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t

I

7 8 -1 0 ,091
NANAXAKKARA, U p a li, 1 9 3 1 THE ECCNCMICS OF COUNTY FAIRGROUND
USE AND THE POTENTIALS FOR PROFITABLE
FUTURE OPERATIONS THROUGH USE EXPANSION —
A CASE STUDY OF THE FAIRGROUNDS PROJECT
IN BMET COUNTY, MICHIGAN.
M ich igan S t a t e U n iv e r s it y , P h . D . , 1977
M ark etin g

University Microfilms International ,

Ann Arbor, Michigan 48106

THE ECONOMICS OF COUNTY FAIRGROUND USE AND THE POTENTIALS FOR
PROFITABLE FUTURE OPERATIONS THROUGH USE EXPANSION — A CASE
STUDY OF THE FAIRGROUNDS PROJECT IN EMMET COUNTY, MICHIGAN
By
Upali Nanayakkara

A DISSERTATION
Submitted to
Michigan S ta te U n iv e rsity
In p a r t i a l f u l f i l l m e n t o f th e requirements
f o r th e degree o f
DOCTOR OF PHILOSOPHY
Department o f A g ric u ltu ra l Economics
1977

ABSTRACT
THE ECONOMICS OF COUNTY FAIRGROUND USE AND THE POTENTIALS FOR
PROFITABLE FUTURE OPERATIONS THROUGH USE EXPANSION — A CASE
STUDY OF THE FAIRGROUNDS PROJECT IN EMMET COUNTY, MICHIGAN
By
Upali Nanayakkara

Fairgrounds p r o j e c t s in Michigan have undergone changes over
tim e in both form and f u n c tio n .

The r e c r e a t i o n a l / e n t e r t a i n m e n t n a tu re

o f f a irg ro u n d s p r o je c ts have gained emphasis over th e agro-economic
o b je c ti v e s they were o r i g i n a l l y designed to a c h ie v e .

In Region 10 in

th e n o rth w est o f lower p e n in su la Michigan, th e s e changes have been more
fundamental on account o f s i g n i f i c a n t a l t e r a t i o n s in th e economic
environm ent surro un ding such community p r o j e c t s .
The fa irg ro u n d s p r o j e c t in Emmet County which l i e s w ith in
Region 10, was used as a ca se stu d y on account o f th e urgency o f t h i s
community's need t o e f f e c t changes in th e fu n c tio n s and f a c i l i t i e s
a v a ila b le a t t h i s community p r o j e c t .

This r e s e a r c h e f f o r t was d i r e c t e d

towards i d e n tif y in g th e o p p o rtu n ity c o s ts to th e community o f c o n tin u in g
with th e p r o j e c t a t i t s p r e s e n t lo c a tio n and in th e p r e s e n t form o f
o p e r a t io n , to a s c e r t a i n th e a t t i t u d e s o f th e people o f th e community
towards th e p r o j e c t , and to e x p lo re th e p o s s i b i l i t i e s f o r an expanded
and p r o f i t a b l e program o f a c tio n .
A b e n e f i t - c o s t approach was used to q u a n tif y th e p o t e n t i a l
o p p o rtu n ity c o s ts o f th e e x i s t i n g p r o j e c t .

The f in a n c ia l acco un ts on

th e p r o j e c t were analyzed to i d e n t i f y th e o p e r a tin g lo s s e s in c u rre d

Upali Nanayakkara
over a period o f years.

The a ttitu d e s o f the community people towards

th is p ro je c t and proposed changes were ascertained through a mail
sample survey.

To explore the scope fo r p ro fita b le reorganization and

use expansion, the unexploited economic o pportunities afforded by
changing trends in the comparative advantage of the area to export a
variety of natural resource based recreatio nal a c t i v i t i e s were id e n ti­
fied from several stu d ies and other published data.

The basic

concept of a fairgrounds p ro je c t was not s a c rific e d in considering
a reorganized community program.

Given the e x istin g in s titu tio n a l

arrangements i t is ra tio n a l fo r Emmet County to e x p lo it the fairgrounds
subsidy scheme of the Michigan Department o f Agriculture to defray
f i f t y percent o f i t s ca p ita l expenditures.

The social cost o f th is

subsidy scheme, however, appears to be q u ite high.
The research evidence is th a t continuing the Emmet County f a i r ­
grounds p ro je c t a t the present location and in i t s present form
involves a high cost to the Emmet community.

Yet, the a t titu d e s of

the people appear to be s t i l l in favor o f continuing the p ro je c t as i t
is.

A s ig n ific a n t proportion of the community (in terms of d iffu sion

theory), however, seem responsive to the ideas for changing the lo c a­
tio n , functions, and organization-management forms within an expanded
fairgrounds program.

Therefore, and also in view o f the growing

importance to Emmet County o f tourism, h o s p ita lity se rv ic e s, and the
export o f a whole range o f natural resource based recreation al
a c t i v i t i e s , basic changes in the location and operation of the f a i r ­
grounds p ro jec t seem necessary.

There is scope fo r community leaders

and decision makers to i n i t i a t e communication programs to win the
support o f the community towards reorganization and use expansion so

Upali Nanayakkara
as to serve the needs o f the community b e t t e r and a t a c o s t commen­
su rate with the b e n e fits th a t are lik e ly to be derived therefrom.
The research model t h a t was developed 1n the study o f th is
problem Is lik e ly to be useful in th e ev alu ation o f fairgrounds
p ro jec ts as well as o th e r community programs Involving problems of
public choice.

To Mr. D. W. R. KAHAMITA (former Chairman, River Valleys Development
Board o f Sri LankaJ, a r e l e n t l e s s boss who put "the p ro je c t" and the
achievement o f i t s o b je c tiv e s f i r s t and us and him self l a s t . His
u n se lfish comnitment to development was seldom understood o r appre­
c ia te d in a so c iety s t i l l anchored to a s e t o f "colonial ru le s o f
the game" in p r o je c t o p e ra tio n ,
And to Professor RAINER SCHICKELE my 'g u ru ' who brought devotion,
excitement and passion in to whatever he did.

ii

ACKNOWLEDGMENTS

I thank the members o f my Guidance Committee f o r a s s i s t i n g me in
t h i s research e f f o r t .

Special thanks, o f co u rse, a re due to Dr.

Lawrence W. Libby, my t h e s i s s u p e rv is o r; h is c o n s ta n t encouragement and
a p p re c ia tio n o f my work was the most e f f e c t iv e f a c t o r in inducing me to
complete t h i s rese arch w ith in the s h o r t time t h a t was a v a i l a b l e .

Dr.

L ester V. Manderscheid, my major p ro fe sso r in the Department o f A gri­
c u ltu r a l Economics, was another sh e e t anchor on whom I depended to
q u ite an e x te n t fo r advice and d i r e c t i o n .

I thank him s in c e r e ly .

Dr.

Jack A llen, my major p ro fe sso r on a previous M.B.A. program, had a
g re a t deal o f confidence in my work: I am g r a te fu l to him fo r t h i s as
well as f o r h is c o n s tru c tiv e c r iti c is m s and su pp o rt during th e course
o f my r e se a rc h .
I t is the fin a n c ia l support o f th e A g ric u ltu ra l Development
Council (A.D.C.) t h a t enabled me to s t a r t t h i s program in 1969 as well
as to f i n a l l y complete i t w ith the Ph.D. t h e s is during 1976/77.

This

award i s g r a t e f u l l y acknowledged as i s P ro fessor Rainer S c h ic k e le 's
advice as an A.D.C. a s s o c ia te in 1969 t h a t I do my graduate work a t
M.S.U. and P ro fesso r Arthur Mosher's active support in re v iv in g A.D.C.
support in 1976.
I wish to place on record the genuine i n t e r e s t and con­
s id e r a tio n th a t Max P u tte r s , the Emmet County P lanner, and h is charming
wife Mary affo rd e d me whenever I was up in Petoskey on f i e l d work.
iii

Max's real concern fo r knowledge of the problem and the a lte r n a tiv e s
av a ila b le fo r problem so lu tio n , his a c tiv e support in the organization
and conduct of the f i e l d research, and most of a l l h is kind and con­
s id e ra te n atu re, went a long way in enabling me to complete my f ie ld
work in record time and with good fe e lin g .

All persons in the

county extension o ffic e up there made some co n trib u tio n or other to
th is work, and I am

gratefu l

to them, too.

Last, but myno means l e a s t , my thanks to a r a r e and enlightened
Head o f Department, Mr. Charles Abeysekara, D irector-G eneral, National
I n s t i t u t e of Business Management, Ministry o f In d u s trie s , Sri Lanka,
for giving me the leave and the encouragement to complete my Ph.D.
th e s is a t M.S.U. before I returned to my su b stan tiv e d u tie s .
indeed to be lucky to serve a boss such as him.

One has

TABLE OF CONTENTS

LIST OF TABLES..........................................................................................

vii

LIST OF FIGURES..........................................................................................

xi

LIST OF M A P S ..............................................................................................

xi

CHAPTER
I.

II.

III.

IV.

INTRODUCTION ...................................................................................

1

The Problem S e ttin g ..............................................................
The P r o b l e m ...............................................................................
O bjectives of the S t u d y ......................................................
The Methodology o f Approach to Problem Solution . .

1
6
14
17

THE THEORETICAL B A S I S .............................................................

21

Location C r i t e r i a and the Value o f Land .....................
The Notion o f Comparative Advantage .............................
Social Costs and Social Gains ..........................................
The Diffusion o f New Ideas and P r a c t i c e s .....................
S u m m ary .......................................................................................

27
41
45
48
53

ALTERNATIVE MEASURES OF OPPORTUNITY COSTS OF
CURRENT FAIRGROUNDS OPERATIONS ..........................................

55

A Financial Measure ..............................................................
An Economic E v a l u a t i o n ..........................................................
Commercial A c tiv ity as an A lte rn a tiv e Use o f
the Fairground L a n d ......................................................
R etail Sales P o te n tia l fo r a Shopping Center
in P e t o s k e y .......................................................................
Capital Costs
.......................................................... .... .
Operating Costs ...................................................................

68
75
76

ATTITUDES AND PERCEPTIONS OF THE COUNTY FAIRGROUNDS
PROJECT BY MEMBERS OF THE EMMET COUNTY COMMUNITY . .

82

The Annual County F a i r ..........................................................
The Farmers' Markets ..............................................................
4-H A c t i v i t y ...............................................................................
Snowmobile Races ......................................................................
A ttitu d e s Towards Changes in th e Location* Operation
and Management o f the Fairgrounds P ro je ct . . . .
v

55
64
64

86
99
105
112
116

CHAPTER
V.

EMMET COUNTY IN CONTEXT, SUMMARY AND CONCLUSIONS

. . .

A g ric u ltu ra l Trends ...................................................................
The Growing I n t e r e s t 1n Recreation ..................................
Opportunity Costs o f the P ro je c t and th e F i r s t
H y p o t h e s i s ................................................................................
A ttitu d e s o f th e People o f Emmet County and th e
Second Hypothesis ...................................................................
The Need f o r New R ecreational F a c i l i t i e s and the
Third H y p o t h e s i s ...................................................................
A Summary o f th e Findings and Recommendations . . . .
The G e n e r a liz a b ility o f th e Case Study of th e Emmet
County Fairgrounds P ro je c t to Other S im ilar
P ro je c ts in Michigan and Related P ro je c ts
Involving Community F a c i l i t i e s ......................................

141
141
149
163
171
175
178

192

APPENDICES
A.

Correspondence R elatin g to th e V aluation o f th e Emmet
County Fairgrounds Land by Bruce W. Horniman, Real
E sta te A p p ra isa ls, in 1971 f o r the Petoskey Economic
Development Commission ...........................................................

197

B.

Survey Q u e s t i o n n a i r e ....................................................................

199

C.

Chi Square T a b l e ............................................................................

202

D.

O perating Incomes and Sources o f Funds o f th e Emmet
County Fairgrounds P ro je c t ...................................................

203

Net Operating Incomes From Fairgrounds O perations
Worked Out From the Annual Accounts o f th e North­
western Michigan F a ir A sso c iatio n , Grand Traverse
County, For th e Years Ending (1) October 15, 1976
(2) October 15, 1975 and (3) October
1973 ...............

207

S ta te G r a n t s .....................................................................................

210

E.

F.

G. Uses o f and Rental Income From th e 4-H C enter in the
Emmet County Fairground Complex During th e Year
1976

214

BIBLIOGRAPHY .....................................................................................................

215

LIST OF TABLES

TABLE
III-l.

P o te n tia l Returns on the Investment o f a Sum o f
$1,006 Min. a t I n t e r e s t Rates Ranging From 5.0
Precent to 15.0 P e r c e n t .......................................................

58

C apital Market I n t e r e s t Rates fo r the Years 1974,
1975 and 1976 (Averages, p ercen t p er annum) . . . .

59

O pportunity Costs o f th e Resources o f Land and
B uildings & S tru c tu re s Adjusted f o r O perational
Losses on th e F a i r .........................

51

Growth in R e tail Sales in Petoskey and Emmet
County During th e Period 1967 to 1976 ($ Min.) . . .

70

R e tail D o lla r Sales and Gross Leasable Area During
1975 in Midwest Shopping................. Centers .......................

72

I I 1-6. GLA Requirements Assessed on the Basis o f P ro je c te d
Sales f o r P e t o s k e y ....................................................................

74

I I I -7. Operating Costs as a Percentage o f Net Sales f o r
a Firm With an A sset Size Between $2.5 to $10 Min. .

77

111-2.
I I 1-3.

I I 1-4.
III-5 .

111-8a.

Costs and B en efits UnderA lte rn a tiv e I (in m illio n s
o f d o l l a r s ) .................................................................................

79

III-8 b .

Net P re sen t Value a t Various Discount

. . . .

79

III-9 a.

Costs and B en efits Under A lte rn a tiv e II ( in m illio n s
o f d o l l a r s ) ................................................................ ...

80

Net P re se n t Value a t Various Discount

. . . .

80

Costs and B e n e fits Under A lte rn a tiv e I I I (in
m illio n s o f d o lla r s ) ................................................................

81

Net P re se n t Value a t Various Discount

. . . .

81

Importance o f th e Annual F a ir to Members o f th e
Community (C4) by Type o f Household ( C l ) .....................

87

III-9 b .
I II -1 0 a .
III-1 0 b .
IV—1.

vii

Rates

Rates

Rates

TABLE

IV-2.

Attendance a t Each Major Fairgrounds Event During
the Past Twelve Months (Cl6 to Cl9) and Expected
Future Attendance During the Next Twelve Months
(C22 to C 2 5 ) .........................................................................

88

Importance o f the Annual F air and the Farmers'
Markets to Members to the Community (C4 and C5»
r e s p e c t i v e l y ) ..........................................................................

93

IV-4. Importance of the Annual F air and 4-H A c tiv itie s
to Members of the Community (C4 and C6,
r e s p e c t i v e l y ) .........................................................................

94

IV-5. Importance of the Farmers' Markets to Members of
the Community (C5) by Type o f Household (Cl) . . .

101

IV-3.

IV-6.
IV-7.

IV-8.
IV-9.
IV-10.

IV-11.

IV-12.

IV-13.

IV-14.
IV-15.

Importance o f 4-H A c tiv itie s to Members o f the
Community (C6) by Type o f Household ( C l ) .........................

108

Importance of 4-H A c tiv itie s to Members of the
Community (C6) and Their Past and Future Attendance
Therein (Cl8 and C24, r e s p e c t i v e l y ) ................................

109

Snowmobile R eg istratio ns in Michigan and in Emmet
County: 1970 to 1976 .................................................................

113

Importance o f Snowmobile Races to Members o f the
Community (C7) by Type o f Household ( C l ) .................

115

Importance o f the Annual F air to Members of the
Community (C4) and Their Choices o f A lte rn a tiv e
Change Proposals (C28) .....................................................

123

Importance o f the Fanners' Markets to Members of
the Community (C5) and Their Choices o f
A ltern ative Change Proposals (C28) .............................

123

Importance of 4-H A c tiv itie s to Members o f the
Community (C6) and Their Choices o f A lte rn a tiv e
Change Proposals (C28) .....................................................

124

Importance o f Snowmobile Races to Members o f the
Community (C7) and Their Choices o f A lte rn a tiv e
Change Proposals (C28) .....................................................

124

Type of Household (Cl) and Choices of A lte rn a tiv e
Change Proposals (C28) .....................................................

125

A ttitud es Towards the Payment o f User Fees for
Proposed New Recreational A c tiv itie s (C30 to C36).

128

v iii

TABLE

IV—16.

A ttitu d e s Towards th e Payment o f User Fees fo r an
Ice Rink (C31) and Family Income Before Taxes(C40).

129

A ttitu d e s Towards th e Payment o f User Fees fo r a
Swinging Pool (C30) and Family Income Before
Taxes ( C 4 0 ) ...............................................................................

130

IV-18. A ttitu d e s Towards the Payment o f User Fees for
Basketball Courts (C32) and Family Income Before
Taxes ( C 4 0 ) ..............................................................................

131

IV-19. A ttitu d e s Towards the Payment o f User Fees fo r
V olleyball Courts (C33) and Family Income Before
Taxes ( C 4 0 ) ...............................................................................

132

IV-17.

IV-20.

IV-21.

IV-22.

IV-23.

IV-24.

IV-25.

V -l.
V-2.

V-3.

A ttitu d e s Towards th e Payment o f User Fees f o r a
Gymnasium (C35) and Family Income Before Taxes
( C 4 0 ) ...........................................................................................

133

A ttitu d e s Towards the Payment o f User Fees fo r
Tennis Courts (C34) and Family Income Before
Taxes ( C 4 0 ) ...............................................................................

134

A ttitu d e s Towards th e Payment o f User Fees fo r
Snowmobiling (C36) and Family Income Before
Taxes ( C 4 0 ) ...............................................................................

135

Percentage o f People Agreeable to the Payment of
User Fees fo r th e Proposed New Recreational
F a c i l i t i e s ...................................................................................

136

Number and Percentage o f Responses Showing
A g re ea b ility to Pay User Fees fo r the Proposed New
Recreational Events by Income Groups...... .........................

138

Number and Percentage o f Responses Showing a High
Degree o f W illingness to Pay User Fees fo r the
Proposed New Recreational Events by IncomeGroups. .

138

Total Earnings by Major Sources During 1969 fo r
Michigan* Region 10 and Emmet C o u n ty .............................

147

Changes in Numbers Employed in D iffe re n t
Occupational Categories in Emmet County fo r the
Period 1960 to 1970 ..............................................................

148

P ro jected Growth Rates in Recreation Needs in
Michigan from 1972 to 1990 ..................................................

151

1x

TABLE

V-4.

V-5.

V-6.

V-7.

Imports and Exports o f A c tiv ity Days o f Nine
Recreational A c ti v itie s in Lower Peninsula
Michigan ( in , 0 0 0 ) ..................................................................

154

Export/Im port Ratios f o r Nine Outdoor R ecreation
A c ti v itie s f o r M ichigan's Planning and Development
Regions Computed on the Basis o f O rig in -D e stin a tio n
Data f o r th e se A c t i v i t i e s During J u ly and August
1972 .................................................................................................

157

S kier Days, Employment, Income, E t c ., from Skiing
A c t i v i t i e s During 1975 and 1976 in Development
Region 10 o f M i c h i g a n ..........................................................

159

P resen t Value o f O pportunity Costs o f th e Emmet
County Fairgrounds P ro je c t Under th e Three
A lte rn a tiv e s Sizes o f Shopping Center ...........................

169

x

LIST OF FIGURES

FIGURE
1.

Production Location and T ransp ort Costs

..................................

36

1.

S ta te Planning and Development Regions ......................................

7

2.

Lower Peninsula Michigan Showing th e Imaginay Line
Dividing Those Counties With a Comparative Advantage
in Exporting Natural Resource Based R ecreational
A c t i v i t i e s .................................................................................................

155

LIST OF MAPS

MAP

xi

CHAPTER I
INTRODUCTION
The Problem S ettin g
In the p a s t, the county fairground served important economic and
social functions f o r the b a s ic a lly a g ric u ltu ra l communities o f Michigan.
On the economic sid e the fairground was a market place fo r a ll farm
output.

Wholesalers, r e t a i l e r s and fin al consumers met a t t h i s con­

venient ce n tral spot on pre-arranged dates and times to make tr a n s ­
actio ns t h a t would enable them to push farm production in to consump­
tio n .

According to A.C. True, a g r ic u ltu r a l farms, e sp e c ia lly those

where liv e sto c k was so ld , were held in the American colonies following
an English custom
. . . for exposing fo r s a le , horses, c a t t l e and merchandise
. . . .
Horse racing and other competitions and the giving
o f p rizes fo r superior animals were sometimes featu re s of
these f a i r s . 1
I t was also a point a t which the farm input supply function was
f a c i l i t a t e d both in terms of performing the a d v e rtisin g and promotion
a c t i v i t i e s as well as fo r the tra n sa c tio n o f input s a le s .

The adver­

tis in g function was la rg e ly f u l f i l l e d via a community devised i n s t i t u ­
tio n ; the annual f a i r week.

The f a i r week was the culmination point of

the community's e f f o r t s during the preceding a g ric u ltu ra l y e a r.

The

^A.C. True, "A History of A gricultural Education In the U.S.,
1785-1925" (Washington D.C.: U.S. Government P rin tin g O ffice, 1929).
1

exemplary e f f o r t s o f members o f the farming community a t producing th e
b est seed m a te r ia l, the f a t s t e e r , the milk cow, the garden produce,
the novel sewing, k n itt in g , weaving, canning o r o th e r innovations
r e la te d to the ru ra l l i f e o f the community, were a ll d isplay ed,
ev alu ated , adjudged and rewarded a t t h i s occasion.

In th e p ro cess, the

ideal inputs were ad v e rtise d and the new input innovators brought in
co n ta c t with p o te n tia l ad op ters.

Appropriate economic behavior p a tte r n s

r e la te d to innovation and d i l i g e n t e f f o r t were also recognized and r e ­
warded through p r iz e moneys a t t h i s annual f a i r .

T his, in tu r n , pro­

vided in c en tiv es fo r pursuing fu tu re behavior p atte rn s consonant with
r a is in g the p ro d u c tiv ity o f the farm economy.
With in c re asin g s p e c ia liz a tio n of la b o r over tim e, the production
o f c a p ita l goods f o r a g r ic u ltu r e came to be tr a n s f e r r e d to s p e c ia liz e d
firms which operated o u tsid e the farm economy.

This was followed by

inp uts of an interm ed iate nature as w e ll, being produced in the urban
in d u s tr ia l s e c to r .

At t h i s sta g e , t h i s urban area located fairground

became the means o f lin k in g the ru ra l farm production system with the
urban, i n d u s t r i a l , c a p ita l and interm ed iate goods supply system.

This

lin k in g fun ctio n rein fo rc ed the e x is tin g r a tio n a le for continuing the
lo c a tio n o f the fairground w ithin an urban s e t t i n g .
Urban land was s t i l l in r e l a t i v e l y abundant supply; i t s oppor­
tu n it y c o s ts r e l a t i v e to th e so cial value o f th e m u lt ip lic ity o f f a i r ­
ground s e rv ic e s performed were low.

With the sep aratio n o f input

production from th e farm, the urban lo c a tio n became id e a lly s u ite d fo r
d isp lay in g both c a p ita l and interm ediate goods th a t were produced in
the urban In d u s tr ia l s e c to r to la rg e congregations of farmers from th e
h in te rla n d .

The fairground, th e re fo r e , became a t t h i s stag e the

p o in t a t which th e se a g r ic u ltu r a l in p u ts were d isp la y e d , a d v e rtis e d and
a c t i v e l y promoted.
B lis s emphasizes the very e a r l y r e l a t i o n s h i p t h a t developed
between government and a g r i c u l t u r e in th e U.S. follow ing a speech by
P re sid e n t George Washington on the importance o f a g r i c u l t u r e to th e
n a tio n J

The s t a t e and county f a i r s became t h e r e a f t e r th e mechanism

f o r the lin k between th e farm population and th e a g r i c u l t u r a l s c i e n t i s t s .
He a ls o p o in ts out t h a t th e f i r s t area in which fe d e ra l government
a s s is ta n c e was given to a g r ic u ltu r e was in th e f i e l d o f ex ten sio n work
and t h a t a g r i c u l t u r a l f a i r s tended to in c re a se r a p id ly t h e r e a f t e r .

2

Thus, s t a t e and county f a i r s were the f i r s t mechanisms f o r th e
d if f u s io n o f a g r i c u l t u r a l innovations under th e le a d e rs h ip and d ir e c tio n
o f the government’ s a g r i c u l t u r a l extension o rg a n iz a tio n .

The i n i t i a l

a c t i v i t i e s o f th e ex ten sion se rv ic e r e la te d to the o rg a n iz a tio n o f
dem onstrations and the encouragement of e x h i b i t p r e s e n ta tio n s by local
farmers a t th ese f a i r s .

Such a g r ic u ltu r a l f a i r e x h i b its were, holds

B lis s , "means o f developing b e t t e r p r a c tic e s through d em o n stratio n s."
P u b lic ly financed premiums were used as inducements to encourage
farmers to develop such behavior p a tte r n s t h a t would tend to r a i s e
4
th e le v e l o f a g r i c u l t u r a l p r o d u c tiv ity .
^R.K. B l i s s , e d . , The S p i r i t and Philosophy o f Extension Work,
Graduate School, U.S.D.A., Washington D.C., 1952.
2 I b i d . , p. 261.
3 I b i d . , p. 26.
4R. McIntyre, F if t y Years o f Cooperative Extension in Wisconsin:
1912-1962, a p u b lic a tio n Dy the Wisconsin Cooperative Extension S erv ice ,
raw; p .“"14.

4

The annual f a i r u su a lly was conducted in th e month o f August
when farm produce and o th e r e x h ib its were ready f o r d is p la y and the
work load o f th e farmers had f a i r l y slackened.

I t was an opportune

time f o r the government ex ten sio n department as well as p r iv a te inp u t
s u p p lie r s to in flu e n c e th e conduct o f a g r i c u l t u r a l a c t i v i t i e s .

I t was

a ls o an economical means o f g ath e rin g in p u ts , in p u t buyers and s e l l e r s
to g e th e r a t one c e n tr a l sp o t f o r th e exchange o f info rm atio n.

McIntyre

s t a t e s t h a t , "F air-g o e rs looked long and w i s t f u l l y a t fanning m i l l s ,
w indm ills, straw and feed c u t t e r s , c i d e r p r e s s e s , th re sh in g machines,
d r i l l s and r e a p e r s . ’^

By o b v ia tin g th e need f o r d isp la y in g a l l these

in pu ts in d i f f e r e n t farming a re a s tr a n s p o r ta tio n and in p u t promotion
c o s t s , which were then s u b s t a n t i a l l y high because o f poor roads and
communication f a c i l i t i e s , were held down.

This mechanism of th e urban

fairg ro u n d s a ls o enabled the farming community to combine business
with e n te rta in m e n t.

"Folks learn ed from f a i r s by going, m ingling,

dem onstrating and e x h i b itin g —w ith fun thrown in f o r merry measure."
The urban lo c a te d fairg ro u n d s acco rd in g ly helped perform the
in p u t and ou tp u t m arketing fu n c tio n s as well as th e inform ation d i f f u ­
sion fu n c tio n a t a r e l a t i v e l y low c o s t.

And, th e f a i r , e s p e c ia lly th e

annual f a i r week, was a l s o an im portant s o c ia l i n s t i t u t i o n .

The f a i r

day o r th e annual f a i r week were o ccasio ns f o r community r e c r e a tio n
and s o c ia l in te rc o u rs e .

All members o f th e comnunity a r r iv e d a t the

f a i r dressed in t h e i r b e s t to renew old acqu ain tan ces and enjoy a
* Ib id .
^ I b i d . , p. 9.

sense o f to g e th e r n e s s .

A v a r ie ty o f r e c r e a tio n a l a c t i v i t i e s developed

e s p e c i a l l y around th e annual f a i r week to f a c i l i t a t e t h i s sense o f
f e s t i v i t y and s o c ia l g a th e rin g .
Over tim e, th e r e c r e a tio n a l/e n te r ta i n m e n t n a tu re o f th e f a irg ro u n d s
complex seems to have gained emphasis over and above the economic
o b je c tiv e s i t was p r im a r ily designed to a c h ie v e .

Today, th e fairg ro u n d

concept i s mainly a s s o c ia te d w ith r e c r e a tio n a l e v e n ts .

A g reater p art

o f th e e f f o r t s o f th e F a ir Board members and th e t a n g ib le c o s ts o f
running th e fairg ro u n d s appear to be p r im a r ily in c u rre d in connection
w ith th e annual f a i r week.

O utside o f 4-H a c t i v i t i e s , most group

e f f o r t s w ith in th e co n fin e s o f th e fa irg ro u n d s seem to be e i t h e r r e c r e a ­
tio n o r e n te rta in m e n t r e l a t e d .

But, th e s o c ia l fu n c tio n i t performs

today is n o t t h a t o f an e a r l i e r tim e.

I t i s j u s t one p la c e among

se v eral o p tio n s a t which a s p e c i f i c type o f su b sid iz e d e n te r ta in m e n t
o r r e c r e a tio n a l a c t i v i t y may be o b ta in e d .

I t i s more a community

owned s e t o f f a c i l i t i e s f o r th e s a t i s f a c t i o n o f group o r t o t a l
community i n t e r e s t s o f an e n t e r ta in m e n t/ r e c r e a t io n a l n a tu re .
The o r ig in a l e x h i b i t s p r e s e n ta tio n f u n c tio n o f th e farm economy
has become today a m a tte r o f secondary im portance s in c e le a d e r s h ip in
inn ov ation and pro du ctio n o f in p u t s u p p lie s o f both seeds and breeds
as well as c a p ita l goods have tr a n s f e r r e d more o r l e s s e n t i r e l y to
s p e c ia liz e d busin ess e n t e r p r i s e s .

Even th e in n o v a tio n - a d v e r tis in g and

d isse m in a tio n r e s p o n s i b i l i t i e s a r e handled today by s p e c ia liz e d firm s
and channeled through a v a r ie ty o f avenues b esid e s th e county f a i r .
doubt th e e x h ib itio n o f farm and o th e r implements, te c h n ic a l devices
and machines, i s s t i l l c a r r i e d o u t a t th e s e annual f a i r s .

But t h e i r

importance in th e e f f i c i e n t conduct o f a g r i c u l t u r a l a c t i v i t i e s in

No

present times has declined s ig n i f ic a n t ly .

Nor is i t today an I n s t i t u ­

tio n o f any importance f o r marketing the fin a l output o f farm ers.

Even

the tra d itio n a l annual f a i r t h a t is conducted by the Emmet County
Fair Board on the basis of i t s being a "valued" community social
function, financial lo sses appear to be the in v a ria b le r e s u l t .

These

losses are perhaps in d ic a tiv e of the low p r i o r i t y the community places
on such a c t i v i t i e s today.

Only the 4-H a c t i v i t i e s for community youth

th a t are conducted w ithin the fairground premises seems, i f a t a l l , to
be of high p r io r i ty to th e community as evidenced by the statem ents of
public o f f i c i a l s , F air Board members and o th e r members of the county.
But, 4-H a c t i v i t i e s alone would not req uire anything more than a very
small proportion o f the resources t h a t are c u rre n tly d iv e rte d to the
county fairground complex.
The Problem
The economic and social environment within which the Emmet County
fairgrounds functions has a lte r e d s u b s ta n tia lly in recent y e a rs .

The

major production needs and income generating a c t i v i t i e s o f Emmet County
and most other counties within Michigan Planning and Development Region
10^ (h e re a fte r re fe rre d to as Region 10), are not in a g r ic u ltu r e any
more.

Since a g r ic u ltu r a l output is faced with a low income e l a s t i c i t y

of demand, a g ric u ltu re tends to occupy a le s s and le s s important
^Region 10 is the area covered by the Michigan counties o f
Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau,
Manistee, Missaukee and Wexford. While the Department of Natural
Resources designates th i s area as Michigan Planning and Development
Region 10, the Department o f Commerce defines t h i s same region as Crop
Reporting D is tr ic t No. 2 for i t s purposes. The Planning and Develop­
ment Regions are shown in Map 1.

7

©
Emmet

County
Detroit
JackM*
Kilamjioo • 6 «t«* Cnoii
Benton Harbor • St. Joaapn
Flint
ianaing
Saginaw-Bay City
a. Cantral
B. thumb
c. North
Grand flapMi
a. South
b. North
f . Alpena
10. T raw ra* Bay

11. Saull Sto. Man*
10. E*canaba-Marquoila*lron Min
13. Houghton-lronwood

14. MusfcaQOft

Map 1.

S ta te Planning and Development Regions

p o sitio n as growth occurs simply because people increase t h e i r food
consumption a t a lower r a t e than the income in c re a se .

Also, rapid

technological advances in the rec e n t economic h is to r y o f th e United
S tates have s u b s t a n tia lly reduced the amount o f land and labor resources
required to produce a given supply of a g r ic u ltu r a l outpu t.

These

changes in the a g r ic u ltu r a l environment w ithin which a county f a i r ­
grounds i n i t i a l l y operated have brought to the f o re fro n t the questions
o f the r a t i o n a l i t y o f a llo c a tin g scarce urban land in Emmet County on a
fairgrounds p r o je c t and the org an izatio n o f t h i s fairgrounds complex
in the p rese n t form.

Yet, the e x isten c e o f p a r t i c u l a r i n t e r e s t groups

which emphasize the importance o f c e r ta in "conmunity n e e d s,11 a
community d e c isio n making le ad ersh ip by o ld e r c i tiz e n s with strong
personal t i e s to an a g r ic u ltu r a l p a s t, pervasive b e lie f s and values

r e la te d to a g r i c u l t u r e 's Importance, and most o f a l l th e absence o f any
o b je c tiv e s tu d ie s on the c u r r e n t c o s ts and r e tu r n s to such a community
Investm ent, have tended to p e rp e tu a te t h i s t r a d i t i o n a l i n s t i t u t i o n .
Another im portant f a c t o r in d i s t o r t i n g th e economics o f county
fairg rou nd s o p eratio n in general i s th e subsidy p o lic y o f th e Michigan
S ta te Department o f A g ric u ltu re ( h e r e a f t e r r e f e r r e d to a s 't h e
Department1) with regard to th e c o n s tru c tio n and maintenance o f physical
f a c i l i t i e s a t th e se fairg ro u n d s and f o r th e conduct o f c e r t a i n fa irg ro n d s
r e la te d a c t i v i t i e s .

The Department provides "matching fun d s11 up to a

maximum o f $8,000 per annum f o r ex p e n d itu res e s s e n t i a l l y o f a c a p ita l
n ature r e la te d to a county fa irg ro u n d s .

These matching funds may

be used f o r a d d itio n s , improvements, r e p a i r s , and even maintenance
e x p e n d itu re s, on b u ild in g s and s t r u c t u r e s and th e race tr a c k .
may a ls o be used fo r equipment r e n t a l s .
once f o r a l l expenditure on a fairg ro u n d

They

Even 50 p erce n t o f a la rg e
may be recovered by a F a ir

Board over a period o f time using such matching funds.
a ls o su b sid iz e s c e r t a i n expenses o f an o p e ra tin g n a tu re .

The Department
I t reitriburses

75 p ercen t o f purse moneys on harness horse ra c in g and 50 p e rc e n t o f
purse moneys f o r l i g h t horse r a c i n g .

The c o s t o f sp e c ia l purses up to

a maximum o f $20,000 fo r ra c in g standardbred harness horses a t th e
fairg ro u n d s complex and 75 p erce n t o f premiurns paid o u t to winners
o f e x h i b i t p r e s e n ta tio n s a t th e annual f a i r , a r e borne by th e D epart­
ment.

I t a ls o stands ready to b ea r a c o s t o f up to $4,000 per annum

fo r tr a i n i n g and s ta b lin g standardbred and harness horses a t th e
th e fairg ro u n d s complex.

F in a ll y , th e Department meets th e e n t i r e

c o s ts o f judges and p h o to - fin is h equipment a t such horse racin g e v e n ts.

D iscussions w ith s e n io r p u b lic

o f f i c i a l s and w ith community

le a d e rs have revealed t h a t th e se p r a c tic e s a r e considered Im portant
because they encourage th e maintenance o f h orses in Michigan and fo r
“keeping th e lo c a l communities happy," whatever t h i s may mean.

I t is

not too c l e a r as to why th e maintenance and th e racin g o f horses
should be supported by pu blic funds today, nor whether such public
ex pen ditu res make a given community b e t t e r o f f than would o th erw ise
be th e c a s e .

The same q u e stio n s a r i s e w ith regard to th e use o f p u b lic

funds fo r th e conduct o f an annual f a i r and f o r th e year-round main­
tenance o f expensive fairg ro u n d f a c i l i t i e s .

Whether a given community

would be enabled to reach a h ig h er le v el o f s o c ia l w elfare i f such
p u blic funds a r e u t i l i z e d f o r c o n s tru c tin g and m a in ta in in g , say,

a

m u lti-p urp ose f ie ld - h o u s e fo r conducting a v a r ie ty o f r e c r e a tio n a l
events f o r se v eral s p e c ia l i n t e r e s t groups r a t h e r than on ra c e h o rse s,
horse ra c e s o r community f a i r s , or f o r any o th e r a l t e r n a t i v e s e t o f
a c t i v i t i e s fo r t h a t m a tte r , has no t been examined.
The f a c t rem ains, however, t h a t a community has “Hobson's
Choice" about determ ining how th e se p u b lic funds should be channeled
w ith in th e county.

Given th e e x i s t i n g departm ental r u le s i t has only

to d ev ise v ario u s s t r a t e g i e s to maximize th e annual share i t could
p r is e o u t o f t h i s given sto c k o f s t a t e funds with th e Department.

Any­

way, i t i s h ig h ly p o s s ib le t h a t such a subsidy scheme has d e l e te r io u s
e f f e c t s on the r a tio n a l use o f lo c al reso u rce s as w e ll.

The r a tio n a l

s tr a t e g y under such circum stances seems not to be t h a t o f s t a r t i n g by
f i r s t determ ining th e primary go als and o b je c tiv e s o f th e community
and then o f proceeding to achieve such goals and o b je c tiv e s in th e
optimum manner, b u t r a t h e r t o begin by being dazzled by th e a v a i l a b i l i t y

10
o f such funds with the Department and then to devise ways and means
o f u til iz i n g them each year 1n combination with some o f i t s own
resources.

I t seems reasonable to believe th a t these payments o f the

Department encourage investment expenditures by local Fair Boards
which would not be j u s t i f i e d by sound economic and social c r i t e r i a
and th a t they even tend to discourage the rational use o f local
resources as well.

In any event, the hypothesis suggested by the

above discussion for the purpose of the present study is th a t the
diversion o f valuable community resources in Emmet County in the form
of high value urban land and u n d er-u tilized buildings and stru c tu re s
fo r a county fairgrounds complex, and the income earning opportunities
lo s t to the community by committing urban land of high value to such
uses, c o n s titu te s a m isallocation of scarce economic resources o f the
community.

Relative to the b en efits th a t are being derived a t present,

or are lik e ly to be derived in the near future from the county f a i r ­
grounds complex, the d ir e c t and in d ire c t co sts of th is in s t itu ti o n
are lik e ly to be extremely high.
Secondly, changes in the environment are not only lik e ly to have
a lte re d the conditions of optim ality fo r the use of scarce resources
for a community f a c i l i t y such as the county fairgrounds, they are also
lik e ly to have a lte re d the needs o f the community both in terms of
i t s production p r i o r i t i e s and e s p e c ia lly , for purposes of t h i s study,
i t s le is u r e time needs.

A s te a d ily r is in g level of real incomes has

been the case in the U.S. over the past several decades.

This risin g

level of real incomes has had important im plications on the optimum
bundle of goods and services demanded.

One n o ticeab le change following upon t h i s r i s i n g trend o f real
incomes is the growing demand fo r recreatio n al a c t i v i t i e s and f a c i l i ­
tie s.

In terms o f the Maslowlan "hierarchy of needs" co ncept,1 i t could

be argued t h a t a larg e number of members o f American so c iety have
reached a stage where the lower order p hy sio lo g ical, sa fe ty and a f f i l i a ­
tio n needs have been f u l f i l l e d while the higher order needs of ego and
s e lf - a c tu a liz a tio n are yearned fo r and sought more ag gressiv ely .

The

achievement o f an income threshold beyond lower order need fu lfillm e n t
has, i t is believed, tended to change the perceptions and a t t i t u d e s of
communities with regard to t h e i r recrea tio n a l opportunity s e ts .

