For a large part of my childhood I lived in a small community outside of Coloma Michigan, which is today called Hagar Shores. We moved to the area right before I started first grade and it was the first real house my parents owned. We lived on a small dead end dirt road, off of another dirt road, with very few neighbors around. The people who lived next door to us were only home in the summer, as well as the people who lived in the house across the street. Most of the homes were older, including ours and we spent many weekends working on projects on the house. My parents paid around $60,000 for the 3 bedroom home in 1992. As a crow flies we were just over a half mile away from Lake Michigan and were only a mile from the nearest public access. As the 1990’s went on my parents careers were doing well and we moved to a much nicer 4 bedroom home in town in 1998. Today I live about 15 miles south of this community.
I frequently research the offerings at the yearly county tax auction sale and it is very typical that 75% of the properties for sale are in Benton Harbor, which for the past 50 years has been an economically struggling city. About 20% of the properties that come up for auction are small vacant lots in the Hagar Shores area and this always struck me as odd. A few years ago I pulled up a plat map of the community and it seemed like much of what was originally planned never happened. The lots were all plotted off, but for much of the area it was all forests, including where the roads were supposed to be. There are some sections of the community where a road will exist for a while, hit a dead end, and then 3 blocks later the same road starts over. All of the lots were of different sizes too, some were really skinny and some took up almost a whole block. I put this in the back of my mind and didn’t pay it much thought until the tax auction list came up this summer.
I found a couple lots that I was interested in, that were located with frontage on a small inland lake that I really wanted to buy. (more on this in an upcoming article). While researching these parcels I dusted off my research hat and once again asked myself why was the community like this?
It All Started With A Newspaper:
In 1922 The Chicago Evening Post ran a promotion that if you signed up for a 6 month subscription they would allow you to purchase a lot near Lake Michigan, with deeded Lake Access for only $54.50. At the time this was the equivalent of about $820.
The newspaper had bought just under a full section of land with a corner on Lake Michigan, covering about 1,750 feet. They took the land, parceled it off and sold the lots as summer retreats for Chicago people. At the time this was a relatively revolutionary idea. The land along the lake was mostly seen as trash land, it was sandy and couldn’t be farmed. It is actually unclear whether the newspaper was the true owner or if they were working as an advertising partner to another developer.
The deal was to put down $8.50 and pay $2.00 per month for 23 months, in addition to subscribing to the Chicago Evening Post for 6 months. In today’s dollars it would be roughly $130 down and $30 a month.
In the fine print it states that each 6 month subscription entitles an individual to buy 1 lot. It also states that they limit you to 5 lots. This sounds like if you wanted 5 lots you would need to order 5 subscriptions in addition to the cost of the lots. They also advise people in the ads to buy multiple lots and to come in with friends and family to buy adjacent lots to each other. Each subscription cost $5.40, or $82 in today’s money.
In the ad they talk about investing $250,000 in the project, adjusted for inflation that would be right around $3.8 million. I also found that they had a total of over 8,000 lots. If each sold for $54.50 that would net $436,000. I’m not sure if the $250,000 includes the initial price of the land, but overall that represents a pretty healthy profit. The ad to the side claims they are offering these lots without profit, which is hard to believe. On the flip side, many people probably never ended their subscriptions and kept paying for the paper AND the Chicago Evening Post could give inflated circulation statistics to advertisers of their paper.
The house I grew up in was on 3/4 of an acre and composed of 3 tax ids, however when reading the property descriptions I found that we had a total of 19 lots. Each original lot that was offered for $54.50 was only 20′ X 100′. Most people after finding this out purchased multiple lots and the individual tax ids became combinations of several lots.
Very little in the way of infrastructure was provided. All the homes built in the area have well and septic systems, the roads are primarily dirt, with a few gravel and a few paved roads sprinkled in. The community grew quickly and in the 2nd year, 1923, over 100 cottages were built.
Slow To Sell?
