DNR Letterhead

BILL ANALYSIS

BILL NUMBER:	HOUSE BILL 5058 (as passed by the House, June 25, 2009)
TOPIC:	Property Conveyance in Iosco County
SPONSOR:	Representative Joel Sheltrown
CO-SPONSORS:	None
COMMITTEE:	Tourism, Outdoor Recreation, and Natural Resources
Analysis Done:	August 27, 2009

POSITION

The Department of Natural Resources (DNR) opposes this legislation.

PROBLEM/BACKGROUND

Mr. Aldridge (or his representative) has contacted the DNR on several occasions to discuss the potential exchange for, or purchase of, state-owned land in the area of the subject 475-acre property. The most recent request on which formal DNR action was taken was a request to purchase 520 acres in the year 2000.

After full field review, that request was denied by the DNR in February, 2001, because it would result in a loss of land that is currently used for public recreation, wildlife habitat (including species of special concern, such as Secretive Locust), and timber production. The desired parcel is currently part of a contiguous 800-acre block of recreational forestland. Since that time, the applicant has expressed interest in working out an exchange transaction for the subject land, but has not provided the DNR with a specific exchange proposal.

House Bill 6268, introduced in 2008, was almost identical to this bill. The Department also opposed that bill for most of the same reasons stated in this analysis.

DESCRIPTION OF BILL

This legislation requires the DNR to convey 475 acres of state-owned land to Boyd S. and Loretta S. Aldridge as a sale at fair market value, with proceeds to be deposited into the General Fund. No reason for such a conveyance is indicated in the language of the bill. It is anticipated the proposed use of the land is for the expansion of the Aldridge's golf course and resort development.

The proposed legislation also contains a provision in Section 6 that revenue from the sale of the land shall be deposited into the Game and Fish Protection Fund. This is contrary to the standard way such revenues are received into the Land Exchange Facilitation Fund to provide for future land acquistions.

SUMMARY OF ARGUMENTS

Pro

None

Con

The DNR recently completed a four-year review of all lands as part of the Land Consolidation Strategy, and designated the land in this area to be retained as part of the Grayling Management Unit. The DNR is opposed to this legislation because it will result in a loss of land that is currently used for public recreation, wildlife habitat (including species of special concern), and timber production. The desired parcel is currently part of a contiguous 800-acre block of recreational forestland. If conveyed, sold or disposed of, the DNR would lose future timber sale revenues from the desired land. The logging industry will be negatively impacted due to loss of harvestable timberland acreage and jobs associated with forest management operations.

Further, this conveyance will result in a significant diminishment of the value of an adjacent 40-acre parcel of state land that will become landlocked as a result of the conveyance (SW1/4 of SW1/4 of Section 9).

House Bill 5058 stipulates that mineral rights be included in the conveyance, and that one-half of the gross revenue generated by any subsequent mineral development be paid to the state. This is an extroadinarily high burden to place on the mineral estate, in that it is unlikely the minerals would ever be developed, depriving the state of possible mineral revenue. The bill further states that all mineral revenue be deposited into the General Fund, which is contrary to Article IX, Section 35 of the Michigan Constitution.

FISCAL/ECONOMIC IMPACT

Are there revenue or budgetary implications in the Bill to the –

(a) Department

Budgetary:

Loss of future timber sale revenues.

Revenue:

A diversion of proceeds to the General Fund. A loss of future timber sale revenues, and a loss of mineral leasing opportunity.

Comments:

The funding diversion is a significant negative consequence for the DNR, particularly with respect to the Land Consolidation Strategy that has been implemented in recent years.

(b) State

Budgetary:

None

Revenue:

Diversion of mineral revenues from the Michigan Natural Resources Trust Fund to the General Fund is unconstitutional. (See Article IX, Section 35 of the Michigan Constitution.)

Comments:

None

(c) Local Government

Comments:

House Bill 5058 would appear to increase the tax base for local units of government. This bill would increase potential tourist revenue to the local economy, though several parcels in various Lakewood Shores Golf and Country Club subdivisions are presently in tax auctions due to low demand and poor sales. It is uncertain what, if any impact, this conveyance would have on the overall viability of the current development.

OTHER STATE DEPARTMENTS

Department of Environmental Quality permits may be required if golf course or residential development will involve filling or other disturbance of wetland areas.

ANY OTHER PERTINENT INFORMATION

In Lakewood Shores Golf and Country Club subdivisions, there are many current tax foreclosures. This does not seem to indicate a demand for more development lands in the area.

ADMINISTRATIVE RULES IMPACT

Rules can be promulgated to provide for administration of the act.

_______________________________

Rebecca A. Humphries

Director

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Date

FMFM/OLAF