An

increased i n t e r e s t in recrea tio n a l a c t i v i t y is the product o f the
a v a i l a b i l i t y of increased le is u r e time as w ell, which, in tu rn , was
enabled by the growth in real incomes.
E specially during the p a s t two decades, th is growth in demand
fo r various kinds o f recrea tio n and re c re a tio n a l am enities has been
dramatic; so much so th a t national concern was expressed by the s e ttin g
up o f the "Outdoor Recreation Resources Review Commission" in the ea rly
o
s ix tie s.
This surge in demand fo r recrea tio n following upon a r i s e
in real incomes, the technological developments t h a t have enabled both
summer and w inter sp o rts on a la rg e r s c a le , the r is in g concern for
environmental is s u e s , the rush to escape from the tense atmospheres o f
the c i t i e s , and developments in tra n sp o rta tio n and highways, have a l l
tended to h ig h lig h t the a t tr a c ti o n s of the natural environment In the
H. Maslow, Motivation and P erson ality (New York: Harper and
Row, 1954).
2

, "Outdoor Recreation For America: A Report to the
President and to Congress by the Outdoor Recreation Resources Review
Commission," January, 1962, Washington O.C.

12

north-western region o f the lower peninsula of Michigan.

This combina­

tio n o f events has c a l l e d f o r t h a new focus to the planning and
programming a c t i v i t i e s of Region 10, and has i t i s believed, sharpened
the perceptions and a t t i t u d e s o f the people o f Emmet County towards
the s e rv ic e s and s a t i s f a c t i o n s provided by the county fairgrounds
complex.

In p a r t i c u l a r , i t i s believed t h a t the people o f Emmet

County have become more concerned with t h e i r own standards of l i v i n g
in r e l a t i o n to the use o f l e i s u r e time and o f the opportunities
a v a ila b le f o r widening t h e i r re c r e a tio n a l a c t i v i t i e s .

I t seems u se fu l,

th e r e f o r e , to examine the hypothesis t h a t the community^ local
r e c r e a tio n a l needs and t h e i r perceptions of en terta in m e n t/re c re a tio n
requirements have changed s u b s t a n t i a l l y from those epitomized by the
t r a d i t i o n a l county f a ir g ro u n d s .
A given county within Michigan has l i t t l e choice in how the
moneys t h a t can be obtained from the Department for fairground opera­
t io n will be u t i l i z e d ; these grants a r e s p e c i f i c to the performance
of p a r t i c u l a r a c tio n s and a c t i v i t i e s .

I f the s t a t e grants were block

annual payments per county fairgrounds complex on the condition t h a t
the t r a d i t i o n a l fairgrounds a c t i v i t i e s be perpetuated, and the comnunity
were given the freedom to a l l o c a t e such funds among d i f f e r e n t fairground
uses, i t might be t h a t a higher level of community s a t i s f a c t i o n
could be reached.

This would seem p o ssib le because such a provision

would b e t t e r enable the s a t i s f a c t i o n o f local needs in terms of local
p r i o r i t i e s and enable r e l a t i v e l y quick adjustments as local circum­
stances changed.

This, however, is not the case; departmental subsidies

can only be spent in terms o f p a r t i c u l a r guidelines and are su b je c t to
supervision and c o n t r o l.

I t may be useful for the local communities to

13

seek a r u l e change so t h a t such annual grants can be more f l e x i b l y
used and w ill a lso reduce the supervisory and r e g u la to ry c o s ts o f the
Department.
Be t h a t as 1t may, the e x i s t i n g r u l e s and r e g u la tio n s for the
r e c e i p t o f such subsidies only leaves room f o r a given county Fair
Board to devise ways and means to draw the optimum amount o f d ep a rt­
mental funds each y e a r.

I f our second hypothesis t h a t new rec re a tio n a l

needs have become important to the people of Emmet County today be t r u e ,
and i f the system of e x i s t i n g s t a t e grants is perpetuated, i t would
seem t h a t a logical hypothesis t h a t would need to be examined in r e l a ­
tio n to t h i s issue would be t h a t th e re i s a unique combination o f s i t e
(or l o c a t i o n ) , s iz e and design of physical f a c i l i t i e s f o r m ultiple
e n t e r ta in m e n t/ re c r e a t io n a l a c t i v i t i e s , and a management-operation system
t h a t would generate

an optimum volume o f s t a t e s u b s i d ie s , income

from marketable s e rv ic e s and f a c i l i t i e s within the complex, and a
bundle o f e n t e r ta in m e n t/ re c r e a t io n a l o p p o rtu n itie s for the community.
This hypothesis draws a t t e n t i o n to the need f o r the simultaneous
so lu tio n of a v a r ie ty o f r e l a t e d issues i f a f i n a n c i a l l y viable (in
c o n t r a d i s t i n c t i o n to economic v i a b i l i t y ) community center i s to be
defined u t i l i z i n g the core concept o f a community fairgrounds complex
as the s t a r t i n g point.
is s u e s :

I t c a l l s for the consideration o f several

F i r s t l y , th e re i s the need to consider the question o f the

optimum lo c atio n o f such a multi-purpose community f a c i l i t y in such a
way as to balance the high c o s ts o f ce ntral business d i s t r i c t loc ation
with considerations o f the market draw.

Secondly, th e re are the s t a t e

grants which have to be optimized by continuing some o f the t r a d i t i o n a l
functions necessary to q u a l i f y for such grants t h a t finance p a r t o f the

14

c a p i t a l and op eratin g c o s ts o f such a complex.

T h ir d ly , t h e r e are

c o n s id e r a ti o n s r e l a t e d to marketable s e r v ic e s and f a c i l i t i e s including
questions o f j o i n t - u s e with o t h e r community o rg an iz a tio n s such as
c o l l e g e s , schools, clubs and o t h e r organized bodies.

F ourthly, th e re

a r e the r e l a t e d is s u e s o f optimum physical s i z e and design t h i s
hypothesis draws a t t e n t i o n t o .

F i n a l l y , but most important, i s th e

question o f how th e management and op eratio n o f such a complex i s to be
organized i f i t i s to operate on a t l e a s t a f i n a n c i a l l y v ia b le b a s is in
the f u t u r e .
O bjectives Of The Study
The problem o f

reorg an iz in g th e o p e ra tio n o f the county f a i r ­

grounds complex to b e t t e r meet c u r r e n t community needs has been
approached by c e r t a i n counties in Michigan on an 'ad hoc' b a s i s .

These

individual county attempts a t re o r g a n iz a tio n do not seem to have been
preceded by any d e t a i l e d a n a l y s i s o f the problem.

The p r e s e n t study

attempts to make th e f i r s t ste p in developing a s e t o f c o n t r u c tiv e ideas
and p r i n c i p l e s f o r examining t h i s question of fairgrounds r e o r g a n iz a ­
tio n to b e t t e r meet c u r r e n t community needs through the means o f a case
study of Emmet County's fairgrounds complex.
That t h i s question i s an important one f o r the Emmet County
people has been h ig h lig h te d by developments beginning in the e a r l y
se v e n tie s .

By t h i s time, the land on which th e c u r r e n t fairground

e x i s t s had been zoned f o r l i g h t I n d u s t r i a l use, and a proposal had
been made in 1973 to s e l l o f f a portion o f t h i s fairgrounds s i t e of

15
26.77 a c r e s . 1

The proposed land s a l e was to an i n d u s t r i a l f ir m engaged

in th e stamping and p l a t i n g o f automobile hub-caps.

I m p l i c i t in t h i s

move by c e r t a i n i n t e r e s t s to t r a n s f e r the use o f t h i s land t o i n d u s t r i a l
production was th e b e l i e f t h a t t h i s high value urban land could b e t t e r
se rv e community i n t e r e s t s i f t r a n s f e r r e d to a use involving higher
economic r e t u r n s .

However, th e atte m p t had been thwarted by th e s tr o n g

o b je c ti o n s o f the people who gathered on November 2 9 th , 1973, in
Petoskey on th e occasion o f th e p u b lic "Fairgrounds Hearing" as r e g a r d s
th e proposed s a l e .

The main o b j e c t i o n s expressed a t t h i s meeting

appear to revolve around t h r e e main c o n s i d e r a t i o n s , v i z . ,
(a) The importance o f a clean environment in Petoskey in
view o f th e major r o l e t h a t tourism p la ys in the
Emmet County economy. I n d u s t r i a l a c t i v i t y o f any
kind was, t h e r e f o r e , n o t considered a p p r o p r i a t e a t t h i s
site.
(b) The community needs a c e n t r a l p u b lic f a c i l i t y for
various purposes in c lu d in g educational and r e c r e a ­
t i o n a l needs.
(c) The fa ir g ro u n d s i s more than t h e county f a i r and th e
p o t e n t i a l e x i s t s f o r use expansion.
Thus, we se e h e r e i n th e concerns o f th e community a l r e a d y f o r a c e n t r a l
p u b lic f a c i l i t y w i t h , perhaps, r e c r e a t i o n a l / e n t e r t a i n m e n t / e d u c a t i o n a l
f a c i l i t i e s , a r e c o g n i t i o n o f t h e development p o t e n t i a l o f t h e region
in the a re a o f tourism and th e need f o r an environment f r e e o f atmos­
p h e r ic p o l l u t i o n .
This f i g u r e i s as per legal d e s c r i p t i o n o f the Emmet County F a i r ­
grounds p r o p e r ty r e f e r r e d to in Bruce W. Horniman o f Real E s t a t e
A p p r a i s a l ' s l e t t e r o f Dec. 1 7 th , 1971, t o the Petoskey Economic Develop­
ment Corporation on t h e s u b j e c t o f a " f a i r market value" o f t h e f a i r ­
grounds p r o p e r ty . I t i s commonly b e lie v e d , however, t h a t th e e f f e c t i v e
use a re a o f t h i s s i t e i s only around 17 t o 20 a c r e s . (See Appendix A
f o r th e le g a l d e s c r i p t i o n and r e l a t e d correspondence on t h e s u b j e c t . )

16

The present study will endeavor to provide Errmet County planners,
the Fair Board, and the community, with c e r t a i n guidelines and organized
Information on which to base t h e i r decision making about these concerns.
This information i s l i k e l y to f a c i l i t a t e t h e i r decision making on the
subject and in the processes of making choices in the u t i l i z a t i o n of the
resources ava ila ble to the community.

More s p e c i f i c a l l y , t h i s research

is direc ted, in the f i r s t place, towards id e n tify in g and measuring the
economic costs to the community of continuing the t r a d i t i o n a l fairgrounds
project in the p re se t form and in the present lo c a tio n .

Such data are

li k e l y to enable the community to b e tte r evaluate the t r a d e - o f f between
cu rren t benefits and the economic costs t h a t are being incurred a t
present on operating the e x is tin g system.

They will a lso enable one

to a r r iv e a t b e t t e r decisions on whether some or a l l o f these costs
should be eliminated a f t e r making comparisons between costs and b e n e fi ts .
Secondly, an attempt will be made to a s c e r ta in the perceptions
and a t t i t u d e s o f the Emmet County people with regard to the e x i s tin g
fairgrounds project and to determine which of the following four
a l t e r n a t i v e s would be favored a t t h i s juncture:
1.

abandoning the fairground concept a l t o g e t h e r ,

2.

no change except for renovation of e x i s t i n g buildings
and s t r u c t u r e s ,

3.

marginal changes in design and management including
renovation, and

4.

a radical change involving r e lo c a tio n , the expansion
of the fairground concept to include r e c r e a t i o n a l /
entertainment aspects and changes in management
philosophy.

Finally, an attempt will be made to describe the major implica­
tions o f a l t e r n a t i v e 4 above.

This i s the only a l t e r n a t i v e involving

17

some degree of complexity.

Describing the im plications o f a radical

change from the e x i s tin g concept o f a community f a c i l i t y , which a l t e r n a ­
t i v e 4 s i g n i f i e s , i s l i k e l y to h ig h li g h t a v a r i e t y o f issues and provide
b e t t e r in s i g h ts f o r local decision making.

Not only would such d e s c r i p ­

tion be useful in implementing a l t e r n a t i v e 4 i t s e l f , i f a t a l l , but a ls o
in understanding and evaluating each o f the s u b - p r o j e c t s , or incremental
a dditions to a core fairgrounds cum r e c r e a tio n a l f a c i l i t y t h a t t h i s
a l t e r n a t i v e would e n t a i l .
The Methodology Of Approach To Problem Solution
The research methodology adopted i s e s s e n t i a l l y t h a t o f examining
the th r e e hypotheses a r r iv e d a t from an a n a ly s is of the problem.

The

f i r s t hypothesis will be examined by quantifying the co s ts t h a t are
involved to the Emmet County people both in terms o f the d i r e c t co s ts
o f operating the fairgrounds a f f a i r s each year and the opportunity c o s ts
involved in not t r a n s f e r r i n g the a v a ila b le land resources to what is
generally deemed to be a higher economic use.

This p a r t o f the problem

w ill involve an assessment o f the economic trends within the region
e s p e c i a l l y to i d e n t i f y the economic uses competing for these scarce land
r e so u rc e s.
The second hypothesis will be te s te d in terms of a f i e l d survey
t h a t was organized to as se ss the a t t i t u d e s and perceptions o f Emmet
County r e s i d e n ts with regard to the e x i s t i n g fairgrounds and f a c i l i t i e s
and the additiona l a c t i v i t i e s and services t h a t are now considered
important f o r the community.

A survey schedule was prepared on the

basis of knowledge and understanding of the problem gathered from
d isc ussions with public o f f i c i a l s and Fair Board members.

Subsequently,

18
a week's f i e l d study was conducted with a d r a f t q u e s tio n n a i r e to p r e ­
t e s t th e relevance and form o f the questions posed and to note the
r e a c t i o n s and responses o f the respondents.

The f i n a l q u e s t io n n a i r e

and th e s i z e o f the sample were determined t h e r e a f t e r from th e evidence
obtained during the f i e l d study.
This survey was organized on th e b a s is o f a mail q u e s t i o n n a i r e .
The q u e s tio n n a i r e was explained to the Emnet County F air Board a t a
formal meeting and i t s a c t i v e a s s i s t a n c e was sought in c r e a t i n g an
atmosphere o f acceptance o f the survey by the people.

I t was s p e c i f i c a l ­

ly requested t h a t the covering l e t t e r attached to the q u e s t io n n a i r e be
signed by th e Chairman of the F a ir Board, and t h a t advanced media
p u b l i c i t y be given f o r the survey so t h a t p o t e n tia l respondents be
pre-warned o f the survey and the a r r i v a l o f the q u e s tio n n a i r e in the
m a il.
The F air Board did comply with these r e q u e s t s .

An a r t i c l e was

published in the Petoskey News Review on the s u b je c t explaining why,
how and by whom the study i s being c a r r i e d out.

The covering l e t t e r

was signed by the Chairman o f the F air Board and was a tta c h e d to th e
q u e s tio n n a i r e .
A sample o f 480 households was s e le c te d on a random b a s i s from
th e l i s t o f Emmet County households defined in terms o f th e telephone
r e g i s t e r s a p p l ic a b le to t h i s County.

These r e g i s t e r s were c o r r e c t e d

as f a r as was p o ssib le to e l im in a te households s i t u a t e d in th e Cheboygan
and Charlevoix c o u n t ie s .

This d e t a i l e d c o r r e c t io n o f th e sampling

l i s t , before th e random numbers were drawn, was n e c e s s i t a t e d because the
population defined by th e ( th r e e ) r e l e v a n t telephone d i r e c t o r i e s in
question did not correspond e x a c tl y with th e defined s t a t i s t i c a l

19

universe.

The a b s o lu te s i z e o f t h e sample was a l s o in c re ase d as a

hedge a g a i n s t shortcomings in th e sampling l i s t .
The t h i r d hypothesis i m p l i c i t l y assumes t h a t the f i r s t hypo­
t h e s i s i s t r u e ; v i z . , t h a t the c o s ts o f the p r e s e n t f airgrou nds
venture a r e g r e a t e r than the b e n e f i t s d eriv e d .

I t a l s o assumes f o r

purposes o f a n a ly s is t h a t circumstances have in f a c t changed and t h a t
the people o f Emmet County would p r e f e r a community p r o j e c t which
combines the t r a d i t i o n a l f airgro unds f u n c tio n s with new a c t i v i t i e s and
a d d itio n a l r e c r e a tio n a l f a c i l i t i e s .

I t seems t h a t the only way the

community could afford to o p erate such a p r o j e c t i s to optimize the
use o f s t a t e s u b s i d i e s , i r r e s p e c t i v e o f whether they involve an
economic use o f scarce resources f o r th e t o t a l s o c i e t y or n o t , and
through the marketing of c e r t a i n f a c i l i t i e s and s e rv ic e s in demand
w ithin th e a re a .
This hypothesis involves in the f i r s t p la c e , a c o n s id e r a ti o n o f
the question o f p r o j e c t l o c a t i o n .

For, on a s u p e r f i c i a l assessment o f

the problem, the c u r r e n t s i t e appears to be uneconomical.

Whether t h i s

i s the case w ill be evaluated by studying the opp o rtu n ity c o s t s i n ­
volved in using the c u r r e n t s i t e .

I f i t i s observed t h a t t h e p re se n t

lo c a tio n i s in f a c t uneconomical, some d e s c r i p t i o n of the c r i t e r i a
r e l a t i n g to the choice o f a new l o c a t i o n f o r the p r o j e c t in Emmet
County w ill be made.

That i s , what f a c t o r s would be r e l e v a n t in the

s i t i n g o f a new f a c i l i t y i f i t be accepted f o r adoption?

Secondly,

what are the market segments or th e c a te g o r i e s o f u sers the new p r o j e c t
w ill appeal o r c a t e r to?

T h ir d ly , what a r e th e options f o r th e commu­

n i t y f o r the j o i n t - u s e o f f a c i l i t i e s w ith organized groups and i n s t i t u ­
t i o n s within the community so as to lower u n i t c o s t s o f product?

20

F ourthly, what a r e t h e f a c i l i t i e s , s e r v i c e s and new r e c r e a t i o n a l
a c t i v i t i e s r e l e v a n t f o r th e d i f f e r e n t market segments?

F i n a l l y , how

should the new p r o j e c t be managed i f f i n a n c i a l p r o f i t a b i l i t y i s to be
a c r u c i a l c r i t e r i o n f o r continued o p e r a t i o n ?

These a r e th e q u e s tio n s

t h a t are implied by t h i s h y pothe sis and w ill be explored in varying
degrees o f d e t a i l .

CHAPTER I I
THE THEORETICAL BASIS
In t h i s chapter an attempt will be made to explore some of the
major th e o re tic a l bases on which t h i s study r e l i e s for the examination
o f the hypotheses posed in Chapter I.

The basic approach to the r e s o lu ­

tion of the overall problem i s b u i l t on an important assumption; the
community is assumed to be r a t i o n a l .

R ationa lity implies t h a t the

primary objective of the community 'v i s a v i s 1 the fairgrounds p ro jec t
is to maximize i t s gains by way of increased inflows of net benefits
to the community as a whole.

Increased inflows of net benefits to the

community imply a reduced level o f ta xes, the level of community
s a t i s f a c t i o n remaining the same, or a higher level of community s a t i s ­
faction due to improved community se rv ic e s, the level of taxes r e ­
maining the same.

Or, i t could mean some combination of both a lower

level of taxes as well as a higher level of s a t i s f a c t i o n from improved
community f a c i l i t i e s and se rvic es.
I t i s recognized t h a t the community is comprised of a c o lle c tio n
of d i f f e r e n t groups with varying i n t e r e s t s , preferences and values.
This is li k e l y to complicate the problem of making choices as to how
to organize the management o f fairgrounds f a c i l i t i e s and the produc­
tion o f necessary fairgrounds se rvic es.

Nevertheless, i t i s believed

reasonable to assume t h a t i f the economic costs of t h i s projec t were
I d e n tif ie d by t h i s study, the decision makers for the community will

22

be b e t t e r able to weigh these economic c o s ts a g a i n s t various notions
o f corresponding b e n e fits f o r d i f f e r e n t groups and i n t e r e s t s and to
endeavor to take appro p riate ac tio n so as to r a i s e the level o f commu­
n ity welfare.
Given t h i s o b je c tiv e for the community based on our assumption
of r a t i o n a l i t y , one element o f t h i s study i s an evaluation o f the
costs of fairgrounds o peration.

Two o f th e most c r i t i c a l f a c t o r s of

production of a c a p ita l nature in use on t h i s fairgrounds p r o j e c t are
(a) land, and (b) buildings and s t r u c t u r e s .

These resou rce s, as do a l l

economic resources, involve opportunity c o s t s , i . e . , c o s ts measured in
terms o f a l t e r n a t i v e r e t u r n s foregone as a consequence of t h e i r c u r r e n t
use.

An attempt w ill be made to e v a lu ate these opportunity c o s ts to the

community.
An important a s p ect of t h i s c o s t i s r e l a t e d to the s p a t i a l
loc ation o f the fairgrounds.

Unique supply and demand f a c t o r s are

associated with a given p r o j e c t s i t e .

In the circumstances, lo c atio n

theory will be a major area from which our concepts and to o ls will be
drawn.
I t i s in the use o f these resources t h a t b e n e f i ts are l i k e l y
to be derived.

No attempt will be made, however, to c a l c u l a t e the

be n e fits to the community from p resent fairgrounds a c t i v i t i e s or pur­
s u i t s ; the onus i s on the community and i t s decision makers to assign
values to the b e n e f i ts accruing from c u r r e n t fairgrounds a c t i v i t i e s .
This study will f a c i l i t a t e the process by itemizing the uses p r e s e n tly
involved.

The b e n e f i ts t h a t may be derived from p o te n tia l a l t e r n a t i v e

uses of c u r r e n t fairgrounds resources w i l l , however, be assessed.

Such

data will serve as measures o f opportunity c o s ts which can be compared

23

a g a i n s t th e real c o s t s t h a t a r e p r e s e n t l y being incurred on th e p r o j e c t .
Such a comparison w ill enable e v a lu a te th e im p lic a tio n s o f continuing
the fairgro unds p r o j e c t a t t h e p r e s e n t l o c a t i o n and in i t s p re se n t form.
In the performance o f t h i s e x e r c i s e , use w ill be made o f the
tools o f b e n e fit-c o st an aly sis.

However, a d e t a i l e d examination o f

t h i s area o f economic theory w ill not be attempted herein .
Fairgrounds in Michigan have "public goods" c h a r a c t e r i s t i c s .
They c o n s t i t u t e c e n t e r s f o r the production o f c e r t a i n s e r v i c e s which
have been organized on a community b a s is because th e nature o f the demand
f o r such s e r v i c e s has not been conducive to i t s o rg a n iz a tio n in a f r e e e n t e r p r i s e c o n t e x t.

While t h e community o b j e c t i v e s o f a g r i c u l t u r a l

input and o utput marketing, a g r i c u l t u r a l innovation d i f f u s i o n and
knowledge d iss em in a tio n e t c . , were then considered to y i e l d public
b e n e f i t s g r e a t e r than the corresponding c o s t s , i t had not been p o s s ib le
t o induce consumers to i n d i c a t e t h e i r in d iv id u al demands f o r such
products so as to determine supply c o n d i tio n s and p r i c e s .

In the la r g e

groups case such as what the fairgrounds s i t u a t i o n epitom izes, th e r e
was every in c e n ti v e f o r indiv idual consumers to und er-declare t h e i r
demand before th e esta b lish m e n t of the p r o j e c t with the hope o f f r e e i
r i d e r advantages.
I t i s in such a c o n te x t t h a t Schmid argues t h a t ,
"The market w ill not r e f l e c t everyone's w illi n g n e s s to pay f o r these
goods as people a r e tempted to be f r e e - r i d e r s . "

2

Such a s i t u a t i o n i s

^A. Allan Schmid, "P ro pe rty, Power & Public Choice," Mimeo,
Department o f A g r i c u ltu r a l Economics, Michigan S t a t e U n iv e r s it y , East
Lansing, Michigan, 1976, pp. 333-34.
2 I b id . , p. 333.

24

n o t conducive t o production under t h e p r i v a t e e n t e r p r i s e system o f
economic o r g a n i z a t i o n .
Furthermore, supply c o n d i t i o n s , to o , have n o t been conducive to
p r i v a t e s e c t o r production o f f a ir g r o u n d s s e r v i c e s .

Fairgrounds p r o j e c t s

involve high fix ed c o s t s and s u b s t a n t i a l economies o f s c a l e such t h a t
marginal c o s t s tend to d e c l i n e to a s u b s t a n t i a l e x t e n t .

And,

. . . where marginal c o s t s a r e f a l l i n g , every consumer wants
to be the l a s t man on th e p la n e , o r t h e a t e r , o r h o te l and
to pay only th e marginal c o s t while th e in tr a - m a r g in a l
consumers pay the fix e d c o s t s among themselves."*
The production and s a l e o f fair g ro u n d s s e r v i c e s involves high e x c lu sio n
c o s t s as w e l l .

While the c o s t o f a community f a irg ro u n d s f a c i l i t y may

be paid f o r by th e r e s p e c t i v e members o f th e community through t a x e s ,
consumers from o t h e r a r e a s cannot be excluded w ith o u t e l a b o r a t e p r i c i n g
r u l e s and expensive p o l i c i n g arrangements a t each and a l l o f the various
f a ir g ro u n d s e v e n ts .

And, high e x c lu sio n c o s t s , to o , a r e an important

f a c t o r d iscouraging p r i v a t e s e c t o r p roduction.
As much as c o n d i t i o n s then were s u i t a b l e f o r the o r g a n i z a t i o n
o f f airgrounds p r o j e c t s on a community managed and c o n t r o l l e d b a s i s ,
p r e s s u r e s e x i s t today f o r th e p e r p e t u a tio n o f such p r o j e c t s on th e same
b a s i s , even though they may have become f i n a n c i a l l y a n d / o r economically
n o n - v ia b le .

This i s on account o f t h e s p e c ia l or vested i n t e r e s t s i t

has tended to c r e a t e .

Community c o n t r o l l e d p r o j e c t s which a t t r a c t

s t a t e f i n a n c i a l a i d as well as some form o f local governmental support
c r e a t e and s o l i d i f y b e l i e f s about i n h e r e n t property r i g h t s by v i r t u e
o f t h e i r long e x i s t e n c e .
1 I b i d . , p. 121.

I t i s t h e experience t h a t once a s e t o f

25
property r i g h t s has been established by a given i n s t i t u t i o n a l configu­
r a t i o n , the holders o f these r ig h t s begin to view them as fixed and
in a lie nable without consideration of changes wrought in the surrounding
environment: I t begins to be believed t h a t changing the e x is tin g s e t
of r i g h t s i s "unfair" d es p ite the f a c t t h a t i t may be a t a very high
expense to other members of the community.
B eneficiaries of e i t h e r ta n g ib le or in ta n g ib le benefits from
the Emmet County fairgrounds p r o jec t encourage i t s continuation since
t h e i r p r iv a te costs on the p r o jec t tend to be f a r le ss than the private
advantages derived therefrom.

For example, i t provides highly valued

s ta tu s positions f o r some members cs community decision makers.

Certain

groups b e n e fit from low c o s t f a c i l i t y use f o r purely p rivate or
sectional i n t e r e s t s .

Public o f f i c i a l s who continue in o f f ic e for long

periods, unlike elected o f f i c i a l s , get to control fairgrounds resources
and with i t the power to dole out the use of f a c i l i t i e s on a d is c r e ­
tionary b asis.

Certain businessmen may b e n e fit from cheap advertising

and promotional o p p o r tu n iti e s .

Such vested i n t e r e s t s become strong

proponents for the continuation of the p r o je c t i r r e s p e c t i v e of in ­
creasing disadvantages to other sections of the community.
i
In s h o r t, as Schmid would tend to argue, a whole c o n s te lla tio n
of property r i g h t s would have been created by the very establishment
o f such an i n s t i t u t i o n a l arrangement.

The problem, however, is th a t

over time these property r i g h t s tend to get shrouded under the mantle
of misleading psuedonyms such as "services to the community," "public
i

A. Allan Schmid, op c i t .

26

s e r v i c e , " e t c . , w ith o u t any r e f e r e n c e t o b e n e f i t - c o s t Im p lic a tio n s o r
th e d i s t r i b u t i o n o f such b e n e f i t s o r c o s t s .
P u b lic , o r community, endeavor in th e p r o v is io n o f fa ir g ro u n d s
s e r v i c e s in Emmet County 1s a c o n t in u a t io n o f a t r a d i t i o n a l c o o p e ra tiv e
community i n s t i t u t i o n which was mostly r e l e v a n t when a g r i c u l t u r e was
th e b a s ic source o f income and employment, and when s p e c i a l i z a t i o n o f
economic f u n c tio n s was r e l a t i v e l y sim ple.

I t s p e r p e t u a tio n in a

changed environment—where a g r i c u l t u r e has long ceased to be a major
source o f income o r employment, where the t r a d i t i o n a l economic and
s o c ia l f u n c t i o n s performed a t th e community f a irg ro u n d s have t r a n s ­
f e r r e d t o s p e c i a l i z e d firm s in th e p r i v a t e s e c t o r , and where i t i s
n e i t h e r f i n a n c i a l l y n o r , perhaps, economically v i a b l e —can a l s o be
t r a c e d to th e d i f f i c u l t i e s o f communicating change ideas and in n o v a tiv e
s u g g e s tio n s .

P er c e p tio n s and a t t i t u d e s a r e r e s i s t a n t to change, as

d i f f u s i o n th e o ry would have us understa nd.

The d i f f u s i o n o f ideas

f o r changing economic and s o c i a l i n s t i t u t i o n s may be made even more
d i f f i c u l t where the d e c i s i o n making body f o r a given community is
composed mainly o f members p s y c h o lo g ic a lly and em otionally committed t o
t h e t r a d i t i o n a l cause o r have a personal s ta k e in i t s p e r p e t u a t i o n .
This c h a p t e r w i l l , t h e r e f o r e , a l s o ex p lo re some o f the theory r e l a t e d
to th e communication and adoption o f new ideas and p r a c t i c e s .
The argument f o r change h erein i s n o t p o s t u l a t e d merely on the
premise t h a t change ' p e r s e ' 1s a d e s i r a b l e o b j e c t i v e .

On the

c o n t r a r y , economic and s o c ia l change 1s viewed herein as a means to an
end; t h e end being h ig h e r l e v e l s o f l i v i n g and i n c r e a s in g real incomes.
The argument i s t h a t changes in economic o r g a n iz a tio n a r e a necessary
p r e - c o n d i t i o n f o r c a p tu r in g new economic o p p o r t u n i t i e s and t o a d a p t to

27

a new economic environment.

I t will be shown t h a t economic growth

trends are tending to a l t e r the pattern of comparative advantage in
the re le v a n t marketable mixes for Region 10 in general and Emmet County
in p a r t i c u l a r .

This s h i f t in comparative advantage for the region seems

to be in favor of exporting natural resource based r e c r e a tio n a c t i v i t i e s
and h o s p i t a l i t y s e rv ic e s.

The theory of comparative advantage, t h e r e ­

fo re , will be another element o f the th e o re tic a l base upon which t h i s
study will r e ly ; i t i s an important concept t h a t is l i k e l y to y ie ld
useful in sig h ts and provide guidelines for the planning and policy
making process.
Location C r i t e r i a And The Value Of Land
The conduct of a county fairgrounds complex involves the use of
scarce economic resources.
nature are involved.

On the one hand, resources of a capital

Capital investments in a fairgrounds complex

usually take the form of land and buildings.

A c e rt a in ex te n t o f land

i s required for the construction of buildings and usually a horse
racing tr a c k .

Land space i s also required for the s e t t i n g up of carnival

a t t r a c t i o n s for the period of the annual f a i r , fo r the parking of vans
and automobiles both o f v i s i t o r s as well as of s u p p lie r s , performers,
workmen, e n t e r t a i n e r s and o f f i c i a l s , e t c .
permanent nature are necessary.

Buildings and s tr u c tu re s of a

Usually, they take the form o f exhibi­

tio n arenas, barns for liv e s to c k , o f f ic e buildings, as well as a raceviewing grandstand, race-track fences, s t i l e s , e t c .

A building for

the conduct of 4-H or a g r ic u ltu r a l knowledge d if fu s io n programs i s
generally an inte gra l p a r t of the fairgrounds complex as well.

28

What i s produced via the medium o f a county fairgrounds complex
i s a s e t o f s e r v i c e s , and the c a p ita l component in the production process
involves only the use o f land and b u ildings.

The question i s what does

i t c o s t the community on the land and buildings being used for the pro­
duction o f these fairgrounds services a t the present Emmet County
fairgrounds location?

With regard to the buildings and s t r u c t u r e s ,

estimated co s ts of r e p a i r s and renewals may be reckoned as the best
measure o f the opportunity co s ts of t h i s component since replacements
have become necessary a t the present ju n c tu re .

The assessment o f such

co s ts pose no se rio u s conceptual or p r a c tic a l problem.

This is not the

case with the valuation of the fairgrounds land resources.
For a given community, the co s ts o f land has several dimensions.
F i r s t l y , th e re i s a sh ort-run economic dimension; the s t a t i c issue of
whether a p a r t i c u l a r use o f land resources a t a given moment in time
brings in a revenue, or a bundle of s a t i s f a c t i o n s , g r e a t e r than or equal
to the c o s ts th e r e o f .

Secondly, th ere i s the long run economic dimen­

sion o f unexploited economic o p p o rtu n itie s t h a t a r e , perhaps, being
bypassed by a community due to i t s pre-occupation or commitment to
existing a c t i v i t i e s .

An understanding o f t h i s issue req u ires an

assessment of trends in the growth and development o f the a r e a .

It

r a i s e s questions about the a c t i v i t i e s the area should be geared to
produce in accordance with changing consumer demand p a tte r n s and
r e le v a n t resource c a p a b i l i t i e s , and how the location o f a c t i v i t i e s
should be planned so as to c a p i t a l i z e on these development tren d s.
F in a ll y , there i s the dimension o f social c o s ts a r i s i n g from the use
of land which w ill be discussed below.

29

In so fa r as the aggregate value o f land over time i s concerned,
Wendt has given us an in d ic a t io n o f some o f the r e l e v a n t v a r ia b le s
in flu en c in g value in the following e q u a t i o n : 1

» .

f <p’ Y- S» V

P1> - (T * °C * 11« + °im>

f„ <1. R. Cg )

where,
V
fx
P
Y
S
Pu
PI
T
°c

= The Value o f Urban Land
= expectation
= population
average income
= supply o f com petitive land

=

=

=
=
=
=

D.im
i
R
Cg

s
=
=

=

com petitive pull o f area
p ublic investment
local taxes
op e ra tin g c o s ts
i n t e r e s t on improvements
d e p r e c ia t io n on improvements
in te re s t rates
investment r i s k
c a p i t a l gain p o s s i b i l i t y

This equation does i n d i c a t e the various in fluences brought to
bear on land value.

I t r e l a t e s , however, to urban land in th e aggre­

gate and to value over time.

Our concern a t t h i s p o in t i s with regard

to the discounted p re se n t value o f a s p e c i f i c l o c a t i o n ; to a s s e s s the
c o s t o f th e fairgrounds land t o th e community a t the p r e s e n t j u n c tu r e .
V a u l F. Wendt, "Economic Growth and Urban Land Value," The
Appraisal Journal 26 ( J u ly , 1958):427-43.

30
The reference to ' c o s t ' herein i s the value o f the b est s e t o f oppor­
t u n i t i e s foregone by the community in d iv e rtin g t h i s scarce f a c t o r of
production, a sp e c if ic portion o f urban land, to a fairgrounds complex.
One way of viewing t h i s opportunity c o s t is to consider the
potential i n t e r e s t income t h a t can be derived by transforming the
current land in use into liq u id form and investing i t to y ie ld a cash
return.

Or, t h i s value of the opportunity cost may be conceived of in

terms of the potential net income the community foregoes by not t r a n s ­
fe r rin g the land in question to the production of higher income earning
activities.

I t may even be conceived o f as the opportunity value of

s a t i s f a c t i o n s l i k e l y to be derived by the community i f i t s use were
tr a n s f e r r e d to the production of any o th e r public good or service ( e . g . ,
the establishment, say, of public o f f i c e s ) , vf such a use were l i k e l y to
y ie ld a return higher than would be the case with another a l t e r n a t i v e .
In e i t h e r case, the c o s t of the land to the comnunity would be the
l a r g e s t discounted present value of a poten tial stream of net earnings
or s a t i s f a c t i o n s .

I t is the opportunity c o s t of the best a l t e r n a t i v e

ava ila ble to the community.
The price of land i s , l i k e any other f a c t o r , determined by supply
and demand.

However, the t o ta l supply of land in i t s generic sense

does not respond to changes in price*, a r i s e in price does not lead to
an increase in the t o ta l ava ila ble though changes may occur within
d i f f e r e n t land c lasse s through the a p p lica tio n of c a p i t a l .
a f a l l in price make the t o t a l supply diminish.

Nor does

In other words, the

resource land in I t s t o t a l i t y i s in i n e l a s t i c supply.

This i n e l a s t i c i t y

of supply becomes more conspicuous when we consider a s p e c if ic s i t e as
a facto r o f production which aids in the supply of some product which

31

becomes d i f f e r e n t i a b l e on the basis of lo c a ti o n i t s e l f .

Alonso s t a t e s

th a t
. . . 1t
to think
monopoly
entiator

is
of
or
of

useful when considering s p a t i a l problems
the r e l a t i o n of supply and demand in terms of
competitive monopoly. Space a c t s as a d i f f e r ­
products and producers.1

I t i s t h i s i n e l a s t i c i t y o f supply t h a t led Ricardo to contend t h a t
r e n t i s a surplus.

2

Landowners, Ricardo maintained, receive in c re a sin g ­

ly higher p ric e s fo r the use o f land even i f they c o n t rib u t e nothing to
in crease i t s physical p r o d u c tiv ity i f the demand f o r the products i t
helps to produce i s r i s i n g .

This surplus or " r e n t is high because

the p r i c e o f corn i s high" and n o t, co n tra ry to popular b e l i e f , t h a t the
price of corn i s high because r e n t i s high.

3

In o the r words, r e n t

i s p r ic e determined and not p rice determining.
Classical r e n t theory which was f u r t h e r developed by Ricardo
in the context o f a growing demand for a g r i c u l t u r a l land and r i s i n g
price s f o r corn during the l a t e 18th and e a r l y 19th c e n t u r i e s , recog­
nized the f a c t t h a t the demand f o r land i s a derived demand; t h a t land
was demanded because 1t helped produce some good o r se rvic e which
yielded s a t i s f a c t i o n to consumers and p r o f i t to producers.

I t a lso

recognized t h a t t h i s i n e l a s t i c i t y o f supply tended to r a i s e the net
r e c e i p t s not o f the producers who used land as a f a c t o r o f production

W i l l i a m Alonso, "A Reformulation o f C lassical Location Theory
and I t s Relation to Rent Theory" in Locational Analysis for Manufactur­
ing: A S election o f Readings (Cambridge, Massachusetts: The MlT Press,
' r e f e r -------------

^David Ricardo, The P rin c ip le s of P o l i t i c a l Economy and Taxation
(London: J . M. Dent & Sons, L t d ., 1817).
3 Ibid.

32

b ut o f th e owners o f the la nd.

More s p e c i f i c a l l y , an in c re a s e in the

demand f o r th e products involving the use o f la nd, tended to in c re a se
the p r o f i t a b i l i t y o f producing such products.

These in c re ase d p r o f i t s

a t t r a c t e d new producers whose competition f o r the lim ited land resources
tended to push up r e n t s and, t h e r e f o r e , th e p r ic e o f land f u r t h e r up­
wards.
. . . because o f purely com petitive eq u ilib riu m , th e r e
can be no p r o f i t s . The e n t i r e n e t revenue accruing to
th e producers w ill have to be imputed as r e n t s to the
owners o f the land. Hence, the process t h a t leads to
the maximization o f the n e t revenues to producers a l s o ,
y i e l d s the maximum r e n ta l income t o the owners o f land.
R ic a rd o 's e l a b o r a t i o n o f economic r e n t was with r e f e r e n c e to
a g r i c u l t u r e and land with d i f f e r i n g degrees o f s o il f e r t i l i t y .

Land

with th e h i g h e s t level o f f e r t i l i t y tended to re c e iv e th e h ig h e s t
economic r e n t as i n c r e a s in g population and other f a c t o r s pushed up
demand f o r i t s products f u r t h e r and f u r t h e r upwards.

Land which i s j u s t

p r o f i t a b l e to bring i n t o production, he held, commands no economic r e n t ;
th e p r i c e i t r e c e iv e s f o r i t s use i s the minimum t r a n s f e r p r i c e , o r
t h a t p r i c e which has to be paid to prevent the land from s h i f t i n g
to i t s next most p r o f i t a b l e use.

I t i s only f o r those lands with

higher l e v e l s o f f e r t i l i t y t h a t economic r e n t , o r a s u r p lu s , did accrue.
While Ricardo emphasized th e d i f f e r e n t i a l r e n t earning c a p a c i­
t i e s o f d i f f e r e n t pieces o f land based on d i f f e r e n c e s in f e r t i l i t y ,
Von Thunen attempted to e x p la in r e n t d i f f e r e n t i a l s in terms of

\ o u i s Lefeber, Location and Regional Planning: Training Seminar
S eries (Athens, Greece: C o n s ta n t!n id ls & Mihalas, 1906}.

