and months into years. Valentini said, “Every time we talked to Braidy’s office, he’d talk to the attorney and he’d say it will be a few more weeks.”
One of the first points of contention as Attorney Swanson worked on the title documentation was the width of County Road 11, which dissects the property. Valentini said ProVal agreed that the deed should include the road easement. However, they did not know that the county would require a 66-foot road right-of-way. “We paid for wetlands delineation and septic studies, but with that much of an easement, the septic sites that we delineated were voided, so we can’t do a planned unit development,” said Valentini.
Valentini said ProVal had hoped to subdivide the parcel and sell lots. “We had earnest money from buyers in August 2008. When the buyers found out we didn’t have the title they were not interested. That was the last straw. We can’t develop it, we can’t sell it. So we want the county to take it back,” he said.
ProVal would now like to terminate the purchase agreement. “When we hit the four-year mark, we said this is ridiculous,” said Prom.
County working
to clear title
County Attorney Tim Scannell acknowledged that this has been a very long process. “In fairness to them, they did believe this was going to take three to six months. But anyone who looked at this should have realized that it would take far longer. It’s not convoluted or complicated—it just takes time,” said Scannell.
Scannell expressed frustration that the county is actually nearing completion of the “proceedings subsequent” process, which deals with all of the surrounding properties. Scannell said the hold-up is because one adjoining property owner has not responded to the county. He said that landowner is Mike Prom.
Title Examiner Dick Swanson said there were a number of factors that led to the delay in clearing the title. However, he said this type of problem occurs “fairly often” and buyers typically escrow funds to make sure the title is ultimately clear. “That was not done in this case, but Cook County agreed to clean up this parcel as well as the landing parcel owned by the county. Thelegal descriptions of many of the properties on the peninsula were poorly drafted and should never have been allowed as registered titles, but years ago things were pretty loose. We are now trying to fix all the descriptions so that they fit together as intended. Actually, a similar fix was put in place for the entire government lot south of these properties about 15 years ago and that probably took even longer.”
Asked if the holdup on the Tip of the Trail parcel was neighboring property owner Mike Prom, Swanson said, “We could have been finished about a year ago on this one, but for the objections raised by the attorney for ProVal, the purchaser from the county.”
Prom and Valentini don’t deny that they are refusing to sign off on the proceedings subsequent documents to clear the title. “We wanted that too—four years ago,” said Prom.
Conflict going to court
Prom and Valentini said they approached the county attorney about a year ago to talk to him about terminating the purchase agreement, but he referred them to another attorney hired to handle this matter. Scannell said that is correct. The county has hired the firm of Iverson Reuvers, which specializes in civil matters. “This isn’t my bailiwick,” said Scannell, adding that he was frustrated that Prom had not provided the information requested by the county for the proceedings subsequent.
“In court the county will argue to separate the two things—the proceeding subsequent is one issue. We want to see that completed. We want to get clarity. Once it is finished and all of the adjacent property owners sign it, the deed can be recorded,” said Scannell.
Scannell said termination of the purchase contract is another matter. He said he isn’t sure if the county will fight termination of the contract. However, he reiterated, “We want to finish what we’ve started with the proceeding subsequent.”
Prom said when ProVal hired an attorney to try to find a way to terminate the contract, the attorney discovered what he believed to be unresolved issues with the sales contract that would not be corrected with the proceedings subsequent. “Our attorney says there are some things on the contract that they can’t clean up. We won’t sign unless they find a way to do so,” said Prom.
He added, “If the county says we’re holding things up, I would ask them what about the first four years? It’s our turn.”
Termination wouldn’t
be simple
Terminating the contract would not be a simple matter. If ProVal was released from the contract and wanted its $70,100 down payment back the money would have to be found somewhere. Powers said the sale was handled in a manner similar to tax forfeited property and that the money “has been distributed—some to unorganized territories, some to the schools, as we always do.”
“It would be a big mess,” he added.
If ProVal were successful in terminating its purchase contract, the county would once again own the land. It would have to decide what to do with it—and it could possibly auction it off again. Asked if ProVal would be allowed to bid on the property again, Scannell replied, “I don’t know if we will ever get there. But obviously we would not want that to happen. There would have to be some kind of stipulation that no one related to ProVal would be allowed to bid on it.”
Further complicating the matter was the 2007 Ham Lake wildfire, which burned a bunkhouse, a bathhouse, and many trees on the property. ProVal had purchased an insurance policy on the land that it did not yet own. The insurance company issued an $80,400 check jointly to ProVal and Cook County in July 2007. Auditor Braidy Powers said the county has been keeping the money in a short-term savings CD, rolling it over each time it comes due. Because of the low rate on short-term CDs, the insurance payment is now worth $83,246.75. “We’ll keep rolling it over until this is settled,” said Powers.
He added, “I never dreamt it would take this long. “
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