June 24, 2013: As White Bear Lake shrinks, property values sink

The plummeting water levels of White Bear Lake have been a slowly unfolding environmental calamity, but for homeowners living along its fast-receding shores it's also proving to be financially ruinous.

At a time when home values are recovering from a deep recession, homeowners along the lake say their property values in what had been a prized location have evaporated by as much as 40 percent in the past three years. And there is no relief in sight.

Len Pratt, a homebuilder for 40 years and a real estate agent for nearly as long, lives on the lake's south shore in Birchwood Village. He was among several of the city's residents last week petitioning the Washington County Board of Appeal & Equalization for reduced property valuations, and thus their property tax bills.

The level of White Bear Lake, one of the largest and deepest in the Twin Cities and a longtime recreational mecca lauded by the likes of Mark Twain and F. Scott Fitzgerald, began falling several years ago, reaching a record low in 2010 of about 6 feet below normal.

"That was a turning point," Pratt said. "That's when it started to affect the marketplace and property values around the lake."

Residents living on the lake — along with those who come to enjoy its fishing, swimming and boating — have watched in alarm as the shore has receded hundreds of yards, leaving docks and boat lifts high and dry. For the fifth consecutive summer, Ramsey Beach is closed because it is now near a dangerous drop-off. Some areas of shore resemble a swamp, and the lake's condition has made it prone to ­noxious plants such as Eurasian milfoil.

"The milfoil has just become a thick carpet," Pratt said. "We're not far from having the lake die."

In making their cases to the board, the petitioners said the assessments aren't keeping pace with the marketplace. Pratt said his home, valued in 2010 at nearly $1.2 million, is more accurately valued now at 33 percent less — $800,000. The county's assessment was at just more than $1 million.

John Burke, who lives near Pratt, was asking for a 35 percent reduction in his valuation to $700,000.

"We who live on the lake know about values going down," Burke told the panel, made up of County Board members. "That's what's happening in the marketplace. I beg you to really take this seriously. … These values are that far down."

Pratt, like others at the hearing, said he is not trying to duck paying his fair share of property taxes. Their requests for value reductions, he said, were based on hard real estate market data. "I'm glad to pay taxes — I know it goes to schools, to the county, to cities," he said. "I'm just trying to get my value to the reality of what it's worth."

Pratt also cautioned that, until a remedy is found to restore the lake, "it's going to continue to have downward pressure on values."

The lake straddles Ramsey and Washington counties. The city of White Bear Lake and White Bear Township surround its western half, while Dellwood, Mahtomedi and Birchwood Village ring the eastern side.

Single-family housing market values in Washington County are trending upward for 2013 after several years of consecutive declines, with a median increase of 4.7 percent, according to county data. Birchwood Village and Mahtomedi saw identical increases of 1.6 percent overall, while Dellwood saw a fourth year in a row of decline, by 3.4 percent.

The board will act this week on the valuation requests. Bruce Munneke, Washington County's assessor, acknowledged "there's no question that property values are falling on White Bear Lake."

His counterpart in Ramsey County, Stephen Baker agreed, but cautioned that it's too soon to tell if the losses can be directly attributed to dropping lake levels because property values across the county — particularly for lakeshore properties — are still down from their peak before the recession. If other values improve, but lag on White Bear Lake, that correlation would become more clear, Baker said.

No residents from White Bear Lake protested their valuations in Ramsey County, he added.

"We have seen more homes for sale on White Bear Lake than in the past, and they have tended to stay on the market longer," Baker said. Because lakeshore property starts out at a higher value, their rapid depreciation can seem proportionally higher and unfair, he added. "And people get emotional about that."

Greg McNeely, chairman of the White Bear Lake Restoration Association, said the recent decline in property values around the lake has been "disastrous," with typical losses of 30 to 40 percent.

"I haven't been able to put my dock in in four years. I usually swam in the lake every night from May to September," he said. Beyond that, "this has really changed the culture of White Bear Lake."

Recreational use of the lake is down 70 percent, he said. Sailing has become treacherous because of the new shallows, even with recent heavy rains that have raised the lake level a mere 7 inches.

The association is suing the Minnesota Department of Natural Resources. While property values are mentioned in the complaint, the suit's focus is on pressing the DNR to take what the group contends is urgently needed action to reduce withdrawals of water from the aquifer that supplies the lake.

The suit does not ask for damages to property owners for their losses. While the loss of the lake and property values has been personally devastating to many, McNeely said the suit is aimed at larger issues.

"It's an environmental lawsuit, it's not about money," he said. "It's about protecting our watershed and preserving a valuable natural resource for all of us — not just the few people who live on the lake."

Jim Anderson • 651-925-5039 Twitter: @StribJAnderson