33
t r a n s p o r t a t i o n c o s t s from a c e n t r a l market p l a c e J

He used t h e idea

o f c o n c e n tr ic zones c e n te r e d around t h i s market p o i n t in h is model.
As one moved out from t h i s c e n t r a l market p o i n t , the economic a c t i v i t i e s
in which each c i r c u l a r zone s p e c i a l i z e d tended to d i f f e r in c h a r a c t e r .
S p e c i a l i z a t i o n occurred by economic r e g io n s w ith in each c o n c e n t r i c zone.
This s p e c i a l i z a t i o n was in such a manner t h a t the o v e r a l l c o s t s o f
t r a n s p o r t a t i o n in c lu d in g time c o s t s to and from th e c e n t e r was lowest
f o r a given c o n f i g u r a t i o n .

R e la tiv e to th e i n t e n s i t y and p a t t e r n o f

community needs, economic a c t i v i t i e s tended to be lo c a te d in o r away
from t h e market c e n t e r so as to minimize the o v e r a l l c o s t o f t r a n s p o r ­
t a t i o n w it h i n th e economic system.
The in n e r zone around Von Thunen's market p la ce r e p r e s e n t s a
proxy f o r t o d a y ' s urban c e n t e r wherein economic a c t i v i t i e s tend to
g e t co n c e n tra te d and a r e l a b o r i n t e n s i v e , income e l a s t i c and highly
s e n s i t i v e to speed and ease o f product supply.

As one moved outwards,

th e speed o f t r a n s p o r t a t i o n became a l e s s and l e s s important f a c t o r
r e l a t i v e t o need.
With Von Thunen's emphasis on t r a n s p o r t a t i o n c o s t s , t h e founda­
t i o n was l a i d f o r t h e s p e c i f i c r e c o g n i tio n o f lo c a t i o n f a c t o r s as
im portant c r i t e r i a f o r determ ining value.

I t a l s o l a i d th e foundation

f o r th e study o f th e economics o f l o c a t i o n as a more s i g n i f i c a n t element
in t h e domain o f c l a s s i c a l micro-economic t h e o ry .

The p e r s p e c tiv e o f

micro-economic theory i s t h a t o f th e in d iv id u a l firm and i t s e f f o r t s
a t making p r o f i t s and o f p e r p e t u a tin g I t s e l f in a c o m p e titiv e world.

^See, Raleigh Bari owe's Land Resource Economics: The Economics
o f Real P r o p e r ty , 2nd E d iti o n , P r e n t i c e Hall I n c . , Englewood C l i f f s ,
N . J . , 1972, f o r a d e t a i l e d e x p la n a tio n o f Von Thunen's th e o r y .

34

The purpose of e a rl y location an a ly sis within t h i s c l a s s i c a l microeconomic framework was to show the s p a tia l implications in the theory
of the firm.

And, what ea rly c l a s s i c a l location theory emphasized

was th a t p r o f i t maximization by the firm was dependent on minimizing
production-distribution c o s ts.
During the days of the 18th century in d u s t ria l revolution in
England, location theory was used to show why iron and ste e l foundries
came to be s ited where iron-ore was mined r a th e r than where coal,
large q u a n t itie s of which were required for smelting pig iro n , was
found.

The overwhelming reason was th a t i t was cheaper to ship coal

to the iron-ore f i e l d s , subject the iron-ore to weight-losing smelting
processes using co a l, and then to ship out standardized sizes of iron
and steel ingots therefrom.

Transport c o s t reduction, th e r e f o r e , was

the main emphasis a t t h a t time, and proximity to sources of raw material
was the overriding consideration f o r the iron and ste el industry.
For other commodities, closeness to sources of power, or pools
o f cheap labor, or other input p r i c e - c o s t advantages were shown to be
the important f a c t o r .

In general, i f the industry were "materials-

o r ie n te d ," meaning t h a t production involved a high degree of weightlosing processes to which the raw m a terials had to be subjected to , the
tendency was to choose a location near the source of raw material so
as to avoid the c o s t of moving la rg e amounts of waste product.

At the

other extreme, i f production involved the addition of ubiquitous
ingredients such as a i r or water to make the final product, or i f the
product were bulky in i t s fin a l form, the production location tended
to be "market-oriented."

35
In any ca se, in a l l e a r l y t h e o r e t i c a l d is c u s s io n , the determina­
t io n o f th e optimum lo c a tio n was on the basis o f a p a r t i a l equilibrium
approach.

The common f a c t o r which dominated a lo c a tio n a n a ly s is was

transport costs.

I t was g en e ra lly assumed t h a t t r a n s p o r t a t i o n costs

rose as a function of d is ta n c e and was also the major r e le v a n t
v a ria b le.

Alonso points out t h a t t h i s heavy emphasis on minimizing

tr a n s p o r t c o s ts had i t s basic j u s t i f a c t i o n in the g r e a t e r r e l a t i v e
importance of supply c o n s id eratio n s during the period as would seem
to be the case today in the developing economies.1
I f the market i s a t D, i t does not matter from a c o s t

angle

whether production takes place a t the p o in t o f raw material supply or
in the market area since d eliv ered c o s ts a t D are the same fo r both s e ts
o f c o s t schedules.

But, i f the market po in t i s before D, i t i s cheaper

to produce a t the point of raw material supply and ship the finished
goods to the market.

And, i f the market point i s beyond D, i t pays

to ship the raw material to a production lo c a tio n s i t u a t e d a t or near
the market.
I f th e optimum lo c a tio n i s a t any point before D, the product i s
said to be " m a t e r i a l s - o r i e n t e d , " while i f the optimal lo c atio n i s
beyond D, the product i s r e f e r r e d to as being "market-oriented."

It

may be noted, however, t h a t t h i s c l a s s i f i c a t i o n i s a p p lic a b le because we
assumed t h a t t r a n s p o r t a t i o n c o s t i s the only r e le v a n t v a r ia b le for the
lo c a tio n decision and t h a t i t increases as a function o f d is t a n c e .

This

was the major approach o f c l a s s i c a l lo c a tio n t h e o r i s t s who:

1 William Alonso, " I n d u s tr ia l Location And Regional Policy" in
Regional Policy: Readings In Theory and A pplicatio n, ed. John Friedman
and William Alonso (Cambridge, Massachusetts: The MIT Press, 1975), p. 66.

COST
PER
UNIT

miles
DISTANCE FROM POINT OF
RAW MATERIALS SUPPLY
Figure l . 1 Production Location and Transport
Costs
1

;----------------

Louis Lefeber, op c i t . , p. 23.

Let us assume t h a t raw materials
supply is a t any point along the vertical
axis which also includes point 0, the
point of zero transportation costs. I f
production takes place a t A, the cost of
one u n it produced is 0A. As these goods
produced a t the point of raw material
supply are shipped to the market, costs
r i s e as a function of distance in accor­
dance with the cost schedule AA' which
includes both production as well as tr a n s ­
portation costs.
The cost schedule BB' represents the
behavior of costs as raw materials
alone are shipped out to a production
location near the market.
I t may be noted t h a t the slope of
AA' i s greater than the slope of BB'.
This is because i t is assumed th a t
moving the finished product from the
point of raw material production is
more expensive per unit of distance in
the case of schedule AA'.

. . . assumed t h a t the sources o f m a terial a r e known,
as well a s th e l o c a t i o n and s i z e o f markets, the
nec essary q u a n t i t i e s o f the se v eral m a t e r i a l s per
u n i t o f product and t h e r e l e v a n t t r a n s p o r t r a t e s .
When the problem i s so s t a t e d , e ve rything but
t r a n s p o r t c o s t s i s held c o n s t a n t ; co nsequently,
th e b e s t l o c a t i o n i s , q u i t e o b v io u sly , t h a t which
minimizes t r a n s p o r t c o s t s . 1
In sum, both th e R icardian and Thunen t h e s e s attem pted to e x p l a in
th e r e t u r n s t o th e f a c t o r land from a g r i c u l t u r a l a c t i v i t y and, t h e r e f o r e ,
how i t s p r i c e i s determined.

The major d i f f e r e n c e , however, i s t h a t

Ricardo approached the q u e s tio n from the demand s i d e while Von Thunen's
a t t e n t i o n was on th e c o s t o r supply s i d e .

R i c a r d o 's emphasis was on

how an i n c r e a s i n g l y derived demand f o r land tended to r a i s e th e economic
r e n t paid f o r i t s use.

This economic r e n t , in t u r n , has to be c a p i t a l ­

ized to a r r i v e a t the p r i c e o f land.

Von Thunen, on the o t h e r hand,

was concerned with a l e a s t c o s t theory o f l o c a t i o n ; e s s e n t i a l l y th e
e f f e c t o f d i s t a n c e on t r a n s p o r t a t i o n c o s t .

T ra n s p o r ta ti o n c o s t s from

th e market c e n t e r was, to Von Thunen, t h e major d e te r m in a n t o f land
use and land r e n t .

The e x t e n t o f r e n t , in t u r n , determined th e p r i c e

o f land.
Hoover has drawn a t t e n t i o n to fo u r s e t s o f c r i t e r i a or fundamental
micro-economic l o c a t i o n f a c t o r s t h a t would help determine th e s u i t a b i l i t y
o f a s i t e f o r a given p r o j e c t .

2

They a r e ,

(a) a "local input" component,
(b) a "local demand" component,
^William Alonso, " I n d u s t r i a l Location And Regional P o l i c y , " in
Regional P o licy : Readings In Theory and A p p l i c a t i o n , op c i t . , p. 66.
o
Edgar M. Hoover, An I n tro d u c tio n To Regional Economics (New
York: Alfred A. Knopf, 1971}.

38
(c) "transfe rred in p u ts ," and
(d) an "outside demand."
The "local input" component r e f e r s to those production f a c t o r s t h a t are
conveniently av a ila ble a t or within the immediate v i c i n i t y o f a p a r t i ­
cular s i t e and cannot be economically moved in from any s i g n i f i c a n t
distance from outside the p a r t i c u l a r production location in question.
This local input component concept bears some resemblance to t h a t of a
"materials orien ta tio n " in the c l a s s i f i c a t i o n of a commodity in terms
of whether final production takes place a t the source of raw material
supply or near the market for the final product.

However, t h i s

Hooverian concept of a local input component draws a t t e n t i o n to pull
factors t h a t apply to inputs other than materials and local services
as well; the reference i s to more i n t r i n s i c features o f a lo c a tio n .
Important local input components may a r i s e in the form of external
economies of lo c a li z a t io n .

For example, the speed o f operation or

rapid adjustment of scheduling changes enabled by the presence of
management and maintenance divisions which serve many other f a c i l i t i e s
close a t hand may give an advantage of lower u n it c o s t to a sp e c if ic
location r e l a t i v e to another.

Or, i t may be an input in the form of

a convenience, or a cheaper "security" dimension.

For example,

buildings and stru c tu re s estab lished within a densely populated urban
section would involve lower costs of supervision aga inst vandalism and
t h e f t r e l a t i v e to sim ila r capital investments in out of the way
loc ations.
The notion of a "local demand" has a Ricardian f lav o r; i t r e l a t e s
to the supply of "non-transferable outputs" a t the location in

39

question.

i

Especially in the production o f s e r v ic e s , the point of

operation i s r e l a t e d to a very s p e c i f i c l o c a ti o n oriented demand; more
so for se rv ic e s such as r e c r e a tio n f o r which tr a v e l c o s t , e s p e c i a lly
o f time, i s perceived as high.

Potential consumers do not tend to

travel too f a r to enjoy r e c r e a tio n a l f a c i l i t i e s on a day to day b a s is .
This category of a "local demand" component can a lso be r e la t e d to the
concepts o f " j o i n t- u s e and " j o i n t products".

Mainly in the case of

community f a c i l i t i e s where p r o j e c t v i a b i l i t y i s usually clouded by
vague notions of 'community w e l f a r e ', j o i n t - u s e by several organized
bodies and the simultaneous production of several products would be
important f a c t o rs in use expansion.

J o in t-u s e could even become a

c r u c ia l condition fo r lowering the u n it co s ts of production and,
th e r e f o r e , the only b as is for p r o je c t v i a b i l i t y .

In any event, i t i s

only the actual existence of a local demand and a real a b i l i t y to supply
the r e l a t e d products t h a t would permit such j o i n t - u s e .

And, j o i n t - u s e

and m ultiple product p o s s i b i l i t i e s , in tu r n , are determined by the
location o f the p r o j e c t s i t e .
Hoover's "tr a n s f e r r e d in p u ts " are those f a c t o r s of production
t h a t are brought to the point of production from outside the s p e c if ic
lo c a tio n a r e a .

This aspect i s conceptually s i m ila r to Von Thunen's

tr a n s p o r t a t i o n c o s t f a c t o r which increases with every concentric zone
away from the market point and determines the f e a s i b i l i t y of input
transfer.

According to the Von Thunen a n a l y s i s , the existence o f

t r a n s p o r t a t i o n c o s t induces a process of events which u ltim a te ly en­
courage a convergence o f demand and supply forces a t the market c e n te r .
^bid .,

p. 14.

40

For, as one moves away from the market c e n t e r , t r a n s p o r t a t i o n c o s ts
rise.

Equilibrium i s achieved given equal wage r a t e s ( r e s u l t i n g from

the assumption o f p e r f e c t m o b ility o f la b o r) and d e c lin i n g land co s ts
away from the c e n t e r , by a r i s e in th e la n d -la b o r r a t i o (a change in
technology).

Less and l e s s la b o r tends to be employed f u r t h e r and

f u r t h e r away from the market c e n te r while more la b o r i n t e n s i v e produc­
tio n takes place in th e urban c e n t e r .
. . . the te c h n ic a l f a c t o r s which u n d e r lie the
formation of Thunen r in g s a l s o in c re ase the
d e n s ity o f labor as we approach the market c e n t e r
from the more o u tly in g a r e a s . 1
This, in t u r n , leads to c e r t a i n ex tern al economies encouraging the
s h i f t o f a l l t r a n s f e r r e d inputs to a common c e n t e r or c e n t r a l l o c a t i o n ,
usually the c e n tr a l urban c i t y : demand as well as in p u t flows tend to
converge in to a c e n t r a l l o c a ti o n wherein inputs brought from o u ts i d e
tend to c o s t the l e a s t .
Hoover's "o u ts i d e demand" i s t h a t a t t r i b u t e o f a l o c a t i o n which
enables i t to earn the h ig h e s t net r e c e i p t s from s e l l i n g a bundle of
goods and s e rv ic e s to non-local or o u ts id e markets than would any o th e r
lo c a t i o n producing th e same bundle o f goods and s e r v i c e s .

This f a c t o r ,

too, i s consonant with an urban c e n te r to which ex tern al buyers would
tend to converge.

This would e s p e c i a l l y be the case with a t o u r i s t

a t t r a c t i o n c e n te r .
In sum, s t a t i c lo c a t i o n theory attem pts t o ex p lain why a c e r t a i n
economic a c t i v i t y w ill take place in a s p e c i f i c space a t a given moment
in time i f p r o f i t a b i l i t y were the b a s is of lo c a t i o n s e l e c t i o n .
1

Louis Lefeber, op c i t . , p. 28.

The

economic rent paid a t the p a r t i c u l a r lo c atio n , in tu r n , enables us to
determine the value of a p a r tic u la r s i t e through the c a p ita l i z a t i o n of
an anticipated stream o f net earnings over time.

■

However, dynamic

locational analysis is necessary to a r r iv e a t a decision on the best
location for a proposed project.

Changes in the r e l a t i v e importance

of d if f e r e n t economic dimensions over time tend to a l t e r space and
distance rela tionships and s e ttin g s in which a p a r tic u la r a c t i v i t y would
find i t p r o fit a b le to locate.

Therefore, a location decision e s s e n t i a l l y

involves an understanding of the many variables th a t are l i k e l y to
influence the future regional space and distance re la te d dimensions and
the a b i l i t y to predict changes in the economic environment through time.
Any location decision involves uncertainty on e i t h e r the supply
side or on the demand side.

A careful id e n t i f i c a t i o n of future

national and regional trends and the analysis o f patterns of growth and
development may go a long way in reducing t h i s uncertainty.
risk factor is ever present.

Yet, the

In terms of the p r o f i t a b i l i t y or v i a b i l i t y

of a single project, there may be nothing th a t project planners may be
able to do to hedge against such losses.

Improved forecasting and

project planning will merely minimize such r is k s .
The Notion Of Comparative Advantage
With the discussion o f issues such as forecasting and planning
to reduce r is k and uncertainty, we s h i f t unobtrusively to the broader
f ie ld o f regional economics.

Regional economic science may be viewed

re a lly as a macro d is c ip li n e which transcends micro-locational issues.
I t may be conceived of being more concerned with a c t i v i t y location in
terms o f whole regions and Industries ra th e r than of point locations

42

and s p e c if ic p r o je c ts .

Our i n t e r e s t in regional science in i t s broader

dimension herein i s due to the important influences th a t temporal s h i f t s
in the comparative advantage of regions may have on regional economic
opportunities and the v i a b i l i t y of micro p r o je c ts .

S ig n ific a n t

transformations in the comparative advantage of regions may r e s u l t
from changes in national demand or local supply conditions.

In f a c t ,

national demand p a tte rn s in the U.S. have tended to change system atically
over the recent years e s p e c i a lly on account o f r i s i n g real incomes,
developments in technology, public investment programs {for example
in highway development and in tra n sp o r ta tio n and communication improve­
ments).

Whatever the causes may be, the r e s u l t has been a s h i f t i n g of

regional s p e c ia liz a tio n given d iffe re n c e s in resource endowments.
Regional s p e c i a l i z a t i o n issues have h i s t o r i c a l l y been viewed
as p a rt of inte rna tiona l trade theory, and i t s o r i g i n s , too, can be
traced to Ricardo and his exposition of the p rin cip le of "comparative
advantage".

Ricardo postulated t h a t economic a c t i v i t y tends to become

specialized by countries based on the comparative advantage each country
has r e l a t i v e to others in accordance with i t s resource endowments.

The

ultimate in te rn a tio n a l s p e c ia liz a tio n pattern t h a t will be determined
on the basis of comparative co st advantages w i l l , in tu rn , y i e ld a
p a r t i c u l a r pattern of in te rn a tio n a l trade and exchange.

i

Intra-country

regional s p e c ia liz a tio n issues were considered to be d i f f e r e n t on
account of the r e l a t i v e mobility of f a c t o rs of production within a
country while immobility was assumed as between co u n trie s.

^Charles P. Kindieberger, International Economics, 5th Edition
(Homewood, I l l i n o i s : Richard D. Irwin I n c ., 1968), pp. 19-20.

43

His a n a ly s is i m p l i c i t l y i d e n t i f i e s the clo se inter-co nnection
between lo c atio n theory and in te r n a tio n a l tr a d e theory; the moment
the assumption o f the f r e e mobility of f a c t o r s of production among
regions i s relaxed in resp e ct to i n t r a country regions with d i f f e r e n t
resource endowments, in te r n a tio n a l tr a d e theory, and, th e r e f o r e , the
concept o f comparative advantage, becomes ap p lica b le 'i n t o t o ' to the
a n a ly sis o f regional science is s u e s .

Using t h i s concept of comparative

advantage, Ricardo was able to specify in terms of economic e f f i c ie n c y
c r i t e r i a , the conditions under which the ideal lo c a tio n for each type
of a c t i v i t y and the optimum output or production f o r each country can
be simultaneously determined, as can the optimum in te r- c o u n t ry trad in g
p a tte r n s t h a t are l i k e l y to be e s ta b li s h e d .

S im ilarly, so long as

there are unequal resource endowments between national regions, and i f
a t l e a s t some of these resources are immobile, the same optimizing condi­
tio n s would apply with regard to in te r - r e g io n a l s p e c i a l i z a t i o n , volumes
o f production and tr a d e .
I t would seem t h a t economic a c t i v i t i e s t h a t need to be encouraged
by policy makers for a given region may be i d e n t i f i e d from a ca re ful
study o f underlying regional c a p a b i l i t i e s plus economic trends and
processes.

The importance of t h i s idea of regional economic planning

based on changing conditions of comparative advantage could be empha­
sized with reference to the concept of "cumulative c a u s a tio n " 1 as
^ h e concept of "cumulative causation" has e s s e n t i a l l y been used
in terms of th e theory o f in te r n a tio n a l tr a d e ; see pp. 49-52 of Harry
Johnson's Trade P o lic ie s Towards Less Developed Countries (New York:
Oxford U niversity"’Press’, 1971) and pp. 134-135 o f Vernon L. Sorenson's
I n tern atio n al Trade Policy: A griculture and Development, M.S.U. I n te rn a tional Business & Economic S tudies, Division o f Research, Graduate
School o f Business A dministration, Michigan S tate University, East
Lansing, Michigan, 1975.

44

e la b o rate d upon by Goodall.^

I f a r e l e v a n t s e t o f economic a c t i v i t i e s

were e s t a b l i s h e d and encouraged w ithin a given urban s e t t i n g , t h e r e
would be a tendency f o r such a s e t o f growth a c t i v i t i e s to gene ra te
m u l t i p l i e r e f f e c t s from t h i s c e n tr a l p o in t o f th e p r o j e c t lo c a tio n in
economic space outwards to the economic p e r i p h e r i e s o f the region.

In

the f i r s t p la c e , th e new and r e le v a n t s e t o f economic a c t i v i t i e s i s
l i k e l y to generate a primary demand for s p e c i f i c f a c t o r s o f produc­
tio n and r e s u l t in a s s o c ia te d income flows to f a c t o r owners.

This

would lead to a secondary r i s e in e f f e c t i v e demand w ithin th e r e g io n .
I f t h i s production i s for a growing market, the outputs produced w ill
tend to a t t r a c t a l a r g e r and l a r g e r custom p erp e tu a tin g thereby a
s e r i e s o f e x te r n a l economies for a v a r i e t y of r e l a t e d in p u t supply
and linked i n d u s t r i e s .

Industry c o n c en tratio n tends t o f u r t h e r enhance

the comparative advantage o f the region in the production o f those goods
and s e rv ic e s o r i g i n a l l y implied by underlying growth tre n d s and p a t t e r n s .
The p rogre ssive r i s e in th e r e g i o n ' s comparative advantage as a conse­
quence o f f a l l i n g c o s t s and an in c re asin g market, leads to f u r t h e r
growth e f f e c t s through a t t r a c t i n g highly s k i l l e d manpower, f in a n c ia l
*

c a p i t a l in search of good investment o p p o r t u n i t i e s and o th e r sc arce
productive resources on account o f derived demands from a growing
market.

Low c o s t p u b l i c i t y and promotion i s generated through market

p a r t i c i p a n t s themselves.

A growing market induces innovation and

invention in a l l r e l a t e d f i e l d s .

The local community in question i s

l i k e l y to find a new a b i l i t y to s h a rp ly in c re a s e i t s tax funds as well
^Brian Goodall, The Economics of Urban Areas (New York: Pergammon
P re ss, 1972), pp. 269-272T The r e s t o f t h i s s e c tio n on urban
economic growth i s l a r g e l y drawn from G oodall's d is c u s s io n t h e r e i n .

45

as expand the service f a c i l i t i e s they themselves will now find possible
to afford on account of lowered unit production c o s ts.

Thus, th is

concept of cumulative causation emphasizes the successive rounds of
m u ltip lie r e f f e c ts th a t may be generated i f regional economic planning
and project implementation is based on a good understanding of regional
growth trends.

As Goodall himself argues,

Urban growth feeds upon i t s e l f and may, th e re fo re, be viewed
as an i n te r - r e la te d process in which each stage in the
development of an urban area is a function of the previous
stages (Pred, 1966). The cumulative causation hypothesis
(Myrdal, 1956, 1957 a, b) thus appears a useful and relevant
concept in analysing the spatial concentration of economic
growth in urban a r e a s .1
Social Costs And Social Gains
"Social costs" and "social gains" are another s e t of the ore tica l
constructs freely used in the theory of ben e fit-c o st analysis and which
are highly relevant to regional planning and project implementation
especially in the l i g h t of new economic opportunities created by
changing conditions of regional comparative advantage.

Attention is

drawn to these concepts herein on account of t h e i r special relevance
in the analysis of public projects.
As Gittinger puts i t , "social gain" r e l a t e s to the "return
of productivity or p r o f i t a b i l i t y to the whole society or economy"
irre sp e c tiv e of who gains and who l o s e s . 1 "Social cost" i s the converse
thereof; costs th a t society as a whole cannot escape from in contra­
d is t in c t io n to a private cost which would simultaneously be associated
' I b i d . , p. 269.
o
Price G ittinger, Economic Ai '
Uni ve rs i ty Press,
The Johnn Hopkins University

is of Projects (Baltimore:
“ p. 5.

46

with a gain to another indiviual or s e t of indiv iduals.

Private costs

are e s s e n t i a l l y , though not n e c e ss a r ily , financial costs or costs
which can usually be measured in monetary terms and do e n t e r the income
and position statements of a p ro jec t a u t h o r it y , be i t a p r iv a te se cto r
firm or a public body.

Social c o s ts , however, are not so d i r e c t l y

i d e n t i f i a b l e nor measurable.

Yet, they may often be so crucial as to

determine whether a p a r t i c u l a r public p ro jec t would be advantageous to
society as a whole, or not.

Haveman argues t h a t in the evaluation of

public expenditure which uses resources, “t h i s b e n e f i t - c o s t , social
gain-social loss t e s t must be a p p lie d .'^

He goes on to add t h a t , “ If

the gain to society from an expenditure exceeds the c o s t, the expenditure i s an ' e f f i c i e n t ' one."

The opposite, i . e . , the c o s t to society

exceeding the gain being ' i n e f f i c i e n t , ' i s , of course, implied.
These concepts of social costs and social gains are a l l the
more important in the evaluation of Michigan's county fairgrounds pro­
j e c t s especially on account of the various sources of funds or resource
(including service) flows and the accounting practice s th a t Fair
Boards adopt.

I t appears reasonable to believe t h a t most of Michigan's

Region 10's fairgrounds projects are able to show a semblance of v i a ­
b i l i t y because, and only because, o f the inflow of s t a t e funds through
the Michigan Department of Agriculture, the channeling of local tax
funds of the respective county to o f f s e t annual lo ss e s, and on account
of unaccounted county services to fairgrounds in the form of (free )
r e p a i r s and maintenance se rv ic e s , water and unpaid for services such as
^Robert H. Haveman, The Economics of the Public Sector, 2nd
edition (New York: John Wiley & Sons, 19>6), p. 8T,
2 Ibid.

47

snow plowing o f access and e x i t r o u te s , e t c .

A major t e s t a b l e hypothe­

s i s with regard to these fairgrounds p r o je c ts may well be t h a t the
social co s ts f a r outweigh the social b e n e f i ts derived.
Social co s ts are also r e l a t e d to a e s t h e t i c or environmental
factors.

The way in which the urban s e t t i n g i s planned and implemented

may lead to " e x t e r n a l i t i e s " e i t h e r p o s it iv e or n egative, or what i s
a l t e r n a t i v e l y termed " s p i llo v e r s " by Bish.

An example o f a p o s it iv e

e x t e r n a l i t y in t h i s context would be the joy t h a t conmunity members
derived from a b e a u t i f u l l y landscaped c i t y .

Conversely, a negative

e x t e r n a l i t y would be the existence o f d ila p id a te d buildings and
s t r u c t u r e s in the middle of the c e n tr a l business d i s t r i c t .

2

E x t e r n a l i t i e s are the " r e s u l t of an economic ac tio n t h a t a f f e c t
3
p a r t i e s not d i r e c t l y involved in the t r a n s a c t i o n . "
Thus, a p r o je c t
which impairs the scenic beauty of the c i t y landscape would be a
negative e x t e r n a l i t y imposed by the proponents o f the p r o je c t on those
whose income earning o p p o rtu n itie s are dependent on a t o u r i s t trade
which i s l a r g e l y based on an a t t r a c t i v e environment.

I t would also

have d e l e t e r i o u s e f f e c t s on the s a t i s f a c t i o n o f c i t y r e s i d e n ts and
commuters to the c i t y ; t h e i r psychic s a t i s f a c t i o n from a beautiful
environment would be held down.

The e n t i r e community would be adversely

^Robert L. Bish, The Public Economy of Metropolitan Areas
(Chicago: Markham Publishing Co., 1972), p. 18.
2

The Survey Report o f "The Emmet County F air: Future Development
Committee" dated January 23rd, 1975 holds t h a t the p re se n t f a i r s i t e
which i s s i t u a t e d within the c i t y l i m i t s of Petoskey "has been
c r i t i c i z e d as something l e s s than scenic by v i s i t o r s of our a r e a ." See
page 5 of th e r e p o r t . To the auth o r, t h i s appears to be a gross under­
statement.
^Bish, op c i t .

48
a f f e c t e d even though those who d i r e c t l y b e n e f i t from th e p r o j e c t would
be compensated more l e s s by th e d i r e c t gains derived from th e p r o j e c t .
The removal or minimization o f negative external e f f e c t s in the
process of urban planning

and p r o j e c t implementation i s l i k e l y to go

a long way in str e n g th e n in g th e comparative advantage o f th e region.
In the case o f Emmet County's Fairgrounds P r o j e c t , whether the
a e s t h e t i c beauty of the region in question i s being enhanced or
diminished, and whether th e p u r i t y o f the a i r w ill be maintained by
the p a r t i c u l a r land use p a t t e r n s e l e c t e d , i s a m a tte r o f c r u c i a l im­
portance f o r t h i s community which i s beginning to depend more and more
on the export o f a mix o f n a t u r a l resource based r e c r e a t i o n a c t i v i t i e s
and h o s p i t a l i t y s e r v i c e s .
The Diffusion Of New Ideas And P ra c tic e s
Providing evidence on th e high op p o rtu n ity c o s ts o f c u r r e n t
f airgrounds o p e ra tio n s or on new economic o p p o r t u n i t i e s w ithin the
region which a r e te nding to r a i s e these opportunity c o s ts to the
community, may not be s u f f i c i e n t to induce acceptance o f ideas with
regard to changes in the l o c a t i o n , o r g a n iz a tio n and management o f the
Emmet County Fairgrounds p r o j e c t .

Diffusion theory emphasizes t h a t

p eo ple’s a t t i t u d e s and behaviors are conditioned and lim ite d by t h e i r
knowledge and e x p e rie n c e s, a h d t h a t bringing about changes in social
behavior p a t t e r n s through the dissemination of innovative ideas i s a
f a i r l y long drawn out process.

Yet, since a t t i t u d e s a r e themselves

le arn ed , and not i n n a t e , t h e r e i s hope f o r inducing a t t i t u d i n a l as well
as behavioral change through the prov ision of new information and
evidence as to wt\y i t i s a d v i s a b le to do so.

The use o f a p p r o p r ia te

49

communication approaches to th e d i f f u s i o n o f new ideas and p r a c t i c e s
could, in f a c t , f a c i l i t a t e and, perhaps, hasten th e adoption o f such
ideas f o r change with regard to th e f a ir g ro u n d s p r o j e c t .
A t t i t u d e s a r e th r e e -d im e n s io n a l; a f f e c t i v e , c o g n i t i v e and
behavioral.1

The a f f e c t i v e component in t h e Emmet County Fairground

case 1s th e emotional attachment o f some members o f the community to
the p roject.

These emotional attachm ents a r e l a r g e l y th e r e s u l t o f th e

h i s t o r i c a l and n o s t a l g i c experiences o f th e o l d e r , e s p e c i a l l y o f th e
farm and farm r e l a t e d p o p u la tio n .

The le a d e r s h i p o f community a f f a i r s

by persons with such a f f e c t i v e a t t i t u d e s towards t h i s h i s t o r i c i n s t i u tio n o f the county f a i r and o t h e r fa ir g ro u n d s o p e r a t io n s helps
p e r p e t u a te and r e i n f o r c e t h i s emotional view o f the p r o j e c t .
The c o g n i t i v e component o f a t t i t u d e s towards the c u r r e n t f a i r ­
grounds o p e r a t io n s may be deemed t o a r i s e from a v a r i e t y o f b e l i e f s
and values

2

a s s o c i a t e d with t h i s p r o j e c t .

One o f th e se b e l i e f s

p e r t a i n s to the f i n a n c i a l v i a b i l i t y o f th e s e o p e r a t i o n s .

Some members

b e l i e v e t h a t th e s e r v i c e s th e fa ir g ro u n d s p r o j e c t provides to the
community a r e more than commensurate with the c o s t s involved; they do
b e l ie v e t h a t the p r o j e c t i s economically v i a b l e as w e ll.

Such b e l i e f s

P h i l l i p Zimbardo and Ebbe B. Ebbessen, I n f 1uencing A t t i t u d e s
and Changing Behavior (Reading, Massachusetts: Addlson-Wesley P u b lis h ­
ing Co., 1969), pp. 6-8.
2

The term "value" in t h i s c o n t e x t r e f e r s t o a view some people
may hold o f what th e world “ought to b e ." I t s v a l i d i t y , however, cannot
be proved o r disproved by o b j e c t i v e evidence. On th e c o n t r a r y , " b e l i e f s "
a r e those p e r c e p tio n s o f "what i s " and can be t e s t e d f o r accuracy.
Hathaway d e f i n e s a " b e l i e f " as an "opinion as t o how t h in g s a r e
and how they r e l a t e t o an e x i s t i n g s t a t e o f a f f a i r s or r e l a t i o n s h i p , "
and a "value" as "a concept o f what 1s good o r bad." See page 4 of
Government and A g r i c u l t u r e : Public P o licy In a Democratic S o c ie ty by
Dale E. Hathaway (New York: The Macmillan Co., 1963).

50

can, of course, be tested fo r t h e i r v e rac ity .

This, however, is not

the case with some of the underlying values.

Farming and farm r e la te d

a c t i v i t i e s are highly valued by some since such work is thought to
inculcate "good sense and a respe ct for hard work," whatever t h i s may
mean.

The fairgrounds p r o je c t is also seen as something which f a c i l i ­

t a t e s exposure of people, esp e c ia lly the youth, to c e r t a in p o t e n t i a l l y
productive a c t i v i t i e s .

4-H work is seen to be very informative and

also something which helps "keep the young people busy and away from
troub le."

Yet others seem to value the opportunity of the annual f a i r

as one which enables urban children to see and get a feel for farm
products, farm implements, farm animals, and the l i k e as i f these were
important requirements in the proper s o c i a l i z a t i o n of urban folk.
Such values are by t h e i r very nature d i f f i c u l t to change in the
short run.

I t may be argued t h a t 4-H a c t i v i t i e s need not be dependent

on and could e a s i l y be separated from the fairgrounds p r o je c t.

Such a

separation may in f a c t be advantageous to the community in t h a t i t may
enable the b e t t e r i d e n t i f i a c t i o n o f costs and re tu r n s on an a c t i v i t y
basis.

I t can also be questioned whether a fairground complex and an

annual f a i r are the best mechanisms today for exposing urban folk to
a knowledge of a g r ic u ltu r e even i f t h i s were considered important, and
for incu lcating so-ca lled 'good* values to youth.

Nevertheless, the

fa c t remains t h a t cognitive a t t i t u d e s with regard to the fairgrounds
projec t are highly influenced by such b e l i e f s and values.
The behavioral dimension i s t h a t connected with attendance
a t the annual f a i r and other fairground a c t i v i t i e s .

Some measures o f

attendance a t these a c t i v i t i e s can be obtained from the f i e l d survey on
a t t i t u d e s and perceptions o f the Emmet County people towards t h i s

fairgrounds p r o j e c t .

A q u a l i t a t i v e aspect o f t h i s behavioral dimension

would seem to be the ex iste n c e of a strong option demand by people
f o r such a community f a c i l i t y c lo se a t hand even though they may not
a c t i v e l y p a r t i c i p a t e in most of the r e l a t e d programs.
Any attempts a t changing a t t i t u d e s as a pre-condition f o r
engineering behavioral changes with regard to the acceptance o f proposals
f o r r e l o c a t i o n , a c t i v i t y r e - o r g a n i z a t i o n , and adjustments in management
approaches in connection with the Emmet County fairgrounds p r o je c t will
need to take in t o account a l l these th r e e a t t i t u d i n a l f a c t o r s .

It

will a l s o be necessary to e s t a b l i s h t h a t these new ideas and p r a c t ic e s
are l i k e l y to be u s e f u l, and to the advantage of various groups within
the community.

Rogers argues t h a t showing the r e l a t i v e advantage of

an innovation to the p o te n tia l adopters may not be s u f f i c i e n t in i t s e l f
and t h a t i t should be shown how i t i s possible to reso lv e the problems
of:
(a) c o m p a ti b ility of the new ideas with e x i s t i n g values
and beliefs^ o f the community,
(b) complexity in the understanding of the proposed
changes,
(c) t r i a l a b i l i t y o f these innovations a t l e a s t on a
small s c a l e in the f i r s t pla ce, and the
(d) o b s e r v a b i l i t y of t h e i r advantages before acceptance,
and before any l a r g e s c a le adoption could take p l a c e d

On the c o n tra ry ,

Schultz has been q u i t e emphatic in pointing out t h a t " p r o f i t a b i l i t y "
alone was the s i g n i f i c a n t v a r ia b le in inducing the adoption by t r a d i ­
tio n a l farmers in c e r t a i n l e s s developed economies of s p e c i f i c new
1E verett M. Rogers and F. Floyd Shoemaker, Communication of
Innovations: A Cross-Cultural Approach (New York: The f r e e h r e s s , 1971),
pp. 137-157.

52
agricultural in p u ts J

S c h u l t z 's experience was t h a t " i t i s not nec es­

sary to appeal to d i f f e r e n c e s in p e r s o n a l i t y , education and so c ia l
environment" to induce innovation acceptance and adoption.

2

Our conten­

tio n herein is t h a t even though the p r o f i t motive may be a strong
in flu en c e in the acceptance and adoption o f new ideas and p r a c t i c e s
r e l e v a n t f o r in d iv id u a l p r o f i t making v e n tu re s, i t may not be s u f f i c i e n t
c o n d itio n t o induce the acceptance o f innovative ideas in r e l a t i o n to
change in th e l o c a t i o n , operation and management o f a t r a d i t i o n a l commu­
n i t y p r o j e c t and where several i n t e r e s t groups and i n d iv i d u a ls are
involved in the d e c isio n making process.

More s p e c i f i c a l l y , we b elieve

t h a t d i f f u s i o n the ory in r e l a t i o n to community d e c is io n s i s r e l e v a n t to
the understanding o f communication needs with regard to the achievement
o f changes in the Emmet County fairgrounds p r o j e c t .
Rogers c l a s s i f i e s members w ithin a given so c ia l system in to
f i v e c a t e g o r i e s in terms o f t h e i r behavior towards innovation accep3
tance over time.
They a r e i d e n t i f i e d in descending o r d e r o f in n o v a tiv e ­
ness as Innovators, Early Adopters, Early M a jority, Late Majority and
Laggards.

His t h e s i s i s t h a t each o f th e se groups have d i f f e r e n t

a t t i t u d e s and behavioral c h a r a c t e r i s t i c s in regard to new ideas and
p r a c t i c e s , knowledge o f which i s important in designing communication
s t r a t e g i e s to induce acceptance o f change i d e a s .

Agencies and agents

o f change involved in th e in tr o d u c tio n o f innovations would do well to
co n c e n tra te more o r l e s s o f t h e i r communication e f f o r t s a t some time or
^Theodore W. S ch u ltz , Transforming T ra d iti o n a l A g ricu ltu re (New
Haven: Yale U n iv ersity P re ss, 1964), pp. 162-168.
2 I b i d . , p. 164
3
Rogers, op c i t . , pp. 175-196.

53

o t h e r in th e process o f inducing change in accordance with t h e s e a t t r i ­
butes and c h a r a c t e r i s t i c s o f each a d o p te r c a te g o r y .
F i n a l l y , even i f one did p r o p e r ly i d e n t i f y the d i f f e r e n t ado p ter
c a t e g o r i e s and u t i l i z e d a mix o f mass-media and i n t e r p e r s o n a l communica­
t i o n s t r a t e g i e s r e l e v a n t to each s ta g e in th e community's in n o v a tio n d e c i s i o n p r o c e s s , t h e p r o b a b i l i t y o f message d i s t o r t i o n always remains
high.

D i s t o r t i o n could a r i s e on account o f a number o f r e a s o n s .

D if­

feren ce s in p e r c e p tio n s and a t t i t u d e s o f sender and r e c e i v e r could
in f lu e n c e message p r e p a r a t i o n by th e sender and i t s m i s i n t e r p r e t a t i o n
by th e r e c e i v e r .

