Business & Economy

Along the North Shore, sleepy Silver Bay embraces development to put itself 'on the map'

A bird's eye view of a residential neighborhood.
A series of developments in Silver Bay along the waterfront and in the heart of the city has the potential to transform the North Shore community.
Derek Montgomery for MPR News

Even by North Shore standards, the stretch of undeveloped land along Lake Superior across the highway from the small city of Silver Bay is spectacular. Some 50 miles out of Duluth, waves crash against jagged rock outcroppings. Pine and birch trees dot the shoreline.

This is the spot where Silver Bay plans to jumpstart a new future, one that embraces newcomers and tourists to supplement an economy based on the giant taconite processing plant that straddles the highway on the way into town.

Earlier this month the city of nearly 1,900 gave final approval to a plan for about 50 new housing units. It’s a mixture of townhomes, vacation rentals, and seven residential lots, along with an event center. Altogether it will cost nearly $25 million.

a map of lake superior north shore
A concept proposal for how Silver Bay on the Lake Superior North Shore will transform itself from an industrial company town to a community attractive to tourists and new residents.
Courtesy City of Silver Bay

“This is the second largest investment in a project in the history of Silver Bay, after the mine,” said Nelson French, chair of the city’s economic development authority.

And it’s just the beginning. $4.6 million in state funding has been secured for a multimodal trail center, and plans are in the works for a new cluster of stores and restaurants along the highway, badly needed housing projects, and even a new downtown city park and amphitheater.

A bird's eye view of a residential neighborhood.
Residential neighborhoods and Silver Bay’s biggest apartment are seen from a bird's eye view on Dec. 8.
Derek Montgomery for MPR News

“I think this is a way for us to kind of put ourselves on the map,” said retired banker Beth Smuk, who was raised in Silver Bay and serves on its economic development authority.

While some people in town are resistant to change — what Smuk attributes to a long-held assumption that Northshore Mining, the town’s largest employer, will take care of everyone— she said most are embracing it.

“We need to do more. And we need to allow projects like this to make us a destination, not just a sign on Highway 61.”

Boathouse Bay

In 2006, Twin Cities developer John Anderson bought a 2.2 acre parcel of land along the shore of Lake Superior across the highway from Silver Bay, at the site of an old gun club.

Development plans accelerated in the past three years, after the pandemic sent hordes of people flocking to the North Shore, including Silver Bay’s newly established Black Beach Park and city campground.

“If you drive through Silver Bay on a Saturday or Sunday, I mean, there’s cars parked up and down the street,” Anderson said. “It's crazy. And the people that come down to Black Beach, you can't believe the traffic we get down there.”

That opened people’s eyes to the city’s untapped potential as a potential destination, for tourists and new residents alike.

"I think their recognition was, maybe the time is right for this area to shift from an industrial focus to more of a service focus for visitors,” said Silver Bay economic development director David Drown. He moved to Silver Bay from the Twin Cities early in the pandemic and now works essentially pro bono for the city.

Anderson plans to break ground in the next few weeks on the first of 24 planned, 1,600 square foot townhomes on the lake. He plans to sell the first six for roughly $630,000 each and hopes to finish them by next September.

A view of the cliff shores along Lake Superior.
A development called Boathouse Bay is planned for a portion of vacant land along the shore of Silver Bay on Dec. 8.
Derek Montgomery for MPR News

He also plans to build 18 rental cabins, sell seven residential lots, rent more than 100 storage units and build an event center, pickleball courts and a chipping and putting green.

“We’ve invested a lot of time to make it right,” Anderson said, adding he’s received interest from people in the Twin Cities and Duluth. “People are excited about it.”

To accommodate the plan, Silver Bay sold Anderson 23 acres of adjacent city-owned property for $1, provided he complete the development in five years.

The city also has agreed to extend sewer and water infrastructure to the site using tax increment financing, where property taxes from the development will be used to pay for the infrastructure. Drown estimates the subsidy will last for eight years.

The city was willing to do that “because the developer is willing to invest a million dollars per acre in development,” said Drown, who estimates that the city’s share of property tax revenue from the development, after the TIF expires, will be in the range of $300,000 per year. That’s about 20 percent of the city’s total budget.

Two men stand along a rocky shore of Lake Superior.
David Drown (left) and Nelson T. French (right) stand along shoreline on Dec. 8 that is near a potential development called Boathouse Bay.
Derek Montgomery for MPR News

“So that’s a big, big help. We live in a community that had all of its infrastructure built all at once 70 years ago, and it’s all wearing out at the same time,” Drown said.

Just off the highway, the city is also crafting plans for a cluster of retail shops and restaurants it’s dubbed the Fishing Village, inspired by the colorful campus of the North House Folk School in Grand Marais.

City officials also support the possible future development of a resort on private land adjacent to the site. They say increasing the property tax base is imperative to help maintain an aging community.

“In order to help keep our taxes reasonable, you got one or two things to do, you can either cut services or increase tax base,” said Silver Bay Mayor Wade LeBlanc.

“This is one way we can increase our tax base and hopefully maintain the service level that people are accustomed to. It’s an exciting project.”

