Lake Erie beachfront land, born out of a bankruptcy, is going fast in North East Township

NORTH EAST — The planned community that is taking shape in North East Township would be notable at most any time.

As many as 20 upscale homes are set to be built on the site, with the total value of the project expected to reach $20 million.

But this planned community is even more notable than most. It is going up on the shores of Lake Erie along a stretch of uninterrupted beach — a rarity for Erie County.

The planned community is called Edgewater Beach. It is north of Route 5, west of Gay Road and east of Twentymile Creek in North East Township, just west of the Pennsylvania-New York line.

Edgewater Beach is the development that grew out of another notable event for North East — the bankruptcy of the Dohler Cottages, a cluster of 20 seasonal rentals that fronted the lakefront for more than 60 years on the 25 acres that now make up Edgewater Beach.

The Chapter 11 bankruptcy estate of Mary Dohler, who did business as Dohler Cottages and Farms, is selling the property to raise money to pay creditors a total of about $2 million, including $1.2 million to the IRS and other taxing authorities.

Dohler filed for Chapter 11 reorganization in 2019 to hold off creditors and retain family ownership of her house and 65.4-acre grape grape farm, which are south of the site of the former Dohler Cottages. Most of the cottages have been removed to make way for Edgewater Beach. More will come down soon.

A judge in U.S. Bankruptcy Court in Erie approved the Chapter 11 plan in 2021. Three years later, 2024 is on its way to being a significant year for the Edgewater Beach project — the sale of the undeveloped lots has started, with more expected to be purchased sooner rather than later.

As of early February, closings had occurred on six of the 20 lots and five more are pending, according to county property records and those involved in the project. The first sale was recorded in mid-December.

Four of the purchased lots make up prime property — they are part of the 10 lots that are on beachfront land. Homes built on them will be set back from the lake.

The other 10 lots, two of which have been sold, are considered "beach view" property. They sit just south of a planned road that divides the beach view lots from the beachfront lots to the north.

Residents of the beach view lots will have access to a private beach to the west of the development, while residents of the beachfront lots will have direct access to Lake Erie.

Edgewater Beach is one of the few places in Erie County that offers continuous beachfront access to Lake Erie. Manchester Beach in Fairview Township is another. In most other places along the lakeshore, the houses sit on bluffs or the beachfront is not long and wide.

"A place where you can walk out and put your foot in the water is really unique," said Erie bankruptcy lawyer Guy Fustine, who is overseeing the sale of the lots as a trustee of the Dohler bankruptcy estate. "Other than Manchester Beach on the west side, I don't know that there is any shoreline in Erie County where you can do that."

Houses with a view of Lake Erie

The beachfront lots are selling for $250,000 each. The beach view lots are selling for $175,000 each. The prices are subject to change, Fustine said.

Interest in the lots has been high, said Erie real estate agent and developer Gregory J. Rubino, who is marketing and selling the lots for the bankruptcy estate's trust, known as a liquidating trust. He put the overall value of the completed project at $20 million.

"We’ve had excellent market acceptance," Rubino said in an email.

He said the rest of the beachfront lots "have been spoken for" with the sales to be final soon. Rubino said he anticipates the other lots to get buyers quickly as well.

"Now that the relocated roadway is being constructed, we expect similar activity on our Beachview Lots, which have exclusive access to a dedicated private beach area," Rubino said.

The homeowner will be responsible for hiring contractors to build the houses — Fustine described them as "four-bedroom cottages" — though the designs must comply with the standards of the homeowner's association for Edgewater Beach, Fustine said. He said a houses must be built within three years after the purchase of a lot.

The beachfront lots are positioned so that their houses will not block the views of the houses on the beach view lots, according to the plans for the development.

A bankruptcy and a plan for development

If all the lots are sold, the revenue should outpace the amount that the Dohler bankruptcy estate owes its creditors. Once the creditors are satisfied, Fustine said, the balance of the revenue will go to Mary Dohler, 71.

Mary Dohler would have been at risk for losing all her property to tax sales, without getting any revenue, had she not filed for bankruptcy protection, Fustine said.