I n c o r r e c t assumptions with regard to r e c e i v e r s t a t u s

o r o th e r a t t r i b u t e s could lead to c o n f l i c t s o f a s t a t u s - e g o n a t u r e .
C o n f l i c t s o f i n t e r e s t ' v i s - a - v i s ' the p r o j e c t i t s e l f could r e s u l t in
implied t h r e a t s and f e a r s and lead t o the propagation o f rumors which
a d v e rs e ly a f f e c t the i n t r o d u c t i o n o f change ideas and th e p ro cesses
o f b a r g a i n in g , compromise and d e c is io n making.

Under the circ u m sta n c e s ,

th e s u c c e s s fu l launching o f a s t r a t e g y to r e v i t a l i z e o r change a
t r a d i t i o n a l i n s t i t u t i o n to se rv e community needs b e t t e r would involve
a c a r e f u l study o f p o t e n t i a l b a r r i e r s and t h e drawing up o f imagina­
t i v e and meaningful s t r a t e g i e s o f communication between th e F a ir Board
and t h e l a r g e r Emmet County community.
Summary
The a n a l y s i s begins with an assumption o f economic r a t i o n a l i t y .
The members o f the Emmet County community a r e assumed to be r a t i o n a l
in t h e i r d e c i s i o n making a t l e a s t in terms o f a g r e a t e r r e c o g n i t i o n
o f the c o s t s involved in o p e r a t i n g t h e c u r r e n t f a irg ro u n d s p r o j e c t a t
th e p r e s e n t l o c a t i o n and in i t s p r e s e n t form.

Measurement o f th e

54
opportunity costs of using the present s i t e w ill be based on the theory
o f location on the one hand and the notion of comparative advantage on
the other.

These two bodies of economic theory are expected to provide

the guidelines for the assessment of the present value o f a stream of
potential future earnings a t th is lo c a tio n .

Costs o f operating the

p r o je c t will also be influenced by considerations of social costs and
social gains e s p e c ia lly in the context t h a t t h i s region i s seen to be
becoming more and more dependent on the export o f natural resource
based r e c rea tio n , holiday and h o s p i t a l i t y se rv ic e s .
The introduction of new ideas with regard to the location and
organization of an old i n s t i t u t i o n within a community with c i t i z e n s
possessing values and a t t i t u d e s sympathetic to the ' s t a t u s q uo', and
a power s tr u c t u r e with estab lish ed i n t e r e s t s and property r i g h t s , is
lik e l y to be a formidable task.

Communication theory r e la t e d to the

d iffusion of new ideas and practices w i l l , th e r e f o r e , form p a r t o f
the th e o r e tic a l basis f o r analyzing the hypotheses s e t down in Chapter I.

CHAPTER I I I

ALTERNATIVE MEASURES OF OPPORTUNITY COSTS OF
CURRENT FAIRGROUNDS OPERATIONS
A Financial Measure
One measure of the opportunity costs of operating the f a i r ­
grounds complex in the present lo c a tio n , and in the present form, can
be a rriv ed a t on the b as is of a financial valuation of the type and
ex te n t of land in use and the estimated c o s t of r e p a i r s and renewals of
th e e x i s tin g buildings and s t r u c t u r e s .

The c u r r e n t fairgrounds complex

u t i l i z e s some o f the most urban o f a l l land resources in Emmet County,
v i z . , City of Petoskey land.

The fairgrounds l i e s adjacent to U.S.

highway 31 s k i r t i n g Petoskey and overlooks L i t t l e Traverse Bay which
is so popular with water r e l a t e d r ecrea tio n e n t h u s i a s t s .
d es c r ip tio n "

A "site

s p e c i f i e s the fairgrounds property as containing a

contiguous block o f 26.77 acres plus another 0.67 acres on the
n o r th e r ly side of U.S. 31.
no market value.

The l a t t e r parcel of land is said to have

Obviously, i t s siz e and location does not lend

i t s e l f to a derived demand.

The highest and b e s t use o f the f l a t

land ad jacent to the highway, which forms p a r t of the contiguous block
o f 27 a c re s, has been declared by the Appraiser as l i k e l y to be derived
from commercial a c t i v i t i e s .

Land deeper down in sid e which i s p a r t l y

^See Appendix A.
55

56
h illy * i s s t a t e d to be useful f o r “m u lt ip ie -f a m i ly dwellings" and
"condominium u n i t s J

The market p r i c e o f t h i s f l a t n o r t h e r l y p o rtio n i s

l i k e l y to be high on account o f the li m i t e d supply o f such la nd.

Not

only does i t c o n s t i t u t e p a r t o f c e n t r a l business d i s t r i c t p r o p e r ty , i t
also l i e s a d ja c e n t to a well tr a v e rs e d highway in a very scenic l o c a ti o n
2
and i s "served by a l l c i t y u t i l i t i e s . "
Furthermore, sin c e the trend in
th e demand f o r n a tu ra l resource based r e c r e a t i o n a c t i v i t i e s in Region 10
in g e n e ra l, and Emmet County, in p a r t i c u l a r , i s seen to be r i s i n g
3
r a t h e r r a p i d l y , the p r e ssu r e o f demand for t h i s land i s l i k e l y to
grow s t e a d i l y into the f u t u r e .
According to an informal a p p r a i s a l

4

which was made on th e b a s is

o f c u r r e n t p r a c t i c e within the a r e a , the s a l e value o f approximately
c
18 a c re s o f t h i s land i s as follows:

^ Ibid.
2 Ibid.
3

"Michigan Recreation Plan-1974," Michigan Department of Natural
Resources, Lansing, Michigan, March, 1975.
4
As a r r i v e d a t from a d is c u s s io n the au th o r had in February 1977
with the Appraiser o f the City o f Petoskey. A re c e n t s a l e of urban
land in Petoskey to a reputed commercial firm was used as a g u id e lin e
in the a p p r a i s a l .
£
I t i s believed t h a t th e area o f " e f f e c t i v e " fairgrounds
use i s about 18 ac re s since the s o u th e rly portion i s h i l l y . Only
18 ac re s a r e being reckoned herein on account o f th e convenience
o f v a l u a ti o n . There i s no reason why the remaining 8.23 a c re s of
th e contiguous block o f 26.77 a c re s should not be reckoned f o r the
assessment o f opportunity c o s ts since they c o n s t i t u t e fairgrounds
p roperty.

57

Front Foot Value
I,365 f e e t of road frontage alongside U.S. 31
with a depth of 200 f e e t , valued a t a minimum
price of $500 per f o o t ................................................

$ 682,500

Remaining Acreage
18

-

1,365 f t . x 200 f t .
------------------------------------- = 11.75 acres
43,650 sq. f t . per acre

II.75 acres @ approximately $2,000 per acre . .
Appraised Value

.. .

$ 23,500
$ 706,000

This estimated price of $706,000 may be accepted as a reasonable measure
of the

market value of the land resources u t i l i z e d for the current

fairgrounds complex.

The cost of repairs and renewals to the existing

buildings and s tr u c tu re s has been estimated to be in the neighborhood
of $300,000.1
I f i t i s now assumed th a t the sum of the estimated value of the
land and the c o s t of repairs to buildings and stru c tu re s can be
invested to y ie ld a return, we can ar r iv e a t some measure of the poten­
t i a l returns from a l t e r n a t i v e investments.

These potential returns

can then be deemed to represent the income earning opportunities
foregone by the community because of i t s continuation of the fairground
a c t i v i t i e s in the present location and in i t s present form.

I t gives

us a measure of the financial opportunity costs of the ca pita l devoted
to the conduct o f fairground a c t i v i t i e s in Emmet County.
I f th is estimated sum of $1,006 mln. were to be placed in a bank
as a demand deposit, the r a t e of i n t e r e s t th a t can be earned is 5.0
percent.

For a fixed deposit, the corresponding r a t e of i n t e r e s t is

Vrom an estimate obtained by the Fair Board.

58
7.5 percent.

Banks lend to Industry in Petoskey a t around 10.0 percent

on long-term investments and from about 9,0 percent to 11.0 percent
on short-term investments.

These i n t e r e s t ra te s give some indic ation

o f potential income earning o p p o r tu n itie s .

While the minimum i n t e r e s t

r a t e s t h a t can be obtained by placing the funds in a bank are 5.0 percent
and 7.5 percent, the upper l i m i t on y i e ld s to d i f f e r e n t types of in v e s t­
ment are l i k e l y to be higher.

In any case, we may specify a range of

i n t e r e s t ra te s from say, 5.0 percent to 15.0 percent and c a lc u l a te the
corresponding annual i n t e r e s t income t h a t can be earned a t each r a te
of in terest.

The r e s u l t s a r e as in Table I I I - l below.

Table I I I - l .

Potential Returns on the Investment of a Sum of
$1,006 Min. a t I n t e r e s t Rates Ranging From 5.0
Percent to 15.0 Percent

Interest
Rate

Annual
I n t e r e s t ($)

Interest
Rate

Annual
I n t e r e s t ($)

.050
.060
.070
.075
.080
.090

50,300
60,360
70,420
75,450
80,480
90,540

.10
.11
.12
.13
.14
.15

100,600
110,660
120,720
130,780
140,840
150,900

The question remains, however, as to which i n t e r e s t r a t e is
the r e le v a n t one for the Emmet County community.

This would depend on

the actual investment opportunities a v a ila b le and the community's r i s k r eturn t r a d e - o f f ; i . e . , the preferences o f the decision makers for the
community with regard to the r is k s they are w illin g to undertake in
r e l a t i o n to the return involved in each investment opportunity ava ila b le .

59

Some idea o f the i n t e r e s t r a t e s t h a t may be earned could be gained
from the c a p ita l market r a t e s published in the Federal Reserve
Bulletin from which the following t a b l e (Table I I 1-2) has been adapted.
Table I I 1-2.

Capital Market I n t e r e s t Rates f o r the Years 1974, 1975
and 1976 (Averages, percent per annum)

Government notes and bonds
U.S. Treasury:
Constant m a tu r i tie s :
7-year
10-year
20-year
30-year
Long-term
S tate and l o c a l:
Moody's s e r i e s :
Aaa
Baa
Bond Buyer s e r i e s
Corporate bonds
Seasoned issues
All i n d u s t r i e s
By r a t i n g groups:
Aaa
Aa
A
Baa
Aaa u t i l i t y bonds:
New issue
Recently offered issues
Common stocks
Dividend/price r a t i o :
P referred stocks
Common stock

1974

1975

1976

7.71
7.56
8.05

7.90
7.99
8.19

7.42
7.61
7.86

6.99

6.98

6.78

5.89
6.53
6.17

6.42
7.62
7.05

5.66
7.49
6.64

9.03

9.57

9.01

8.57
8.84
9.20
9.50

8.83
9.17
9.65
10.61

8.43
8.75
9.09
9.75

9.33
9.34

9.40
9.41

8.48
8.49

8.23
4.47

8.38
4.31

7.97
3.77

-------

-------

Source: Adapted from Table 1.36 a t page A27 of the “Federal
Reserve B u lletin " No. 6, Volume 63 o f June 1977 o f the Board of
Governors o f the Federal Reserve System, Washington D.C.

60

The i n t e r e s t income from in v e s tin g estim ated proceeds o f the s a le
o f the fairground land and the c o s t savings on r e p a i r s to b u ild in g s and
s t r u c t u r e s t h a t have become c u r r e n t l y necessary, may be t r e a t e d as a
benchmark o r t e n t a t i v e guide line with regard to the o p p o rtu n ity c o s ts
involved in the c u r r e n t fairgrounds p r o j e c t .
re p r e s e n t economic c o s t s .

I t would not t r u l y

N eve rthe less, as a rough and ready guide,

these measures can be u s e f u l.

The community and i t s d e c is io n makers

could compare th e s u b j e c t i v e values they would assign as the average
annual n e t b e n e f i t derived from fairgrounds a c t i v i t i e s a g a i n s t these
c o s t f i g u r e s and, perhaps, use a decision r u l e such a s :

"consider

abandoning or a l t e r i n g the c u r r e n t fairgrounds p r o j e c t i f th e b e n e f i t s
derived a r e believed to be l e s s than the f i n a n c i a l c o s ts a t a s e l e c te d
rate of in te r e s t."

I t may be noted t h a t the o perational l o s s e s in curred

on the annual f a ir ^ which i s believed to be a more o r l e s s re g u la r
f e a t u r e f o r Emmet County y e a r a f t e r y e a r , should be t r e a t e d as negative
b e n e f i t s , or added on to the estimated annual i n t e r e s t income f i g u r e .
In the l a t t e r c a s e , the o pportunity c o s ts may be reckoned as the sum
o f th e foregone i n t e r e s t income plus the o perational lo s s of approximate­
ly $5,000 per annum on the fairgrounds p r o j e c t .

These c o s t s may then

be compared a g a i n s t th e b e n e f i ts accruing from a l l fairgrounds a c t i v i t i e s
(excluding the f a i r ) to determine whether or not the community should
H h e county u s u a lly has to su b sid iz e the F a ir Board's a c t i v i t i e s
by a sum o f approximately $5,000 per annum f o r expenses incurred over
and beyond i t s ea rn in g s. Hidden s u b s id ie s which ta k e the form o f
fre e r e p a i r s e f f e c t e d by the county maintenance departments, f r e e w ater,
f r e e s e r v i c e s such as plowing o f access roads during w in t e r , e t c . ,
r a i s e th e c o s t sid e o f the p i c t u r e even higher.

61

c ontinue to o p e r a t e t h e p r e s e n t f a irg ro u n d s p r o j e c t in t h e p r e s e n t
form and l o c a t i o n .

In th e case where th e usual o p e r a tio n a l l o s s o f

$5,000 per annum on th e F a i r i s added on to t h e p o t e n t i a l i n t e r e s t
income, th e o p p o r tu n ity c o s t r e l a t i v e to a s p e c i f i e d i n t e r e s t r a t e
would be as shown in Table I I I - 3 below.
Table I I 1-3.

Interest
Rate
.050
.060
.070
.075
.080
.090

O pportunity Costs o f the Resources o f Land and Buildings
& S t r u c t u r e s Adjusted f o r Operational Losses on th e F a i r

Annual
I n t e r e s t ($)

Annual
I n t e r e s t ($)

Interest
Rate

50,550
60,660
70,770
75,825
80,880
90,990

.10
.11
.12
.13
.14
.15

101,100
111,210
121,320
131,430
141,540
151,650

These measures o f o p p o r t u n i t y c o s t are more convenient than those which
only used p o t e n t i a l i n t e r e s t income.

These c o s t da ta have now to be

compared only a g a i n s t t h e b e n e f i t s derived from fair g ro u n d
o t h e r than those from t h e F a i r .

activ ities

That i s , i f t h e b e n e f i t s derived

from a l l th e a c t i v i t i e s a t th e fa ir g ro u n d s o t h e r than from th e F a i r ,
a r e worth l e s s than th e above s p e c i f i e d i n t e r e s t income, t h e i n d i c a ­
t i o n would be t h a t th e c o s t s outweigh th e b e n e f i t s d e riv e d .
No a tte m p t i s being made in t h i s study to a s s e s s the b e n e f i t s
derived by th e community from t h e f a ir g ro u n d s complex.

Yet, the

c o s t f i g u r e s a r e c o n s id e re d useful f o r t h e F a ir Board and t h e community
so a s to make more informed judgements with regard to th e r a t i o n a l i t y
o f co n tin u in g th e p r e s e n t fair g ro u n d s p r o j e c t .

Data on th e a t t i t u d e s

62
of comnunity members will be used to provide the decision makers with
evidence on how such a c t i v i t i e s are being perceived by the people within
the county.

Preliminary f i e l d studies did indicate the presence of

much doubt with regard to the v i a b i l i t y o f the present fairgrounds
project.

The very f a c t th a t the comnunity has already expressed some

desire for changing the location, and perhaps the pattern of operation
as well, indicates a degree of suspicion of e i t h e r a low, or even a
negative, b en e fit-c o st r a t i o from th is project.

That some e f f o r t was

made in 1971 to sell the fairgrounds property and tr a n s f e r i t s use to
another economic a c t i v i t y , lends further support for th is b e l i e f .
Any e f f o r t s a t computing the benefits of the current fairgrounds
operations should also involve a careful assessment of the present
uses of fairgrounds f a c i l i t i e s .

Furthermore, an itemization of a l l

the e x p l i c i t and hidden operational costs involved would have to be
carefully studied i f one were to derive a l te r n a ti v e measures of net
benefits.

A calendar of fairgrounds events has been drawn up below.

I t gives a f a i r indication of the events conducted during a twelve
month period and some hint of unaccounted operational costs.
Insofar as the Fair is concerned, the net benefits to the members
of the community as taxpayers seems to be negative; even the operational
costs on t h i s Fair are never recovered.

If price be a measure of value,

the i n a b i l i t y to charge prices th a t even cover variable costs, not to
speak of the fixed costs of the project, is a strong indication th a t
comnunity menbers do not think too highly of such services and f a c i l i ­
ties.

On the contrary, the Fair appears to co n s titu te a hidden subsidy

to ce rtain groups; perhaps, a few suppliers of entertainment,
adve rtisers o f equipment, and a handful of farmers, gain some d i r e c t

63

monetary advantages from the Fair a t the expense o f others in the
comnunity who are i n d i r e c t l y compelled to pay through the levy of
taxes.

Whatever i t i s , the i n d i r e c t nature of the transactions in ­

volved in the whole fairgrounds p ro jec t as i t i s presently organized
makes evaluation o f the d i s t r i b u t i o n of co s ts and benefits among
d i f f e r e n t groups within and from outside the comnunity, d i f f i c u l t to
assess.

Such an assessment, however, is not considered necessary for

purposes of t h i s study.
Calendar of Events in the Present Fairground Complex
(Excluding the Use of the 4-H Building)

Month

No. of
days
used

Reason For
Use

Remarks

Snowmobile
races

In addition to use on the day of the race,
th r e e to four weeks of ice track (8 i n s . )
preparation is involved. The horse-race
track i s unearthed and flooded with water
from the county f i r e hydrant.
No payment i s made for t h i s water and
t h i s c o s t i s , th e re fo re , not r e f le c te d in
the accounts of the Fair Board.

4-6

Horse
shows

Each horse show l a s t s a day. In addition
to the four to s ix horse shows held
during these two months, several days o f
race track preparation are involved.
Certain machinery and equipment belonging
to the county are u t i l i z e d for t h i s work,
but no payments are made the re fore. To t h a t
ex te n t, the accounts of the Fair Board
understate expenditure.

1

Firemen's
demonstration

Jan

1

Feb

1

Mar
Apr
May

0
0
0

JuneT
Aug *

Aug

64
Calendar of Events (Cont'd)

Month

No. o f
days
used

Reason For
Use

Remarks

Jul

4-5

Preparation
of floats

Fairgrounds barns are used f o r the purpose
of c o n s tru c tin g and decorating f l o a t s for
the Independence Day parade.

Jul i
Aug *

4

Farmers'
Market

About s ix farmers use the fairgrounds to
s e l l produce on Saturday mornings during
these two months. No charges are levied
from th e farmers for the use o f the land
and b u ild in g s.

Aug

6

F air Week

F air week i s preceded by in te n s iv e prepara­
to ry work such as r e p a i r s to b u ild in g s,
dragging and preparation o f th e race
t r a c k , new constru ctions f o r the c a r n i v a l ,
e t c . Certain functions performed by the
co u n ty 's maintenance departments a r e not
r e f l e c t e d in the expenditure accounts of
the F a ir Board. To t h a t e x t e n t , expenses
are understated in the f in a n c ia l accounts.
Barns a r e used f o r c o n s tru c tin g and
decorating f l o a t s f o r the High School
"Homecoming" football match c e le b r a t i o n s .

*

Sep

2-3

Preparation
of f l o a t s

Sep y
Nov

2-3

Fall F e s ti v a ls For various re c r e a tio n a c t i v i t i e s for
& Halloween
c h i ld re n .

An Economic Evaluation
Commercial A c ti v ity As An A lte rn a tiv e Use
Of The Fairground Land
A b e t t e r measure o f the opportunity c o s ts o f the c u r r e n t use of
the Emmet County fairgrounds land would be a discounted n e t present
value o f a stream o f earnings t h a t can be generated by t r a n s f e r r i n g
these urban land resources to income earning economic a c t i v i t i e s .

If

the p o te n tia l annual n et b e n e f i ts foregone by f a i l i n g t o t r a n s f e r the
fairgrounds property to a higher economic use can be q u a n t i f i e d , i t would

65

be p o s s ib le to i d e n t i f y th e se opp o rtu n ity c o s ts more p r e c i s e l y .

The

f i r s t s te p in the process*of q u a n t i f i c a t i o n would, however, be a
d e f i n i t i o n o f the "best" a l t e r n a t i v e use (the most p r o f i t a b l e economic
a c t i v i t y ) t h a t may be conducted a t t h i s lo c a ti o n using the a v a i l a b l e
fairgrounds land.
This land l i e s in an urban area zoned f o r l i g h t i n d u s t r i a l
purposes.^

But, the people o f Emmet County thwarted an attem pt in

1973 to s e l l t h i s land to an i n d u s t r i a l firm t h a t wished to l o c a te
i t s auto hub cap manufacturing p la n t t h e r e i n .

2

This seems to be an

in d i c a t i o n o f t h e i r concern f o r a natural environment f r e e o f i n d u s t r i a l
pollution.

The conduct o f comnercial a c t i v i t i e s a t t h i s pla ce, however,

cannot be s u b je c t to such a charge.

I f the buildings a r e designed

with notions of a e s t h e t i c beauty in mind, commercial buildings are
l i k e l y to enhance th e a t t r a c t i v e n e s s of the area r e l a t i v e to the
d e r e l i c t b u ild in g s and s t r u c t u r e s t h a t e x i s t a t p r e se n t.
M/s. Real E s ta te A ppraisals valued the land in 1971 f o r the
Petoskey Economic Development Commission and suggested t h a t t h i s area
be rezoned fo r l i g h t commercial a c t i v i t i e s (see Appendix A) due,
perhaps, to the easy highway access to the p r e s e n t fairgrounds p r o p e r ty ,
the clo se n e ss o f such a l o c a t i o n to la rg e numbers o f t o u r i s t s and
r e s i d e n t s , and th e a v a i l a b i l i t y o f a l l the necessary i n f r a s t r u c t u r a l
^ e e the County P l a n n e r 's statem ents r e f e r r e d to in the "Petoskey
News Review" o f November 30th, 1973, in the news item "People Want
Fairgrounds Kept For P u b lic ."
2
This resentment was in d ic a te d a t th e "Fairgrounds Hearing" of
November 29, 1973, in Petoskey on th e proposed s a l e o f the Emmet
County fairgrounds p ro perty . See a r t i c l e r e f e r r e d to in footnote 1
and proceedings of th e "Fairgrounds Hearing."

66
and p u b lic u t i l i t y f a c i l i t i e s a t t h i s p o i n t f o r the p r o f i t a b l e conduct
o f such a s e t o f economic a c t i v i t i e s .
There a l s o appear to be more compelling reasons why th e most
p r o f i t a b l e uses f o r t h i s l o c a t i o n a r e l i k e l y t o be in commercial and/
or h o s p i t a l i t y in d u s t r y s e r v i c e s .

Trends in Emmet County's growth and

development i n d i c a t e a r a p id expansion in t o u r i s t tr a d e and the demand
f o r n a t u r a l re s o u r c e based r e c r e a t i o n .

I f Emmet County i s t o c a p tu r e

the b e n e f i t s o f t h i s i n c r e a s i n g inflow o f people t o th e a r e a , a d d i tio n a l
f a c i l i t i e s w ill be necessary t o s e r v i c e th e s e in c r e a s in g requirements
o f t o u r i s t s , v a c a ti o n e r s and summer time r e s i d e n t s .
In any c a s e , l e t us assume f o r the p r e s e n t t h a t commercial
a c t i v i t i e s c o n s t i t u t e t h e most p r o f i t a b l e use o f the a v a i l a b l e land
r e so u rc e s a t t h i s l o c a t i o n .

We th in k o f t h i s a l t e r n a t i v e o f comnercial

use as one which suggests th e e s ta b li s h m e n t o f a Shopping Center in the
c u r r e n t f airg ro u n d p r o p e r ty .

The p r e s e n t value o f a stream o f p o t e n t i a l

e a rn in g s from t h i s "Shopping Center" p r o j e c t can be estim a te d from
th e a n t i c i p a t e d n e t incremental cash flows from the p r o j e c t discounted
a t an a p p r o p r i a t e r a t e o f d is c o u n t.
This idea o f a "Shopping Center" p r o j e c t i s being viewed as a
p r i v a t e s e c t o r e n t e r p r i s e as opposed to a community p r o j e c t but
considered an a p p r o p r i a t e a l t e r n a t i v e use o f e x i s t i n g comnunity owned
land re s o u r c e s in th e g r e a t e r i n t e r e s t o f th e community.

The concern

h erein i s in an assessment o f t h e p o t e n t i a l income earning o p p o r tu n i­
t i e s a v a i l a b l e to th e community f o r th e se v alu able lo c a t i o n a l r e s o u r c e s ;
o r more simply, f o r a measure o f o p p o r tu n ity c o s t s .

This i s not an

a tte m p t to show the m e r it s o f p r i v a t e s e c t o r endeavors, o r to emphasize
t h a t th e p r i v a t e p r o f i t motive i s more l i k e l y to le ad to t h e b e t t e r

67

u t i l i z a t i o n o f scarce economic resources.

We merely assume herein

th a t (a) given the comnunity's antipathy towards industrial a c t i v i t y
a t t h i s lo c a tio n , (b) the economic growth trends within the region,
(c) the s u i t a b i l i t y of t h i s central business d i s t r i c t location for a
shopping c e n te r , and (d) a e s t h e t i c considerations, commercial a c t i v i t i e s
are l i k e l y to generate the highest net value of output a t t h i s place.
T hereafter, we proceed to estimate the net present value of a stream
of earnings over the l i f e of the project.
I t i s a lso being i m p l i c i t l y assumed th a t the whole community
is l i k e l y to b e n e fit by the generation of these economic a c t i v i t i e s
a t t h i s lo c atio n .

D istributional iss u e s, however, will not be taken up

in t h i s research e f f o r t .

The opportunity costs assessed by such an

approach is l i k e l y to show the community and i t s decision makers a more
r e a l i s t i c measure o f income foregone by the community due to the current
use of these land resources for a fairgrounds complex.
The source o f cash flows from t h i s hypothetical shopping center
p ro jec t i s s a le s .

We need to id e n tif y the incremental growth in sales

over time t h a t can be a t t r i b u t e d to the s e tt i n g up of t h i s sp e c if ic
shopping ce n te r a t t h i s location as compared to the incremental growth
in t o t a l sales t h a t is l i k e l y to r e s u l t from the normal growth and
development of the area .

In other words, our concern herein is the

increase in sales generated by v irtu e of an expansion in physical s e l l i n g
area through the establishment of t h i s shopping center exclusive of th a t
component o f sa les growth l i k e l y to r e s u l t without the p r o je c t.

More

s p e c i f i c a l l y , we will attempt to avoid the "before and a f t e r " problem

68
in b e n e f i t - c o s t a n a l y s i s . 1

Instead, our concern w ill be centered on
o
the "with-without" s i t u a t i o n .
The p resent value of t h i s p r o je c t w ill
be c a lc u l a te d on the basis of a stream o f po te n tia l net earnings which
c o n s t i t u t e the estimated d if f e r e n c e between growth in s a le s with the
p r o j e c t and growth in s a le s without i t .
Retail Sales Potential For A
Shopping Center in Petoskey
To determine the net cash flows from a r e t a i l shopping ce nter
in Petoskey, we need to make some assessment o f a n t i c i p a te d r a t e s of
growth and the market p o te n tia l f o r r e t a i l sales in the area .

"Market

P o te n tia l" has been defined by Kotler as "the l i m i t approached by market
demand as indu stry marketing e f f o r t goes to i n f i n i t y , f o r a given
3
environment."
One of the most widely used general purpose measures
of market p o te n tia l is the Index o f Buying Power (BPI) developed by
4
p r o fe ssio n a ls o f "Sales Management-The Marketing Magazine."
I t is
A weighted index t h a t
population, E ffec tive
in to a measurement o f
i t as a percentage o f

converts th ree basic elements—
Buying Income, and r e t a i l s a l e s —
a market's a b i l i t y i o buy, and expresses
the U.S. p o t e n t i a l .5

While the BPI i s most useful f o r estim ating the p o te n tia l f o r s p e c i f i c
products which are conducive to mass marketing, i t would not be too
^ t t o Eckstein, Water Resource Development: The Economics of
P ro je c t Evaluation (Massachusetts: Harvard University Press, 1958), p. 58.
2 Ibid.,

p. 51.

o

P h i l l i p Kotler, Marketing Management, Analysis. Planning and
Control, 3rd Edition (New Je rse y: Prentice-Hal'l, 1976), p. 121.
^A bi-monthly p u blic ation (except in Dec.) issuing from 633,
Third Avenue, New York, N.Y. 10017.
5

I b i d . , p. A - l l .

69

useful a measure to assess the f u tu re market p o te n tia l f o r an e n t i r e
r e t a i l ce n te r in a growing regional r e s o r t a r e a .

I t would seem b e t t e r

to assess th e market p o te n tia l in Emmet County in terms of past
performance and i t s f u tu re growth and development p o t e n t i a l .
Growth in r e t a i l s a l e s in Petoskey i s believed to be highly
c o r r e la te d with growth in the flow o f t o u r i s t s , vacationers and outdoor
s p o rts e n t h u s ia s ts to the northern p a r t o f lower peninsula Michigan.
The Study on Waterfront Living 1 s p e c i f i c a l l y emphasizes the a t t r a c t i o n
t h a t Petoskey has for v i s i t o r s to Cheboygan County.

"Shopping f a c i l i ­

t i e s and r e s t a u r a n t s in the Petoskey area had strong appeal t o waterf r o n t r e s id e n ts of Cheboygan County."

2

Emmet County i s highly endowed with the natural resources
3
r e le v a n t f o r several types o f outdoor r e c r e a tio n a l a c t i v i t i e s which
4
are expected to show an increasing growth in demand.
However, the
consequential increase in v i s i t o r flows to t h i s area t h a t can be
a n t i c i p a t e d have not been q u a n tifie d in any stu d ies so f a r .

For

purposes o f estim ating f u tu r e growth in r e t a i l s a l e s in Petoskey,
t h e r e f o r e , past performance alone i s being used.

This approach to the

R o b e r t W. Marans, e t a l . , Waterfront Living: A Report on
Permanent and Seasonal Residents in Northern Michigan, The I n s t i t u t e
of Social Research, University o f Michigan, Ann Arbor, 1976.
2

3

I b i d . , p. 142.

"An Appraisal o f Potential Outdoor Recreational Developments For
Emmet County" — a study sponsored by the Emmet County Soil Conserva­
tio n D i s t r i c t (undated), and the "Comprehensive Recreation Plan f o r
Emmet County," 1970, prepared f o r the Emmet County Planning Commission
by Vilican-Leman Associates I n c . , Community Planning Consultants,
S outhfield, Michigan.
4
Michigan Department of Natural Resources, "1974 Michigan Recrea­
tio n Plan Summary," Lansing, Michigan, 1975.

70

problem o f measuring f u t u r e growth in r e t a i l s a l e s i s , in any c a s e ,
considered more a p p r o p r i a t e than th e use o f the general purpose BPI.
As apparent from Table I I I -4 below, th e t o t a l value o f r e t a i l
s a l e s in Petoskey has
from 1967 to 1972.

grown a t an annual compound r a t e o f 13.6 percent

However, growth in the value o f s a l e s per square

f o o t o f r e t a i l f l o o r area from 1972 to 1975 has only been
according to the Urban Land I n s t i t u t e (ULI)'s s t u d y . 1

8

p e rc e n t p .a .

I t i s assumed

t h a t t h i s d i f f e r e n c e between the r a t e of growth in th e t o t a l value o f
r e t a i l s a l e s and th e r a t e o f growth in the value o f r e t a i l s a l e s per
square f o o t o f r e t a i l f l o o r a r e a , has been due to an expansion in the
physical f l o o r area devoted to r e t a i l s e l l i n g .
( i . e . , 13.6 p ercent -

8

Thus, 5.6 percent

p e r c e n t) o f th e expansion in the value o f r e t a i l

s a l e s i s a t t r i b u t e d to an expansion in f l o o r a r e a .
Table I I I - 4 .

On the b a s is o f t h i s

Growth In R e ta il Sales In Petoskey and Emmet County
During the Period 1967 to 1976 ($ mln.)

Year

Annual Compound
Rate o f Growth

1967

1972

1976*

Petoskey

30.5

57.7

96.2

13.6%

Emmet County

38.1

73.3

123.6

14.0%

★

Projected

Source: Michigan S t a t i s t i c a l A b s tr a c t, 11th Ed., David I.
Verway ( e d . ) 9 Division o f Research, Graduate School o f Business
A dm inistration, Michigan S t a t e U n iv e r s it y , East Lansing, Michigan, 1976.
D ollars and Cents o f Shopping C e nters, 1975--A Study o f Receipts
and Expenses in Shopping Center O p e ra tio n s, The Urban Land I n s t i t u t e ,
Washington, D.C., 1976, pp. 278-279. The p ercent change in s a l e s f o r
Comnunity Shopping Centers has been assessed in t h i s study t o be 26 p e r ­
c e n t during the period 1972 to 1975. This r e p r e s e n t s a compound y e a r l y
in c re a se o f 8 p e rce n t.

evidence, i t i s being projected th a t any future expansion in the floor
area devoted to r e t a i l sales in Petoskey is lik e l y to absorb an i n ­
crease in net incremental sales of 13.6 percent p.a. until the e n tire
new floor capacity is reached, but th a t sales will grow th e re a f te r
only a t

8 .0

percent per annum.

The extent of floor area th a t could be devoted for r e t a i l
operations a t t h i s location could be based on the ULI's 1975 study of
i
Shopping Centers.
According to t h i s study, r e t a i l sales stores within
th is p a r t of the U.S. could be c l a s s i f i e d into four broad categories
o f shopping centers, v i z . ,
(a) The Neighborhood Shopping Center (NSC),
(b) The Community Shopping Center (CSC)
(c) The Regional Shopping Center (RSC), and
(d) The Super Regional Shopping Center (SRSC).
The NSC i s b u i l t around a supermarket as the core r e t a i l sales unit.
All day to day requirements of the immediate neighborhood as well as
convenience and personal needs are available a t such shopping centers.
The average Gross Leasable Area

2

(GLA) of a NSC i s 50,000 sq. f t .

The

CSC has a g reater depth o f merchandise available and is usually b u i l t
around a junior department sto re .
approximately 150,000 sq. f t .

The typical CSC has a GLA of

The RSC c a r r ie s general merchandise

as well as apparel, fu rn itu re and home furnishings.

Services and

recreational f a c i l i t i e s are also available within such a complex.
1 1 bid.
2

The Gross Leasable Area (GLA) is defined as the to ta l floor
area designed for tenant occupancy and exclusive use, including base­
ment, mezzanines and upper f lo o r s , i . e . , a l l the floor area used by
a r e t a i l center operation excluding vehicle parking area.

72

B u i lt usually around one or two fu ll l i n e department s t o r e s , t h e i r GLA
average around 300,000 sq. f t .

F inally, the SRSC with an average GLA

of about 750,000 sq. f t . provides an extensive v a r ie ty of items and
is usually b u i l t around a t l e a s t three department s to r e s .

The GLA and

d o lla r sa les during 1975 o f a l l these four categories are summarized in
Table 111-5 below.
Table I I 1-5.

Retail Dollar Sales and Gross Leasable Area During 1975
In Midwest Shopping Centers

Lower
Decile

Median

Nei ghborhood
a . GLA - sq. f t . (,000)
b. Sales per sq. f t . ($)

26
37

42
98

152

2. Community
a. GLA - sq. f t . (,000)
b. Sales per sq. f t . ($)

61
40

143
77

279
247

3. Regional
a. GLA - sq. f t . (,000)
b. Sales per sq. f t . ($)

261
37

377
76

653
114

4. Super Regional
a. GLA - sq. f t . ( , 0 0 0 )
b. Sales per sq. f t . ($)

243
48

483
75

1085
108

Type of Shopping Center
1.

Upper
Decile

11 0

Source: "Dollars and Cents of Shopping Centers, 1975—A Study
of Receipts and Expenses in Shopping Center Operations," The Urban
Land I n s t i t u t e , Washington D.C., 1976.
Given a t o ta l land area o f 27 acres a t the Emmet County f a i r ­
grounds s i t e and a generally accepted rule o f a three to one r a t i o
between parking area and GLA, 1 the Conmunity Shopping Center type

^ b i d . , p. 811 on the "Parking Ind ex."

73

referred to In Table I I 1-5 above, is considered to be a reasonable size
of shopping center applicable to the location in question . 1

On the

basis that reta il sales in Petoskey will increase a t 13.6 percent per
annum, sales projections and the corresponding GLA requirements have
been worked out in Table 1I 1-6 below.

These data f a c i l i t a t e the

analysis of choices that are available with regard to the size of
physical f a c i l i t y tha t may be established.

I t also enables the

estimation of related capital costs for the proposed size of r e ta il
shopping center.
Me could calculate the p r o f it a b il ity of a variety of different
sizes of shopping center so as to understand the trade-off between the
costs of having excess physical capacity a t any point in time (in
anticipation of future sales expansion) and the savings from building
a large physical structure that could accommodate sales growth over a
protracted period of time.

That is , i f i t were desired to estimate the

optimum size of the building that should be constructed on the basis
of the data in Table I I 1-6 below, we could calculate a number of a l t e r ­
native sizes and th e ir related costs and then select that size where
the marginal costs of building an additional unit of excess capacity is
ju s t recompensed by an additional amount of savings that can be
attributed to building a large physical f a c i l i t y a t one and the same
time.

However, since this is more an exercise in evaluating the

Hwenty-seven acres constitute approximately 1.17 mln. sq. f t .
One-fourth thereof, viz., 291,525 sq. f t . would constitute the floor
area that would normally be constructed to serve as the physical shop­
ping center area. The Community Shopping Center type referred to in
Table I I 1-5 above f a l l s within the category with a floor area ranging
from 61,000 to 279,000 sq. f t . of GLA, Hence, this category of
shopping center is considered a logical model to base our assessments
on.

74

Table I I I - 6 .

GLA Requirements Assessed On The Basis Of Projected Sales
For Petoskey

Estimated
Increase In Sales
@ 13.6% p.a.
Year

1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

Annual
Annual
Sales
Increase
($, mil i.)
96.000
109.056
123.888
140.736
159.876
181.619
206.320
234.380
266.255
302.466
343.601
390.331
443.416
503.720
572.226
650.049
738.456
838.886
952.975
1082.578
1229.809
1397.063

13.056
14.832
16.848
19.140
21.743
24.701
28.060
31.875
36.211
41.135
46.730
53.085
60.304
68.506
77.823
88.407
101.430
113.089
129.604
147.231
167.254

Annual Increase
In Sales
Attributed To
Increase
in GLAl

Other «
Factors

($, n ln .)
5.376
6.108
6.938
7.882
8,953
10.171
11.554
13.125
14.910
16.938
19.242
21.859
24.831
28.208
32.045
36.403
42.354
46.978
53.367
60.624
68.869

7.680
8.724
9.910
11.259
12.790
14.530
16.506
18.750
21.301
24.107
27.488
31.226
35.473
40.298
45.778
52.004
59.076
67.191
76.237
86.606
98.385

Increase
In Dollar
Sales Per
Sq. Ft. Of
GLA @ 8 % p.a.
1975 = $77

Sq. Ft. Of
GLA Required
To Capture
The Increase
In Sales

($)

(Sq. F t.)

83
90
97
105
113
122

132
143
154
166
180
194
209
226
244
264
285
308
332
359
388
419

59,733
62,9693
66,076
69,743*
73, 385.
77.0535
80,797
85,227
89,812
94,100
99,186
104,589
109,872
115,607
121 ,383
127,730
137,513
141,500
148,655
156,248
164,365

^The increase in sa les a t t r i b u t a b l e to an expansion in physical
s e l l i n g area is estimated to be 5.6 percent of the previous y e a r ' s gross
s a le s .
2
The increase in sales a t t r i b u t a b l e to facto rs other than the ex­
pansion of physical s e l l i n g area is 8 percent of the previous y e a r 's
gross sa les.
3
GLA requirements i f Alternative I were adopted.
^GLA requirements i f Alternative II were adopted.
5GLA requirements i f Alternative I I I were adopted.

75

opportunity costs o f current urban land use on a fairground f a c i l i t y and
a means of ide n tify in g the implications o f not adopting income genera­
tin g a l t e r n a t i v e uses o f such urban land resources, only th ree a l t e r n a ­
t i v e sizes o f physical s tr u c t u r e are being examined below.