Company town

Silver Bay is a company town, built by Reserve Mining from the ground up in the early 1950s to house the workers for its brand new taconite plant (now Northshore Mining, owned by Cleveland Cliffs).

Unlike other towns on the North Shore built right along Highway 61, Silver Bay is set back from the highway and the lake, tucked in a valley about a mile inland.

“Reserve Mining took care of everything,” recalls Beth Smuk, who grew up in Silver Bay. “We had want for nothing. Basically, we were our own little community, and we did not need anybody else.”

But times have changed, Smuk said. “We need to start looking at things differently.”

A view of a mining facility.
Northshore Mining in Silver Bay.
Derek Montgomery for MPR News

That includes welcoming new residents, and tourists alike, Smuk said — to entice people to turn off the highway and drive up into Silver Bay.

“I know that probably scares some people to hear me say that because they probably imagine this invasion coming in. I think it’s going to be a good thing.”

A goal of bringing in visitors is controversial, acknowledged Drown, both in Silver Bay and in other communities along the North Shore. Earlier this year nearby Two Harbors nixed a proposed townhome development near its iconic lighthouse.

There’s a sense of parochialism in small towns like Silver Bay, said Morris Manning, a retiree who’s been involved in work to develop a comprehensive plan for the town. He said there is a resistance among some residents to change.

“And it has to do with [a sense that] things are going to change, you’re going to bring in all these outsiders. They’re not going to look like me. They’re not going to think like me. They feel like what they know and are comfortable with is being changed, and they don’t like that.”

Drown believes Silver Bay, in part because the downtown is separated from the planned development along the lakeshore, has an opportunity to balance more tourism while preserving its small town feel.

Lifetime resident Katelyn Goutermont agrees. Just over a year ago, the 32-year-old opened Timber Coffee Company, Silver Bay’s first coffee shop.

A woman holds a drink in a white mug.
Katelyn Goutermont stands for a portrait Friday at her business, Timber Coffee Company, in Silver Bay. Businesses like Goutermont’s stand to benefit from a series of developments in Silver Bay along the waterfront.
Derek Montgomery for MPR News

“I think it is exciting. I think that we need more infrastructure in Silver Bay,” Goutermont said. “We can’t just survive on locals alone.”

But increased tourism is a double-edged sword for long-time residents.

“I remember Black Beach, for example. I could take my kids down there, And we’d be the only ones down there. And now you go down there and it’s packed,” Goutermont said.

Housing needs

When Silver Bay was built 70 years ago, most homes were pre-manufactured modular units, shipped to town on trucks and bolted together on slabs. They’re 1950s-style ranches, with two or three bedrooms, and modestly sized around 1,000 square feet.

“We have three or four housing styles across the community, and they’re all the same, and they’re wearing out at the same time,” Drown explained.

Now Drown is exploring creating a partnership with an energy efficiency nonprofit to purchase homes, renovate them, and put them back on the market at an affordable price.

At the same time, the city is exploring several options to add to the housing stock.

“I’ve yet to run into an employer that doesn’t say affordable housing for my employees is not close to my number one problem,” Drown said.

In partnership with Lake County, the city is working to build a number of fourplexes to provide workforce housing, as well as a second apartment building.

A few miles outside town, next to its golf course, the city plans to create a 40-lot subdivision among stands of white pine and cedar trees, near a protected trout stream. Lots are expected to range up to $150,000. Drown hopes to see construction begin next year.

That would create revenue for the city from lot sales and future property tax payments. Officials also believe current residents will buy a number of the lots, freeing up existing homes.

“So this is part of a strategy to at least indirectly develop our workforce housing for the community,” said Drown.

Re-envisioning downtown

Earlier this summer, on a Friday evening in July, more than a thousand people gathered in an open grassy field in the center of downtown Silver Bay, for a concert by well-known Duluth-based musician Charlie Parr.

“We were shocked, quite frankly, at the turnout,” said French, who also runs a nonprofit music promotion company that has brought a series of summer concerts to Silver Bay the past three years.

The success of the concerts has reignited an idea bandied about Silver Bay for years: the creation of a city park and outdoor amphitheater in the center of town, next to City Hall, with a commanding view looking down the valley to Lake Superior. French said work has begun on the design of a possible facility.

“And that will come back to a community discussion and a city council discussion in the future. So there is general interest in the vibrancy that those programs are bringing to town and having something more permanent there,” he said.

Two men talk.
Nelson T. French (left) and David Drown talk about a series of proposed developments while standing outside the city hall in Silver Bay.
Derek Montgomery for MPR News

In addition, a team of volunteer design and planning professionals came to Silver Bay over the summer to help develop concepts and solicit community feedback to help form a vision for a more vibrant downtown, with a wider diversity of retail and service offerings.

But progress comes slowly, Drown cautions. He expects it will take a decade or more for various ideas to come to fruition. Tax revenues generated by the Boathouse Bay development will help fund subsequent projects.

“Growing a community is like growing a small business,” he said. “If you get too impatient, and you try to go too fast, things fall apart.”