Legacy of Pine Island biotech park: foreclosures, unpaid taxes and interchange to nowhere

The fast-growing biotech companies and high-paying jobs never materialized near Rochester, leaving a story of what might have been.

September 6, 2015 at 1:03AM
A 2010 sign for Elk Run Biotechnology Center along Hwy. 52 in Pine Island, Minn. A sluggish economy made it tough to recruit businesses.
A 2010 sign for Elk Run Biotechnology Center along Hwy. 52 in Pine Island, Minn. The fast-growing biotech companies and high-paying jobs never materialized on the land formerly devoted to an elk farm. (Star Tribune/The Minnesota Star Tribune)

PINE ISLAND, Minn. – A new elementary school opens here this week, but to reach it the residents of this town 65 miles southeast of the Twin Cities will drive 2 miles into the fields on crushed gravel roads.

That the school ended up so far from Pine Island's main street stands as one of the more curious legacies of Elk Run, a $1 billion biotech business park launched in 2007 that was promoted as a medical technology hub that could become Minnesota's version of Silicon Valley.

The fast-growing biotech companies and high-paying jobs never materialized on the land formerly devoted to an elk farm. The school was left marooned in cornfields, and locals like landowner Elmer Stock were left to tell the story of what could have been.

"The money didn't come," said Stock, who sold some of his farmland in 2006 to Tower Investments, the California development firm pushing Elk Run. "There's been no building, no development, nothing at all," said Stock.

The project has never officially been declared dead, but Stock took back through foreclosure much of the 382.5 acres he'd sold to Tower. A $1 million property tax bill could put much of the rest of Tower's land holdings near Pine Island into a forfeiture sale by next spring, according to an Olmsted County official. And a significant piece of the project's land went on the market this year at a sharp discount from the prices Tower originally paid.

Attempts to reach someone from Tower Investments last week were not successful.

Along with the school, the project left behind a striking interchange off of Hwy. 52 meant to handle bustling traffic flowing in and out of Elk Run.

The state Department of Transportation built the $45 million interchange, but then slapped Pine Island with a $3.65 million penalty when job-creation targets were missed.

The penalty has since been erased.

The interchange just 15 miles north of Rochester looks like a big-city project with roundabouts and ramps, a design meant to keep traffic moving with a minimum of traffic lights.

Some of the new roads attached to the interchange end abruptly in cornfields, however, and instead of bustling traffic, the new bridge over Hwy. 52 was mostly unused on a recent weekday.

Project delays

As recently as 2012, Tower Investment officials said they were close to a deal with a biotech firm that would bring 200 jobs and construction of a 50,000-square-foot building to Elk Run's biotech campus. Tower Investments senior vice president John Pierce told the Star Tribune at the time that he was not promising anything, but that he had a signed letter of intent from the company.

Pierce could not be reached for comment last week. Earlier this summer he told a reporter with Finance & Commerce that the school's opening would spur residential development, and that Elk Run continued to move forward.

The project was riddled with delays since it was first unveiled in 2007. Construction dates were pushed back, deals with prospective tenants fell apart and then taxes went unpaid.

At one time, project planners said they would bring 182 jobs by 2019.

Elk Run was the brainchild of G. Steven Burrill, a venture capitalist and Wisconsin native.

He sketched a vision that would turn a 2,325-acre piece of land into a biotech version of Silicon Valley, a vibrant center for medical device manufacturing and biotech jobs, with homes and retail to match.

The project would sit on the Hwy. 52 corridor between the Twin Cities and Rochester, home of the Mayo Clinic.

Hoping to spur the development along, Pine Island invested at least $200,000 in infrastructure.

The timing of Elk Run couldn't have been worse. It launched in 2006, just before the recession hit. By the time the economy recovered, Rochester officials were unveiling a massive plan to remake downtown Rochester with the very same biotech businesses Elk Run hoped to draw.

The Destination Medical Center vision is backed by $585 million in public financing over 20 years.

The project was further tarnished when Burrill was sued by investors this summer.

The case, filed in Superior Court of California in San Francisco, accuses him of embezzling more than $17 million from one of the funds he ran.

The embezzlement led to $30 million of investment losses, according to the suit.

The investors allege that the embezzlement was already underway when Burrill pledged to raise $1 billion in venture capital for Elk Run in 2009.

Burrill couldn't be reached for comment.

Hope for the future

Most of the parcels that Tower bought will be subject to tax forfeiture next year, said Mark Krupski, head of the Olmsted County property records and licensing department. The sale would most likely take place in May, he said.

A large piece of Elk Run, 1,057 acres, was put on the market this year for $3.95 million, a steep discount from what Tower paid.

A call to the listing agent, Frank Jermusek with Northco Real Estate Services, was not returned.

In hindsight, Krupski said, the vision for Elk Run was flawed.

"I didn't want to be a naysayer, but I was highly skeptical of some of the things that were being shared," said Krupski.

Still, despite the delays, the unpaid taxes and the scandals, Elk Run may still have a future, Krupski and others said.

Paul Wilson, chair of the Olmsted County Board, said he still thinks a biobusiness park could happen in Pine Island.

"Something good will come out of it at some point," Wilson said.

The mayor of Pine Island, Rod Steele, didn't return phone calls last week seeking comment. The Pine Island superintendent of schools was not available for comment.

Even Stock, the landowner whose dealings with Tower Investments led to foreclosure proceedings against them, agrees that something could eventually take root in Pine Island.

But now that the massive 20-year redevelopment plan known as Destination Medical Center is underway just 15 miles to the south in Rochester, Stock thinks it's unlikely anytime soon.

Matt McKinney • 612-673-7329

about the writer

about the writer

Matt McKinney

Reporter

Matt McKinney writes about his hometown of Stillwater and the rest of Washington County for the Star Tribune's suburbs team. 

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