County commits loan funding to zip line project in Grand Marais

A new zip line with a big view of Lake Superior looks like a go.  After asking a lot of questions and with the full support of two businessmen on the Cook County Revolving Loan Fund Committee, the county board agreed on June 17, 2012 to write a letter committing $250,000 from the Revolving Loan Fund for Matt Geretschlaeger and his new business, Superior Zip Lines, with a few contingencies.
Geretschlaeger recently purchased 20 acres of land from the City of Grand Marais on the west side of the Gunflint Trail.  It extends about a quarter of a mile up from the city’s water tower.  The business plan calls for two lines, one offering a “high flight” experience and the other designed for children and “the faint of heart.”  The big zip line will be 1,440 feet, descend 20 stories, and involve speeds up to 45 miles per hour.  The smaller line will be 300 feet, descend three stories, and involve speeds up to 20 miles per hour.
“Canopy tours started in Central America as a way for naturalists to traverse the canopy of forests in a way that didn’t disturb the wildlife,” says the business plan.  “Then tourists began to pay to use the naturalists’ lines and courses specifically for tourists were built.  …Canopy tours and zip lines first made their appearance on the continental United States in 2005 and have continued to grow from there. ….”
Geretschlaeger is planning to build a lodge on the property, with a deck overlooking the lake.  Log ceiling beams and siding will be made from wood harvested on the property, although only 5 percent of the 20 acres will be disturbed. “It is in my opinion the most passive development we could put here,” Geretschlaeger told the board.   The lodge will be built with local labor and the “secondary market” will be tapped for furnishing it. 
Geretschlaeger sees potential for numerous activities on the site, including weddings at which he can officiate, since he is also a chaplain.  Other potential amenities at the site include camping, snowboarding, an endurance course, and a restaurant.
Gunflint Lodge much further up the Gunflint Trail recently installed a canopy tour of zip lines, but Geretschlaeger expects the two businesses to complement each other.  The Gunflint Lodge experience involves a series of zip lines that take hours to complete, whereas the Superior Zip Lines experience will take 20 minutes.  Geretschlaeger reports that the cost of zip lining in other places ranges from $29 to $69.  A Superior Zip Lines flight will be $25 initially, and local residents will get a $5 discount.
Zip lining is not regulated by the State of Minnesota, but Geretschlaeger expects it to be regulated soon and is developing the course to exceed anticipated state safety regulations. 

“Superior Zip Lines will create jobs that pay well and reinforce the foundations of our economy,” says the business plan, “…ensuring livable wage employment opportunities to the community.”  Geretschlaeger expects the business to create 20 new jobs, with staff earning $9 -11 per hour and two managers each earning $25,000 a year for six months of work.  He expects to pay $14,000 in property taxes for this parcel that was formerly tax-exempt.

In order to break even, Geretschlaeger said, the business will need to operate at 25 percent capacity and capture 2.5 percent of Cook County’s tourist market, which is was comprised of 1.1 million visitors annually according to a 2006 study by the Cook County Economic Analysis Council sited by Geretschlaeger.  He also expects local residents to enjoy the sport.  

The commissioners spent considerable time debating how much of a risk it would be for the county to loan Geretschlaeger the amount he requested.  Both John Lindell and Hal Greenwood, businessmen on the Revolving Loan Fund Committee, recommended that the county make the loan. 
Commissioner Jim Johnson said his main concern was the impact of storm water runoff.  “On anything that goes on a hillside, there’s always drainage,” he said.  “I’ve seen too many drainage issues in Grand Marais….” Geretschlaeger said that Cook County Assistant Planning & Zoning Administrator Dave Demmer had no concerns when he inspected the property and that he would be inspecting it again.  Geretschlaeger also told the board that a conditional use permit required by the city would address any runoff issues.
Geretschlaeger is seeking three loans for the project, which he expects will cost $929,300:  $250,000 from Cook County, $329,300 from Security State Bank, and $250,000 from the Iron Range Resource and Rehabilitation Board (IRRRB) (with the City of Grand Marais acting as fiscal agent). He will be using $100,000 in personal funds for the project.  He listed five pieces of property he would be using for collateral:  his home, a piece of property with a pole barn on it, a vacant lot, a cabin, and the zip line parcel itself.
Geretschlaeger’s home was one of the properties available to the county as collateral.  “If the zip line fails,” said Commissioner Sue Hakes, “do you have the chutzpah to take Matt’s house?  Could you sleep at night?”  Hal Greenwood said that even if Geretschlaeger went bankrupt, creditors would have the right to the house if a lien had been placed on it.
Greenwood said the committee had spent a lot of time analyzing the numbers.  “Our position is we’re secure,” he said. 
John Lindell said that in the course of loaning about $2 million over the course of time, the Revolving Loan Fund had suffered only two or three losses.  “I’ve chided the committee, ‘We should lose some money once in awhile.  Maybe we’re not taking enough risk,’” he said.  “This loan is showing more collateral, I think, than anything else we’ve had.”
By a split vote, the board approved a motion to write a letter of commitment for the loan, subject to loans also being approved by Security State Bank and the IRRRB and a personal guarantee from Geretschlaeger with the house, the pole barn property, and the vacant lot being used as collateral.  Commissioner Jan Hall was absent, Commissioners Jim Johnson, Bruce Martinson, and Fritz Sobanja voted yes, and Commissioner Sue Hakes voted no.