Minnesota’s role in $345,000 Wisconsin land purchase raises eyebrows

HUDSON, Wis. (FOX 9) - Minnesota taxpayers are financing the $345,000 purchase of a small, wooded property in western Wisconsin under a complicated land deal that has alarmed neighbors.

The purchase, which is the final piece of a multi-million dollar mitigation agreement between the Minnesota Department of Transportation and St. Croix County, has taken longer than expected to finish. Despite concerns about its cost and impact to nearby property owners, government officials in both states stand by the deal.

 St. Croix County never did an appraisal on the two-acre property, and the purchase price is far higher than the county’s own assessment. The St. Croix County Board of Supervisors’ negotiation over the deal raised concerns among elected officials about money laundering, and neighbors fear the county is trying to encroach on private property.
 
“I think they (Minnesota taxpayers) should scratch their heads and wonder if their taxpayer dollars are better spent over in Minnesota, instead of purchasing a small parcel of land here in Wisconsin,” said Karrie Weaver, one of the neighbors.
 
The mitigation agreement was meant to preserve bluffs and green space on the Wisconsin side of the St. Croix River after the St. Croix Crossing between Oak Park Heights, Minnesota and St. Joseph, Wisconsin took out part of the Wisconsin bluff line. 
 
St. Croix County got $2.4 million from the 2012 agreement, and county officials have since bought up several large parcels for parks. That includes 170 acres near the St. Croix River purchased from two families for a new park, to be called Eckert Blufflands.
 
The agreement with MnDOT was scheduled to end May 31, and St. Croix County had $345,000 left to spend. With the clock running out, officials turned their attention to a small, two-acre parcel immediately south to the 170 acres they’d already purchased.

The deal: buy the two-acre property from local developer Gary Zappa, who owns eight acres adjacent to the St. Croix River but has been unable to build a house because he’s never convinced neighbors to let him build a driveway and lay utilities across their property.
 
Zappa signed over the property and agreed to limit construction on his remaining eight acres. In exchange, the county agreed to pay him the $345,000 and give him the right to that driveway. And, in a separate move, Zappa signed a promise to donate “approximately $340,000” back to the Eckert Blufflands project if he ever got his house.
 
The St. Croix County Board of Supervisors approved the deal, 11-1, on June 4. But the questions had only begun.

No appraisal
 
The county’s most recent assessment of Zappa’s entire 8.3-acre property was $70,200, county records reviewed by FOX 9 indicate. That means the county is paying nearly five times as much for one-fourth of the land.

Ellen Denzer, the county’s director of community development, said county officials “didn’t think it was necessary” to get an appraisal on the Zappa property.
 
The deal was about more than the land, Denzer said. Even more valuable was the guarantee that no one would ever build condos or multiple houses nearby, because of the deed restriction Zappa agreed to.
 
And, Denzer argued, land near the St. Croix River routinely sells for far above assessed value.
 
“I don’t think that applies. I think what applies is what we want to do and what the goals are, which is preservation,” Denzer said in an interview. Asked whether Minnesota taxpayers should feel comfortable with the purchase, she said, “I think they should feel very comfortable.”
 
Despite the time crunch – which required a short extension into June – the sale has not closed. Denzer blamed a combination of county staff turnover, a significant year of local development, and a paperwork delay in the Town of Hudson.
 
Denzer said she expected the deal to close in November.
 
MnDOT officials declined an interview for this story. But they have repeatedly stood by St. Croix County’s handling of the Zappa purchase.
 
“The acquisition of this property is an eligible use of the mitigation funds per the agreement,” said Jake Loesch, a MnDOT spokesman. “MnDOT believes that St. Croix County has always followed the terms of the agreement.”

 Neighbors’ fears

Neighbors in the high-end Starr Wood community just south of Eckert Blufflands have a different view of why the county valued Zappa’s land so highly.
 
The two-acre parcel is adjacent to a 28-acre, privately-owned conservancy park with heavy woods, a walking trail and a 700-foot sandy beach on the St. Croix River.
 
Neighbors point to a comment made by Denzer at the June 4 county board meeting that suggested county officials were interested in utilizing the conservancy park.
 
“Do we have access to the river at all?” county supervisor Roy Sjoberg asked Denzer at the meeting.
 
“I would suggest that yes, we would,” she responded. “We’ve looked at it.”
 
Neighbors said they were stunned to hear that officials were talking about their conservancy park, which was set aside as private land when their 25-lot neighborhood was developed in 2000.
 
“It’s very violating,” said Julie Harper-Wylie, one of the neighbors. “One feels like they have opened your front door.”
 
But Denzer said she had simply misunderstood Sjoberg’s question. No one ever considered allowing the public to use the neighbors’ conservancy park, she said.
 
“From the very beginning, we knew that would never be open to the public,” Denzer said. She pointed to a map of Eckert Blufflands, which will have access to the river in two other locations north of the conservancy.
 
Denzer said she wished she had gotten more involved with the Starr Wood neighbors sooner. She said she had deferred to Zappa, who developed the Starr Wood community and remains a member of the homeowners association.

 Money laundering?

Zappa’s promise to donate money back to the county’s Eckert Blufflands if he gets approvals for his house has also raised questions.
 
Before approving the land deal June 4, county supervisors said they wanted to force Zappa to return most of the purchase price. But the county’s lawyer, Scott Cox, said a contract would be an “inappropriate use” of MnDOT’s mitigation funding.
 
Two county supervisors are heard at the meeting calling characterizing the issues raised by Cox as “money laundering.” In the end, the board decided to accept Zappa’s promise instead of reworking it into a guarantee.
 
In an interview, Zappa said he remains committed to his promised donation, despite the local controversy that has swirled around the land deal.
 
“That’s a very good question,” he said. “It’s still at this point worth it, but it’s getting to that point soon.”
 
The final donation amount depends on closing costs, but will likely be within 5 percent of the original $340,000 promise, he said.
 
Two county supervisors who raised concerns about the land deal in June went in opposite directions when contacted for this story.
 
Tom Coulter, who represents the district that includes Starr Wood, said he regrets his “yes” vote on the deal.
 
“Absolutely misled,” Coulter said, when asked how county officials had explained the deal to him. “I think the whole board was.”
 
But Sjoberg, who had raised concerns about the donation promise, said he had since been won over.
 
“I think this ends up being a good deal,” Sjoberg said in a telephone interview. “It’s kind of like there’s no ‘there’ there in the end.”
 
Zappa said he remains confident in the deal he’s made.
 
“I think that maybe (the critics) overreacted to some of Ellen Denzer’s comments,” Zappa said. “I had hoped that everyone would get along with it, and I hope they will. And I’m very confident that the county will not offend the homeowners association and the property.”