In all

these three cases, we assume th a t:
(a) the ca pita l costs are incurred in 1977,
(b) the cash flows begin from January 1978,
(c)

the p r o je c t will l a s t for twenty years from
the cash flows begin, and t h a t

the year

(d) salvage values, i f any, are a l l zero.
A lternative I assumes t h a t f u ll capacity o f physical s e l l i n g
area is reached during the f i r s t year of p r o je c t operation, i . e . ,
by the end o f 1978.

I f so, the required GLA i s 63,000 sq. f t .

With A lternative I I , full capacity i s

assumed to be reached a t

the end of the th i r d year of p ro jec t operation, i . e . , a t the end of
1980.

The rele v an t GLAis 70,000 sq. f t .
In A lternative I I I , five years o f p r o je c t operation are assumed

before reaching full capacity by the end o f 1982.

Therefore, a GLA

of 77,000 sq. f t . i s required under t h i s assumption.
Capital Costs
The median c a p ita l costs o f construction for Comnunity Shopping
Centers
sq.

opened in 1974 was $28.20 per sq.

f t . of GLa J

This r a t e per

f t . of GLA was adjusted for i n f l a t i o n with the use of the Composite

Construction Index o f the U.S. Department of Commerce as reported in

d o l l a r s and Cents of Shopping Centers, 1975—A Study of Receipts
and Expenses in Shopping Center Operations, op c l t . , ta b le 8-3, p. Zfe3.

76

the monthly "Construction Review"

1

final ca pita l cost estimates f o r the

to $32.85 per sq. f t . of GLA.

2

The

three a l t e r n a t i v e s as given by the

formula "capital cost per sq. f t . o f GLA x spe cified a r e a ," th e r e ­
fore, are as follows:
i . A lternative I

:

62,969 sq. f t . x $32.85 = $2,068,532

i i . A lternativ e II :

69,743 sq. f t . x $32.85 = $2,291,058

i i i . A lternative I I I :

77,053 sq. f t . x $32.85 = $2,531,191
Operating Costs

Operating costs as a percentage of s a le s for what i s considered
to be a typical r e t a i l i n g firm, as in the case presently under examina­
t io n , was drawn from the "Manual of Performance Ratios For Business
Analysis and P r o f i t Evaluation."

3

These data are shown in Table I I 1-7

below.

^'Construction Review," Vol. 22, No. 10 of U.S. Department of
Commerce, Dec., 1976.
2

Median d o l l a r cost per sq. f t . of GLA of Community Shopping
Centers opened during 1974 (vide Table 8-3; p. 283 on "Supplementary
Information" in the "Dollars And Cents Of Shopping Centers: A Study of
Receipts and Expenses In Shopping Center Operations" of the Land
I n s t i t u t e , 1976) = $28.20.
The Composite Construction Cost Index 1967 = 100.0
1974 = 172.8
Nov. 1976 = 201.3
Therefore, the adjusted ca p ita l c o s t per square foot of GLA as of
November, 1976
= $28.20 x
3

= $32.85 per sq. f t .

"Manual of Performance Ratios for Business Analysis and P r o f i t
Evaluation," Troy Leo (Englewood C l i f f s , New Jersey: Prentice-Hall Inc.,
1966).

77

Table I I I -7.

Operating Costs As A Percentage Of Net Sales For A Firm
With An Asset Size Between $2.5 to $10 Min.

Percentage
Of Sales

Item Of Cost

Cost of Sales
Executive S a la rie s
Repairs
Advertising
Rent
Bad Debts
Interest
Taxes (excluding Fed. Txs.)
Contributions
Depreci a t i on/Amortzn. /Depln.
Pension & Benefits
Net P r o f i t A fter Income Tax

Deductible
Percentage

6 8 .0
1 .0

68.0
1 .0

0.3
2.9

0.3
2.9

3.1
0.4

__

0 .6

—

—

1.7
0.1
1 .2

- -

0.3

—

1.6

“ —

Total Deductible Expenses .................

72.2%

I t may be noted t h a t expenses such as bad d e b ts, r e n t , i n t e r e s t , con­
t r i b u t i o n s and pension and b e n e f i t s , are not reckoned as operating
costs in the case of an economic e v a lu a tio n , as i s also the case with
d e p rec iatio n .

Though such expenses may be valid deductions for an

individual f ir m 's p r o f i t c a l c u l a t i o n s , to s o c ie ty as a whole the former
are purely d i s t r i b u t i o n a l a sp ects in the process o f resource use.
Depreciation i s taken in to account in the inclusion of t o t a l ca p ita l
costs for the assessment o f the b e n e f i t / c o s t r a t i o and in the assumption
with regard to salvage value; any deduction f o r d e p rec iatio n would
th e r e f o r e , mean double counting.

Accordingly, deductible operating

expenses in the assessment o f n e t b e n e fi ts c o n s t i t u t e only 72.2 percent
of s a le s as shown in Table I I I -7 above.

78
Data on a l l c o s ts and b e n e f i t s f o r each
t i v e s r e s p e c t i v e l y a r e shown in Tables I I I - 8 a ,

of the t h r e e a l t e r n a ­
I I I - 9 a and I I I - 1 0 a . The

corresponding n e t p r e s e n t values a t s i x r a t e s o f discount

(10

p e rce n t,

12 p e r c e n t, 14 p e r c e n t, 16 p e r c e n t, 18 percent and 20 p e r c e n t ) , have
been worked out in s u b - t a b l e s I I I - 8 b, I I I —
9b and I l l - 1 0 b , r e s p e c t i v e l y
f o r each o f the th r e e a l t e r n a t i v e s .
From t h i s assessment i t would seem t h a t even a t very high r a t e s
o f d isc o u n t, the n e t p re se n t value o f a r e t a i l

shopping c e n te r i s

p o s i t i v e and l a r g e .

how valid a r e the

The q u e s tio n , however, i s

s a l e s p r o je c tio n s f o r Petoskey?

Undoubtedly, the p r o j e c t i o n s a r e made

with l i t t l e s p e c i f i c evidence from t h a t a r e a .
b es t p o s s ib le under the circum stances.

But these data are the

Evidence on th e growth in

demand f o r r e c r e a t i o n a l a c t i v i t i e s in Emmet County seem to s u b s t a n t i a t e
the tren d towards an increased demand from t o u r i s t s , v acationers and
second home owners f o r a growing volume o f products t h a t such a
shopping c e n t e r could provide.

I t c o n s t i t u t e s a whole s e t o f

unexploited economic o p p o r t u n i t i e s f o r the Emmet County community
which could help r a i s e i t s level o f income and employment.

79
Table I I I - 8 a .

Row
No.
1
2

3
4
5
6

7
8

9
10
11
12

13
14
15
16
17
18
19
20
21

Costs and B e n e fits Under A lte r n a tiv e I 1
( in m illio n s o f d o lla r s )

Year

Capital
Costs2

1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

2.069
---—
—--------

---------

Gross o
Benefi t s

Net
.
B e n efits

6.10800
6.59659
7.12437
7.69432
8.30986
8.97465
9.69262
10.46800
11.30550
12.20990
13.18670
14.24160
15.38100
16.61140
17.94040
19.37560
20.92560
22.59970
24.40760
26.36030

1.69802
1.83387
1.98057
2.13902
2.31014
2.49495
2.69455
2.91011
3.14292
3.39435
3.66590
3.95917
4.27591
4.61798
4.98742
5.38641
5.81732
6.28271
6.78532
7.32815

The siz e o f s t o r e i s 62,969 square f e e t o f Gross Leasable Area.
This i s a r r i v e d a t m ultiplying the number o f squre f e e t GLA @
$32.85 per square f o o t.
2
3

Full c a p a c ity i s assumed to be reached in the f i r s t year o f
p r o j e c t o p e ra tio n ; v i z . , by th e end o f 1978.
A
Operating c o s t s a r e 72.2 percent o f gross b e n e f i t s .
Table I I I - 8 b.

Net Present Value At Various Discount Rates

Rate o f I n t e r e s t
.10
.12

.14
.16
.18
.20

Net Present Value ($ mln.)
24.0108
19.8700
16.6336
14.0727
1 2 .0 2 2 0

10.3609

80
Table I I I - 9 a .

Row
No.
1
2

3
4
5
6

7
8

9
10
11
12

13
14
15
16
17
18
19
20
21

Costs And B e nefits Under A lte rn a tiv e 11^
( in m illio n s o f d o lla rs )

Year

Capital
Costs2

1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

2.291
------------------------

--

Gross Benefits
6.1080
6.9387
7.8824
8.5129
9.1940
9.9295
10.7238
11.5818
12.5083
13.5090
14.5897
15.7568
17.0174
18.3788
19.8491
21.4370
23.1520
25.0041
27.0044
29.1648

Net
4
Benefits
1.6980
1.9290
2.1913
2.3666
2.5559
2.7604
2.9812
3.2197
3.4773
3.7555
4.0559
4.3804
4.7308
5.1093
5.5180
5.9595
6.4362
6.9511
7.5072
8.1078

H he size of the s to r e is 69,743 square f e e t of Gross Leasable
Area.
2

This is arrived a t by multiplying the number of square f e e t
GLA @ $32.85 per square foot.
3
Full capacity is assumed to be reached in the th i r d year of
p ro jec t operation; v i z . , by the end of 1980.
4
Operating costs are 72.2 percent of gross b e n e fi ts .
Table I II-9 b .

Net Present Value At Various Discount Rates

Rate of I n t e r e s t
.10
.12

.14
.16
.18
.20

Net Present Value ($ mln.)
26.3166
21.7412
18.1660
15.3380
13.0743
11.2413

81
Table III- 1 0 a .

Row
No.
1
2

3
4
5
6

7
8

9
10
11
12

13
14
15
16
17
18
19
20
21
1

Costs And B e n e fits Under A lte rn a tiv e I I I 1
( in m illio n s o f d o lla r s )

Year

Capital
Costs 2

1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

2.531
—
—
- —
- —
—
—
- —
- - —
- - »_
—
—
- —

Gross »
Benefi t s
6.1080
6.9387
7.8824
8.9544
10.1721
TO. 9859
11.8648
12.8140
13.8391
14.9462
16.1419
17.4332
18.8279
20.3341
21.9609
23.7177
25.6151
27.6644
29.8775
32.2677

Net .
Benefits
1.6980
1.9290
2.1913
2.4893
2.8279
3.0541
3.2984
3.5623
3.8473
4.1550
4.4875
4.8464
5.2342
5.6529
6.1051
6.5935
7.1210
7.6907
8.3059
8.9704

The s iz e o f the s to r e i s 77,053 square f e e t of Gross Leasable

Area.
2

This i s a r r iv e d a t by multiplying the number of square f e e t
GLA @ $32.85 per square foot.
3
Full capacity is assumed to be reached in the f i f t h year o f
p r o je c t operation; v i z . , by the end of 1982.
^Operating c o s ts a r e 72.2 percent o f gross b e n e f i t s .
Table III-10b.

Net Present Value At Various Discount Rates

Rate of I n t e r e s t
.10
.12

.14
.16
.18
.20

Net Present Value ($ mln.)
28.5231
23.4851
19.5523
16.4447
13,9600
11.9508

CHAPTER IV

ATTITUDES AND PERCEPTIONS OF THE COUNTY FAIRGROUNDS
PROJECT BY MEMBERS OF THE EMMET COUNTY COMMUNITY
An o b je c tiv e of t h i s study was to assess the a t t i t u d e s of

the

local community towards the county fairgrounds p r o je c t and the various
events conducted t h e r e i n .

I t was also deemed necessary to understand

whether the r e c r e a tio n a l needs o f t h i s community have changed s i g n i f i ­
ca n tly enough to warrant changes in the fairgrounds p r o j e c t in a way
t h a t would make i t more r e le v a n t to p resent times.

Therefore, a survey

o f the a t t i t u d e s o f th e Emmet County people towards the present f a i r ­
grounds p r o j e c t and t h e i r re a c tio n s to a v a r ie ty o f proposed changes
to t h i s p r o j e c t , was conducted in March, 1977.
The survey technique used was t h a t of a mail survey based on a
pre-designed q u e s tio n n a ire .

This questionnaire^ was drawn up a f t e r a

study of the issues involved and several s e ts o f discussions with Fair
Board members, public o f f i c i a l s in Emmet and Grand Traverse Counties,
the p r e s id e n t o f the local Chamber o f Commerce, a hotel and r e s ta u r a n t
owner/manager, managers o f c e r t a i n r e c r e a tio n centers in Emmet County,
the P re sid e n t of the North Central Michigan College in Petoskey (who
has a special i n t e r e s t in a reorganized fairgrounds p r o je c t in r e l a t i o n
to the r e c r e a tio n a l needs o f the College), and various othe r members

^ e e Appendix B f o r a copy o f the questionnaire .

82

83
o f the local community.^
Several p r e - t e s t s o f the q u e s tio n n a ire were made with some
members with whom the o r i g i n a l d isc u ssio n s were held, with o th e r persons
nominated by them, as well as with a few in d iv i d u a ls randomly contacted
who were w i l l i n g to o b lig e with a few minutes o f t h e i r time.

2

Though the population to be surveyed was intended to be a l l the
heads o f households in Emmet County, the actual sampling frame was
prepared from the telephone d i r e c t o r i e s f o r the area c o r r e c te d as f a r
as p o s s i b le to exclude a d ja c e n t coun ties and business e s tab lish m e n ts.
Special provision was made in the q u e s tio n n a i r e as well to enable

the

elim in a tio n o f responses from non-Emmet County householders.
The q u e s tio n n a i re was mailed to the s e l e c t e d householders with
an explanatory covering l e t t e r and a s e l f addressed stamped envelope.
The u n i t o f i n v e s t i g a t i o n was the household and the q u e s tio n n a ire was
addressed to the person l i s t e d

1n

the d i r e c t o r y though e i t h e r the man of

the house o r his spouse was required to respond.
The formulation o f the q u e s tio n n a i re as well as the mechanics
o f th e mail survey, among many o th e r m a t t e r s , received a g r e a t deal o f
e n t h u s i a s t i c support from Mr. Max P u t t e r s , the County Planner in
Petoskey.
2

This was found by the author during the problem in v e s t i g a t i o n
and q u e s tio n n a i r e p re p a r a tio n and p r e - t e s t 1 ng sta g e s to be a very r a r e
commodity to many persons in Emmet County. I t may be a p p r o p r ia te to
place on record a t t h i s sta g e t h a t very few members on the Emmet County
F a ir Board were r e a l l y a v a i l a b l e o r in c lin e d to f a c i l i t a t e t h i s study
by spending time e i t h e r in d isc u ssin g th e p re se n t problems in regard to
the fairgrounds p r o j e c t o r in q u e s tio n n a i r e e v a l u a t i o n / p r e - t e s t i n g ,
e t c . But, the study was highly d e s ire d by a l l and sundry as members of
th e F a i r Board, perhaps, because i t 1s to be more o r l e s s f r e e o f any
heavy f i n a n c i a l commitment to the F a ir Board. Yet, as p r i v a t e i n d i v i ­
duals most of th e se members had n e i t h e r th e time nor the i n c l i n a t i o n
to help with t h e i r knowledge and experience so as to improve the
q u a l i t y o f t h i s rese arch e f f o r t .

84
To induce a high response r a t e , th e community was f i r s t made
aware o f th e proposed survey by means o f an a r t i c l e in a popular local
newspaper.^

This news item was t o make the p o t e n t i a l respondent aware

o f the study and the need f o r i t , to mention t h a t no postage c o s t to
him was involved, and to a s s u re him o f p e r f e c t anonymity.

I t was

a ls o i m p l i c i t l y s t a t e d t h a t th e r e s e a r c h study was being conducted by
one with no personal s ta k e in th e fair g ro u n d s p r o j e c t or in the outcomes
from th e survey.
Because o f th e r e q u e s t f o r income d a t a , assurance o f anonymity
was considered im p o rta n t.

T h erefo re , d e s p i t e the importance o f follow -

up l e t t e r s to r a i s e th e response r a t e in a mail survey ,
was not f e a s i b l e in th e p r e s e n t case on account o f
o f respondent anonymity.

2

th is

technique

our avowed guarantee

I t was not p o s s i b l e to determine who had not

responded a t any given p o i n t in time so t h a t a reminder could be s e n t to
a non-responder w ith in t h e sample.
th e process o f communication.

Rumor has important i m p l ic a tio n s on

Reminder l e t t e r s to

i r r e s p e c t i v e o f whether one had r e p l i e d

a l l sample households

o r not was considered de trim e n ta l

to the c r e d i b i l i t y o f our guarantee o f anonymity.

Those who had not

responded could have (wrongly) suspected t h a t th e r e s e a r c h e r was, in
f a c t , a b l e to i d e n t i f y th o se who had not responded to t h e q u e s t i o n n a i r e
inducing him to n o t r e p l y a t a l l through doubt about the anonymity
guarantee and have encouraged th e s u s p ic io u s to spread rumors adverse to
th e proper conduct o f t h e survey.
H h e "Petoskey News Review" o f March 1, 1977.
2

R.C. Buse, "Motivating P o t e n t i a l Respondents In Mall Surveys,"
Report o f th e Research D iv is i o n , College o f A g r i c u l t u r a l and L ife
S ciences, U n iv e r s ity o f Wisconsin, Madison, June 1972.

85

The ultimate e f f e c t i v e response r a t e was 31 percent o f the to ta l
number o f selected sample households.

The absolute number o f acceptable

responses exceeded the s t a t i s t i c a l l y necessary minimum.

The data from

these questionnaires were, th e re fo r e , used for the analysis which
follows.
I t may be noted t h a t the method o f in v e stig a tio n adopted in th is
case is lik e l y to have led to some systematic bias in the type of
responses received.

A major weakness o f the mail survey technique is

t h a t i t is more prone to s u f f e r from

s e le c t i v e exposure,

. .a

tendency to attend to communication messages t h a t are c o n s is te n t with
one's e x is tin g a t t i t u d e s and b e l ie f s ." ^

This concept draws our a t t e n ­

tion to the p o s s i b i l i t y t h a t people in Emmet County who do not believe
t h a t the fairgrounds p r o je c t i s in accord with t h e i r needs and i n t e r e s t s
are l i k e l y to ignore any messages connected th e re to .

To quote Rogers

Generally, individuals tend to expose themselves to
those ideas which are in accord with t h e i r i n t e r e s t ,
needs, or e x i s tin g a t t i t u d e s . We consciously or un­
consciously avoid messages which are in c o n f l i c t with
our p r e d is p o s itio n s .^
Responding to a survey questionnaire involves co s ts to the individual.
I f the individual perceived the tr a n sa c tio n s costs of p a r t i c i p a t i n g in
the survey as being g r e a t e r than the po te n tia l gain to him therefrom,
he is unlikely to have completed the questionnaire and posted i t back.
I t i s possible t h a t a large proportion of the non-respondents on t h i s
mail survey f a l l within the category t h a t lack any i n t e r e s t in the
fairgrounds pro jec t.

The r e l a t i v e l y low level o f response to t h i s

^Rogers with Shoemaker, op c i t . , p. 105.
2 Ib id .

survey may i t s e l f be an indic ation o f the lack of relevance of the
fairgrounds p r o je c t as i t i s prese ntly organized to a large proportion
o f people in Emmet County.
I t was not possible to carry out f u r th e r in v e stig a tio n in to the
c h a r a c t e r i s t i c s of the non-respondents because records were not main­
ta ined to id e n tify respondents and non-respondents.

However, a

reasonable inference from the a v a ila b le data i s t h a t a high proportion
of the respondents are persons already i n te r e s te d in and exposed to
the fairgrounds p r o je c t in Emmet County, and do have an i n t e r e s t in
i t s maintenance and improvement.
In sum, the mail survey method may not be the ideal survey
technique to have been used in the present case.

The personal interview

technique i s l i k e l y to have yielded a more re p r e se n ta tiv e cross section
of views of the Emmet County people and, perhaps, a s e t o f views le ss
biased in favor of the fairgrounds p ro jec t than may be the case with
the present data.

Nevertheless, the c o s t in terms of time and other

resources a v a ila b le to the rese arch er prohibited the use of the
personal interview technique.
The Annual County Fair
Of the complex of fairgrounds a c t i v i t i e s , the most popular
event appears to be the Annual County F air ( h e r e a f te r r e f e r re d to as
the F a i r ) .

According to Table IV-1 below, 67 percent of the respondents

considered the Fair an important event in the l i f e o f the community.
Compared with the other important sub-projects within the fairgrounds
complex, attendance of a t l e a s t one member o f the respondent family
during the twelve month period preceding the f i e l d survey was highest

87
Table IV -1.

Importance o f the Annual F a ir to Members o f the Community
(C4) By Type o f Household (C l)

Type o f Household (Cl)
City

Rural
Non-Farm

Rural
Farm

Other

Per­
No. cent

No. Per­
cent

No. Per­
cent

Per­
No. cent

A ttitu d es Towards
The Annual Fair
(C4)

Five Point Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Negative
6 . Total
Three Point Scale
7. Important
8 . Neutral
9. Negative

20
20
20
1
6

67
40
20

7

29.9
29.9
29.9
1.5
9.0
51.5

23

59.8
29.9
10.5

33
7

10

7
1
1

42

2

54.8
23.8
16.7
2.4
2.4
32.3
78.6
16.7
4.8

7
2
2

63.6
18.2
18.2

—
—

Total
No.

53
34
31
4

40.8
26.2
23.8
3.1

8

6.2
100.0

3

30.0

2
2
2
1
10

2 0 .0
20.0
2 0 .0
10.0

7.7

130

11

8.5

9

81.8
18.2

5

50.0

2

20 .0

87
31

- -

3

30.0

12

2
- -

Per­
cent

67.0
23.8
9.3

a t the F a ir ; 71.5 percent o f the respondents r e p o r t such a tten d a n ce--see
Table IV-2 below.

The corresponding percentages for the o th e r events

are 44.6 percent f o r the Farmers' Markets, 25.9 percent f o r 4-H
a c t i v i t y and 18.0 percent f o r snowmobile races.

Anticipated attendance

during the next twelve month period i s also expected to be h ig h e st f o r
the same event (Table IV-2).
I t was seen above t h a t 67 percent o f the survey respondent con­
sidered the Fair an important event to them; only 9.3 percent had
negative f e e l in g s about i t (Table IV-1).

I t may be u se fu l, however, to

examine the a t t i t u d e s o f groups within the community c l a s s i f i e d by
type o f household (Cl).

As Table IV-1 i n d i c a t e s , there appear to be

s i g n i f i c a n t d if fe re n c e s in a t t i t u d e s as between these groups.

Of the

c i t y respondents, 59.8 percent considered the F air important while

88
Table IV -2 .

Attendance a t Each M ajor Fairgrounds Event During the Past
Twelve Months (C l6 to C l9) and Expected Future Attendance
During the Next Twelve Months (C22 to C25)

Annual
Fair
No.
Past Attendance
1. Attended
2. Did Not
3. Do Not Know

93
37

Future Attendance
4. Expect To
5. Do Not
6 . Do Not Know

93
19
13

Farmers'
Market

Per­
cent

(C16)
71.5
28.5

—

—

(C22)
74.4
15.2
10.4

No.

Per­
cent

4-H
A c ti v ity
Per­
cent

No.

29
77

25.9

(19)
18.0
80.2
89

6

5.4

36
42
29

(C24)
33.6
39.3
27.1

No.

(17)
44.6
53.7
2
1.7
(C23)
60
52.2
27
23.5
28
24.3
54
65

Snowmobi1e
Races

(18)
6 8.8

10.5 p erce n t in d ic a t e d negative a t t i t u d e s towards i t .

Per­
cent

20

2

1.8

(C25)
20.4
64
62.1
18
17.5

21

Of th e rural

r e s i d e n t s (farm as well as non-farm), 79.2 percent thought the F a ir
important to them; only 3.8 percent have given negative responses
thereto. 1

When we i s o l a t e farm people from the " r u r a l" group

r e f e r r e d to above, we find t h a t nobody in the farm household s e c t o r
has negative f e e l i n g s about the F a ir ; 81.8 percent c o n s id er i t important
and the r e s t remain n e u t r a l .

City householders c o n s t i t u t e by f a r the

l a r g e s t ac tu a l householder category in Emmet County, y e t the data
i n d i c a t e a p o s i t i v e f e e l i n g towards the F air as an im portant event in
the l i f e o f the community t o a co n sid erab le number w ithin each of the
groups c l a s s i f i e d by type o f household.

^Derived from rows 7 and 9 o f columns 4 and

6

o f Table IV-1.

89

A chi square t e s t 1 of the hypothesis of independence between the
variables

2

"Use of Fairgrounds F a c i l i t i e s During the Past Five Years"

(C3) and "Attitudes Towards the Annual Fair" (C4) indicates t h a t there
may be a strong r ela tio n r a th e r than independence between the two
variables a t a 5 percent level of significance.
the variable "Use of Fairgrounds F a c i l i t i e s . .

Similar t e s t s of
(C3) with a t t i t u d e s

towards each of the other fairgrounds events also indicate positive
relationships.

Yet, the strongest r ela tio n i s between "Attitudes

Towards the Fair" (C4) and "The Use of Fairgrounds F a c i l i t i e s . .
<C3) . 3
These s t a t i s t i c a l t e s t s add further support to the contention
t h a t i t is the Fair which i s the main basis for community p a r tic ip a tio n
in the a c t i v i t i e s of the fairgrounds complex.

The Fair is the mainstay

of th is connunity f a c i l i t y and the primary reason for i t s perpetuation.
All the other events appear to be additions th ereto to r a is e the level
of resource u t i l i z a t i o n .

In the days of yore when land was in

This s t a t i s t i c a l t e s t i s im plicitly a t e s t of the hypothesis of
no dependence between the specified pair of varia bles. Where the
Calculated ^ value i s greater than the Table Value a t the specified
level of significance (.05 in th is case), we cannot accept t h i s hypo­
thesis of independence between the variables. The r e s u l t s o f all x^
t e s t s are shown in the table in Appendix C. Column 6 o f th a t table
shows the level of confidence a t which the r e la tio n between these
variables is s ig n i fic a n t . In the above case, for example, the r e la tio n
between each pair of varia bles is s ig n i fic a n t a t any level of confidence.
While the
measure gives evidence about the lack of indepen­
dence between the specified variables, the Contingency Coefficient a t
column 7 is a measure of the degree of dependence between the specified
variables; the higher the Contingency Coefficient, the greater the
r ela tionship between the variables,
o
Please see the questionnaire in Appendix B for a l l variables
d e f in itio n s.
3

See Appendix C for r e s u lt s .

90

r e l a t i v e l y abundant supply, the community had no compunction towards a
very lim ited use of these land and building resources.

With increasing

population and the complextiy of urban l i f e , however, i t s s c a r c i t y
value has tended to r i s e and additional a c t i v i t i e s have begun to be
added on on an 'ad hoc' basis simply because an underutilized f a i r ­
grounds is a v a ila b le for use as a community f a c i l i t y .

The t r a d i t i o n a l

event of the Fair has continued to dominate the use to which these
scarce resources are put.
That the Fair is the crux o f the e n t i r e operation is a lso
supported by the financial accounts of the Emmet County F air Board.
The statements of Annual Net Operating Incomes From Fairgrounds
Operations in Emmet County fo r the period 1967 to 1976 which were
reconstructed from the income-expenditure statements of the F air
Board are shown in Appendix D(l).

They reveal t h a t nearly a l l the

annual financial income of the Fair Board i s derived from t h i s single
event as are most o f the expenses.^

Even in the case o f the f a i r ­

grounds projec t in Grand Traverse County (Northwestern F a i r ) , the
Annual Net Operating Incomes for the three accounting years ending
October 1973, 1975 and 1976 (Appendix E), and which were also worked
out from the income-expenditure statements o f t h a t Fair Board, i t i s
s t i l l the annual county f a i r which predominates as the c e n t r a l , or,
perhaps, the only f in a n c ia ll y s i g n i f i c a n t event.

Even the various

s t a t e aids to county fairgrounds organizations in Michigan are a l l
^Expenses incurred on maintenance, lab or, o f f i c e expenses, e t c . ,
will all have to be apportioned among a l l the events to a r r i v e a t the
relevant costs for the Fiar. I t may be s ta te d with a high degree of
confidence, however, th a t the l a r g e s t proportion o f such costs are
on account of the Fair.

county f a i r r e l a t e d as Appendix F on the Michigan Department o f
A g r i c u l t u r e 's grants to f a i r a s s o c ia tio n s c l e a r l y i n d ic a t e s .
In view o f t h i s predominant p o sitio n of the F air in the operation
o f the Emmet County fairgrounds p r o j e c t , i t seems reasonable to s t a t e
t h a t the community's a t t i t u d e towards the Fair i s the most important
determinant o f the comnunity's perceptions of the overall fairgrounds
complex.

The main b as is for i t s continued a t t r a c t i o n and, th e r e f o r e ,

the context in which the p r o je c t i s viewed today appears to be i t s
r e c r e a tio n a l / e n t e r t a i n m e n t element r a t h e r than the economic functions
i t served in e a r l i e r y e a rs .

The payment o f premiums f o r presenting

e x h i b its r e p r e s e n ts the only expenditure on a t r a d i t i o n a l fairgrounds
function r e l a t e d to local e f f o r t s a t r a i s i n g the level o f a g r i c u l t u r a l
p r o d u c tiv ity .

Premium payments c o n s t i t u t e , however, a r e l a t i v e l y small

proportion of fairgrounds expenses today.

I t i s the incomes

and

expenditures for r e c r e a tio n /e n te r ta in m e n t r e l a t e d events which dominate
the accounts of the F a ir Board.

Furthermore, the perpetuation of the

t r a d i t i o n a l e x h i b i t p re se n ta tio n and premium payment events may be
highly influenced by the heavy subsidy of 75 percent o f a l l such
awards reimbursed by the Department of A g ricu ltu re.

I t seems reasonable

to believe t h a t but f o r t h i s s t a t e subsidy the t r a d i t i o n a l e x h i b it
p re se n ta tio n event, too, i s l i k e l y to have l e f t the fairgrounds p r o je c t
*

scene.
Nevertheless, th e re is s t i l l a strong a g r i c u l t u r e r e l a t e d theme
to the F air and the overall fairgrounds complex which continues to
influence policy-making and operation of t h i s p r o j e c t .

The survey data

have revealed a strong inte r-conne ction between a t t i t u d e s towards each
o f the th ree a g r i c u l t u r e r e l a t e d su b - p ro je c ts within the fairgrounds

92

complex, v i z . , th e F a i r , the Farmers' Markets and 4-H a c t i v i t y .
According to Table IV-3 below, 51.1 percent o f those who think t h a t
th e Farmers' Markets a r e important also consider t h a t the F a ir i s
important as w ell.

The corresponding percentage in r e s p e c t o f 4-H

a c t i v i t y and the F a ir i s 48.0 (Table IV-4 below).

Chi square t e s t s o f

the hypothesis o f independence between each p a i r of th e se a t t i t u d i n a l
v a r ia b le s confirm t h a t such an hypothesis has to be r e j e c t e d . 1

Each

o f th e se t h r e e p a i r s o f v a r ia b le s i s dependent a t any level o f s i g n i ­
f ic a n c e , and the r e l a t i v e l y high contingency c o e f f i c i e n t s confirm the
s t r e n g t h o f each of th e se r e l a t i o n s .

2

Interdependence between the a t t i t u d i n a l v a r ia b le s r e l a t e d to
these t h r e e s u b - p r o j e c t s within the fairgrounds complex may be explained
with ref e r e n c e to a combination o f i n t e r - r e l a t e d f a c t o r s , v i z . , the
strong a g r i c u l t u r e r e l a t e d b e l i e f s and values w ithin the community in
general and amongst th e members o f the F air Board in p a r t i c u l a r , the
powerful in flu e n c e o f the Emnet County A g ric u ltu ra l Extension Division
on such b e l i e f s and valu es, and the poor system o f accounting adopted
by the F a ir Board.
4-H a c t i v i t y by th e youth i s highly valued by the o ld e r members
of the community, perhaps, in the b e l i e f t h a t such a c t i v i t i e s in c u lc a te
and r e i n f o r c e important r u ra l values.

A stepwise r e g r e s s io n o f the

major v a r i a b l e s t h a t in flu e n c e a t t i t u d e s towards the F air supports
t h i s contention t h a t a t t i t u d e s towards 4-H a c t i v i t y have a strong
in f lu e n c e on a t t i t u d e s towards the former.
See Appendix C f o r th e r e s u l t s of th e se chi square t e s t s .
2

See Appendix C.

Table IV-3.

Importance o f the Annual F a ir and the Farmers' Markets to Members to the
Community (C4 and C5» re s p e c tiv e ly )

Attitudes Towards the Farmers' Markets (C5)
Attitudes Towards
The Annual Fair
(C4)

Three Point
Scale*

Five Point Scale

Total
Important

Somewhat
Important

Neutral

Somewhat
Negative

Important

Negative
Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

—

1

9.1

38

56.7

1

8.3

54 41.2

100.0

2

18.2

18

26.9

3 25.0

34 26.0

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

19

70.4

19

47.5

15

28.8

6

22.2

12

30.0

13 25.0

8

20.0

22

42.3

—

—

1

1.9

—

1

2.5

1

1.9

—

40

30.5

52

39.7

1

0 .8

31

77.5

28

53.8

1

100.0

—

8

20.0

22

42.3

7.4

1

2.5

2

3.8

No.

Very
Negati ve

No.

Five Point Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.

—

—

2

7.4

5. Very Negative

- -

6.

27

20.6

25

92.6

Total

—

—

—

1

30 22.9

—

—

8

11.9

—

1

9.1

2

3.0

1

8.3

4

3.1

—

7 63.6

1

1.5

7 58.3

9

6.9

8.4

67

51.1

12

9.2

131

100.0

56 83.6

4

33.3

88

67.2

—

30

22.9

66.6

13

1 0.0

—

11

—

—

Three Point Scale
7. Important
8

. Neutral

9. Negative

—

2

—

—

3 27.3
8

*The th i r d point, v i z . , "neutral" is already shown in columns

72.7
6

8

11.9

3

4.5

and 7.

—

8

Table IV-4.

Importance o f the Annual F a ir and 4-H A c tiv itie s to Members o f the Community
(C4 and C6, re s p e c tiv e ly )

Attitudes Towards 4-H A ctiv itie s (C6 )
Three Point
Scale*

Five Point Scale
Attitudes Towards
The Annual Fair
(C4)

Five Point Scale
1. Important

Total
Important

Somewhat
Important

Per­
No. • cent

No.

Per­
cent

No.

12

50.0

11

8

33.3
16.7
—

2. Somewhat Imp.
3. Neutral

6
2

75.7
16.2
5.4

4. Somewhat Neg.

1

2.7

5. Very Negative
6 . Total

28

Neutral
Per­
cent

22.9
16 33.3
19 39.6

Somewhat
Negati ve
No.

3

Per­
cent

100.0

Very
Negati ve
No.

Important

Per­
cent

No.

40 65.6
14 23.0
6
9.8

4

6.7
26.7

2

13.3

8

53.3

—

1

Per­
cent

Negative
No.

Per­
cent

—

—

4
4

22.2

1 .6

2

—

22.2

11.1

8

44.4

9

7.1

127

1 00.0

2.1

—

1

2.1

—

—

18.9

48

37.8

3

2.4

15

11.8

61

48.0

18

14.2

83.3
4 16.7
—
—

27
19

56.2

3

1 00.0

1

54

88.6

4

22.2

—

—

4

6.7
26.7

6

9.8

4

22.2

—

—

10

66.6

1

1 .6

10

55.5

37

29.1

24

34

91.9

20

2

5.4
2.7

1

51 40.2
34 26.8
22.8

1

—

—

Per­
cent

29
4

—
—

4

No.

3.1

Three Point Scale
7. Important
8 . Neutral
9. Negative

1

2

39.6
4.2

*The t h i r d point, v i z . , "neutral" is already shown in columns

6

and 7.

85 67.0
29 2 2 . 8
13 1 0 . 2

95

The regression analysis in question was c a rr ie d out with a
regression equation o f the form:
V = a 0 + f l ^ + S2 X2 + ........................... + BnXn + e
The r e s u l t s are as follows:
c4

t

+ 0.463C6

+ 0.748C16

(.219)

(.051)

(.17)

( .211)

( -5 .0 )

(9.0)

(4.4)

(4.3)

= -1.095

=

IT =

+ 0.909C

.69

where
= A ttitudes Towards the Annual County Fair^
Cg

= A ttitud es Towards 4-H Activity^

C^g = Attendance a t the Last Annual County Fair
C^

3

= Use of Fairgrounds F a c i l i t i e s During the Past Five Years

4

The above an a ly sis shows t h a t the major explanatory v a r ia b le s, in
descending order of importance, are " a t t i t u d e s towards 4-H a c t i v i t y , "
"attendance a t the l a s t Fair" and "past use of fairgrounds f a c i l i t i e s . "
All the c o e f f i c i e n t s derived are highly s i g n i f i c a n t .

Approximately 69

percent of the v a r ia tio n in a t t i t u d e s towards the Fair are explained by
these three variables alone.

Of these three explanatory v a ria b le s,

a t t i t u d e s towards 4-H a c t i v i t y alone were found to explain 48.7 percent
of the v a r ia tio n in the dependent varia ble.

The corresponding changes

1, 2, 3, & 4gefi Questio n n a ir e in Appendix B for a d etailed
d e f i n i t i o n o f each o f these v a ria b le s.

96
\

2

in R f o r the v a ria b les "attendance a t the l a s t annual f a i r " and
p a s t p a r t i c i p a t i o n in fairgrounds a c t i v i t i e s " a r e 16.0 percent and
4.9 perce nt, r e s p e c tiv e ly .
The work o f th e county Cooperative Extension O ffice, too,
helps to f u r t h e r strengthen and maintain t h i s value.

The county has a

strong extension work program d e s p ite the f a c t t h a t the r e l a t i v e
importance of a g r i c u l t u r e within the Emmet County economy has been
declining s t e a d i l y and income from a g r i c u l t u r e c o n s t i t u t e s a very
small proportion o f income generated w ithin the county.

This d iv is io n

does re g u la r broadcasts e s p e c i a l l y about a g r i c u l t u r a l issues and
4-H work.

I t also conducts programs f o r the youth a t the 4-H Youth

Center in the fairgrounds premises.

The comnunity is thus con stan tly

influenced by a g r i c u l t u r e and youth work program r e l a t e d messages
thus helping to s u s t a i n and strengthen e x i s t i n g a g r i c u l t u r e r e la te d
b e l i e f s and values.

The conduct o f 4-H programs within the fairgrounds

premises and the focussing o f a t t e n t i o n towards e x h i b i t preparation
and p rese n tatio n by the youth a t the F air tends to perpetuate an
image of importance and in te r-co n n e ctio n among a l l these a c t i v i t i e s
where a g r i c u l t u r e i s involved.

In c o n t r a s t to the importance given

to the a g r i c u l t u r a l programs within the county, county o f f i c e s r e la te d
to the r ap id ly growing t o u r i s t , h o s p i t a l i t y and r e c r e a tio n i n d u s t r i e s ,
seem to be poorly

coordinated.

There i s f a r le s s a t t e n t i o n by the

county extension s t a f f to these rapidly growing in d u s t r ie s so cru c ia l
to the fu tu re growth of the Emmet County economy.
By t r a d i t i o n and p as t momentum, the influence of the extension
o f f i c e on decision making by the Fair Board i s high.

The Director

o f Extension is a f u l l time and permanent member o f t h i s Board.

He i s

97

a l s o a s s i s t e d and supported a t th e se meetings by a f u l l time 4-H
Youth Program A s s i s t a n t working under h i s a d m i n i s t r a t i v e c o n t r o l .
These personnel r e p r e s e n t s c i e n t i f i c knowledge about a g r i c u l t u r e and
r e l a t e d m atters and have a high degree o f c r e d i b i l i t y and acceptance
among o t h e r F a ir Board members as well as the County Commissioners.
The li n k o f t h i s d i v i s i o n with the U n iv ersity boosts i t s c r e d i b i l i t y
further.

The F air Board depends very much on th e Extension o f f i c e for

advice and counsel in making decisions t h a t a f f e c t use o f the f a i r ­
grounds.

This le a d e r s h ip of the extension personnel a ls o encourages

a c lo se in te r- c o n n e c ti o n among s u b - p r o j e c t s such

as the F a i r , the

farmers' markets and 4-H a c t i v i t y and makes i t d i f f i c u l t to s e p a r a te
out the co s ts and r e tu r n s from these individual s u b - p r o j e c t s and to
e v a lu a te them s e p a r a t e l y .
F a ir Board members themselves tend to be highly homophilous^
in regard to t h e i r views and a t t i t u d e s towards a g r i c u l t u r e and the
fairgrounds p r o j e c t .

The method of s e l e c t i n g new Board members on the

b as is o f nominations by e x i s t i n g members tends to encourage the
maintenance of a c e r t a i n s e t o f preferences on the Board.

This too

helps p e r p e tu a te an a g r i c u l t u r a l l y o r i e n t e d view o f the fairgrounds
p r o j e c t and i n h i b i t s th e evolution of the p r o j e c t to s a t i s f y changing
community needs.