Through the advertisements for Lake Michigan Beach and the Chicago Evening Post’s subsequent projects it reads like a runaway success with unfettered demand. With each person being limited to purchasing only 5 lots. In 1929 however a Chicago real estate broker named Geo S. Owens sued Hagar Township over over taxation, claiming that he was over taxed by $2,000 on his 1,800 lots. For a single person to own 1,800 lots, almost 25% of the entire development 7 years after launch the situation points to The Chicago Evening Post selling the unsold lots after their initial promotion to a dealer to wash their hands of the project.
Could you even build on a 20′ lot?
Why yes, yes you could, although very few people did. In fact I combed through a parcel map and found only 1 instance where I could find houses that appeared to be built on the original 20′ wide plots. Along M63, which is the main drag through Lake Michigan Beach, there is a seasonal rental setup of 9 units called “The Sandcastles”. 4 of these appear to have been built to fit exactly in the middle of the 20 foot wide plots, but set as far back as possible. I suppose I am using the term house loosely. These cottages are essentially 1 room with a kitchenette, the tiniest bathroom in the world and a front porch. They maybe have 200 square feet total.
I used Google Maps and counted all the houses in the Lake Michigan Beach area and came up with 388 houses total (give or take a few). Out of around 8,000 original lots that’s a fairly low conversion rate, even with the average property owner having 2 to 5 lots. I think a lot of the people who purchased the lots upon learning how difficult it would be to clear the land and build a summer cottage just never did.
Overall, despite many of the lots never being developed, a thriving community developed and to this day, almost 100 years later, the Lake Michigan Beach community is still filled with summer residents from Chicago and a small population of locals. The area is extremely relaxing, the beach is just a hop, skip, and a jump away, and it is nestled in between the St.Joseph/Benton Harbor area to the South and South Haven to the North. The area is also a great location for locals who work at Whirlpool corporation. Their world headquarters is only 6 miles down the road in Benton Harbor (My dad worked there for about 25 years). The property tax rate in Hagar township is among the lowest in Southwest Michigan at 1.16% of fair market value.
Changes To The Community:
In the 1960s I-196 was built right through the middle of this community, in effect isolating the population in two. Hundreds of lots were taken away by the building of the highway, and I’m sure dozens of homes were lost. At the time there were many newspaper articles and letters to the editor about the impending highway and what its exact route would be. The highway dividing the community in two took away from the ease of walking anywhere in the community, especially to the beach. Only 1 bridge crossing over the highway exists in the community, on Central Ave, which is a fair distance from many of the houses. The highway coming in essentially limited the small population on the East side from walking to Lake Michigan and the large population on the West side from walking to the 2 inland lakes. Currently, both public access points to these lakes are overgrown and not labelled, although the parcel maps show them still existing.
Overtime the township adopted standard (overbearing, nonsensical, and arbitrary) ordinances that effectively render thousands of lots unusable. In order to build anything you must have 100 feet of frontage on an existing road and 10,000 total square feet. Since a good chunk of the property in this development never had roads built to it, building a house on those parcels is out of the question. You also need 5 20′ wide lots in order to meet the 100′ requirement and 10,000 square foot requirement. There are hundreds of examples of lots being patchwork owned in 20′, 40′, 60′, and 80′ chunks; no building here either. And lastly, any single story dwelling must be a total of 864 square feet. (1.5 and 2 story buildings have a higher required minimum square footage.) Why 864 square feet? This is actually a pretty large house. I own a 3 bedroom house that has 850 square feet and a 2 bedroom house with around 770 square feet.
These ordinances combined make owning many of these lots of little value and prevent people from building economical summer cottages, which was the whole point of Lake Michigan Beach to begin with. This community would be PERFECT for the tiny house movement if not for these building code regulations. The ordinance claims the 10,000 square foot minimum is to allow room for a well and septic system, however that can typically be installed on much less than 10,000 square feet, especially for a small house.
The Lake Michigan Beach neighborhood was certainly the poor man’s second home location. Paw Paw Lake, about 5 miles inland from Lake Michigan Beach was already a popular Chicago second home destination by the time Lake Michigan Beach was created and over the next several decades exploded in popularity. To this day the average home on Paw Paw Lake is worth over $500,000, with several homes worth over $1 million. Today virtually the entire shoreline of Paw Paw Lake is developed.
