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After sluggish start, Esko Industrial Park growing

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After years of debate and planning, the Thomson Township Board of Supervisors in 2007 took the plunge into commercial real estate development by starting construction of a business and industrial park.

The 60-acre site, about two miles west of Esko between I-35 and Highway 61, opened in 2008 — just in time for what became known as the Great Recession.

“Three or four businesses seemed ready to buy lots,” said township clerk Rhonda Peleski. “But when the recession hit, they all fell by the wayside.”

Within a few years, township supervisors were catching considerable flack.Town Board Chair Terry Hill started wondering if maybe the park was a mistake.

“But then I had a long talk with Marv Bodie,” he said, referring to a former supervisor and current Carlton County commissioner. “Marv said, ‘Look, you haven’t thrown the money away…it’s invested for the long term. It’s good land, the roads and sewers are in place, and you’re all set for the recovery.’

“Marv helped me regain perspective,” said Hill, a township supervisor since 2001 and Cloquet police officer for 24 years before retiring as interim chief in 2014.

The turnaround began in the fall of 2013, and as of today four companies have acquired 17 of the park’s 36 lots, while a fifth — this one of national name recognition — has signed a purchase agreement for four more lots. Meanwhile, several other new commercial developments have materialized in the Esko area.

“There’s a sense of optimism throughout the community,” said Hill.

Hill and Peleski, who joined the township staff in 1993 and became clerk in 1996, give much of the credit to Connie Christenson, Carlton County economic development director.

Christenson serves as de facto developer for Esko, Barnum and Moose Lake and works closely with Cloquet’s economic development agency. Christenson, who commutes daily from her native Virginia, Minn., took the job in 2013 and brought years of experience in state and regional economic development plus a wide network of public and private sector contacts.

“Carlton County’s a fantastic place,” she said. “With a great highway system — I-35 and Highways 61, 33 and 210 — and six railroads, excellent schools and close proximity to the Duluth-Superior port and airport, it’s poised for growth.”

The Esko business park was built via a $1.75 million bond issue ($250,000 of which was used for township sewer improvements), a $200,000 economic development grant from Carlton County (to acquire property adjoining township land) and a $350,000 state bonding appropriation engineered by Rep. Mary Murphy. Christenson is now working on a $385,000 state grant to blacktop the park’s roadways, widen the Highway 61 eastbound turning lane and reinforce the highway median for heavy trucks.

The four companies that have purchased lots are, in chronological order, Superior Fuel Co. (one lot in October 2013 for $25,000), Coates RV (11 lots in September 2014 for $375,000), Lohse Transfer (two lots in June 2015 for $70,000) and Brown-Wilbert (three lots in August 2015 for $130,000).

The next occupant is expected to be Old Dominion Freight Lines, which recently signed a purchase agreement for four lots. Old Dominion, established in 1934 in Thomasville, N.C., operates internationally and has 19,000 employees. A closing date has not been set.

It’s axiomatic in development circles that success breeds success, but no one wants to be first. Once activity begins, however, other companies tend to get interested.

Superior Fuel Co., a Duluth-based fuel oil and propane distributor, led the way as the park’s first occupant. Owner Ryan Gunderson said the company had been leasing property in Carlton, but the business grew and it was time to settle into a long-term Carlton County site.

“When we approached the township, we were handed a huge document with overly restrictive covenants that only a lawyer could love,” Gunderson said, “but the township wanted to work with us and said, ‘Cross out what you don’t like and we’ll go from there.’

“It’s been a great place to be, given our business needs.”

Established by Gunderson in 2006, Superior Fuel owns 13 bulk storage sites and has a market area stretching from the Canadian border to Hinckley and from northwestern Minnesota to Ashland, Wis. The Esko site, near the park entry, holds a 30,000-gallon propane storage tank that’s used to service commercial and retail customers within about a 40-mile radius.

Next came Coates RV, a Hugo, Minn.-based company that sells and services travel trailers, fifth wheels, park models, tent campers and expandable units. It was founded in 1938 and has become one of the nation’s top dealers of Forest River products.

Original plans called for a $6.7 million development — replete with an impressive showroom, service center and office complex facing I-35 — but the project has been hung up for nearly two years pending outcome of a situation involving the Minnesota Department of Transportation (MnDOT).

Co-owner Sarah Coates Lange, a fourth generation member of the founding family, said the site had everything the company desired — especially the freeway exposure, “one of the main reasons we bought the property.”

Separating the site from the freeway, however, is a thin line of tightly-grouped jack pine, red pine, white spruce and aspen trees planted by MnDOT in the 1970s, shortly after I-35 opened. It is inside the freeway fence, and the developers were told it was on park property.

Immediately after taking possession, Coates began removing the trees. But on the second day, MnDOT ordered the work stopped because, representatives said, the trees are not part of the park and were planted as a “living snow fence.”

“We thought at first it was just a bump in the road,” Lange said, “and we didn’t want to make a big deal out of it. We thought it could be resolved fairly quickly.”