The e x i s t i n g s e t o f i n s t i t u t i o n a l and power sharing

arrangements thus in flu e n c e and con dition the perceptions o f the
community with regard to these f airgrounds a c t i v i t i e s .

They a l s o

in f lu e n c e the members o f the comnunity to r e t a i n strong a t t i t u d e s in

^"Homophily" r e f e r s to the high degree o f correspondence
between th e id e as, b e l i e f s , v a lu e s, backgrounds, e t c . , o f two o r more
persons.

98

favor of such a c t i v i t i e s without reference to t h e i r relevance in the
development of the Emmet County economy or the c o s t-b e n e f it r e l a t i o n ­
ships within a c t i v i t i e s or of the to ta l fairgrounds project.
Attitudes towards t h i s complex of sub-projects and the overall
fairgrounds project are affected by the accounting practices adopted
by the Fair Board (about which more will be said l a t e r ) and im p lic itly
approved by the Eirmet County Treasurer's Division sometimes without
examination or v e r if ic a tio n of even the accuracy of the annual accounts)
as well as by the County Board of Commissioners.

The accounting system

as i t i s presently organized does not d i f f e r e n t i a t e between sub-projects
nor provide for the clear id e n ti f i c a t i o n of operating losses e i t h e r in
terms of the to ta l complex o f a c t i v i t i e s or on a sub-project by subproject basis.

These deficiencies in the accounting system mean that

there is no useful feedback to the decision makers about the pro­
f i t a b i l i t y of the various sub-projects and prevents highlighting the
major loss items and f a i l s to encourage the investigation o f major
loss items.

The f a c t th a t there is an automatic approval of county

funds to cover a l l annual losses without review or even question helps
perpetuate the ' s t a t u s quo' with regard to the fairgrounds project.
In summary, the Fair Board consists o f members who are closely
connected with ag ric u ltu re and hold a g r ic u ltu ral a t t i t u d e s , beliefs
and values.

The method of succession of new members to the Fair

Board ensures t h a t people who hold sim ilar views and values will
continue to hold sway in making decisions with regard to the fairgrounds
project.

The mediation of the County Extension Director, a permanent

member o f the Fair Board, between 4-H and other a g r ic u ltu r a l a c t i v i t i e s
within the county and the Fair Board, his close access to the County

99

Board o f Commissioners, and his influence over th e volunteer members
on the F air Board on account of the o f f i c i a l p o sitio n he holds and
the o f f i c i a l resources he commands, f u r t h e r encourages decision making
in favor o f a g r i c u l t u r a l l y r e l a t e d a c t i v i t i e s a t the fairgrounds
complex.

This s i t u a t i o n has a lso encouraged clo se in te r-co n n e ctio n s

between the F a ir , the Farmers' Markets and 4-H a c t i v i t y , the a g r i c u l ­
tu ra lly related sub-projects.

The close c o n tact the Extension Division

in Emmet County has with the youth, and i t s re g u la r communication of
a g r i c u l t u r e and 4-H r e l a t e d messages to a community with strong
b e l i e f s in the importance o f such s u b - p r o j e c t s , tends to perpetuate
favorable a t t i t u d e s for such a g r i c u l t u r e r e l a t e d community a c t i v i t i e s .
F in ally , the f a i l u r e o f the accounting system of the Fair Board to
h ig h lig h t lo ss e s and the co sts a t which c e r t a i n community o b je c tiv e s
are being achieved leads to a myopic view o f the whole fairgrounds
p r o je c t and the continuation of t r a d i t i o n a l a c t i v i t i e s in a t r a d i ­
tio n a l manner without regard to the changing environment or e f f i c ie n c y
consid eratio n s.
The Farmers 1 Markets
Farmers' Markets a r e a r e l a t i v e l y minor event as judged by the
number of s e l l e r s ( s ix ) and the number of times they a r e conducted each
year (four) in the fairground premises.

These markets are a continua­

tio n of a t r a d i t i o n a l a g r i c u l t u r e r e l a t e d a c t i v i t y and c l o s e ly connected
to 4-H work as well as the F air.

They seem a n a c h r o n is ti c , however, in

.an age o f so much modernization and la rg e s c a le operation in the
marketing of farm produce.

The i n f i n i t e s i m a l l y small number o f s e l l e r s

and the few occasions such markets are held each year a r e , perhaps, an

100

Indication o f the waning importance of t h i s event in the l i f e o f the
Emnet County people.
Yet, 51.6 percent o f the respondents considered them Important
and

8.6

percent declared negative f e e l in g s about these Farmers'

Markets (Table IV-5 below).

When we d i f f e r e n t i a t e the respondents by

type of household (Table IV-5) a l a r g e r proportion o f the rural farm
respondents emphasize the importance of these markets r e l a t i v e to the
proportions so rep o rtin g from each of the othe r household types.
was also the case regarding the F air as well as 4-H a c t i v i t y .

This

The

farm population, however, c o n s t i t u t e d only 7.8 percent of the universe,
the sm allest o f a l l c a te g o r ie s .
Of a l l the respondents t h a t considered the Farmers' Markets
important the lowest percentage i s from the c i t y (Table IV-5), the
l a r g e s t s i n g l e household group in the population.

Only 48.5 percent

of them considered the Farmers' Markets important as compared to 52.4
percent from the r u r a l non-farm and 80 percent from the r u ra l-fa rm
c a te g o r ie s .

When we consider the other end of the s c a l e , v i z . ,

negative a t t i t u d e s ,

10 .6

percent of the c i t y respondents openly

declare negative a t t i t u d e s towards t h i s event.
the rural non-farm category.

So does 4.8 percent o f

None of the r u ra l-fa rm respondents

expressed negative a t t i t u d e s towards these markets.

Since these

markets are conducted in Petoskey, perhaps, farm people enjoy t h i s
opportunity to combine business in the c i t y with some form of ple asure.
P o s itiv e a t t i t u d e s shown towards these Farmers' Markets may
also be an expression o f some aversion to the withdrawal o f an
e x i s t i n g , and seemingly " f r e e , " s e r v ic e .

Such an a t t i t u d e i s l i k e l y

to be b o lste re d by the subsidized co s ts o f conducting them; n e i t h e r

101
Table IV -5 .

Importance o f the Farmers' Markets to Members o f the
Comnunity (C5) By Type o f Household (C l)

Type o f Household (Cl)
A ttit u d e s Towards
The Farmers' Market
(C5)

City

Rural
Non-Farm

Per­
No. cent

P er­
No. c e n t

Five Point Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Neaative
6 . Total

1
6
66

Three Point Scale
7. Important
8 . Neutral
9. Negative

32
27
7

12
20

27

18.2
30.0
40.9
1.5
9.1
51.6

9
13
18
—

2

42

48.5
40.9

22

1 0 .6

2

18

Rural
Farm
Per­
No. cent

21.4
31.0
42.9

3
5

30.0
50.0

2

2 0 .0

Other
No.

Per­
cent

3

30.0

1

1 0 .0

4

40.0

Total
Per­
No. cent
27
39
51

21.1

30.5
39.8

-----

- -

-----

—

-----

2 0 .0

10

7.8

2
10

1
10

0 .8

4 .8
32.8

-----

7.8

128

10 0 .0

8
2

80.0

40.0
40.0

66

2 0 .0

4
4

51

51.6
39.8

—

2

2 0 .0

11

8 .6

52.4
42.9
4.8

—

- -

7.8

the s e l l e r s nor the buyers a t these markets a r e c a l l e d upon to defray
any o f t h e fixed c o s t s o r the o p e ra tin g c o s t s o f u t i l i z i n g the f a i r ­
grounds and i t s physical f a c i l i t i e s f o r th e purpose.

Hence, t h e market

p r ic e s of comnodities traded a t these markets u n d e r sta te the real
costs o f production (marketing) and convey i n c o r r e c t s i g n a l s to both
buyers as well as s e l l e r s .
To delve a l i t t l e deeper in to a t t i t u d e s toward the events
conducted a t the f a ir g ro u n d s , a q u a l i t a t i v e question was r a i s e d in
the q u e s tio n n a i r e .

The respondent was asked to i n d i c a t e with r e f e r e n c e

to each major event how i t s d is c o n tin u a tio n would a f f e c t him
(adversely)J

Only 33 percent o f th e respondents answered t h i s question

^See questions CIO
Appendix B.

to CIS o f th e survey q u e s tio n n a i r e a t

102

in r e l a t i o n to the Farmers' Markets o f th o se who d i d , 24 p e r c e n t
d e c la r e d t h a t t h e r e would be no adverse e f f e c t s on them i f t h e Farmers'
Markets were done away w ith .

Most o f th e r e s t i n d i c a t e d t h e i r i n t e r e s t

in t h e s e markets only because they could o b ta in f r e s h produce t h e r e i n .
Such a sta tem en t can by no means be i n t e r p r e t e d to imply t h a t f r e s h
produce cannot be purchased in Emmet County o u t s i d e o f t h e s e Farmers'
Markets.

The U.S. marketing system f o r f r e s h produce has evolved to

such a high standard o f performance t h a t th e a v a i l a b i l i t y o f produce in
every place in the mainland which i s not only f r e s h , but i s a l s o
cleane d, processed and e f f i c i e n t l y packaged, i s something taken fo r
granted by consumers.

A reaso n ab le conclusion from both th e responses

to t h i s q u es tio n about th e p o t e n t i a l ad verse e f f e c t s from d i s c o n t i n u i n g
th e Farmers' Markets, as well as from the lack o f responses t h e r e t o ,
would be t h a t th e se markets do not r e a l l y rank very high in t h e i r use­
f u ln e s s to the community, they a r e b eliev e d useful by some members o f
the conmunity, perhaps, because they a r e novel, a r e assumed t o c o s t the
taxpayer nothing f o r allow ing them to be conducted w ith in a community
owned f a c i l i t y , and most o f a l l because they provide some o p p o r tu n ity
f o r f a i r l y cheap f r e s h produce on account o f s u b s i d iz e d production
(marketing) c o s t s .

The e n t e r ta in m e n t and economic a s p e c t s surrounding

th e s e markets a r e a l s o so i n t e r t w i n e d , and t h e r e a l c o s t s and p r i c e s a t
th e s e markets so d i s t o r t e d t h a t many members o f t h e Emmet County
community a r e not ab le to view t h i s is s u e o b j e c t i v e l y .
In a c e r t a i n se n se, t h e s e Farmers' Markets cannot be viewed
independently o f t h e o t h e r fairgroun ds a c t i v i t i e s such as th e F a i r and
4-H a c t i v i t y which a r e connected in some manner w ith a g r i c u l t u r a l
a c t i v i t i e s and r e l a t e d v a lu e s.

Chi square t e s t s between a t t i t u d e s

103

towards the Farmers' Markets and r e la te d variables (see Appendix C)
encourage such a viewpoint.

There i s a substantial degree of

dependence between a t t i t u d e s towards the Farmers' Markets on the
one hand and p a r tic ip a t io n in fairgrounds a c t i v i t i e s , a t t i t u d e s
towards the Fair and 4-H work, past and future attendance a t c e r t a in
fairground a c t i v i t i e s and desire s to r e t a i n but improve upon the
e x istin g f a c i l i t y on the othe r.

One has to keep in mind, however, t h a t

i t is highly probable t h a t those who responded to the survey question­
naire are only those with some i n t e r e s t in the fairgrounds complex and
i t s a c t i v i t i e s and t h a t those who did not respond are la rg e ly people
who consider the whole complex of fairgrounds a c t i v i t i e s unworthy of
t h e i r time and a t t e n t i o n .
A stepwise regression a n a ly sis of the major variables influencing
a t t i t u d e s towards these Farmers' Markets reveals t h a t 51 percent o f the
variation in the dependent varia b le is explained by a t t i t u d e s towards
4-H a c t i v i t y and attendance a t the previous s e t o f Farmers' Markets
t h a t were held in the fairgrounds premises.

Attitudes towards

4-H work, however, c o n s titu t e the major explanatory v a ria b le ; the
2

change in R with the inclusion o f t h i s variable was 32 percent.
The r e s u l t s o f the regression analysis are summarized below:
C5

= -.0844
(.254)

t

=

.33

R2

=

.51

+

.435C6

+

.933C] 7

(.057)

(.138)

7.63

6.76

104

where:
Cg

= A ttitu d e s Towards the Farmers' Markets 1

Cg

= A ttitu d e s Towards 4-H A c tiv ity

C17

= Attendance a t the Farmers' Markets During the
Last Twelve Months3

2

The B.j are thus seen to be highly s i g n i f i c a n t .

The a t t i t u d e s of the

Emmet County people towards the Farmers' Markets appear to be best
explained by t h e i r a t t i t u d e s towards 4-H a c t i v i t i e s and t h e i r past
behavior in regard to attendance a t these markets.
Thus, in the case o f t h i s su b -p ro je c t o f the Farmers' Markets,
too, the in te r-co n n e ctio n with a t t i t u d e s towards 4-H a c t i v i t y , as was
the case with the F a i r , is strong.

Perhaps the r e l a t i v e l y high

percentage o f respondents viewing these Farmers' Markets as important,
even though many have s t a t e d t h a t the e lim ina tion of these markets
from the fairgrounds complex would not have any adverse e f f e c t s on them,
i s an in d ic a tio n o f the high value the community places on 4-H a c t i v i t y .
I n t e r e s t in 4-H a c t i v i t y on account o f the youth induces the adult
members of the community to view these Farmers' Markets a t which fresh
garden produce and o th e r a g r i c u l t u r a l products a r e displayed r i g h t in
the h e a rt o f the c i t y as important since such markets help maintain the
i n t e r e s t o f the youth in a g r i c u l t u r e r e l a t e d a c t i v i t i e s .
F in a ll y , i t may be noted t h a t so long as the fairgrounds complex
continues to operate a t such a low level o f c a p i t a l u t i l i z a t i o n , even
the conduct of these Farmers' Markets without any charge on s e l l e r s
1

9

oo

i, c, a^gee
quest i o n n a i r e a t Appendix
d e f i n i t i o n of each o f th e se v a r ia b le s .

B for a d e t a il e d

105

o r buyers, i s a c t u a l l y a means o f r a i s i n g the value o f the b e n e f i t
s id e o f the c o s t - b e n e f i t equation.

In othe r words, so long as the

op p o rtu n ity c o s t o f th e c a p i t a l in use f o r the fairgrounds complex i s
zero a t th e time o f th e event, the Farmers' Markets being held t h e r e in
helps to in c re a s e the n e t value o f the b e n e f i ts derived from the p r o j e c t
provided some members o f the community a t l e a s t d e riv e some s a t i s f a c t i o n
therefrom and th e re i s as a consequence o f such use no damage or
d e s t r u c t i o n to the c a p i t a l being u t i l i z e d .
4-H A c tiv ity
4-H a c t i v i t y is a
technique of o rganiz in g boys and g i r l s in to clubs through
which Extension programs . . . help youth le arn p r a c t i c a l
knowledge and s k i l l s in a g r i c u l t u r e , home economics and
rela ted areas. . . J
In Emmet County, too, t h i s work is conducted under the l e a d e r s h ip ,
d i r e c t i o n and control o f the D irector o f Extension who i s , as alre ad y
s t a t e d , a permanent member o f th e F a ir Board and has easy access to
and is in c l o s e touch with the County Board of Commissioners, the
local governing body.
These a c t i v i t i e s are conducted within the Emmet County f a i r ­
grounds premises in a s p e cia l building provided f o r the purpose.

This

4-H Center within the fairgrounds premises is where a g r i c u l t u r a l educa­
t i o n meetings, horse shows connected with 4-H a c t i v i t y , farm e x h i b i t i o n s ,
e t c . , a r e conducted on a r e g u la r b as is by the a g r i c u l t u r a l extension
s t a f f under the aegis o f th e 4-H club.

This work i s not funded by the

ln 4-H in Century I I I , " a b u l l e t i n of the Extension Committee on
Organization and P olicy, 4-H Youth Programs, 175, South Anthony, Michigan
S ta te U n iv e r s it y , East Lansing, Michigan 48824, 1976.

106

F air Board; i t i s financed through the Cooperative Extension Program
which i s d i r e c t e d by Michigan S t a te U n iv ersity .

Yet, the 4-H club

pays no r e n t to the F a i r Board f o r the use of t h i s fairgrounds
f a c i l i t y and the county commissioners a l l o c a t e “$ 1 , 0 0 0 each year to th e
4-H for r e p a i r s and maintenance o f 4-H f a c i l i t i e s . " ^
The f r e e use of fairgrounds f a c i l i t i e s f o r 4-H a c t i v i t i e s i s
l a r g e l y a m a tte r o f t r a d i t i o n .

The fairgrounds has g en e ra lly been

a s s o c ia te d with a g r i c u l t u r a l d i f f u s i o n and extension work in a d d i tio n
to i t s major marketing fu n c tio n .

All a g r i c u l t u r e r e l a t e d a c t i v i t i e s

have tended to become consolidated with the fairgrounds as the main
focal p o in t.

Hence, the 4-H club which r e p r e s e n ts a form o f informa­

t i o n d i f f u s i o n program, i s not charged f o r the use o f th e se physical
f a c i l i t i e s even though i t i s c l e a r l y a p r o j e c t which i s se parable and
should normally be s e p a r a t e l y accountable from the o th e r fairgrounds
sub-projects.

The building i s rented out to p r i v a t e p a r t i e s , churches

and o t h e r n o n - p r o f i t o rg a n iz a tio n s and in d iv id u a ls f o r the conduct o f
r e l i g i o u s s e r v i c e s , wedding ceremonies, musical shows, e t c .

2

at

r e l a t i v e l y low r a t e s on the b a s is t h a t t h i s low re n ta l charge, too,
3
is a "community s e r v i c e , " whatever th e term may mean.
^See the proceedings o f the "Fairgrounds Hearing" o f Nov. 29, 1973.
2

3

See Appendix G.

I t was found during f i e l d s t u d i e s t h a t t h i s term "community s e r ­
vice" was commonly used by public o f f i c i a l s and local government le a d e r s
to j u s t i f y whatever ac tio n they had taken in r e l a t i o n to the use o f f a i r ­
grounds resou rce s. I f , f o r example, the use o f the 4-H Center i s d e s ire d
by Group "X" f o r a p a r t i c u l a r purpose, t h i s approval may be granted a t a
nominal charge, o r even withheld, a t th e d i s c r e t i o n o f the o f f i c i a l having
c o n tro l o r influence over such approval. I f permission i s g ran te d , the
reason adduced i s "community s e r v i c e . " A r e f u s a l , too, could presumably
be based on the same grounds. In any case, no gu id e lin e s e x i s t as to
what c o n s t i t u t e s a "community se rv ic e" ' v i s a v i s ' the use o f d i s c r e ­
t i o n a r y power over the use o f fairgrounds resources.

107

A strong a t t i t u d e of a g r ic u ltu r a l fundamentalism seems to pervade
the discussions of Fair Board members, c e r t a i n county commissioners as
well as the public o f f i c e r s and senior community members encountered.
They maintain t h a t people in Emmet County consider 4-H a c t i v i t i e s as a
very important p a r t of t h e i r l i f e .

This feelin g of i t s importance,

they hold, is based not only on the educational value of a g r ic u ltu r a l
in s t r u c tio n , but also because 4-H a c t i v i t y o f f e r s o pportunities to
"keep the youth busy" on work th a t i s " tr u ly productive."^

There is

also an im p l ic i t assumption among the upholders of these viewpoints
th a t there i s some "goodness" in inculcating youth with a g r ic u ltu r a l
knowledge and a g r ic u ltu r e r e la te d value.

These strongly held values

by coimunity leaders about a g r ic u ltu r e and, th e re fo r e , of 4-H
a c t i v i t y , seem to underlie decision making with regard to the fairgrounds
project.
Even though members of the local governing body, public o f f i c i a l s
and other community leaders in Emmet County with whom i t was possible
to hold discussions on t h i s projec t seem to uphold such views about 4-H
a c t i v i t y , the survey data indicate t h a t only 48 percent of the popula­
tion reported 4-H a c t i v i t y as important to them (see Table IV-6 ).

This

is low in comparison to 67 percent who thought t h a t the Fair was impor­
t a n t to them (Table IV-1) and as did 51.6 percent with regard to the
Farmers' Markets (Table IV-5).

In other words, fewer respondents

have indicated a p o sitiv e a t t i t u d e towards 4-H a c t i v i t i e s within the
fairgrounds premises as compared to the Fair and the Farmers' Markets.
At the other end o f the s c a le , a la rg e r percentage of the population
^These are some of the terms used when discussing the fairgrounds
a c t i v i t i e s , esp e c ia lly those which a r e a g r i c u ltu r e r e la te d .

108
Table IV -6.

Importance o f 4-H A c t iv it ie s to Members o f the Community
(C6) By Type o f Household (C l)

Type of Household (Cl)
A ttitu d e s Towards
4-H A c tiv ity
(C6 )

City
No.

Five Point Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Negative
6 . Total
Three Point Scale
7. Important
8 . Neutral
9. Negative

16
8

30
2
8

64
24
30
10

Per­
cent

Rural
Non-Farm
No.

Per­
cent

Rural
Farm
No.

Per­
cent

Other
No.

Per­
cent

2

3
2

No.

Per­
cent

2 0 .0

38

30.0

22

2 0 .0

48
3
14
125

30.4
17.6
38.4
2.4
1 1.2
100.0

60
48
17

48.0
38.4
13.6

25.0
12.5
46.9
3.1
12.5
51.2

17 41.5
7 17.1
13 31.7
1
2.4
7.3
3
41 32.8

-----

- -

3

30.0

10

8 .0

10

8 .0

37.5
46.9
15.6

24
13
4

58.6
31.7
9.7

7
3
--

70.0
30.0
--

5

50.0

2

2 0 .0

3

30.0

3 30.0
4 40.0
3 30.0

Total

-----

have unequivocally indic ated negative a t t i t u d e s towards the F a ir
(9.3 percent) and th e Farmers' Markets ( 8 . 6 percent).^
When we assess a t t i t u d e s by household types, we see t h a t 70
percent of the comparatively small rural farm population have sp e c if ie d
the importance to them o f 4-H a c t i v i t i e s , none of these respondents
from the r u ra l farm group have expressed a negative a t t i t u d e towards
these a c t i v i t i e s .

But, in the case of the c i t y f o lk , only 37.5 percent

consider 4-H work important while as much as 46.9 percent remain
neutral and 15.6 percent sp e cify negative f e e lin g s about i t (Table IV-6 ).
Likewise, p a r t i c i p a t i o n in 4-H a c t i v i t y i s r e l a t i v e l y low.
Table IV-2 gives data on attendance a t each of the four major events a t
H a b l e IV- 6 , IV-1 and IV-5, r e s p e c tiv e ly .

Table IV-7.

Importance o f 4-H A c tiv itie s to Members o f the Conmunity (C6) and T h e ir Past and
Future Attendance Therein (C18 and C24, re s p e ctive ly)

Attendance a t 4-H
A ctiv itie s During the Last
Twelve Month Period (Cl 8 )
A ttitutdes Towards
4-H A ctivitie s
(C6 )

Attend

Did Not
Attend

Don't
Know

Per­
No. cent

Per­
No. cent

Per­
No. cent

Anticipated Attendance a t
4-H A ctiv itie s During the
Coming Twelve Month Period (C24)
Total

No.

Per­
cent

Expect To Do Not
Attend Expect To
Per­
No. cent

No. Per­
cent

Don't
Know

Total

Per­
No. cent

Per­
No. cent

Five Point Scale
62.1

12

16.0

3 50.0

2. Somewhat Imp.

7 24.1

8

2

33.3

3. Neutral

4

13.8

38

10.7
50.7

33 30.0
17 15.5

1

16.7

43

39.1

2

1 .8

15

13.6

1. Important

18

4. Somewhat Neg.

—

—

2

2.7

—

—

5. Very Negative

—

—

15

20.0

—

—

6.

29

26.4

75

68.2

6

7. Important

25

86.2

20

26.7

5 88.3

. Neutral

4

13.8

38 50.7

Total

55.6
9 25.0

20

7

19.4
—

—

2

4.9

10

34.5

32

30.2

3

7.3

6

20.7

18

17.0

24

58.5

10

34.5

41

38.7

2

6.9

2

1.9

3.4

13

12.3
100.0

12

29.3

1

11 0 1 0 0 . 0

36

34.0

41

38.7

29

27.4 106

50

45.5

29

80.6

5

12.2

16

55.2

16.7

43

39.1

7

19.4

24

58.5

10

34.5

—

17

15.4

12

29.3

5.5

Three Point Scale
8

9. Negative

—

—

17

22.7

1
—

—

—

3 10.3

50 47.2
41 38.7
15

14.2

110
th e fairground s premises during the p a s t twelve months and on a n t i c i ­
pated attendance during the following twelve month period.

Compared

to the F air and th e Farmers' Markets, past as well as expected f u tu r e
attendance i s low f o r 4-H a c t i v i t y ; only 26 p ercen t p a r t i c i p a t e d in 4-H
work while 72 perce n t attended the F a ir and 45 p erce n t attended the
Farmers' Markets.

However, attendance data a r e not s t r i c t l y comparable

between these events since p a r t i c i p a t i o n in 4-H a c t i v i t y i s p r im a r ily ,
but not e x c l u s iv e ly , by youth.

There may be some f a m ilie s with no

c h ild re n in t h i s age c a te g o ry .

N evertheless, a 26 percent attendance

le vel f o r 4-H a c t i v i t y seems r a t h e r low given the general b e l i e f among
local le a d e r s and p u b lic o f f i c i a l s about i t s importance to the people
in Emmet County and as compared to attendance a t some o th e r a c t i v i t i e s
a t the fairgrounds complex.

I t may be noted t h a t o f those who did

p a r t i c i p a t e in 4-H a c t i v i t i e s during the past twelve month period, 13.8
percent remained n e u tra l in t h e i r assessment o f the importance o f
th e se a c t i v i t i e s (see Table IV-7 above).
Chi square t e s t s o f th e r e l a t i o n between th e a t t i t u d e s towards
4-H a c t i v i t y (C6 ) and o th e r connected variables^ reveal t h a t th e re i s
dependence between the a t t i t u d e s o f the comnunity towards 4-H
a c t i v i t y and t h e i r a t t i t u d e s and/or behavior with regard to the F a ir ,
th e Farmers' Markets and 4-H work, as well as t h e i r choices of a l t e r n a ­
t i v e proposals f o r changing th e l o c a t i o n , functions and management o f
the fairgrounds complex.

2

The d ata show t h a t i f one ranks the F a ir as

being o f high importance to him, the p r o b a b i l i t y i s high t h a t he w ill
^ 3 , 04, C16, C18, C22 to C24 and C28.
2

See Appendix C f o r the r e s u l t s o f the c h i-sq u a re t e s t s and
Appendix B f o r a d e t a i l e d d e f i n i t i o n o f each v a r i a b l e .

Ill

view 4-H a c t i v i t i e s , too, as being equally or somewhat Important.
Furthermore, past behavior with regard to attendance a t the Fair and
in 4-H a c t i v i t y , i s positively related to expected future attendance
a t these same events.
The fact remains th a t the actual number of families in which a t
l e a s t one member in the family p articipated in 4-H a c t i v i t y during the
past twelve months is less than the equivalent figure for past p a r t i c i ­
pation in the Fair during the same time period.

This is partly an

indication that the potential audience for 4-H work (measured in terms
o f a t l e a s t one member of a family being a youth or an adult competent
to teach or be otherwise involved in 4-H a c t i v i t y ) is less than the
potential audience for the Fair ( a ll sampling units within the popula­
tio n ) .

I t is also an indication th a t even though people value 4-H

work, they are not so e n th u sias tic when i t comes to a question of actual
personal p a r tic ip a t io n , or are unable to induce young members of t h e i r
family to take much i n t e r e s t in i t .

Perhaps other off-time a t t r a c t i o n s

or a c t i v i t i e s prevent people from being in te r e s te d in 4-H work as much
as they would lik e .
An analysis of the q u a l ita tiv e question on how discontinuation
of 4-H a c t i v i t y would (adversely) a f f e c t the family in question^ shows
th a t of those who responded to th is question, 44.7 percent, the l a rg e s t
single response category, saw i t as a reduction of desirable spare time
a c t i v i t i e s for the youth in Enmet County and, th e re fo re, inimical to
youth development.

1 Question

36.2 percent of these respondents thought, however,

nunfcer Cl2, Appendix B.

112

t h a t there would be no i l l e f f e c t s i f 4-H a c t i v i t y were done away
with e n t i r e l y .
Snowmobile Races
With the advent of the snowmobile, snowmobiling has become an
important winter sport for Michiganders.

The snowmobile has tended to

m itigate the harshness of the weather and winter l i f e by inducing
people, including older folk, to enjoy the outdoors during winter.
The number of snowmobiles licensed in Michigan has risen rapidly
from 154,000 units during 1970 to 440,000 by 1976.

In Emmet County,

too, th is is a recreational innovation t h a t has caught on f a s t among
community members.

From a t o ta l of 1,228 r e g i s t r a t i o n s during 1970,

a peak o f 2,972 snowmobile r e g i s t r a t i o n s has been reached by 1975
(Table IV-8 ).

The people of Emmet County have shown great enthusiasm

for t h i s sport by organizing themselves into the Petoskey Snowmobile
Club and by s e t t i n g up a permanent club house and a variety of arrange­
ments to enjoy the sport through group events.

One of these organized

group events o f the club c o n s titu t e s o f two s e ts of races conducted
each winter on the Emmet County fairgrounds (horse) race track; one in
January and the other in February each year.

Before snowmobile races

can be conducted, however, t h i s race track has to be converted from
one s u it a b le for horse racing to an ice track.

This conversion involves

digging out the straw packed track and the freezing o f a large volume
of water^ into an eig h t inch thick ice trac k.

_____

The labor for t h i s work

_______

This water comes o f f a county f i r e hydrant within the fairgrounds
premises. No charge i s levied on the Fair Board by the county a u t h o r i­
t i e s f o r the use o f t h i s water and i s , th e r e f o r e , borne out of tax funds.
A rough estimate of the volume of water used fo r the purpose t h a t was
furnished to the author is 350,000 to 400,000 gallons. I t i s not known
how accurate t h i s estimate i s .

113
Table IV- 8 .

Snowmobile R e g istratio n s
in Michigan and in Emmet
County: 1970 to 1976

Snowmobile R e g istratio n s
(in , 0 0 0 s)
Year
In the S tate
of Michigan

In Emmet
County

154
207
298
372
430
435
440

1.23

1970
1971
1972
1973
1974
1975
1976

1 .6 8

2.35
2.72
2.97
2.80
n .a .

n . a . = not a v a i la b le .
Source: Office of the Secretary of S ta te ,
Capitol Bldg., Lansing, Michigan
prese ntly comes v o l u n ta r i ly from snowmobiling e n t h u s i a s t s .

However,

th e subsequent reconversion of the trac k in to one s u i t a b l e f o r horse
racing i s generalized in to a cost on the t o t a l community.

Reconversion

costs in the form o f r e f i l l i n g the tr a c k with hay and ru bble, and
dragging i t to make i t s u i t a b l e for horses to run on, is borne
e n t i r e l y out of county f u n d s J
Whatever these costs to the community may be of t h i s snow­
mobiling p r o je c t within the fairg rounds, the b e n e fits are l i k e l y to be
s u b s ta n tia l too.

For, on the one hand, a la rg e number o f people

within the community, both snowmobilers as well as s p e c t a t o r s , seem to
I t must be noted t h a t a reconversion c o s t is involved only
because i t is d es ire d t h a t horse races should be continued a t t h i s com­
plex during the event o f the f a i r . I f , however, i t is decided t h a t horse
racing should be done away with because i t is le s s r e le v a n t within the
a re a , o r because f in a n c ia l and economic losses a r e involved in such a
s u b -p ro ject, then the costs of the snowmobiling s u b -p ro ject would
f a l l by the amount of the reconversion c o s ts .

114

gain a g r e a t deal o f s a t i s f a c t i o n out of these events.

The value t h a t

can be placed on t h i s winter r e c r e a tio n may need to be weighted more
since

1t

i s an event conducted a t a time when outdoor a c t i v i t i e s are

r e l a t i v e l y scarce.

I t has also to be borne in mind t h a t the use of

fairgrounds f a c i l i t i e s a t t h i s time of the year involves extremely
low, or zero, opportunity c o s ts .
Snowmobiling rep rese n ts the f i r s t in tr u s io n of modern r e c r e a ­
tional a c t i v i t i e s in to a t r a d i t i o n a l i n s t i t u t i o n .

This i n s t i t u t i o n i s

being perpetuated today d e s p ite a ra p id ly changing environment, not so
much f o r economic reasons for which i t was f i r s t s e t up, but for the
r e c r e a tio n a l and so c ia l enjoyment value o f i t s s e r v ic e s .

Perhaps snow­

mobiling a t the fairgrounds in d ic a te s to some e x t e n t the future d i r e c ­
tio n for such community organizations and the type of a c t i v i t i e s a
fairgrounds organization should embrace so as to make i t a viable
enterprise.

This does not mean t h a t the co s ts to the community o f a

su b -p ro je c t such as snowmobiling should not be properly accounted f o r
or t h a t the incidence o f these expenditures should not be assessed.
I t only means t h a t the b e n e f i ts a r i s i n g from the snowmobile races subp r o je c t within the Emmet County fairgrounds premises are l i k e l y to be
s u b s t a n tia l and l i k e l y to in crease over time on account o f the in c r e a s ­
ing i n t e r e s t in the s p o r t and the p o te n tia l t o u r i s t a t t r a c t i o n value i t
appears to have.

For a b e t t e r understanding o f t h i s is s u e , we need to

examine what the survey data reveal with regard to t h i s event.
As Table IV-9 in d i c a t e s , 17.5 percent o f the population con­
sidered snowmobile races a t the fairgrounds important to them.

It

seems t h a t here, too, snowmobile races a t the fairgrounds are most
important to the r u ra l-f a r m category as was also the case with regard

115
T able IV -9 .

Importance o f Snowmobile Races to Members o f th e
Community (C7) By Type o f Household (C l)

Type o f Household (Cl)
A t t i t u d e s Towards
Snowmobile Races
(C7)

No.
Five P o in t Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Neqative
6 . Total
Three P oint Scale
7. Important
8 . Neutral
9. Negative

Rural
Non-Farm

C ity
P er­
cent

1

1.6

7
25

11.5
41.0
9.8
36.1
50.8

6
22

61
8

25
28

13.1
41.0
45.9

No.

4
7
15
4
10

40
11

15
14

Per­
cent
10 .0

Rural
Farm
No.

Other

Per­
cent

No.

Per­
cent

1
0

10 .0

0
1

11.1

40.0
30.0

5

55.6

1 0 .0

4
3

25.0
33.3

2
10

20 .0

27.5
37.5
35.0

17.5
37.5

8.3

1

1 0.0

1

4
5

40.0
50.0

5
3

Per­
cent

No.

5.0
12.5
40.8

6

0

3
9

Total

15
49
13
37

—

33.3
7.5

1 0 .8

30.8

120

10 0 .0

11.1

21

55.6
33.3

49
50

17.5
40.8
41.6

t o t h e o t h e r f a ir g ro u n d s e v e n t s .

All t h e s e events a r e o f high r e c r e a ­

t i o n a l value to th e farm people.

This i s an i n d i c a t i o n o f the r e l a t i v e l y

fewer r e c r e a t i o n a l o p p o r t u n i t i e s r e a d i l y a v a i l a b l e to them as compared
to the c i t y f o l k .

Even t h e r u r a l non-farm population p r o p o rtio n fa v o r ­

ing snowmobile r a c e s a t th e f a ir g ro u n d s complex

is r e la tiv e ly greater

than th e p ro p o rtio n o f c i t y people approving t h i s s u b - p r o j e c t by
i n d i c a t i n g t h a t the e v e n t i s im portant to them.
Given th e f a c t t h a t the number o f snowmobiles a v a i l a b l e i s much
l e s s than th e number o f a d u l t members o f th e community, and even l e s s
than th e number o f households in th e p o p u la tio n , a 17.5 p e r c e n t
approval r a t e ( i n terms o f th e p ercentage o f people s t a t i n g t h a t th e
e v e n t i s im portant t o them) can be c o n s id e re d f a i r l y high.

I t 1s a lso i n t e r e s t i n g to note t h a t a s l i g h t l y higher proportion
expect to a t t e n t fu tu re snowmobile races (20.4 percent) than did
a c t u a l l y attend these races held during the past year (18 percent),
and t h a t the percentage of people th a t w ill not attend future races
(62 percent) is s u b s t a n t i a l l y le ss than those t h a t did not attend past
snowmobile races (80.2 percent) (see Table IV-2).
A ttitudes Towards Changes in the Location, Operation
and Management o f the Fairgrounds Project
The Emnet County fairgrounds p ro jec t has become a bone of
contention among d i f f e r e n t p a r tie s with diverse i n t e r e s t s .

Conflicts

have already arise n as to what should be done with the fairgrounds,
where the p r o je c t should be located and what purposes i t should serve
in the context of changed times and a l t e r e d community needs.

That the

area in which the fairgrounds is s itu a te d was re-zoned for l i g h t
in d u s t r ia l uses in the e a rly part of t h i s decade and th a t an attempt
was made to s e ll a portion of t h i s land to an in d u s t ria l firm engaged
in the stamping and p la tin g o f automobile hub-caps are evidence of a
r e a l i z a t i o n of the need for change.

Im p lic it in t h i s e f f o r t to s e ll

the land was the b e l i e f t h a t i t could now be tr a n s f e r r e d to a "higher
and b e tte r " economic use.
the c i t y o f Petoskey.

The fairground is s it u a te d in the h ea rt of

Convenient access and the conglomeration of

t o u r i s t s and other potential consumers in t h i s area has tended to
increase the a t t r a c t i v e n e s s of t h i s s i t e for various other uses.

In

terms o f Von Thunen's concentric r in g s , the c i t y o f Petoskey has
become the zone o f convergence of a large market.

From a Ricardian view

point, the economic re n t on t h i s location is l i k e l y to be r i s i n g .

117

That the people of Enmet County r e a l i z e the need f o r changes
in the fairgrounds p r o je c t i s evidenced by an admission t h a t i t i s
u n d e r u tiliz e d , and by th e expression of the need f o r use expansion . 1
However, the need f o r change as expressed a t the "Fairgrounds Hearing"
o f November 29, 1973, was i m p l i c i t r a t h e r than e x p l i c i t .

The g r e a t e r

emphasis a t t h i s "Hearing" was on "no change" r a t h e r than the opposite.
This may, however, be a strong reac tio n to the f ears and suspicions
2
aroused w ithin the community by the preceding events.
The attempt a t
imposing top down change through the s a l e of the fairgrounds land to
^See the news item "People Want Fairgrounds Kept For Public"
in the "Petoskey News Review" o f November 30, 1973.
2

Rumor has i t t h a t an attempt was made in 1973 to rush through
a s a l e o f the fairgrounds land to M/s. Norris Industries without the
knowledge, l e t alone the consent, of the people of Emmet County. I t
appears t h a t the "Fairgrounds Hearing" o f November 29, 1973, was
convened by an i r a t e people incensed by t h i s attempted s a le of t h i s
community f a c i l i t y .
According to the "Petoskey News Review," of November 30, 1973,
the purchase o f f e r was through the Department o f Commerce to the
Petoskey Economic Development Commission (PEDC), the head o f which is
a lso the President of the Petoskey Chamber of Commerce.
I t appears t h a t the PEDC had commissioned an appraisal o f the
fairgrounds land in 1971 (see Appendix A). The land and buildings had
in f a c t been valued (as i f in a n t i c i p a t i o n of a purchase o f f e r ) a t a
p r ic e o f $163,000 f o r an estimated e x te n t of 26.5 acres o f fairgrounds
land. The s a le did not m a te r i a l i z e on account of the strong opposition
of the people a t the "Fairgrounds Hearing"
Many verbal c r i t i c i s m s and rumors were heard in connection with
t h i s episode during the survey p r e lim in a r ie s . A l e t t e r received from
a respondent on the survey also in d ic a te s another rumor which seems to
be spreading around. I t reads:
There has been a l o t o f t a l k about a deal between the
government agencies and the real e s t a t e developers to
trad e t h i s land for o th e r land so they can develop i t
and p r o f i t thereby. We would l i k e to have i t r e ta in e d
as a public se rvic e area for family, 4-H and local
farmers' use, or as a park area to look a t but not f o r
p ic n ic s . Hope t h a t the real e s t a t e development people
do not get t h i s property to develop. Please keep i t a
• r e s t f u l park a r e a ."

118

in d u stry without popular approval, or acquiescence, or even knowledge,
gave r i s e , perhaps, to su sp icio n s and a strong wall o f r e s i s t a n c e .

As

a consequence, d e s p i t e the grave need f o r some form o f change in the
fairgrounds p r o j e c t , nothing has been p o s s i b le up to d a t e .

