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STEPHANIE HEMPHILL: Most people who visit the North Shore of Lake Superior drive right through Two Harbors. Highway 61 runs through a strip of restaurants and gas stations on the edge of town. That's all most people ever see of Two Harbors. But six blocks from the highway, the city's old downtown nestles against a natural harbor that's as attractive as any along the shore.

A giant ore dock loads ships with taconite from the mines. A new boat launch is busy all summer. The city hopes to build a marina before too long, and protecting all that activity on the harbor is a narrow point of land that stretches out into Lake Superior. It's called Lighthouse Point. The working lighthouse is also a bed and breakfast.

Three years ago, volunteers built a walking trail that winds through the Cedars, pines, and wildflowers that make their home on the point. Lake Superior is right there at your elbow. John Jacoby says local people have always loved Lighthouse Point, and now tourists are starting to discover it, too.

JOHN JACOBY: People like to walk their dogs. They like to come down here and just get away. We've got trails right out onto the rocks and right to the water. People can fish, cast, right along here.

STEPHANIE HEMPHILL: Jacoby played here as a kid. Now he's on the Two Harbors city council. He and his fellow council members are wrestling with a difficult decision. A developer from Minneapolis wants to build here. He's proposing condominiums and a motel, restaurant, and shops. He wants to put the condos on the high ground in the middle of the woods. John Jacoby says that would ruin the quiet walks people are used to an destroy a haven for deer and migrating birds.

JOHN JACOBY: If you let somebody build here, it's not going to be like this anymore. You can't take it back after.

STEPHANIE HEMPHILL: Things are changing in Two Harbors. For more than 100 years, it's been a railroad town. The DMIR, the Duluth, Missabe and Iron Range runs the taconite trains from the mines to the ore dock. The railroad owned most of the land around the harbor, including Lighthouse Point. But the mines are shipping less ore and the railroad is trying to cut its costs. It decided to sell a lot of its land.

The city wanted to buy the point, to keep it as a park. It negotiated with the railroad for four years. The city finally scraped together the $1.4 million the railroad wanted for the land. But, suddenly, last December, the railroad sold the land to Sam Cave. He's a Minneapolis developer who's recently expanded his operations to the North Shore. He says he was talking with the railroad about two other parcels when they offered him the land next to the harbor.

SAM CAVE: So I went and looked at it, and I was amazed that such a nice piece of property, nice shoreline would be available for sale. And so I said, yes, I'm interested. And we made our offer on all three sites together.

STEPHANIE HEMPHILL: The sudden sale to a private business was a shock to nearly everyone. Mary Rizzotti grew up in Two Harbors and serves on the city council. She says the DMIR was always a good neighbor. In fact, sometimes it was hard to separate the railroad from the town.

MARY RIZZOTTI: Most of us, our parents, worked for the railroad. Many of these old homes have actual railroad ties to hold the houses up. But the railroad is not the old DMIR railroad. It's been sold several times.

STEPHANIE HEMPHILL: The new owner is an investment firm, the Blackstone Group, in New York. Sam Cave says his plan to develop the point would be a good fit for Two Harbors. But he says if the city really wants to keep the land as it is, he's willing to sell it.

He told the city last spring he wanted $1.8 million. That's nearly a half million more than he paid for it. But now the land is being appraised, and Cave says he'll wait and see what an appraiser thinks it's worth.

Mary Rizzotti says she's delighted Cave wants to build in Two Harbors. She says the town needs money. The sewer system is 100 years old and needs rebuilding, and the council is slashing the city budget because of cuts in state aid.

MARY RIZZOTTI: I like Lighthouse Point and I think the lake walk is beautiful, and I've enjoyed it, as have a lot of people. But I'm always concerned about how, when a town needs so many things, you can justify paying $1.8 million for a park.

STEPHANIE HEMPHILL: Rizzotti says Sam Cave's plans would fit well with the existing boat launch and the planned Marina. She says Cave wants to be a good neighbor, and he should be given a chance to contribute to the city's economic health.

The city has raised nearly $1.7 million through grants from the state and federal governments. The nonprofit organization, the Trust for Public Land, helped the city find that money. The Trust for Public Lands Minnesota director is Susan Schmidt. She says the city should go ahead and buy Lighthouse Point.

SUSAN SCHMIDT: You just look at this piece, and it's just such an obvious place for a park, the land that should be protected as development occurs. But again, the city has to figure out what they want, ultimately, what they want this property to be for their community. But this is like, in our minds, a no-brainer. Of course it should be a park.

STEPHANIE HEMPHILL: The city's comprehensive plan defines the land as a park. So before Sam Cave builds anything, he has to get a special permit. He's applied for a permit to build the condos. At the city's request, he's doing a study of possible impacts to the environment. He says that'll take about three months. The city council voted last week to open negotiations with Sam Cave in hopes of buying Lighthouse Point. Stephanie Hemphill, Minnesota Public Radio, Two Harbors.