Dohler fell behind on the taxes and experienced other financial problems with Dohler Cottages and Farms following the death of her husband, George Dohler, at age 52 in 2000, according to a disclosure statement filed in the bankruptcy case.

As "a side effect of her grief," according to the statement, "Ms. Dohler did not keep the books and records of the business for many years. As a result, there are large tax liens against Ms. Dohler, as well as unpaid real estate taxes."

As part of the bankruptcy plan, Mary Dohler's bankruptcy estate put the cottages up for sale, and her son, George Dohler Jr., took over operation of the grape farm. He did not file for bankruptcy but cooperated in his mother's Chapter 11 case so it could proceed, according to court records.

The farm and Mary Dohler's house were spared liquidation in bankruptcy because Mary Dohler chose to sell the cottages and use the money to satisfy the liens on the farm and house.

Dohler's bankruptcy pays dividends for steelhead anglers

The bankruptcy estate also raised money to pay creditors by auctioning the cottages and their contents in 2021 — the net proceeds totaled $4,582 — and by selling an easement to sections of Twentymile Creek to the Pennsylvania Fish and Boat Commission for public access for steelhead fishing.

The easement, sold for $200,000 in 2023, covers about 9,000 feet along the stretch of the waterway that flows through Dohler's grape farm, which is south of Route 5; and, to the north of Route 5, the sections of the creek that flow through 3.6 and 2.2 acres that Dohler owns closer to Lake Erie and the mouth of Twentymile Creek.

Mary Dohler is no longer a part of the family business, though grape farm remains in the family. And as result of the sale of the cottages, Dohler is on course to pay all her creditors in full. Such a situation, Fustine said, occurs "very rarely" in Bankruptcy Court, where most creditors are lucky to get paid cents on the dollar for what they are owed.

"The relief afforded by Chapter 11," according to a summary of the bankruptcy plan, "will enable the family farm to continue in operation without the burden of multiple tax liens and will enable the lakefront property to be sold free and clear of liens, at a substantially higher value than currently exists, for the benefit of all Creditors, including but not limited to the taxing authorities."

In addition, Fustine said, the project "will have a very positive impact on the economy of North East."

Extension of sewer line aids in development

Approval and execution of the Chapter 11 bankruptcy plan were just two of steps that had to occur for the Edgewater Beach project to proceed. Other critical step included getting regulatory clearances, including North East Township's approval of a subdivision plan and a plan for sewer service.

Planning for the sewer system also required approval from the Pennsylvania Department of Environmental Protection. Faced with potential problems related to the use of septic tanks so close to Lake Erie, Fustine and others advocated extending township sewer lines to Edgewater Beach.

The township and the DEP signed off on that proposal, which is advancing with the help of a $2.44 million loan from the Pennsylvania Infrastructure Investment Authority to the North East Water and Sewer Authority. The Pennvest loan will fund a 17,000-foot sewer line to serve Edgewater Beach as well as 112 homes and two businesses, according to the office of state Sen. Dan Laughlin, of Millcreek Township, R-49th Dist.

"This project will help to prevent pollutants from finding their way into our local water resources, which not only protects the environment, but also public health," Laughlin said in a statement in January.

The chairman of the North East Township Board of Supervisors, Fritzer Shunk, helped shepherd the approval process for Edgewater Beach. He said the development will strengthen the township's tax base, and he said the sewer line will help protect the environment from what could have been problematic septic tanks near the lake and Twentymile Creek.

"It is all beneficial stuff," Shunk said.

A 'unique' project with many facets in North East

Fustine praised the cooperation that he said has allowed Edgewater Beach to move forward years after the project was conceived in Bankruptcy Court.

"The hope is that with Chapter 11 reorganization you are able to build a better future than what you are facing at the time," Fustine said.

He said the plan has allowed Mary Dohler and her son to keep control of her house and the family farm. At the same time, the plan led to the creation of Edgewater Beach.

"It is very unique," Fustine said.

Contact Ed Palattella at epalattella@timesnews.com. Follow him on X @ETNpalattella.

This article originally appeared on Erie Times-News: Edgewater Beach, rare project on Lake Erie, is advancing in North East