The just-concluded year will go down as one in which some cracks became visible in the plans of developers to step up the creation of housing stocks in Leelanau County.

The Enterprise annually picks out three trends that became apparent during the past year. The emergence of a year in which developers scrambled to keep their plans alive, or scaled back their expectations, was a logical follow-up to a trend identified in 2006 when the real estate market changed from one controlled by sellers to one benefiting buyers.

Several homes have already been built in The Cottages
at Morgan Farms, which can be accessed from both M-72
and Carter Road.

It's taken a year, but three of the largest developments ever proposed for Leelanau County are taking a more cautious approach, showing signs of financial stress — or both.

The obvious example can be found at the BayView development in the Village of Suttons Bay, which just a couple years ago touted plans to double the size of the village when fully built. But sales of waterfront condominiums never did take off, and stagnated amid a downturned housing industry and publicity of a trail of unpaid construction subcontractors and claims of shoddy workmanship.

The development is fighting nine lawsuits filed in 13th Circuit Court, more suits in 86th District Court, and has filed a lawsuit against the Leelanau Enterprise for its coverage of BayView's problems.
While the largest example — Bay View was designed as huge by Leelanau standards, calling for 529 units when completed — the county is home to many smaller developments with lots that have not been sold or are vacant. Property in the 51-lot Bay Hill development just south of M-204 overlooking Lake Leelanau has been for sale for years, but not one home has been built.

Three of the largest developments ever proposed in Leelanau County have been affected. BayView when and if fully built would be the county's second-largest development, behind the well-established Homestead with 685 units. Some 492 residential units have been approved for Timber Shores in Leelanau Township, with construction due to begin this spring. And Morgan Farms in the City of Traverse City — but in Leelanau County — was originally envisioned to offer 450 units on 132 acres, although only 27 homes have been built.

The managing director of Morgan Farms, Bob Fenton, remains optimistic about the development despite a foreclosure notice run in the Enterprise by Independent Bank (of) West Michigan seeking $4.4 million in a delinquent loan. He said private owners of homes in the development need not worry as investors scramble to line up new financing. The foreclosure notice only affects property still in the hands of Morgan Farms Development, L.L.C., he said.

No homes at Morgan Farms are visible from the main
entrance to the development on M-72 at Bayview.

There is one reason for the slow start at Morgan Farms, Fenton said: a poor housing market.

"At the end of the day … I don't think there is a better parcel in Traverse City in a better location," said Fenton. "Things change. You can plan all you want, but some things are out of your control."

Originally designed in two phases as a mixed-use community with a shopping area, the only homes built so far are in a neighborhood designed to resemble a street of cottages. Presently, some 60 single-family lots are available for sale, as well as 12 lots zoned for multiple-family dwellings.

Fenton said once refinancing, a reorganization of investors —or both — have been achieved, Morgan Farms will progress slowly. He expects poor market conditions to last another 18-30 months, or even longer.

While no representatives of BayView returned emails for this story, Leelanau County professionals who study the real estate market believe it makes sense for developers to move slowly.

One is Chuck Kalchik, who is owner of Northport Properties Limited and a local consultant for the Timber Shores development proposed south of Northport in Leelanau Township. Also in the "mega-development" scale by Leelanau standards with shoreline condos and single family homes approved in September by the Leelanau Township Planning Commission, the plan is for Timber Shores to creep along as the market dictates.

Not sinking valuable capital into condo units before a line-up forms for their purchase will help in two ways: The development itself will not over saturate the market, as some have suggested occurred with BayView, and the delay in sales will allow more baby-boomers to retire and enter the second home market.

Kalchik and Timber Shores primary owner Fred Gordon, a Royal Oak attorney who has created housing developments from California to Florida, are convinced Timber Shores will be embraced by a growing number of new retirees — eventually.

"You've just got to look at it in the long-term. It's a 10-year build-out. We're hitting the baby boomer market, and that is the group that is starting to retire," he said.

Timber Shores will seek to provide housing in a wide range of prices, from $175,000 to over $1 million. Construction should begin in the spring, with some condo units off West Grand Traverse Bay ready by fall.

One of the problems that beset BayView condominium sales may have been their prices, said Shelly Brunette, a real estate agent with Real Estate One in Suttons Bay. She said while the Leelanau housing market has weathered the downturn much better than surrounding counties, there is a two-year supply of units in the $250,000 to $550,000 range. BayView units were selling for just above that mark, in the $700,000 range.

Brunette sold six two-acre lots in the $50,000 range during the past year in The Orchards, a small development on Stony Point.

"To sell six in a year that I would call our "buyers' caution year" has been good," she said.

And she added that developments such as BayView unveiled their plans several years ago — long before the market took a downturn.

"Those developments that are on the bubble didn't start last year — they started years ago before that market went haywire," said Brunette.

County planner Trudy Galla said Leelanau County had plenty of empty lots available long before developers sought permission from local units of government to create large-scale developments. She pointed to a Leelanau County Planning Department study in the 1990s.

"What we found was that every (township) had vacant lots. What we were able to show was there were a lot of vacant lots out there, and so why do we need subdivisions?" she asked.

She suggested that Leelanau's villages and townships demand that developers provide market studies prior to approval showing a demand for the lots they seek to create.

"No one wants to have another development out there sitting vacant," she said. "If the market studies aren't there to support it, why are they proposing 150 to 200 more units?"

The problems created by struggling developments can ripple through a community, as was experienced at BayView where contractors have gone unpaid, property taxes have gone delinquent and estimates of utility usage has fallen woefully short. Sewer fees in Suttons Bay Village were increased in November by about $500 annually for the average user to make up the shortfall.

Officials at BayView development did not respond to requests for comment for this story.