Controversy stemming from a proposed house on Merrillan’s Oakwood Lake has left the future of the village’s dam and scenic waterfall uncertain.

The Merrillan Village Board could make a decision as early as this month on purchasing a piece of property adjacent to the lake where a house was to be built, but — even if approved — the village would still need to fund repairs to a wall on the dam. A Wisconsin Department of Natural Resources order to lower the lake in the spring over concerns of the dam’s structure has left the village’s popular waterfall dried up.

“We realize something needs to be done,” said village President Ray Ransom. “I think the village board, as a whole, thinks something can be worked out.”

The situation over the dam and proposed house has been going on for about a year. A section of property along the dam, owned by Allen and Laura Thompson, contains a 107-year-old mill that has been used as storage since the 1940s. Last fall, the Thompsons’ daughter, Anne Ennesser, proposed constructing a $750,000 environmentally friendly home on the property in place of the mill.

However, Ransom, acting as the village zoning administrator, denied the project based on the structure not meeting codes and setback requirements; there were also questions of zoning. A subsequent board of appeals denied variances.

“That didn’t go so well,” said Ennesser, 37, a 1989 Lincoln High School graduate who works as an engineer in California. “They just voted it down.”

Ennesser and her husband, Joe, continued through legal means of trying to get the project approved, but about last March, a structural wall on the south side of the mill collapsed. According to Mark Stephenson, a watershed management engineer with the DNR, the damage threatened the safety of the dam and a drawdown of Oakwood Lake was ordered.

The lake’s lowering affected the village’s waterfall.

“All we have there now are a lot of weeds,” Ransom said. “People would drive off the interstate to come see this because it was a beautiful sight.”

Although village engineers had determined the wall was part of the mill, the DNR ruled the wall was part of the dam and was the village’s responsibility to fix. Ennesser, though, offered to pay for repairs to the dam’s wall, and, in August, proposed that repairs would be made if the board agreed to consider a structure on the site in the future. The board denied the proposal 6-1.

Ransom was the lone dissenting vote. Despite denying the house based on zoning issues, Ransom supported the project as village president.

“What we had there is a dilapidated building and we still have a dilapidated building falling down,” Ransom said. “We could have gotten rid of it.”

Ennesser said she feels village officials were swayed by the DNR regarding the house project.

“As an engineer, I know this would have worked, but I think the DNR caught wind of it and they pretty much said ‘We don’t like it.’ I think if the DNR was comfortable with it, (the village) would have been for it ... but I think the DNR kind of scared them a little bit.”

Stephenson, though, said there were concerns of safety and relayed those to the village.

“It was a safety concern from the state’s perspective,” Stephenson said. “The state has about 3,700 dams and there are no houses on any of them. It’s just not something you do. Intrinsically putting a house on a dam is an unsafe procedure.”

Since then, Ennesser has abandoned hopes of building on the property, and the Thompsons have offered to sell the land to the village for $42,000, which would help recoup legal costs from their side. Allen said it would also give the village an opportunity to do with the mill and property what it deems best.

“It would have been a tremendous improvement to the village,” he said. “But apparently we can’t proceed, so we’ve decided to try to find the best way out of the situation.”

The village board has since ordered an appraisal of the land. Ransom said the board is expected to meet and discuss the appraisal when it is completed, which could come this month.

Ennesser and the Thompsons estimated the proposed house would have added 5 percent to the village tax base. Plus, a proposed observatory in the “green” residence would have been open to the community and students.

“We figured if we were going to build up there, it would really be a good opportunity for the community and local schools to learn about math and science,” Ennesser said.

Ennesser, who grew up in Merrillan, called the whole situation “disheartening.”

“I was very disheartened to think they didn’t want what I thought would not only be an improvement to their tax base but something important to the community,” she said. “I was really kind of shocked. I thought everyone would be excited — they’d be ‘thank you for returning back to Merrillan’ — and they’d be happy someone would want to invest in their community.

“It’s very disheartening. I thought it was a much more progressive place.”

Another issue that could make the situation more complicated is actual ownership of the mill itself.

In the 1940s, the village sold the mill and it exchanged hands since then, with the Thompsons owning it the last 24 years. However, because the DNR contends the mill is part of the dam, Stephenson said the DNR has questioned the legality of the village’s original sale; Merrillan is considered the owner of the dam, and municipalities are not allowed to sell dams or parts of them.

Regardless, Stephenson said Merrillan’s former waterfall won’t flow until repair plans are made.

“The village of Merrillan likes its pond, and I want to give them their pond back; we just need to get a design back,” Stephenson said.

Other members of the village board were unable to be reached for comment.