I think we’re taking a little bit of a risk together on that. The builders who build in this market, who build $700,000 and $800,000 homes, are pretty confident. So that’s made me confident.”

Development Director Paul Robinson

A special meeting was held on Wednesday, Sept. 6 with St. Michael-based real estate firm Rachel Development and Cottage Grove city staff to discuss a new plan for developing the land of the former Mississippi Dunes golf course. Development Director Paul Robinson represented Rachel Development at the meeting, laying out their new plan for new residential properties on 123.7 of the 200.5 acres of land on the site. 

The newly proposed residential development, located south of 103rd Street South and west of Hadley Avenue South along the Mississippi River, currently includes 182 planned lots, split into properties ranging in width from 40 feet to 65 feet at an average size of 1/4 acre each. The project denotes three distinct neighborhoods, currently ranging in price from an estimate of $400,000-$700,000, separated by ponds, storm water drainage, and landscaping. The residential area will reside just north of the planned riverside Mississippi Dunes Park being developed by Cottage Grove Parks & Recreation. 

The history of the emerging development has hit multiple hurdles and some public pushback over the last several years, beginning with the 200.5-acre property’s foreclosure and the closing of the Mississippi Dunes Golf Course in 2017. The owner, David Gustafson, was accused of employee harassment at that time. The property was subsequently transferred to a holding company, Dunes LLC. 

In the spring of 2021, the Friends of the Mississippi River (FMR) organization spoke to the City Council on behalf of residents, hoping to preserve the former riverside golf course land as wild space for the recreation of residents. 

In the early morning of Aug. 5, 2021, the former clubhouse building of the golf course was reported to be ablaze, called in by local residents who noticed the smoke from the site. Arson was suspected, though it has never been proven. 

At the time, Cottage Grove Public Safety Director Pete Koerner commented, “They did a good job. The building is a total loss.”  

In August 2022, CGPD Sgt. Michael McCormick said, “The case is still open. It’s not been resolved.  We’re still working with the State Fire Marshal. It’s still open and considered an active investigation.” Since then, the Minnesota State Fire Marshal has turned the case back over to the Cottage Grove Police Department, and it remains unsolved. 

Other concerns have been raised about the land regarding potential PFAS groundwater contamination from prior 3M activity over the last few decades, as is the case with many properties along the Mississippi River in the region. An Environmental Assessment Worksheet was completed in the fall of 2021, and City Attorney Kori Land advised the city council to take care and follow the rules, suggesting the delicacy of the situation and potential legal issues in the future if environmental concerns were not dealt with properly. 

In January 2022, a further Environmental Impact Statement was deemed unnecessary by the city, vocal objection from FMR and some residents notwithstanding. Pulte Homes pulled out of their plans to be lead developer of the site in the summer of 2022. 

Despite the history of the property, re-zoning for new residential housing has been approved by the city and development is again on the table between the holding company that owns the land, the new developer, and Cottage Grove. Parks & Recreation is working to create a nearly 20-acre park along the riverfront with approximately $17 million allocated, complimenting a previously established 12-acre Minnesota Scientific & Natural Area reserve to the east. 

Bedrock removal and care of wetlands, drainage, and buffers present a significant challenge to the developer, but Robinson assured city staff that plans are in place to handle them as needed. 

After hearing Rachel Development’s proposal at the meeting, Councilmember Steve Dennis said, “I like the changes to this plan versus the previous. The larger homes toward the riverfront and putting the pond in the back to create a separation is an important benefit.”  

He also noted that he feels good about the city’s positive working relationship with Rachel Development based on the result of a previous project completed by the developer in the city. 

Mayor Myron Bailey noted that the previous Rachel Development project paid off well for both the city and the developer. 

Councilmember Tony Khambata suggested the importance of focusing more on medium-density housing for entry-level buyers in the development plan. He also asked Robinson about the reality of the larger 65-foot lots for the proposed high-market value, considering they will be near the railroad, needs for erosion control, storm water retention, and noting that the groundwater levels next to the river can bring up potential concerns. Robinson replied that drainage concerns were being addressed, saying that there are certain areas in which they will “have to be very careful.” 

Khambata also questioned the viability of the price point for the larger lots, asking whether they will sell. 

“I think we’re taking a little bit of a risk together on that,” Robinson said. “The builders who build in this market, who build $700,000 and $800,000 homes, are pretty confident. So that’s made me confident.” Khambata replied that he’s concerned the project might not work without the high-market homes selling, so he wanted to make sure there was some contingency being included by the developer. Robinson then suggested that turning some of the currently planned larger lots into 40-foot lots could be a possible backup plan in that event. 

After discussion with the City Council, Parks & Recreation, and city administrative staff, the plan was approved. A motion to approve was made by Councilmember Justin Olsen and seconded by Councilmember Steve Dennis before a unanimous vote.