Ely board approves lakeside resort-style short-term rentals at 1759 N Pioneer Rd

The Ely City Board of Adjustment approved a conditional use permit on Nov. 19 to allow 1759 N Pioneer Rd to operate as a licensed resort with five new short-term rental cottages, bringing the site to six rental units in total.

The motion, made by Board member Anderson and seconded by Palcher, carried on a 4-0-1 roll call vote; Chair Roose abstained. The approval included revocation of a prior conditional use permit issued Sept. 7, 2021 that authorized an RV park on the property.

Planning and Zoning Administrator Kochendorfer told the board the applicant, Patrick Knudson, owner of Rock Country Masonry, proposed building five three-bedroom, one-bath units of approximately 1,095 square feet each over a five- to six-year period and operating the site as a small resort with a commons area and onsite property management. Kochendorfer said the property is in the Shoreland Overlay District for Miners Lake and noted required permits and erosion controls would be obtained.

Applicant Patrick Knudson said the project is intended to preserve the natural landscape while allowing short-term rentals to move the project forward and to create model homes that could lead to affordable housing in the future. "A 'resort' is the label that's being placed on the property, but the intent will be for short-term renting of the units," Knudson said.

During public comment, five residents spoke in favor of the proposal, and the Ely Chamber of Commerce submitted a letter of support; one letter of opposition from Marcia Mahoney was read into the record. Ely Building Official Doug Whitney told the board the city needs both short-term and long-term rentals and workforce housing and clarified regulatory scope for the board: "Resorts don’t fall under the rental limitations so long as they meet the definition of a 'resort.'"

The staff findings listed several regulatory points the board considered: the property totals about 831,996 square feet (about 19.1 acres); proposed and existing building coverage was described in the staff report as 13,492 square feet; the Shoreland Overlay requires at least a 75-foot setback from Miners Lake, and the proposal sets units back at least 100 feet; the Minnesota Environmental Assessment Worksheet (EAW) threshold of 15 units is not met, so an EAW was not required under MN Statute 4410.4300; and utility capacity for water and sewer was reported to fall within local limits.

Staff also recommended revoking the prior CUP on the basis that the RV park had not been operated or developed within the one-year start window specified in that permit; the board included that revocation as a condition of the new approval. A question about a driveway crossing property outside the parcel boundary was noted; Kochendorfer said resolving any access over adjacent land would be the property owner's responsibility and handled through administrative permits if needed.

The board’s approval concludes the hearing process at the Board of Adjustment level; the staff report and conditions identified required permits, erosion control plans, and coordination with applicable agencies where jurisdiction applies. The board adjourned at 6:01 PM.