But so far, efforts to find a solution have failed. In the meantime, Coates leased and later bought the former Cloquet Motor Sports building in Scanlon.

“It takes some time to grow our business,” Lange said, “so we’re OK with this [the Scanlon property] for now, but we’re still eager to get into the park.”

Duane Hill, MnDOT district engineer since 2012, said his office signed a five-year memorandum of understanding with the township last August that allows some trees to be removed for the erection of billboards, but it would still require snow fences wherever vegetation is removed. He said his office has heard nothing since then.

“We’re open to any reasonable alternative that would keep ground-level snow from blowing across the freeway,” Hill said.

Given the uncertainties of the situation, Lange could not project Coates’ eventual use of the site. For now, it has a half-dozen units positioned on land partially visible from the freeway.

Lohse Transfer opened a 7,200-square foot truck terminal and office in the Esko park this past January — and owner Tim Lohse says “we’re already out of room.” He said he hopes to add on within a year or so.

“I was looking at putting up a new building in the Duluth area when I heard of the development in Esko,” Lohse said. “I liked the area right from the start: perfect location between I-35 and 61, closer to the Twin Cities, closer to the Iron Range.”

Since making the move, the company has increased its on-site staff from 10 to 14 full-time employees. Five trucks make daily runs to the Twin Cities while seven serve Duluth and the Iron Range.

Headquartered in Maple Lake, Lohse Transfer was established in 1939. It operates 42 trucks statewide from terminals in Maple Lake, Minneapolis and Rochester and, now, Esko.

Brown-Wilbert, founded in 1922 in Roseville, Minn., completed a 6,500-square foot distribution center and office area this past March. It deals exclusively with licensed funeral directors and sells products ranging from urns and caskets to burial vaults.

Jack Ascheman, vice president of operations, said the Esko outlet serves customers from International Falls to the Hinckley area and from western St. Louis and Carlton counties to northeastern Wisconsin. Two drivers and two trucks work out of the Esko facility.

Outside of the park, the township’s most intriguing new development is the emergence of new structures on East Highway 61, a mile from Esko’s town center, on property that once housed Central Sales and more recently Gasoline Alley.

Expected to open in October, the site will become the new northern home of Boreal Natives, an offshoot of Princeton, Minn.-based Prairie Restorations, Inc.

Company President Ron Bowen said Boreal Natives, like Prairie Restorations, strives to preserve, restore and enhance native plant communities at sites altered by industry (such as mining operations on the Iron Range) or manufacturing (including various sites in the St. Louis River estuary) or by natural events (think 2012 flood).

Bowen established Prairie Restorations in 1977 and focused on restoring and managing native plant communities in southern and western Minnesota. Besides Princeton, the company now has locations in Scandia, Northfield, Watertown and Moorhead. But when the business expanded into the northeastern part of the state, the localized name was changed to Boreal Natives to more accurately reflect the regional landscape.

The Esko site represents a replacement and expansion of a facility in Munger and will serve northeastern Minnesota, northwestern Wisconsin and the Upper Peninsula of Michigan.

“Our work is analogous to the medical field where doctors evaluate patients and prescribe solutions — we do the same things with prairies, wetlands and woodlands,” Bowen said.

“I think we’re the oldest plant restoration company in North America, if not the world.”

He said the company will employ five or six professionals in the Esko office plus up to 20 seasonal workers. The facility also will have areas for equipment storage and maintenance and for processing seeds not available in the conventional marketplace.

Other recent Esko developments include the following:

Country Tax Service owners Debbie and Dave Gellatly acquired and transformed a former hair salon at the corner of Thomson Road and Highway 61 into a building resembling a country cottage. The new structure is in remarkable contrast to the gas stations and other businesses that have occupied the site.

Edward Jones, the financial services company, opened an office in May in the Eskomo Pizza Pies building. It’s managed by Kari Ferkul. On the other side of the restaurant is a rebuilt office leased by Diane Krych for her Esko Tax Service. (Incidentally, property owner and attorney Pete Radosevich is having the building repainted in Esko blue and gold.)

Hansen’s Welding Service, which specializes in truck and tank repair, added a 56x100-foot building with 26-foot-high sidewalls to its layout near the corner of Church Road and Highway 61. Owner Donn Hansen said the expansion enabled him to close his Hermantown shop and to consolidate his business into one location.

Mini Mos, a daycare center for children from six weeks old to 10 years, opens next month on Beth Ann Drive, just off West Highway 61. Licensed for up to 85 children, the facility replaces Think N’ Play, which closed a year ago. The new owner is Courtney Greiner of Esko.

Finally, also reflective of the slow but steady recovery, the township issued 14 new home construction permits this year through July.

Leah Pykkonen, township deputy clerk, said from 2009 through 2013, the annual average for new permits was just 10 — a major decline from the 2000-2008 average of 37 (including a peak of 53 in 2003). Nineteen permits were issued in each of the past two years, and Pykkonen anticipates the total will hit 20 by the end of this year.

Editor’s note: Look for a story next week on the other existing and prospective business parks in Carlton County and what’s happening there in the Pine Journal.