In the last decade the Harbor Shores development in Benton Harbor centered around the Jack Nicklaus golf course has become a large draw for Chicago residents, with hundreds of homes priced from the $300,000 range up to over $1 million across several neighborhoods. New homes are still being built and will continue to be built for several years.
The Tax Revenue Of Lake Michigan Beach:
I always imagined that this area had to be a drain on the local government because there are so many roads to maintain serving so few residents. But I never did the math or any real research until now.
All of these vacant lots are only worth as much as someone is willing to pay for them, and the truth is, it’s a bit less than what the original buyers bought them for. Routinely these properties sell at the 2nd tax auction for $50. Occasionally they are listed on the market for a couple grand, but unless someone with a house there wants to expand their yard, it isn’t likely that these listings will find any buyers.
Now lets look at the tax assessments on some of these lots. The average assessment on a 40′ X 100′ lot is $2,200, indicating a market value of $4,400. The vast majority of these lots are still owned by people who live in Chicago, which means they do not receive a primary residence exemption on their property here. A $4,400 lot would pay $87 in taxes so their rate is almost 2% compared to the 1.16% for locals.
To Chicago people who can afford a second home, these property taxes are cheap anyways (taxes in Chicago are high). When we moved out of that home in 2000 our neighbors bought our house with cash for around $50,000. It has literally sat empty and abandoned for the past 20 years. The house is MAYBE worth $15,000 today and that’s if it doesn’t need to be torn down and can possibly be rehabbed. The assessment is at $39,600 suggesting a $79,200 market value. Our ex-neighbors are paying $1,574 in property taxes every year on this house.
Completely ignoring all of the houses, if it was purely vacant land owned by out of state people, 8,000 lots at $1,100 each would result in $352,000 in tax revenue. Most of the roads in the area aren’t plowed in the winter, as there are very few winter residents. I remember the main paved road being plowed but the road we lived on and the road that connected it to the paved road were rarely plowed. I think with these relatively high assessments the township is able to maintain the area, despite how sprawling the community is.
Lake Michigan Beach Property Owners Association:
To be members of the association today you have to own property in the Lake Michigan Beach neighborhood with a house on it and pay a yearly fee, which I’ve heard is the steep price of $500 a year. For this fee you get access to the clubhouse, the park, and the 1,750 feet of private beach. The park is now 32 acres instead of 40 acres, it appears that over time a few parcels were sold off of the original park property.
Other Newspaper Communities:
I originally believed that there was no way this could have been profitable, but apparently it was extremely profitable because the Chicago Evening Post did the same thing 3 more times after Lake Michigan Beach. They built 3 more vacation communities all in Wisconsin and all marketed in the same way; Pell Lake in 1924, Lake Como in 1926, and Interlaken in 1929. For Interlaken they required buyers to purchase at least 2 lots.
I looked up all 3 of these communities and it appears that both Pell Lake and Lake Como were more successful than Lake Michigan Beach. The lots seem to be evenly built with a lot less random woods sprinkled in between houses. The last development, Interlaken appears to be more random than Lake Michigan Beach and has far fewer total houses.
The Mastermind Behind The Newspaper Resorts: Bertram C. Mayo:
The roots of the Lake Michigan Beach community can be found with Bertram C Mayo. This guy understood the most pressing part of business: Repeat. He founded several communities through the same model. Buying large tracts of land, then selling dirt cheap tiny subdivided lots as vacation lots to build cottages on (cottages that I imagine his development company would build, but I couldn’t find any evidence of this). He started out buying land in hopes of striking it rich in oil, but when he didn’t discover oil he came across the idea of selling vacation plots based on the good times he had on the land with his friends. After the first 2 communities that didn’t have lakes, each community he built featured a clubhouse on the lakes that had to be built before the lots were advertised. He also insisted that the land around the lakes would not be developed and would be public use for the whole community. This provided the draw for all the lots as being of equal value, otherwise a handful of lots would have a high value and the rest would be essentially worthless.