The rumors,

f e a r s and suspicio ns crea ted in the e a r l y p a r t o f the decade continue
to a c t as a b a r r i e r in the comnunication process between the community's
o f f i c i a l and honorary change le aders and the r e s t ' v i s a v i s 1 changes
in the fairgrounds p r o j e c t .
The need f o r change, however, i s urgent.

The "Future

Development Committee" appointed by the F a ir Board in 1975 to study
the needs and requirements a t the fairgrounds complex p o in t out t h a t
the
Present fairground b u ild in g s a r e o u t-d a te d and w ill
ev e n tu a lly need to be replaced. The grandstand
could be condemned sometime as a f i r e h a z a r d J
This Committee has recognized the need f o r new d i r e c t i o n s t h i s community
p r o je c t must take.

The most important f a c i l i t y required according to

i t s r e p o r t i s a l a r g e b u ilding equipped with kitchen and restroom
f a c i l i t i e s to serve as a c e n te r to hold conventions, food shows,
ex h ib itio n s and th e l i k e .

This recommendation recognizes the economic

changes t h a t a r e occurring w ithin th e r e g io n , the s h i f t from a b a s i c a l l y
a g r i c u l t u r a l community to one which in c r e a s in g l y depends on tourism
and h o s p i t a l i t y s e r v i c e s .

I t envisages the importance o f stren g th en in g

Emmet County's c a p ac ity to a t t r a c t la r g e numbers o f persons who p r e f e r
a t t r a c t i v e r e s o r t areas f o r conventions and h o lid a y s , and t o provide
le a d e rsh ip in up-grading the q u a l i t y o f i t s h o s p i t a l i t y s e rv ic e s
H h e "Future Development Committee: Study and Survey Report,"
January 23, 1975.

through the conduct o f food shows and e x h i b i t i o n s .
Yet, the I n t e r e s t groups ' v i s a v i s ' the fairgrounds p r o j e c t
a r e many such t h a t a f in a l d ec ision on what should c o n s t i t u t e the
new fairgrounds p r o j e c t i s l i k e l y to be a complicated one.

Farm

people and those with strong a g r i c u l t u r a l o r i e n t a t i o n p r e f e r to con­
tin u e the fairgrounds p r o je c t in b a s i c a l l y i t s p re se n t form.

It

r e s u l t s in the a l l o c a t i o n o f county resources f o r purposes which a r e
l i k e l y to y i e l d d i r e c t b e n e fi ts to a small proportion o f the population.
Those serving on th e F air Board have i n t e r e s t s in continuing with
the p r o j e c t as i t i s ; they are in these honorary posts because o f the
a g r i c u l t u r a l e x p e r t i s e they possess.

The D irector o f Extension in

p a r t i c u l a r has an important i n t e r e s t in i t s p e r p etu atio n ; h is l e a d e r ­
ship r o l e in the community is enhanced so long as the p r o j e c t continues
to have a stro ng a g r i c u l t u r a l o r i e n t a t i o n and 4-H a c t i v i t i e s a r e i n t e ­
g rate d with th e F a ir .
People from the h o s p i t a l i t y se rv ic e s are i n t e r e s t e d in the
p r o j e c t today s in c e they see i t as a means o f obtaining a convention
exhibition center.

According t o a news r e p o r t , a convention c e n t e r is

envisaged in the new fairgrounds program proposed by the "Future
Development Committee" 1n a d d i tio n to :

"an e x h i b i t i o n b u ild in g la rg e

enough to handle th e Northern Michigan Food Services Show, Home and
Garden Shows and Boat and Snowmobile Shows."

2

^In a d d i tio n to the annual lo ss e s on th e F a ir t h a t a r e w r i t t e n
o f f by county g ra n ts to the F a ir Board and unaccounted f o r su p p lie s and
s e r v i c e s , the Emmet County Board o f Commissioners approve an y e a r l y sum
o f $1,000 from county funds f o r the r e p a i r and maintenance o f 4-H
f a c i l i t i e s a t the fairgrounds complex according to the proceedings on
th e "Fairgrounds Hearing" of November 29, 1973.
2

Petoskey News Review o f Friday, January 24, 1977.

120
Indoor r e c r e a tio n e n t h u s i a s t s a r e i n t e r e s t e d in a v a r ie ty o f
re c re a tio n a l f a c i l i t i e s .

An I c e - r i n k f o r s k a tin g and ice-h o ck ey , a

f a c i l i t y t h a t th e people o f Emmet County do n o t have now, i s one subp r o j e c t d isc u sse d a t th e F a ir Board meeting h eld in February, 1977.^
A gymnasium, c o n v e r tib le i n t o th e c o n v e n tio n /e x h ib itio n c e n te r r e f e r r e d
to above, i s a n o th e r indoor r e c r e a tio n a l f a c i l i t y t h a t i s d e s ir e d .
T ennis, b a s k e t b a l l , v o l l e y b a l l , e t c . , f o r th e community people a re
envisaged t h e r e i n .
d is c u s s e d .

A swimming pool i s a n o th e r f a c i l i t y t h a t has been

"The Parks and R ecreation Plan" drawn up in 1976 by th e

Michigan S ta te Department o f Parks & R ecreatio n s t a t e s w ith r e f e r e n c e
to Emmet County t h a t th e r e a re no s a t i s f a c t o r y swimming f a c i l i t i e s and
t h a t sample surveys rev eal t h a t : " . . .

b e t t e r than 40 p e rc e n t o f any
2
gien age group in th e school system cannot swim a t a l l . . ."
Again, th e P re s id e n t o f North C entral Michigan C ollege i s
i n t e r e s t e d in a r e l o c a t i o n o f th e fa irg ro u n d s p r o j e c t c l o s e r to i t s
campus and th e p ro v isio n o f new r e c r e a tio n a l f a c i l i t i e s a t t h i s f a i r ­
grounds complex t h a t may be used j o i n t l y by th e F a ir Board and th e
C ollege.
Businessmen a r e i n t e r e s t e d in th e C ity o f P eto sk e y 's c a p a c ity
to a t t r a c t v i s i t o r s to enjoy th e n a tu r a l beauty and th e v a rie d n a tu ra l
re so u rc e based r e c r e a tio n a l f a c i l i t i e s in Emmet County.

They view th e

p r e s e n t fa irg ro u n d s a s an eye so re which s p o i l s th e sc en ic environment
and ten ds to lower P e to sk e y 's t o u r i s t a t t r a c t i o n .

They d e s i r e t h a t th e

"*At which th e au th o r was p r e s e n t.
2

"Parks and R ecreatio n Plan f o r th e C ity o f Petoskey" o f June
1976 p repared by th e Parks & R e creation D iv isio n o f th e Michigan D epart­
ment o f Natural R esources, Lansing, Michigan.

121
land be made a v a ila b le fo r a modern market food se rv ic e complex which
serves the growing needs and requirements o f a v a rie ty o f holiday
and rec re a tio n e n th u s ia s ts .

S im ilarly , environm entalists argue th a t

the land area now u t i l i z e d f o r the fairgrounds p ro je c t should be
maintained as open space to enhance the natural beauty of the Petoskey
scenery, and second-home owners 1n and around Petoskey are lik e ly to
oppose any developments th a t are lik e ly to r a is e local taxes or even
any ac tio n s th a t a re lik e ly to a t t r a c t more re sid e n ts or vacationers
into the area.

According to the 1976 survey rep o rt on w aterfro n t

dwellers in Emmet and Cheboygan cou n ties, "one out of four w aterfro n t
re sid e n ts advocated a no-growth policy while only four percent favored
extensive growth and development in the region."^
Questions were ra ise d in the survey qu estionnaire to a s c e rta in
the a t t i t u d e s o f the people towards a change in the fairgrounds
p r o je c t.

The respondent was f i r s t asked what choice he would make

out o f four a l t e r n a t i v e s e ts o f change proposals presented to him.
2

The choices placed before them may be summarized as
1.

Abandon,

2.

Renovate only,

3.

Renovate plus re-o rg an ize,

4.

Relocate, reorganize and expand re c re a tio n a l a c t i v i t i e s , e tc .

The evidence is t h a t most p re fe r a l te r n a ti v e 3; approximately 49 percent
p re fe r to continue in the same place a f t e r re p a irin g the e x istin g
f a c i l i t i e s and with some changes in the management and mix o f a c t i v i t i e s .
V arans e t a l . , op c i t . , p. 190.
2

See question no. C28 in q uestionnaire a t Appendix B.

122

Only about

6

percent agree to abandon the idea o f such a community

p ro je c t, and about

10

percent believe th a t j u s t renovating the p rese n tly

d ila p id a te d s tru c tu re s would be q u ite s u f f i c i e n t .

The prospect of

d r a s ti c changes in the p ro jec t appeals only to about 35 percent of
a l l the respondents (see Tables IV-10 to IV-13 below).
I f one considers the f a c t th a t a lte r n a tiv e s 2 and 3 can be
lumped to g e th er, the choice of a m ajority o f the respondents is
heavily weighted towards the 's t a t u s quo.'

The percentage choosing

the present lo c atio n a l te r n a tiv e on t h i s b asis is approximately 59
percent.

Lumping these two a lte r n a ti v e s would seem lo g ic a l.

Neither

any s ig n i f ic a n t c o s t reductions nor an increase in net b e n e fits
through a c t i v i t y expansion appears to be po ssib le i f the tr a d itio n a l
a c t i v i t i e s are to be continued a t t h i s lo c a tio n .
A chi square t e s t shows a s ig n i f ic a n t r e la tio n between the type
o f household (Cl) and the a t titu d e s expressed towards changes in the
fairgrounds p ro je c t (C28) a t a .05 level of s ig n ific a n c e . 1

Yet, the

l a r g e s t percentage o f people w ithin each household group have preferred
a l te r n a ti v e 3 to a l l other a lte r n a ti v e s (Table IV-14).

Forty-one

percent of the c i t y , 55 percent of the ru ral non-farm and 55 percent
o f the ru ra l-farm people have opted fo r a l te r n a ti v e 3.

These percentages

r i s e to 53, 58 and 82 r e s p e c tiv e ly , when a lte r n a ti v e s 2 and 3 are
combined in to a sin g le category.

Thus, the evidence is o f support

mainly fo r the 's t a t u s quo 1 by a l l groups.
A s ig n i f ic a n t proportion w ithin two household ca teg o rie s have
opted fo r a re lo c a tio n and reorganization (or more b r i e f l y , to a
^ e e Appendix B fo r the d e f in itio n of v ariab les and Appendix C
fo r the r e s u lt s o f the chi square t e s t s .

123
Table IV-10.

Importance o f the Annual F a ir to Members o f the Community
(C4) and T h e ir Choices o f A lte rn a tiv e Change Proposals (28)

A ttitu d e s Towards
The Annual Fair
(C4)

Five Point Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Neaative
6 . Total
Three P oint Scale
7. Important
8 . Neutral
9. Negative

Table IV-11.

Choices or Alternative Proposals For Changing
________ The Fairgrounds P ro je c t (C28)
Renovate
Relocate
Only
Abandon
and
Re­
and Re­
Total
Renovate
organize
organize
Per­
Per­
Per­
Per­
Per­
No. cent No. cent No. cen t No. cen t No. ce n t
- -

—

- -

—

3

42.9

—

5
3
3
—

4
7
- -

- -

3
4

—

57.1
6.0

42.9
57.1

45.5
27.3
27.3

31
16
7
4

- -

53.4
27.6
12.1

53
31

9

22 .0

22

- -

—

3
41

9.4

58

49.6

8

72.8
27.3

47
7
4

81.0

—

41.5
29.3

6.9

11

3
—

12

17

12.1

6.9

29
9
3

4
7.3
7
35.0 117
70.8

84

2 2 .0

22
11

7.3

45.3
26.5
18.8
3.4
6 .0
1 00.0

71.8
18.8
9.4

Importance of the Farmers' Markets to Members of the
Community (C5) and T heir Choices o f A lte rn a tiv e Change
Proposals (C28)

A ttitu d e s Towards
The Farmers'
Market (C5)

Five P oint Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Neqative
6 . Total
Three Point Scale
7. Important
8 . Neutral
9. Negative

Choices of A lte rn a tiv e Proposals i-or
Changing The Fairgrounds P ro je c t (C28)
Renovate
Relocate
Only
and Re­
Abandon
and
Re­
Total
Renovate
organize
organize
Per­ No. Per­ No. Per­
Per­
Per­
No. cen
No.
No.
cen t
t
cen t
ce n t
ce n t
—

3
1

—

2

42.9
14.3

5
3

—

—

1

3
7

42.9

- -

6.0

11

3

42.9
14.3
42.9

1

3

7
3
1

18.2
45.5
27.3
9.1

12

21.1

19
23

33.3
40.4

19

26.8
19.5
46.3

11
8

25
35
46
1

- -

9.5

3
57

5.3
49.1

3
41

7.3
9
35.3 116

63.7
27.3
9.1

31
23
3

54.4
40.4
5.3

19
19
3

46.3
46.3
7.3

- -

60
46
10

21 .6

30.2
39.7
0.9
7.8
1 0 0.0

51.7
39.7
8.7

124
Table IV -12.

Importance o f 4-H A c t iv it ie s to Members o f the Community
(C6) and T h e ir Choices o f A lte rn a tiv e Change Proposals
(C28)

A ttitu d e s Towards
4-H A c t i v i t i e s
(C6 )

Five P o in t Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Negative
6 . Total
Three Point Scale
7. Important
8 . Neutral
9. Negative

Table IV-13.

—
- -

2

- -

28.6

3
3
4

71.4
6.1

—

2

5

28.6
71.4

19
13

—

21
2

1
11

9.1
9 .6

3
58

6

54.6
36.4
9.1

21

—

5
7

27.3
27.3
36.4

4
1

32
5

32.8
22.4
36.2
3.4
5.2
50.9

13

34.2

8

21.1

14

36.8

3
38

7.9
33.3 114

10.5
100.b

55.2
36.2

21

55.3
36.8
7.9

59
41
14

51.8
36.0
12.3

8 .6

14
3

30.7

35
24
41
2
12

2 1.1

36.0
1 .8

Importance o f Snowmobile Races to Members o f th e
Conmunity (C7) and T heir Choices o f A lte rn a tiv e Change
Proposals (C28)

A ttitu d e s Towards
Snowmobile Races
(C7)

Five P oint Scale
1. Important
2. Somewhat Imp.
3. Neutral
4. Somewhat Neg.
5. Very Negative
6 . Total
Three P oint Scale
7. Important
8 . Neutral
9. Negative

i

Choices o f A lte rn a tiv e Proposals fo r Changing
_________ The Fairgrounds P ro je c t (C28)_______
Renovate
Relocate
Only
Abandon
Total
and Re­
and Re­
Renovate
organize
organize
No. P er­ No. P er­ No. Per­ No. P er­ No. Per­
cent
cen t
cent
cent
cent

Choi ces o f A lte rn a tiv e Proposals f o r
Chang ing the Fairgrounds P ro je c t (C28)
Relocate
Renovate
Only
Total
Abandon
and
Re­
and
ReRenovate
organize
organi ze
Per­
Per­
Per­
Per­
Per­
No. c e n t No. cen t No. cen
t No. c e n t No. c e n t
4
2

5

•• ■**

7
7

10 0.0

6.4

2
2
11
2

7

1 0 0.0

5
4

18.2
45.5
18.2
18.2

8

25
3

10.1

12
62

18.2
45.5
36.4

25
15

12

7.7
15.4
48.1
5.8
23.1
47.7

2

5.1

6

5
15
7

12 .8

15
45

5.5
13.8
41.3

12

11 .0

31

28.4
lb b . 0

23.1
48.1
28.9

39

38.5
17.9
25.6
35.8

10$

7
15
17

17.9
38.5
43.5

45
43

10

21

19.3
41.3
39.4

125
Table IV-14.

Type o f Household (Cl) and Choices of A lternative
Change Proposals (C28)

Type o f Household
(Cl)

Choices of A lternative Proposals for
Changing The Fairgrounds Project (C28)
Renovate
Relocate
Only
and
Re­
Abandon
and Re­
Renovate
organize
organize
No.

1. City
2. Rural Non-Farm
3. Rural Farm
4. Other
5. Total

6
1
—

7

Total

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

85.7
14.3

7

63.6

25

42.4

23

1

9.1
27.3

21

35.6

15

57.5
37.5

61
38

52.1
32.5

6

10.2

2

11

9.4

7
59

11.9

- -

5.0
—

7

6.0

50.4

40

34.2 117

100.0

—

6 .0

3
11

9.4

radical change), in the fairgrounds project:

37.7 percent of the c ity

people and 39.5 percent o f the rural non-farm people have chosen th is
a lte r n a tiv e (Table IV-14 again).

In terms o f absolute numbers, i t is

more of the c ity people th a t have chosen a lte r n a tiv e 4.

In proportional

terms, however, i t is the rural non-farm people th a t rank highest in
terms of choosing th is a lte r n a tiv e (39.5 percent) from within th a t
p a r tic u la r group.
a lte r n a tiv e 4.

Within the c ity category, only 37.7 percent chose

Insofar as farm people are concerned, th e ir heaviest

choice is for a continuation of the present s itu a tio n .

Yet, even from

among the farm householders, 18.2 percent are w illing to go along with
the radical changes proposed with regard to the fairgrounds p ro jec t.
Chi square t e s t s o f the hypothesis of independence between
a t titu d e s towards each of the four main sub-projects, v i z . , the Fair
(C4), the Farmers' Markets (C5), 4-H A ctivity (C6 ) and Snowmobile
Races (C7), and the re la te d choice o f the a lte rn a tiv e change proposals

126

offered (C28), suggest th a t there may be a close r e la tio n s h ip between
each p a ir o f variables a t a .05 level o f sig n ific an c e as the data a t
Appendix C would in d ic a te .

Those who consider th a t a given su b -p ro ject

is important d e s ire not only to have th is fairgrounds p ro je c t con­
tinued, but also p r e f e r , on balance, to continue the p ro je c t in the same
lo catio n .
On the basis of learning theory and empirical evidence on the
process of innovation d iffu s io n , Rogers c l a s s i f i e s a social system into
fiv e categ o ries of people . 1

These ca teg o rie s are based upon the degree

of readiness o f each group to accept and adopt a new idea involving
some form of behavioral change.

The f i r s t group of adopters of an

innovation Rogers c a lls the “ Innovator" group.
o f 2.5 percent of the population.

This group c o n s titu te s

Next, comes the "Early Adopter"

category which makes up 13.5 percent o f the social system, followed by
the "Early M ajority" (34 p erce n t), the "Late Majority" (34 percent)
and the "Laggards" (18 percent) who never respond to new ideas and
are generally impermeable with regard to change ideas.

2

When we juxtapose the data sp e cified in Rogers' Theory on
the innovation-adoption process with the data r e la tin g to the a t titu d e s
o f the people o f Emmet County towards changes in the fairgrounds
complex to b e tte r s u i t environmental conditions and c u rre n t needs, the
in d icatio n s are th a t th ere i s an high degree of acceptance o f these
change ideas r e l a t i v e to what the theory p re d ic ts .
35

As already s ta te d ,

percent of the respondents have in d icated t h e i r w illin gn ess to
R o g ers and Shoemaker, op c i t . , p. 182.
2 I b id .,

pp. 174-191.

127

accept the Idea o f a ra d ic a l change in t h i s community p r o je c t.

That

only r e l a t i v e l y few a r e prepared to abandon the p ro je c t and very l i t t l e
inform ation has been presented to the people of the community with
regard to th e lo ss e s and the o pportunity co sts o f the p rese n t complex,
provide f u r th e r reason to be o p tim is tic about encouraging a g r e a te r
degree o f aceptance o f a new program o f ac tio n fo r a more viab le
community r e c r e a tio n a l complex.
I t may be noted, however, t h a t these data do not rep re se n t
actu al "adoption" o f the idea as is implied in Rogers' theory.

It

does, however, hold out a high degree o f promise about the p eo p le's
w illin g n e ss to change and t h e i r re a c tio n s about the fu tu re of t h i s
community p r o je c t and would be useful information fo r planners and
policy makers.

The a n a ly s is o f th e se a t t i t u d e s towards accepting the

idea o f new forms o f organizing t h i s community p ro je c t cannot be
complete u n til we see the data on how people responded to the proposal
to pay user fees fo r these new s e rv ic e s and a c t i v i t i e s as w ell.
Data r e l a t i n g to user fees are shown in Tables IV-15 through
IV-22 below, and percentages o f respondents agreeable to the payment
o f user fees f o r each event a re f u r th e r summarized in Table IV-23
in descending o rd er of th e percentage o f respondents g en erally w illin g
( i . e . , "somewhat agreeable" plus "highly agreeable" responses) to
pay such fe e s .

More than 50 percent of th e respondents in d ic a te

t h e i r w illin g n ess to pay fo r each o f th e seven rec re a tio n a l f a c i l i t i e s
th a t were suggested and more than 31 percent in d ic a te t h i s w illin g n ess
more em phatically ("h ig hly agreeable" responses only) in resp e ct of a l l
re c re a tio n a l events suggested.

Table IV-15.

A ttitu d e s Towards the Payment o f User Fees fo r Proposed New Recreational
A c t iv it ie s (C30 to C36)

Proposed New Recreational A c tiv itie s
A ttitudes Towards
The Payment of
User Fees

Swimming
Pool
(C30)
No.

Per­
cent

Ice Rink
(C31)
No.

Per­
cent

Basketball
(C32)
No.

Per­
cent

Volleyball
(C33)
No.

Per­
cent

Tennis
(C34)
No.

Per­
cent

Gymnasium
(C35)
No.

Per­
cent

Snowmo­
b ilin g
(C36)
No.

Per­
cent

Five Point Scale
1. Quite Agreeable

71

58.2

56

46.3

35

31.3

38

34.2

45

39.8

40

36.0

46

43.4

2. Somewhat Agrbl.

19

22

18.2

23

20.4

18

16.2

21

18.6

21

18.9

10

3. Neutral

15

15.6
12.3

19

15.7

34

30.1

34

30.6

22

19.5

29

26.1

29

9.4
27.4

4. Not Agreeable

11

9.0

18

14.9

17

15.0

16

14.4

16

14.2

16

14.4

10

9.4

6

4.9

6

5.0

4

3.5

5

4.5

9

8 .0

5

4.5

11

10.4

122

100.0

121

100.0

112

100.0

111

100.0

113

100.0

111

100.0

106

100.0

7. Agreeable

90

73.8

78

64.5

58

51.7

56

50.4

66

58.4

61

54.9

56

52.8

8.

15

12.3

19

15.7

34

30.1

34

30.6

22

19.5

29

26.1

29

27.4

17

13.9

24

19.9

21

18.5

21

18.9

25

22.2

21

18.9

22

19.8

5. Strongly Disagree
6.

Total

Three Point Scale
Neutral

9. Not Agreeable

Table IV-16.

A ttitu d e s Towards the Payment o f User Fees fo r an Ice Rink (C31) and Family
Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment o f User Fees
For An Ice Rink
(C31)

$5,000
to
$9,999

< $5,000

$1 0 , 0 0 0
to
$14,999

$15,000
to
$19,999

Total

> $2 0 , 0 0 0

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

3

42.9

11

57.9

11

34.4

10

38.5

20

50.0

55

47.0

21.1

7

21.9

5

19.2

6

18.2

22

18.8

Five Point Scale
1. Quite Agreeable
2. Somewhat Agreeable

—

—

4

3. Neutral

—

—

1

5.3

8

25.0

4

15.4

3

9.1

16

13.7

57.1

2

10.5

5

15.6

5

19.2

2

6.1

18

15.4

—

1

5.3

1

3.1

2

7.7

2

6.1

6

5.1

4. Not Agreeable
5. Strongly Disagreeable
6.

Total

4
—

7

6.0

19

16.2

32

27.4

26

22.2

33

28.2

117

100.0

3

42.9

15

79.0

18

56.3

15

57.7

26

78.8

77

65.8

—

1

5.3

8

25.0

4

15.4

3

9.1

16

13.7

57.1

3

15.8

6

18.7

7

26.9

4

12.2

24

20.5

Three Point Scale
7. Agreeable
8

. Neutral

9. Not Agreeable

—

4

Table IV-17.

A ttitu d e s Towards the Payment o f User Fees fo r a Swimning Pool (C30) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment of User Fees
For A Swimming Pool
(C30)

< $5,000

$5,000
to
$9,999

$1 0 , 0 0 0
to
$14,999

$15,000
to
$19,999

Total

>$2 0 , 0 0 0

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

4

50.0

11

57.9

20

57.1

17

63.0

19

57.6

71

58.2

14.3
17.1
11.4

5

18.5

6

18.2

19

15.6

3

11.1

5

15.2

15

12.3

1

3.7

1

3.0

11

9.0

1

3.7

2

6.1

6

4.9

Five Point Scale
1. Quite Agreeable
2. Somewhat Agreeable
3. Neutral
4. Not Agreeable
5. Strongly Disagreeable
6.

Total

—

—

3

15.8

5

—

—

1

6

4
—

50.0

1

5.3
5.3

- -

3

15.8

- -

4

—

8

6 .6

19

15.6

35

28.7

27

22.1

33

27.0

122

100.0

4
—

50.0

14

25

81.5
11.1

15.2

90
15

73.8

3

25
5

75.8

6

71.4
17.1

22

1

73.7
5.3

4

50.0

4

21.1

4

11.4

2

7.4

3

9.1

17

Three Point Scale
7. Agreeable
8 . Neutral
9. Not Agreeable

—

12.3
13.9

Table IV-18.

A ttitu d e s Towards the Payment o f User Fees fo r Basketball Courts (C32) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment of User Fees
For Basketball Courts
(C32)

< $5,000

$1 0 , 0 0 0
to
$14,999

$5,000
to
$9,999

$15,000
to
$19,999

>$2 0 , 0 0 0

Total

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

NO.

Per­
cent

2

28.6

7

41.2

5

16.7

7

28.0

14

46.7

35

32.1

4

32.5

9

30.0

4

16.0

5

16.7

22

20.2

11

36.7

6

24.0

9

30.0

31

28.4

16.7

6

24.0

1

3.3

17

15.6

2

8.0

1

3.3

4

3.7

Five Point Scale
1. Quite Agreeable
2. Somewhat AGreeable

—

—

3. Neutral

3

42.9

2

11.8

4. Not Agreeable

2

28.6

3

17.6

1

—

30

27.5

25

22.9

30

27.5

109

100.0

5. Strongly Disagreeable

5

7

6.4

17

5.9
15.6

7. Agreeable

2

28.6

11

73.7

14

46.7

11

44.0

19

63.4

57

52.3

8.

3

42.9

2

11.8

11

36.7

6

24.0

9

30.0

31

28.4

2

28.6

4

23.5

5

16.7

8

32.0

2

6 .6

21

19.3

6.

Total

—

—

—

Three Point Scale
Neutral

9. Not Agreeable

Table IV-19.

A ttitu d e s Towards the Payment o f User Fees fo r V o lle y b a ll Courts (C33) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment o f User Fees
For Volleyball Courts
(C33)

$5,000
to
$9,999

< $5,000

$1 0 , 0 0 0
to
$14,999

$15,000
to
$19,999

Total

> $2 0 , 0 0 0

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

2

25.0

7

41.2

7

24.1

8

34.8

14

46.7

38

35.5

4

23.5

7

24.1

2

8.7

4

13.3

17

15.9

Five Point Scale
1. Quite Agreeable
2. Somewhat Agreeable

—

—

3. Neutral

3

37.5

2

11.8

9

31.0

7

30.4

10

33.3

31

29.0

4. Not Agreeable

3

37.5

3

17.6

6

20.7

3

13.0

1

3.3

16

15.0

1

5.9

3

13.0

1

3.3

5

4.7

5. Strongly Disagreeable
6.

Total

—

—

—

—

8

7.5

17

15.9

29

27.1

23

21.5

30

28.0

107

1 00.0

7. Agreeable

2

25.0

11

64.7

14

48.2

10

43.5

18

60.0

55

51.4

8.

3

37.5

2

11.8

9

31.0

7

30.4

10

33.3

31

29.0

3

37.5

4

23.5

6

20.7

6

26.0

2

6.6

21

19.7

Three Point Scale
Neutral

9. Not Agreeable

Table IV-20.

A ttitu d e s Towards the Payment o f User Fees fo r a Gymnasium (C35) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment of User Fees
For a Gymnasium
(C35)

$5,000
to
$9,999

< $5,000

$1 0 , 0 0 0
to
$14,999

$15,000
to
$19,999

>$2 0 , 0 0 0

Total

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

2

28.6

8

47.1

7

24.1

11

44.0

12

41.4

40

37.4

—

4

23.5

9

31.0

3

12.0

4

13.8

20

18.7

Five Point Scale
1. Quite Agreeable
2. Somewhat Agreeable

—

3. Neutral

3

42.9

1

5.9

6

20.7

5

20.0

11

37.9

26

24.3

4. Not Agreeable

2

28.6

2

11.8

6

20.7

5

20.0

1

3.4

16

15.0

—

2

1 1.8

1

3.4

1

4.0

1

3.4

5

4.7

5. Strongly Disagreeable

—

7

6.5

17

15.9

29

27.1

25

23.4

29

27.1

107

1 00.0

7. Agreeable

2

28.6

12

70.6

16

55.1

14

56.0

16

55.2

60

56.1

8.

3

42.9

1

5.9

6

20.7

5

20.0

11

37.9

26

24.3

2

28.6

4

23.6

7

24.1

6

24.0

2

6.8

21

19.7

6.

Total

Three Point Scale
Neutral

9. Not Agreeable

Table IV -21.

A ttitu d e s Towards the Payment o f User Fees fo r Tennis Courts (C34) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment o f User Fees
For Tennis Courts
(C34)

<$5,000

No.

Per­
cent

$5,000
to
$9,999
No.

Per­
cent

$1 0 , 0 0 0
to
$14,999
No.

Per­
cent

$15,000
to
$19,999

>$2 0 , 0 0 0

No.

Per­
cent

No.

10

43.5

17

4
3
4

17.4
13.0
17.4
8.7
20.7

4

Total

Per­
cent

No.

Per­
cent

54.8
12.9
19.4
3.2
9.7
27.9

7

6.3
16.2
28.8

111

100.0

6

67.7
19.4

25
32

4

12.9

54

22.5
28.8
48.6

Five Point Scale
1.
2.
3.
4.
5.
6.

Quite Agreeable
Somewhat Agreeable
Neutral
Not Agreeable
Strongly Disagreeable
Total

2
1
1

3
—

28.6
14.3
14.3
42.9
—

9
3

50.0
16.7

9
8
8

3

5.6
16.7

2

11.1

2

1

5

7

6.3

18

16.2

32

Three Point Scale
7. Agreeable
8 . Neutral

3

42.9

12

66.7

17

1

1

9. Not Agreeable

3

14.3
42.9

5.6
27.8

5

28.1
25.0
25.0
15.6
6.3
28.8

2

23

14

8

53.1
25.0

7

21.9

6

3

60.9
13.0
26.1

6
1

3
31

21

19
32
23
31

20.7
27.9

Table IV-22.

A ttitu d e s Towards the Payment o f User Fees fo r Snowmobiling (C36) and
Family Income Before Taxes (C40)

Income Groups (C40)
A ttitudes Towards
The Payment of User Fees
For Snowmobiling
(C36)

$5,000
to
$9,999

< $5,000

$1 0 , 0 0 0
to
$14,999

$15,000
to
$19,999

Total

>$2 0 , 0 0 0

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

4

57.1

9

52.9

9

32.1

12

52.2

13

44.8

47

45.2

—

2

11.8

2

7.1

2

8.7

4

13.8

10

9.6

13

4
3

17.4
13.0

8

26

1

27.6
3.4

10

25.0
9.6

Five Point Scale
1. Quite Agreeable
2. Somewhat Agreeable
3. Neutral

—

1

4. Not Agreeable

2

14.3
28.6

1

5.9

3

46.4
10.7

29.4

1

3.6

2

8.7

3

10.3

11

10.6

16.3

28

26.9

23

22.1

29

27.9

104

100.0

64.7
—

11

39.2

14

17

46.4

4

57
26

25.0

35.3

4

14.3

5

21.7

4

58.6
27.6
13.7

54.8

13

60.9
17.4

21

20.2

—

—

7

6.7

5
17

7. Agreeable
8 . Neutral

4

57.1

11

1

14.3

—

9. Not Agreeable

2

28.6

5. Strongly Disagreeable
6 . Total

—

—

Three Point Scale

6

8

136

Table IV-23.

Percentage o f People Agreeable to the Payment o f User
Fees fo r the Proposed New Recreational F a c i l i t i e s

Percentage of Respondents
Recreational
F ac ility
o r Event
1. Swimming Pool
2.
3.
4.
5.
6.
7.

Ice Rink
Tennis Courts
Gymnasium
Snowmobiling
Basketball
Volleyball

Agreeable To The
Payment o f User
Fees

Highly Agreeable
To The Payment
o f User Fees

73.8
64.5

42.3
47.0

58.4
54.9
52.8

39.8
36.0
43.4

51.7
50.4

31.3
34.2

A swimming pool is th e f a c i l i t y fo r which most persons have
in d icated t h e i r general w illin g n e ss to pay user fees.

An ic e rink is

the one f o r which the most number of emphatic responses o f a g r e e a b il ity
to pay u se r fees have been received .

This is because a stro ng need

seems to have already been f e l t by many people in Emmet County fo r an
ic e r in k , perhaps because of the general p o p u la rity t h a t snowmobiling
is gaining w ithin the area .

This contention i s supported by a chi

square t e s t o f th e r e la tio n between a t t i t u d e s towards th e conduct
o f snowmobile races a t t h i s fairground complex (C7) with a t t i t u d e s
towards user fees fo r an ice rin k a t a new and reorganized coiranunity
r e c re a tio n a l complex (C31) a t a .05 level of s ig n ific a n c e (see Appendix
C).

The stro n g er th e a t t i t u d e towards the importance of snowmobile

ra c e s , th e higher the tendency to agree to the payment o f user fees fo r
an ic e r in k .

i

137

T enn is, to o , has received a high degree o f fav o rab le responses
i f one were to use th e se data on

a g r e e a b il ity to payu ser fees as a

measure o f th e r e l a t i v e importance attac h ed to each r e c r e a tio n a l event.
On th e same b a s i s , b a s k e tb a ll and v o lle y b a ll seem to come lower down
in th e s c a le . O v e ra ll, however, th e re seems to be a high degree of
dependence among th e s e a t t i t u d i n a l v a ria b le s r e la te d to u ser fees f o r
the proposed r e c r e a tio n a l a c t i v i t i e s . ^

Generally, i f one lik e s the idea

o f any one o f th e r e c r e a tio n a l a c t i v i t i e s proposed in the q u e s tio n n a ire ,
th e tendency i s high fo r the respondent to lik e most, i f n o t a l l , o f the
o th e r r e c r e a tio n a l ev ents and, th e r e f o r e , the idea o f paying u ser fe e s .
There i s no s t a t i s t i c a l r e la tio n s h i p between income le v e ls and
a t t i t u d e s towards th e payment o f user fees f o r th e proposed seven
r e c r e a tio n a l e v e n ts.

However, the frequency d i s t r i b u t i o n o f responses

showing a g r e e a b i l i t y ( i . e . , both "highly ag reeab le" and "somewhat
ag reeable" respo nses) to pay user fees c l a s s i f i e d by income groups
(which a r e summaries o f Tables IV-16 through IV-22) shows t h a t more of
the h ig h er income respondents seem to be ag ree ab le to u se r fee payments
than tho se in th e lower income b ra c k e ts.

The modal group o f persons

agreeing to pay u se r fees i s c l e a r ly in the $2 0 , 0 0 0 or more per annum
income group f o r a l l r e c r e a tio n a l a c t i v i t i e s with bi-modal d i s t r i b u ­
tio n s fo r a swimming pool and a gymnasium in th e $10,000 to $14,999 per
annum and th e $2 0 , 0 0 0 o r more per annum income group.
When we s e p a r a te out the emphatic (" h ig h ly a g ree ab le ") responses
to th e q u estio n o f user fee payment and c l a s s i f y them by income groups,
we fin d again a s im ila r p a t te r n .

More o f th e h ig h e st income group

^See Appendix B fo r the d e f i n i t i o n o f v a r ia b le s and Appendix C
f o r th e r e s u l t s o f th e chi square t e s t s .

Table IV-24.

Number and Percentage of Responses Showing A greeability to Pay User Fees fo r the
Proposed New Recreational Events by Income Groups*

Swimming Pool

Ice Rink

Basketball Volleyball

Tennis

Gym

Snowmobiling

Income Group
No.
<5,000
5,000 - 9,999
10,000-14,999
15,000 -19,999

22

25
90

2 2 0.000

Total
*

4
14
25

Per­
cent
4.4
15.6
27.8
24.4
27.8
100.0

No.
3
15
18
15
26
77

Per­
cent
3,9
19.5
23.4
19.5
33.8
100.0

No.
2
11

14
11

19
57

Per­
cent
3.5
19.3
24.6
19.3
33.3
100.0

No.
2
11

14
10

18
55

Per­
cent

No.

3.6

3

Per­
cent

20.0

12

25.5
18.2
32.7

17
14
21

4.5
17.9
25.4
20.9
31.3

1 00.0

67

100.0

No.
2
12

16
14
16
60

Per­
cent

No.

3.3

4

2 0.0

11
11

26.7
23.3
26.7
100.0

14
17
57

Per­
cent
7.0
19.3
19.3
24.6
29.8
100.0

Summarized from Tables IV-16 through IV-22.

Table IV-25.

Number and Percentage o f Responses Showing a High Degree o f Willingness to Pay
User Fees for the Proposed New Recreational Events by Income Groups*
Swimming Pool

Ice Rink

Tennis

Basketball Volleyball

Gym

Snowmobiling

Income Group
No.
< 5,000
5,000 - 9,999
10,000-14,999
15,000 - 19,999
> 20,000
Total
T

4
11
20

17
19
71

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

Per­
cent

No.

5.6
15.5
28.2
23.9
26.8

3

5.5

2

5.7

2

11
11
10
20

20.0
20.0

2 0.0

7
7

20.0

8

21.1

10

40.0

55

100.0

14
38

36.8

100.0

7
5
7
14
35

5.3
18.4
18.4

17
47

18.2
36.4

14.3
100.0

Summarized from Tables IV-16 through IV-22.

100.0

2

9
9

Per­
cent

No.

Per­
cent

4/3
19.1
19.1
21.3
36.2

11
12

17.5
27.5
30.0

100.0

40

100.0

2
8

7

5.0
20.0

No.
4
9
9
12

13
47

Per­
cent
8 .6

19.1
19.1
25.5
27.7
100.0

139

(.>$ 2 0 , 0 0 0 per annum) give "highly agreeable" responses r e la tiv e to the
other income groups except in the case of the swinming pool where the
$10,000 to $14,999 per annum group gives a s li g h tly higher number of
emphatic responses.

All in a l l , i t would seem th a t there is some

tendency fo r the higher income groups to be more receptive to th is
idea of new recreation al f a c i l i t i e s a t a conmunity ce n ter with user
charges being levied for th e ir provision.
I t is necessary to conclude th is chapter with a warning note.
When the re s u lts of the survey are viewed in the lig h t of what innova­
tio n diffu sion theory p o stu late s, there appears to be promise for the
successful introduction of change ideas within the conmunity as
regards th is presently uneconomic fairgrounds p ro jec t.

These tendencies

towards the possible acceptance of ideas for changing the lo c atio n , the
organization, and the management of a new fairgrounds program, however,
is no indication whatsoever of the economic v ia b ilit y o f any o f the new
sub-projects discussed, nor of the p r o f i t a b i l i t y of the overall pro­
gram as a consequence of adding new a c t i v i t i e s .

Especially since the

new recreatio n al a c t i v i t i e s in question involve high fixed co sts,
demand analyses fo r these events would be a 's in e qua non' before
planners and policy makers take any steps towards implementation.
The economic demand o f the local community members, from anticipated
v is ito r s to the region, and from business and other i n t e r e s t s , for each
proposed sub-project will have to be studied c a re fu lly as should the
p o te n tia litie s for organizing jo in t-u se programs with the NCMC,
neighboring schools and organized regional recreational groups.

This

study is not in any way a su b s titu te for the necessary micro-economic

stu d ies of th e p r o f i t a b i l i t y of a new program of ac tio n fo r the Emmet
County Fairgrounds P ro ject.

CHAPTER V

EMMET COUNTY IN CONTEXT, SUMMARY AND CONCLUSIONS
I t i s important to view the problem o f th e Emmet County f a i r ­
grounds p ro je c t in a context broader than the purely local s e ttin g
within which i t operates before summarizing d isc u ssio n s contained in
the previous ch ap ters.

I t has h ith e r to been implied or sometimes

e x p l i c i t l y s ta te d th a t the environment w ithin which t h i s p ro je c t
operates has changed s u b s ta n tia lly during re c e n t y e a rs .