While building his career he worked for the San Francisco Enquirer in their circulation department and later worked his way up to General Manager. Mayo was still working for the Enquirer when he went speculating for oil and with his past promotion strategies for increasing circulation he started his first community through selling lots on this property for $5.40 with a subscription to his paper. This first community was called Casadero Woods.
His next project was Beverly Glen in 1909, also in California working in partnership with Sunset Magazine. Beverly as in Beverly Hills. This parcel of land is only 2 miles from Sunset Boulevard. At the time it was cheap land. Beverly Glen had high ambitions. The area was plotted off as if the land were flat, which of course it wasn’t. These lots were priced at $19.60. Most of the lots sold were not even remotely possible to turn into buildable lots. The houses that were built were primarily along the main drag. Here’s a picture of the plot map next to a Google maps image.
In 1912 Mayo started The Lakewood Club located about 5 miles north of Muskegon, MI centered on Fox Lake. He partnered with The Chicago Evening Post for this community which was started a full decade before Lake Michigan Beach. For this development you would receive 2 25′ X 100′ lots for $23.20. There were a mind boggling 43,250 lots in the community. This tells me that if it were proportional to the 590 acre Lake Michigan Beach community with 8,000 lots, then this should have been over 3,200 acres in total. It is apparent that this development, like Lake Michigan Beach, had thousands of lots that were never developed and/or over time have been taken back by nature. There are several full blocks with either no houses or only a couple houses on them. During the Great Depression many of these lot owners had to let the properties go into tax foreclosure. One result from the Great Depression on Lakewood was that a total of 1,600 acres of the planned development ended up being donated to the Chicago Boy Scout Council.
In 1914 Mayo had a new resort community, Beachwood in New Jersey composed of 1,763 acres with 20 X 100 lots selling for $19.60. I found a wealth of information on this development thanks to Erik Weber and the Beachwood Historical Alliance. The original purchase price was $90,000. With lots selling for $19.60 a piece with 18 lots per acre there were a total of roughly 31,000 lots. 31,000 lots X $19.60 = $607,000. The community was advertised through the New York Tribune in the same manner that his other developments were advertised through the Chicago Evening Post. These ads also claimed the newspaper was doing this at no profit, which triggered lawsuits for mail fraud, as it was apparent that they would profit from the partnership. While $20 for a plot of land seems inexpensive, the property was actually priced extremely high. From the ensuing investigation it was reported by Postal Inspector Hugh McQuillan that “We found that practically all the property except within a half mile, at the most, of the beach, was wild scrub-oak land and sand of practically no value at all. The postmaster at Toms River said it was worth about $6 an acre. It was being sold for $19.60 per lot… [or] three hundred some dollars [an acre].”
additionally he wrote “Some of the first subscribers received lots 2 ½ miles away from the water – most of them did… They had, I should say, nine-tenths of the waterfront and several thousand lots in the back… I found that the promoter had done precisely the same thing in another development which he handled for a Chicago paper. At this development he sold some twenty-six or twenty-seven thousand lots.”
The more I read about this guy the more I picture Lyle Lanley from the Simpsons peddling Monorails then skipping town.
In 1916 Mayo’s next community was Brown’s Mills in the Pines, also in New Jersey. This one was promoted through the Philadelphia Press selling lots for $39.20. The advertisements for this resort were much more subdued, possibly as a result from the investigation into Beachwood by the Postal Inspectors.
Resorts 6 – 9?:
Bertram Mayo died in 1920, so although he was not personally involved in the Lake Michigan Beach development or the subsequent Pell Lake, Lake Como, and Interlaken, it is clear that his fingerprints are all over these communities. Perhaps he was involved in the initial scouting of the land and even the early planning stages, but he died 2 years before the Lake Michigan Beach community began being advertised for sale.
I had a lot of fun researching the History of Lake Michigan Beach and I am sure there is still much more to learn. This is certainly a unique community and I was fortunate to have grown up there. I hope that in the future the building codes can be changed to allow the neighborhood to grow as it was originally designed, with affordable small houses on small lots. If we could get the building codes changed I would love to develop tiny houses in this community to sell to our summering Chicago friends.
What do you think of Lake Michigan Beach and the idea of these master designed communities with small lots and cottages?