However, no

concrete evidence o f these changes have been provided.
A g ricu ltu ral Trends
H is to r ic a lly , the U.S. farm s e c to r has been considered important
fo r many reasons.

A g ricultu re c o n s titu te d the major income generating

a c t i v i t y in e a r l i e r times when the fairgrounds p ro je c t reached the
zenith of i t s development.

Family farms were seen as the backbone o f

the U.S. p o l i t i c a l and social system.

Fairgrounds, which were a s s o c ia ­

ted with a g r ic u ltu r e and ru ra l needs, came in f a c t to be supported
by the federal and s t a t e governments a f t e r P resid ent George Washington
made a public speech emphasizing the importance o f a g r ic u ltu r e to the
nation and the need fo r a c tiv e p ublic encouragement and development.^
The payment o f premiums by s t a t e governments and the organized pursuance

^R. K. B lis s , op c i t . , p. 261.
141

142

o f a g r i c u l t u r a l extension and dem onstration programs through th e se f a i r ­
grounds p r o je c ts followed t h e r e a f t e r .
A g ric u ltu re , however, has d eclined in importance in Region 10
in general and in Enmet County in p a r t i c u l a r during th e l a s t few
decades . 1

Since U.S. a g r ic u ltu r e reached a high le v el o f p r o d u c tiv ity ,

i t has been a d e c lin in g in d u stry w ith in t h i s re g io n , and comparative
advantage in such a c t i v i t y has tended to s h i f t to th e c o u n tie s in the
south o f lower peninsula Michigan.
The general trend in M ichigan's a g r i c u l t u r e during r e c e n t
y e a rs has been

fo r a steady red u ctio n in th e number o f farms and

t o t a l acreage o f land in farms.

From an average o f approxim ately

110,000 farms during 1961/63, th e number o f farms d eclin ed to ap p ro x i­
mately 81,000 by 1971/73.^ In 1974, t h i s number f u r t h e r d eclin ed to
3
68,638.
The average s iz e o f farm, however, had tended to become
la r g e r .

For Emmet County, th e corresponding fig u re s with regard to

the number o f farms f o r 1964, 1969 and 1974 were 413, 248 and 218
4
r e s p e c tiv e ly .
The average s iz e o f farm in Emmet County which was 196
ac re s during 1964 increased to 229 a c re s by 1969.
diminished in s iz e s l i g h t l y to

211

By 1974, i t had

ac re s per farm.

V h i s se c tio n on a g r ic u ltu r a l tre n d s is based la r g e ly on
P ro fesso r Karl T. W right's a n a ly s is in "Michigan A g r ic u ltu r e ," Extension
B u lle tin 785, Farm Service S e f ie s , Oct. 1974, issued by th e Cooperat i v e Extension S erv ice, M.S.U.
I am a ls o indebted to P ro fesso r Wright f o r h is personal a t t e n t i o n
to my needs in t h i s area and fo r making some o f h is personal papers and
his fund o f knowledge on the s u b je c t a v a ila b le to me.
^ I b i d . , p. 5.
3
Extension B u lle tin 785, op c i t . , Fig. 35.
4
Bureau o f th e Census, U.S. Department o f Commerce, The "Census
o f A g ricu ltu re" fo r th e corresponding y e a r.

143

The e x t e n t o f land in farms in Michigan reached a peak o f 18.5
mln. a c re s by 1935.

Since th e n , t h i s acreag e d ecreased s t e a d i l y to

an average o f 14.8 mln. a c re s by 1961/63 and to 12.4 mln. a c re s by
1971/73.

In 1974, i t was only 10.9 mln. a c r e s .

For Emmet County, th e

e x te n t o f land in farms d u rin g 1964 was 81,000 a c r e s , approxim ately
27.5 p e rc e n t o f th e t o t a l acreag e o f a l l county land .

This e x t e n t o f

land in farms d e c lin e d s u b s t a n t i a l l y to 57,000 a c re s by 1969.

In

1974, i t had d e c lin e d f u r t h e r to 46,000 a c re s (1 5.6 p e rc e n t o f th e
t o t a l county a c re a g e ).
S im ila r ly , th e e x t e n t o f cropland h arv ested in Michigan
d e c lin e d from an average f o r 1961/63 o f

6 .8

mln. a c re s to an average o f

5.9 mln. ac re s by 1971/73, o r by 13 p e rc e n t ap pro xim ately .

In 1974,

t h i s f ig u r e f o r Michigan had in c re a se d s l i g h t l y to 6 .2 mln. a c r e s .

As

f o r Emmet County, cropland acreag e h a rv e ste d d e c lin e d p r o g re s s iv e ly
from 21,000 a c re s in 1964 to 15,000 a c re s in 1969 and to 14,000 a c re s
by 1974.
D espite th e s te a d y d e c lin e in th e use o f land re so u rc e s in
M ichigan's a g r i c u l t u r e , th e evidence i s t h a t th e o u tp u t o f crops f e l l
only by one p e rc e n t d u rin g th e te n y e a r p eriod 1961/63 to 1971/73
s ig n i f y in g a s u b s t a n t i a l growth in p r o d u c tiv i ty over time in th e
prod uction o f c ro p s .

Corn o u tp u t had in c re a se d by 42 p e rc e n t w hile the

p ro d u ctio n o f soy beans had r i s e n by as much as 85 p e r c e n t.
t i v i t y growth in th e a re a o f

1 iv e s to c k ,

Produc­

to o , had a l s o taken p la c e .

L ivestock reso u rce s measured in animal u n its d e c lin e d by 17 p e rc e n t
d u rin g th e p eriod 1961/63 to 1971/73, b u t l iv e s to c k o u tp u t had f a l l e n
only by 4 .0 p e rc e n t d e s p ite th e f a c t t h a t th e la b o r engaged in liv e s to c k
farming had a ls o d ecreased a s much a s 26 p e r c e n t.

At th e same tim e, th e

144

y ie ld per milk cow had risen as much as 30 percent; from 8,663 lbs.
per cow in 1961/63 to 11,287 lb s, per cow by 1971/73.

And, the index

of liv e sto c k production per animal had re g iste re d a 19 percent increase
from

88

to 105—during the period.

Thus, p ro d u ctiv ity per head of

liv e sto c k had rise n s u b s ta n tia lly during t h i s ten year period.
Labor e ffic ie n c y per u n it o f time had also shown a marked
improvement larg ely due to the g re a te r use of c a p ita l and purchased
inputs in the production process.

Professor Wright holds th a t

". . . the 1971/73 a g ric u ltu ra l output was produced by 26 percent fewer
farmers than ten years e a r l ie r ." ^

C learly , much fewer resources were

being u til iz e d during 1971/73 to produce nearly as much as the same
output as before.

The increasing d iv isio n o f labor and the increased

use o f c a p ita l in production processes were some o f the important
fa c to rs underlying the r i s e in the level o f p ro d u ctiv ity .

More and

more o f the farm input requirements were being manufactured outside
the farm se c to r leading thereby to considerable economies of scale.
The lin e s o f separation o f the farm and non-farm secto rs were thus
becoming blurred.
During the ten year period 1961/63 to 1971/73, a g ric u ltu ra l
prices as well as incomes rose.

As a consequence, real farm incomes

rose over 30 percent during the period; the index of average prices
rose from 84 to 132 for 1971/73, an increase of 57 percent.

2

However,

average money income must have rise n much f a s te r on a per farm basis
i f th is su b sta n tia l gain in real income were in f a c t r e a liz e d .

^Extension B u lletin 785, op c i t . , p. 3.
2 I b id .,

p. 3.

145

The gain in real farm income has been a t tr i b u t e d p a r tly to
an in c re ase in the average acreage per farm and mostly to an increase
in p ro d u c tiv ity in both crop and liv e sto c k production.

Despite t h i s

growth in farm incomes, however, the share o f Emmet County's income
from a g r ic u ltu r e has tended to become le s s and le s s im portant.

In

1969, to ta l farm income, defined as cash r e c e ip ts from the s a le of
crops, liv e sto c k and liv e s to c k products, was only $2.34 mln. for
Emmet CountyJ

This r e p re s e n ts an in c re ase of j u s t $0.27 mln. (11.5

percent) from the income o f $2.07 mln. derived in 1964.

During the

same y e a r (1969), t o ta l farm income f o r the s t a t e o f Michigan was, in
comparison, as much as $829.5 mln.

While the s t a t e average income

per farm (Class I to Class V) was $18,030, the corresponding average
income per farm f o r Emmet County was only $10,400.
Emmet County's income from farming has r is e n slowly as w ell.
By 1974, the to ta l money value of farm products sold was only $2.7
mln.^ rep rese n tin g only a 13.4 percent in crease in money income over a
period o f fiv e years d e s p ite s u b s ta n tia l p ric e i n f l a t i o n .
corresponding regional

The

income from a g r ic u ltu r e was $80.8 mln. and the

a g r ic u ltu r a l income fo r the s t a t e o f Michigan was as much as $1,464 mln.®
^ I b i d . , p. 44.
2

Bureau o f the Census, U.S. Department o f Cormierce, "1974 Census
o f A g ricu ltu re: Prelim inary R eport," September 1976.
3

4

Extension B u lle tin 785, op c i t . , Figure 35.
Bureau o f th e Census, op c i t .

5Region 10.
®David I. Verway ( e d . ) , "Michigan S t a t i s t i c a l A b s tra c t," 11th
e d itio n , Division o f Research, Graduate School o f Business Administra­
t i o n , Michigan S ta te U n iv e rsity , 1976, p. 623.

146

Labor and p r o p r i e t o r s ' ea rn in g s In a g r i c u l t u r e fo r Emnet County as a
p ro p o rtio n o f t o ta l county earn ing s by la b o r and p r o p r i e t o r s , was an
in s i g n i f i c a n t 2 .3 p erce n t during 1973.

By 1974, t h i s p ro p o rtio n had

d eclin ed s t i l l f u r th e r to 1.9 p erce n t.^

The ac tu al d o l l a r income
2
from la b o r and p r o p r ie to r s ' ea rn in g s in a g r i c u l t u r e during 1974

was $1.4 mln.

3

as compared to a t o t a l personal income o f $98.6 mln.
4
fo r Emmet County during th e same y e a r .
Even as f a r back as in 1969,
farm earn in gs in Emmet County c o n s titu t e d only 1.4 p e rc e n t o f t o t a l

earnings w hile "Wholesale and R etail Trade" accounted fo r 26 p erce n t
w ith "S ervices" follow ing a c lo se second with 25 percent (se e Table V -l).
Employment in a g r ic u ltu r e has a ls o tended to become l e s s and
le s s s i g n i f i c a n t in th e Emmet County economy.

According to Table V-2,

th e number o f farmers and farm managers has declined by 52.3 p ercen t
during th e period 1960 to 1970.

Decline in th e number o f farm la b o re rs

and farm foremen during th e same period was 71.8 p e rc e n t.

In 1973, t o t a l

employment in a g r ic u ltu r e in Emmet County was only 3.4 p e rc e n t o f t o t a l
county employment.

5

And, o f a l l th e ten co u n ties w ith in Region 10,

Emnet County ranked low est both in terms o f th e p ro p o rtio n employed in
a g r i c u l t u r e in r e l a t i o n to t o t a l employment w ith in th e county during
1973 as well as th e p ro p o rtio n o f ea rn in g s from a g r i c u l t u r e in r e l a t i o n
H h l s in c lu es " . . . n e t farm income and a l l forms o f la b o r
compensation b efore deduction o f payroll ta x e s ."
2

Verway, op c i t .

3

Ib id .

4

I b i d . , p. 302.

5I b id . , p. 622.

Table

V -l.

Total Earnings by Major Sources During 1969 f o r Michigan,
Region 10 and Emnet County

S ta te o f
Michigan
a . Total Earnings ($000,000)

Region 10,
Michigan

29,608

352.3

Emmet
County
45.5

- P ercen t -----b. D is tr ib u ti o n by Source
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Farm
Government
Manufacturing
Mining
C o n tra ct C o n stru c tio n
T ra n s p o rt, Communication
and P u b lic U t i l i t i e s
Wholesale & R e ta il Trade
Finance, Insurance &
Real E s ta te
S erv ices
Other

1.1
12.0
45.4
0.1
5.7

3.5
19.4
26.8

1 .4
15.0
15.4

7 .3

9 .3

4 .9
13.9

5.5
18.5

4 .7
26.0

3.2
12.2
0 .2

2 .4
15.9
0 .5

2 .5
25.0
0.7

- -

Source: “County and Regional F acts,“ a co m p ilatio n o f d a ta by
th e C ooperative Extension S e rv ic e , Michigan S ta te U n iv e r s ity , an
undated b u l l e t i n .
to t o t a l county e a rn in g s during 1974.^
Thus, th e evidence i s a g r i c u l t u r e has become a s e c to r o f
d e c lin in g Importance in th e Emnet County economy.

Labor and p r o p r i e t o r s 1

e a rn in g s in a g r i c u l t u r e a s a p e rc e n t o f t o t a l county la b o r and pro­
p r i e t o r s ' e a rn in g s was only 2 .3 p e rc e n t in 1973 and 1 .9 p e rc e n t by
1974.

2

Farm ea rn in g s c o n s t i t u t e d only 1.4 p e rc e n t o f t o t a l e a rn in g s

f o r th e county during 1969 (see Table V-2 below).

The p e rc e n t o f

males employed in a g r i c u l t u r e d u rin g 1970 was j u s t 2 .0 p e rc e n t o f th e
1 Ib id .
2David I . Verway ( e d . ) , “Michigan S t a t i s t i c a l A b s t r a c t , ” 11th
e d i t i o n , 1976: D ivision o f Research, G raduate School o f Business
A d m in is tra tio n , Michigan S t a t e U n iv e r s ity , Table XI1-21.

148

Table V-2.

Changes In Numbers Employed in D ifferent Occupational
Categories in Emmet County fo r the Period 1960 to 1970

1970

Change From
1960 to 1970

1960

Occupational Categories

1. Total Employed3
2. P rofessional, tech­
nical and kindred
workers
3. Managers and admin­
i s t r a t o r s except
farm0
4. Sales workers
5. C lerical and kindred
workers
6. Craftsmen, foremen
and kindred workers
7. Farmers and farm
managers0
8. Farm labo rers and
farm foremen0
9. Other

Per­
cent

No.

Per­
cent

No.

Per­
cent

6,261

100.0

3,372

100.0

767

12.3

302

9.0

465

154.0

720
452

11.5
7.2

509
240

15.1
7.1

211
212

41.5
88.3

922

14.7

157

4.7

765

487.3

905

14.5

658

19.5

247

37.5

105

1.7

220

6.5

-115

-52.3

22
2,368

0.4
37.8

78
1,208

2.3
35.8

- 56
1,160

-71.8
96.0

No.

Source: The 1960 and 1970 Censuses o f Population: General,
Social and Economic Characteristics-M ichigan.
Reference Table 84 of the U.S. Census of Population, 1960 Final Report PC(1)-24A of the U.S. Department of Commerce, the to ta l
fo r 1960 r e f e r s to a l l males employed. The corresponding fig u res fo r
1970 obtained from Table 122 o f the 1970 Census of Population—-Report
PC(1)-C r e la te to persons who are 16 years old and over.
bThe corresponding category during the 1960 Census was "Managers,
o f f i c i a l s and p ro p rie to rs except farm."
R e fe re n ce Appendix 21 o f the "1970 Census of PopulationGeneral, Social and Economic C h a ra c te ris tic s ," these categories include
farm foremen, farm la b o re rs, wage workers, unpaid family workers
and self-employed farm service laborers. According to Appendix-18
th e re in , " . . . the information referred to the job held during the
reference week. I f he was employed a t two or more job s, the job a t
which he worked the g re a te s t number o f hours during the reference
week was reported."
#

149

to ta l number o f males employed in the county.

Total employment In

a g r ic u ltu r e as a percentage o f to ta l county employment was only 3.4
percent during 1973.1

The e x te n t o f land in farms is today only

15.6 percent o f the to ta l ex ten t of county land.

From 1964 to 1969,

the number o f farms in the county declined by as much as 39.9 percent.
In 1969, 51.2 percent of the farm operators were working o f f the
farm, and 28.6 percent o f them were working more than 200 days o f
the y ear o f f the farm.

2

The Growing I n te r e s t in Recreation
With increasing pro du ctiv ity in U.S. a g r ic u ltu r e and r is in g
real income le v e ls , th e re has been a tendency fo r these freed resources
to go more and more in to the production o f outdoor re c re a tio n f a c i l i t i e s
and se rv ic e s.

In Emmet County, t h i s d r i f t is indicated in the g re a te r

importance today o f trad e and serv ices as income earning sources.
Rising real income le v e ls , improved tra n sp o rta tio n f a c i l i t i e s
and the a v a i l a b i l i t y o f more le is u r e time have in te n s if ie d i n t e r e s t in
the physical environment and in outdoor rec re a tio n on a nationwide
basis since the 1950s.

With t h i s growing importance o f re c re a tio n in

the U.S. consumers1 basket o f goods and serv ices purchased, a p r e s i ­
d e n tia l commission was appointed to survey demand and supply conditions
for outdoor re c re a tio n a c t i v i t i e s , f a c i l i t i e s and serv ices and to make
policy recommendations.

The outcome was the "Outdoor Recreation Report

1 Ibid.
2

"County and Regional F acts," an undated pu blicatio n o f the
Michigan S tate U niversity, Cooperative Extension S ervice, pages 58 and
60.

150
For America" in 1962.^

I t rep o rted t h a t

. . th e expanding population

has achieved more l e i s u r e tim e, more money to spend, and b e t t e r tr a v e l
f a c i l i t i e s ; and i t has sought more and b e t t e r o p p o r tu n itie s to enjoy
2
the o u td o o rs."
Among i t s o th e r p ro p o sa ls , t h i s commission recommended
t h a t a Bureau o f Outdoor R ecreation be e s ta b lis h e d in th e Federal
Government and t h a t a Federal Grants in Aid Program f o r th e s t a t e s be
s e t up.
I t i s w ithin t h i s o v e ra ll co n te x t t h a t we have to view the
3
"Michigan Recreation Plan, 1974"
which attem pted to "provide a
4
v ehicle from which p o licy d e c isio n s can be c o n s id e re d ."
This plan
contains an assessm ent o f e s s e n t i a l l y outdoor r e c r e a tio n a l a c t i v i t y
needs on the b asis o f se v e ra l surveys w ithin Michigan, v i z . , the
1972 "Michigan R ecreation Survey," th e " S ta te Park Day Use Survey" and
th e "Local Government Survey."

I t has a ls o p ro je c te d a n tic ip a te d

r a te s of in c re a se fo r t h i s s e t o f r e c r e a tio n a l a c t i v i t i e s up to the
y ea r 1990.
Table V-3 below which has been adapted from th e se data in d ic a te s
t h a t both the number o f p a r t i c i p a n t s engaged in t h i s v a r ie ty o f
r e c r e a tio n a l a c t i v i t i e s as well as th e volume o f a c t i v i t y days in
each o f th e se r e c r e a tio n a l a c t i v i t i e s may in c re a s e s u b s t a n t i a l l y over
^Outdoor R ecreation Resources Review Commission (ORRRC)'s r e p o r t
to th e P re sid e n t and th e Congress o f January 1962 e n t i t l e d th e "Outdoor
R ecreation Report For America," Washington D.C.
2 Ibid.
3The "Michigan R ecreation P lan, 1974" prepared by th e Michigan
Department o f Natural Resources, Lansing, Michigan, 1975.
^The "1974 Michigan Recreation Plan Summary," Michigan Department
o f Natural Resources, Lansing, Michigan, 1975, p. 2.

151

Table V-3.

P ro je c te d Growth Rates in R e creation Needs in Michigan
from 1972 to 1990

P e rc e n t In c re a se In
A cti vi ty

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.

Senior C itiz e n C enter
Hunting
Indoor C om petitive Sports
Snowmobiling
Power Boating
Outdoor C om petitive Sports
Nature Study
Other Boating
F ishing
P icn icking
M otorcycling
Canoeing
Camping
Hiking
Swimming in Lakes and Streams
Swimming in Pools
Indoor R ecreatio n C enter
B icyclin g
Horseback Riding

Number o f
P a rtic ip a n ts

Volume of
A c tiv ity Days

31.3
26.3
22.7
19.6
19.5
19.2
19.2
19.0
18.8
18.8
18.5
18.4
18.2
17.6
16.9
15.1
14.9
14.8
13.7

32.3
25.0
23.6
19.2
18.8
17.4
19.4
18.6
18.8
18.9
18.0
17.0
17.9
17.2
15.7
13.7
---

15.6
12.1

Source: ”1974 Michigan R e crea tio n Plan Summary," O ffic e o f
Planning S e rv ic e s , Michigan Department o f N atural R esources, 1975.
th e p erio d 1972 to 1990.

I t a ls o shows t h a t th e p r o je c te d growth

r a t e s a r e h ig h e s t in reg ard to s e n io r c i t i z e n c e n t e r s , h un ting and
indoor c o m p etitiv e s p o r t s .

These p r o je c te d r a t e s o f growth i m p l i c i t l y

assume th e c o n s tr u c tio n o f r e l a t e d f a c i l i t i e s as th e r e p o r t p o in t
o u t.

They have been based p r i n c i p a l l y on p r o je c tio n s o f p o p u la tio n

growth and changes in age s t r u c t u r e .

A c t i v i t i e s which w ill n o t be

c o n s tra in e d by th e need f o r p h y sical f a c i l i t i e s , as f o r example "c ro ss
i
country s k ii n g , b ic y c lin g and m otorized t r a i l r e l a t e d a c t i v i t i e s " and
1 I b i d . , p. 26.

152

those which Involve r e la tiv e ly low adoption costs to the consumer a re ,
in f a c t, expected to grow f a s te r .
Research o f the Michigan Department of Natural Resources also
shows a p o sitiv e c o rre la tio n between the degree of p a rtic ip a tio n 1n
recreational a c tiv ity and growth in income w ithin the s ta te of
Michigan.

While the re la tio n sh ip between Income and a ll recreatio nal

a c t i v i t i e s taken as a generic group may be held to be p o sitiv e , the
Michigan Recreation Study has found considerable v ariatio n in th is
re la tio n sh ip —between the level of income and the in te n sity of adoption
of d iffe re n t types of recreatio nal a c t i v i t i e s .

The re la tio n sh ip is

very close for some, moderate in the case of o th e rs, but
marginal or even negative in the case of y e t other recreational
a c tiv itie s.

The 1972 Michigan Recreation Survey shows th a t

. . . p a rtic ip a tio n in power boating increases with each
increase in income le v e l. . . . Swimming in lakes, swim­
ming in pools, motorcycling, outdoor competitive sp o rts,
and indoor competitive sports a ll increase quite rapidly
with increases in income.'
A c tiv itie s such as snowmobiling, horseback rid in g , nature study,
camping, boating (other than power boating) and b icy clin g , however,
are le ss closely re la te d to income though the c o rre la tio n is s t i l l
p o sitiv e.

I t is only senior c itiz e n a c tiv ity th a t is shown to be

negatively co rrelated with income in th is study.
I f the o rig in -d e stin a tio n data for recreatio n a c t i v i t i e s
during July and August of 1972 for those outdoor recreation a c t i v i t i e s
shown in the 1974 Michigan Recreation Plan be a p o in te r, the indica­
tio n is th a t the demand fo r recreational f a c i l i t i e s and a c t i v i t i e s in

1 Ib id .

153

th e northern p a r t o f Michigan 1s l ik e ly to be r is in g to reasonably
high le v e l s .

I t appears t h a t urban dw ellers 1n southern Michigan,

e s p e c ia lly those from major c i t i e s , and people from a d jo in in g s t a t e s ,
do a con siderab le amount o f t r a v e l l i n g to northern lower peninsula
Michigan 1n quest e s p e c ia lly o f outdoor r e c r e a tio n .
Also derived from the 1974 Michigan Recreation Plan Summary
is Table V-4 below which gives data on the number o f a c t i v i t y days
o f nine r e c re a tio n a l a c t i v i t i e s Imported and exported1 by each o f the
development regions

2

In lower peninsula Michigan.

These data provide

strong support f o r t h i s contention o f an increasing use o f Region 10s
n atural resource based r e c re a tio n f a c i l i t i e s .

I f "e x p o r ts 11 be defined

f o r t h i s purpose as those re c re a tio n a c t i v i t y days spent in the region
.

♦ t

by n o n -resid en ts (implying t h a t the region has produced and supplied
these se rv ic e s to o u ts id e r s to be consumed w ithin the confines o f the
producing region) and " im ports" be re c re a tio n a c t i v i t y days re s id e n ts
o f th e region in q u estio n enjoyed o u tsid e t h e i r own region o f residence
(implying t h a t th ese r e s id e n ts demanded the se rv ic e s produced by
o u tsid e rs and consumed them o u tsid e t h e i r r e s id e n tia l re g io n ), Table V-4
c le a r ly shows th e la rg e volume o f exports o f re c re a tio n a c t i v i t y days
by the northern cou nties o f th e lower peninsula region.

Corresponding­

ly , a high import volume i s in d ic ated fo r the development regions in
th e south o f Michigan.
"*It may be noted t h a t the d e f in itio n s o f 'im p o rts' and 'e x p o r ts '
adopted in the Michigan Recreation Plan are d i f f e r e n t from th e d e f i n i ­
tio n s adopted h erein .
2

The o f f i c i a l " S ta te Planning and Development Regions" e s ta b ­
lish ed e a r l i e r by th e Executive O ffice of the Governor fo r planning
purposes have been used f o r purposes o f the 1974 Recreation Development
Plan as Recreation Plan Sub-Regions.

Table V-4. Imports and Exports3 of A ctivity Days of Nine Recreational A c tiv itie s in Lower
___________ Peninsula Michigan (in ,000)

7Region
. b

1
1. Canoeing
2. Power Boating/
Water Skiing
■
3. Other Boating
4. Fishing
5. Swimming In
Lakes &Streams
6. Picnicking
_

7. Camping
8. Hiking =
2 hours
9. Motor Cycling/
T rail Riding

1,627
24
M 6,244
493
X
”tr 3,319
x
194
10,018
^
326
M 17,502
589
X
M 7,220
^
493
m 10,814
^
1,783
M 2,451
36
X
to 2,869
164
X
x

2 13
4 1 ~ 5 6"
7 7 T fflT 14 1 7 B T '7 C ’ 1 88 I '9 T 10"
North o1 Imaginary Line0
South of Imaginary Line0
27
10
177 35
367 254
24
48
201
49
99
79
202
37
34 262
269
22 88
34
1
11
585 485 600
37
T
56
40
430
64*T 142 1,597 1,592 1,396 1.2TT 354 271 171
652
378
914 284 2,276
851 2,022 2,281
283
64 261
506 278
249 107
22
5
6
580
9 "W
673 844
589 “228
250
855
232
40
313
193 808 768 1,501
179
109 180
79
123
303
187
159
139
89
557
817 462 1,764 1,989 2,043 1,86S 474
758 1,556
245
165 298
765 2,750 1,292 2,630 3,224
660 449 303
188
37
79 ™55
868 1,447 889 2,733 3,339 4,213 3,444
637
577
883 1,135 760 845
106 416 2,161 2,898 1,773 5,317 2,120 3,854 4,346
72
204 ' 1 4 3
544
214 229
809
826 868 1,188 1,187 1,632 2,016
484 1,292
966 1,151 1,649
407
326 402
926 1,952
431 597
709
214
111
215
221
298
803 1,192 618 1,700 1,354 1,720 1,791 ' 889
1,992
2,810
447 2,275
504
410 304
192
255 1,592 1,349
184 208
67
28
30
8
507
42
29
30 148
395
517
61
255
471
618
27
307
251
12
188
42
39
119
6
301
7
370
104 66
178
21
99
527
156
9
364
401 1,061
982 462
72
900
154
137
107
258 1,286
195
253 14
80
"

Source: Adapted from Table 3 of the "1974 Michigan Recreation Plan Summary," Michigan
Department o f Natural Resources, Lansing, Michigan, March 1975.
a Imports(M)=Number o f a c tiv i ty days residen ts spent on th a t a c tiv i ty outside th e ir region of
residence. Exports(X)=Number of a c tiv i ty days non-residents spent on th a t a c tiv i ty within the region
in question.
^These are groups o f counties adopted by the Executive Office of the Governor of Michigan fo r
purposes of development planning. The 1974 Recreation Development Plan has adopted the same groups
fo r purposes of reporting and recreatio n planning. See Mafp I a t page 7.
cThe Imaginary Line goes along the northern boundaries o f the counties o f Allegan, Kent,
Montcalm, Is a b e lla , Midland, Bay, Genessee, Lapeer and St. C lair. See Map I I , page 155.
*

155
In f a c t , one 1s a b le to I d e n t if y the com parative advantage th a t

th e n orthern c o u n tie s o f lower peninsula Michigan^ hold r e l a t i v e to
th ose below th e imaginary l i n e shown 1n Map II below

2

1n th e production

and marketing o f se v e ra l n a tu ra l resource based r e c r e a tio n a l a c t i v i t i e s .

THE IMAGINARY LINE

ry /l'fM
w w ■abenidlandT/^7&^
ll-a: ^ v /^ v /
Montcalm
L ^ iK e n t

Genes secT
Lapeer

rAllegan

Map I I .

f

Lower Peninsula Michigan Showing th e Imaginary Line Dividing
Those Counties With a Comparative Advantage 1n Exporting
N atural Resource Based R ecreational A c ti v itie s

Those c o u n ties 1n th e lower peninsula above an imaginary l i n e
along th e n o rth ern boundaries o f the c o u n tie s o f A llegan, Kent, Montcalm,
I s a b e l l a , Midland, Bay, Genessee, Lapeer and S t. C l a ir .
A c c o rd in g to th e "1974 Michigan Plan Summary" (page 2 6 ), "Many
a re a s o f the s t a t e p a r t i c u l a r l y in th e northern a r e a s , have a n atu ra l
com petitive advantage f o r outdoor r e la te d a c t i v i t i e s t h a t i s d i f f i c u l t
to overcome in p o rtio n s d f th e southern a re a s even w ith c a r e f u l l y
developed management."

156

I t may be observed in Table V-5 below th a t the export/import r a tio s for
a l l the recreation a c t i v i t i e s under reference (except for four of these
a c t i v i t i e s within Region 7B) are g reater than unity for those regions
in lower peninsula Michigan above the imaginary lin e shown 1n Map I I .
In other words, these counties export such recreation a c t i v i t i e s more
than they import them.

Not only are t h e i r exports greater than th e ir

imports, Table V-4 shows th a t the absolute number of recreation a c tiv i ty
days exported are, indeed, su b s ta n tia l.

And, within these counties in

the lower peninsula north of th is imaginary lin e , Region 10 1n which
Emmet County l i e s has the highest export/import r a tio s fo r five of
these nine a c t i v i t i e s ; v iz ., power boating and water skiin g, hiking,
swimming in lakes and streams, canoeing and camping.

Even out of the

remaining four a c t i v i t i e s , Region 10 is s t i l l close behind th a t region
with the highest export/import ra tio s in picnicking, other boating
and fish in g .

This strong r e la tiv e advantage of Region 10 derives

from the q u ality of i t s natural environment with a high degree o f landwater in te rf a c e s , easy public access,^ a sub stan tial annual snowfall
which tends to a t t r a c t skiing e n th u sia s ts, and i t s a c c e s s ib ility through
land, water or a i r .

Table V-4 shows th a t Region 1 0 's exports of

a c tiv i ty days of the nine recreational a c t i v i t i e s l i s te d therein are
su b stan tia l r e la tiv e to both i t s own imports as well as to the exports
^That easy access to water based recreational f a c i l i t i e s tend
to r a is e the price of bordering land in recognition of the increased
p o ten tial benefits from th a t water is supported by empirical evidence.
Land-water in terfaces with ease of access for recreational a c t i v i t i e s
tend to Increase the s a tis f a c tio n y ie ld in g capacity of the physical
environment. See, "The Effects of Water Frontage on Recreational
Property Values," by J. R. Conner, K. C. Gibbs and J . E. Reynolds,
"Journal o f Leisure Research," 1973, No. 5 (Spring), pp. 26-38.

Table V-5.

Export/Import Ratios fo r Nine Outdoor Recreation A c tiv itie s for Michigan's Planning
and Development Regions Computed on the Basis o f O rigin-Destination Data for these
A c tiv itie s During July and August 1972

Lower Peninsula
South o f Imaginary
Line

Upper
Peninsula

North of Imaginary
Line
Region

1
1. Canoeing
2. Power Boating/
Water Skiing
Other Boating

4

7B

3

.02

.47

.12 2.5

.17

.08

.66

.78 2.0

.24 .04 .19 .54 2.6

.06

.72

.44 1.7

.12 .05 .21 .53 1.0 21.4

5

6

7A 8A 14

2

-0 .10 .13 5.4

.11
1.0

7C

8B

9

10

11

12

26.9

4.9

.44 13.6

21.7 20.2

12.5

18.8 15.2

50.6 2281.

26.9 34.9 300.

142.5

13

6.0 1.04

1.8

0

3.8

0.38

4. Fishing

.03 1.2

.55

.66 .14 .08 .15 .41 3.3

4.1

17.3

9.3

29.6

10.6 12.6 1.3

2.8

5. Swimming in
Lakes &Streams

.03 l.C

.79

.85 .31 .03 .10 .63 4.6

3.1

28.3 57.3

48.8

79.0

5.0 1.7

2.1

6. Picnicking

.07 0.5

.52

.69 .60 .27 .25 .46 3.6

2.3

5.6 13.4

5.6

11.5

7.3 1.3

5.0

7. Camping

.17

.34

.49 .11 .14 .12 .25 2.6

7.2 12.2

9.3

13.1 16.5 2.6

3.2

.63

.86

8. Hiking >
9.0
7.5
58.9 0 7.2
.02 2.0
.40 -0 .48 .16 .01 .05 4.5
.73 10.6 20.6
2 Hours
9. Motor Cycling/ .06 .69 2.4
4.7 2.9 .47 8.5
.21 .53 .38 ,15 .64 1.2
.40 100.0 7.3 140.0
T rail Riding
Source: Adapted from Table 3 of the "1974 Michigan Recreation Plan Summary" prepared by the
Michigan Department o f Natural Resources, Lansing, Michigan, December 1975.

158

o f th e o th e r development region s; i t a ls o leads the way in th e export
o f power b o atin g , fis h in g and camping.
Winter sk iin g during what was formerly considered to be the
o ff-seaso n fo r t o u r i s t s and v acatio ners is becoming in c re asin g ly
popular.

Region 10 provides 63 percent o f the p a y r o lls , 43 percent

o f s k ie r days and 39 percen t o f to ta l employment out o f a l l o f Michigan's
annual sk iin g a c t i v i t i e s as would be shown by Table V-6 below.
P ro je ctio n s o f a c t i v i t y days during the period 1972 to 1990
o f c e r ta in outdoor re c re a tio n a c t i v i t i e s drawn from the Michigan
Recreation Plan Summary f o r 1974, i t must be r e a l iz e d , are j u s t
in d ic a to rs o f the p o te n tia l upward trend in re c re a tio n f a c i l i t y use
r a th e r than conceptually valid estim a tes of fu tu re demand fo r r e c r e a ­
tio n a l a c t i v i t i e s in northern lower peninsula Michigan.

The econom ist's

notion o f "demand" r e f e r s to a s e t o f r e la t i o n s between q u a n titie s
demanded and s p e c if ic p ric e s a t a given moment in tim e, and the notion
o f an in c re ase in demand is the notion o f an outward s h i f t in the whole
demand schedule s ig n ify in g th a t more o f th e commodity w ill be purchased
a t each o f th e e a r l i e r sp e c ifie d p r ic e s .

In t h i s sense, the data

provided in the Plan are not demand p ro je c tio n s but e stim a te s .

They

are based only on expected population growth p a tte rn s and changes in
the s t r u c t u r e o f the population.^
In f a c t , some o f the a c t i v i t i e s considered in the Plan are
highly dependent on the p ro v isio n , e i t h e r p u b lic ly or p r iv a te ly , o f
f a c i l i t i e s fo r t h e i r adoption.

1

As Wilkinson has a ls o pointed o u t,

I b id . , la s t paragraph o f p. 21.

159

Table V-6.

S k ier Days, Employment, Income, E t c ., from Skiing
A c t i v i t i e s During 1975 and 1976 in Development Region 10
o f Michigan

S kier Days
( in ,000s)

1 . Michigan
2. Region 10
3. Emmet
4. Charlevoix
5. Wexford
6. Antrim
7. Benzie
8. Leelanau
9. Grand
T raverse
10. Missaukee
11. Kalkaska
12. Manistee

Total
Employment
(days)

No.

Per­
cent

No.

Pe r ce n t

2,221

100.00
43.00
4.54
23.95
4.91
4.13
2.92

4,105

100.00

1,610

39.00
4.90
15.71
3.31

953.5
100.8
532.0
109.1
91.8
65.0
38.0
15.0
1.8
—
—

1.71
0.67
0.08
—

201
644
136
337

P ayro l1s
( in ,000s)

Average
Length
Of Season
(days)

No.

Per­
cent

9.012.0
5,659.0
802.2
2,562.0
190.4
1,242.2
198.0

100.0
63.0
8.90
28.43
2.11

93
105
125
125
104
70
123

78
170

8.20
1.90
4.14

39
5
—

0.95
0.12
—

—

—

- -

—

—

__

—

—

600.0

13.78
2.20
6.66

100

61.5

0.68

100

2.7

0.03

90

Source: Adapted from Table 5 o f F rancis M. Domoy's "An Employ­
ment A nalysis o f th e Michigan Ski In d u s try ," A g ric u ltu ra l Economics
Report No. 329 o f March 1977.
"The amount o f r e c r e a tio n 'demand' ( e . g . , v i s i t s , user days, e t c . )
v a rie s with th e number and s iz e o f f a c i l i t i e s a v a ila b le ." ^

While

r e c r e a tio n a l a c t i v i t i e s such as p ic n ic k in g , hiking and th e l i k e may
be la r g e ly independent o f th e supply o f f a c i l i t i e s , swinming in p ools,
se n io r c i t i z e n a c t i v i t i e s , sk a tin g and ic e hockey, e t c . , would depend
Paul F. W ilkinson, "The Use o f Models in P re d ic tin g th e Con­
sumption o f Outdoor R e crea tio n ," Journal o f L eisure Research, Vol.
5, No. 3, Summary 1973, p. 35.

on th e c o n s tr u c tio n o f r e l a t e d p h y sic al f a c i l i t i e s .

The tr e n d is c l e a r

th e n o rth e rn c o u n tie s o f lower p e n in su la M ichigan, e s p e c i a l l y Region 10
a r e e x p e rie n c in g a r i s i n g tre n d 1n demand f o r r e c r e a tio n a l a c t i v i t i e s
based on t h e i r n a tu ra l re so u rc e ad v an tag es.

The Michigan R ecreatio n

Plan r e p o r ts t h a t Region 10 c o n ta in s th e most camp s i t e s and i s a ls o
one o f th e most sc e n ic and e a s i l y a c c e s s i b l e a r e a s w ith in th e s t a t e d
O r i g in - d e s tin a tio n d a ta on a survey o f camping by Michigan r e s id e n ts
show t h a t Region 10 recorded th e h ig h e s t number o f camping d e s t i n a t i o n s
in 1972 w ith approxim ately 3.1 mln. lo c al r e s i d e n t s alo n e and th e
h ig h e s t p e rc e n t d i s t r i b u t i o n {15.4 p e rc e n t) o f camping d e s t i n a t i o n s o u t
o f a l l re g io n s .

2

Within Region 10, th e C ity o f Petoskey in Emmet County c o n s t i ­
t u t e s an im p ortant fo cal p o in t f o r t o u r i s t s , v a c a ti o n e r s , second home
owners and s p o r ts e n t h u s i a s t s .

This c i t y adds to th e com parative

advantages o f th e Region as well as t h a t o f Emmet County on account
o f a v a r ie ty o f f a c t o r s .

N estled in a b l u f f ov erlooking b e a u tif u l

L i t t l e T raverse Bay, i t combines an h ig h ly scen ic and q u ie t en v iro n ­
ment with th e ready a v a i l a b i l i t y o f and a c c e s s i b i l i t y to a v a r i e t y o f
w ater and land r e l a t e d s p o r ts f a c i l i t i e s a s well as a well developed
s e t o f h o s p ita lity se rv ic e s.

The wide network o f la k e s and r i v e r s ,

n a tu ra l ski slo p es and th e bay c lo s e a t hand p ro v id es th e C ity o f
Petoskey a s t r a t e g i c p o s it io n in th e r a p id ly growing t o u r s i t and
r e c r e a tio n in d u s tr y w ith in th e a r e a .

The stu d y o f w a te r f r o n t l i v i n g

in th e Emmet and Cheboygan c o u n tie s found th e C ity o f Petoskey a
^'"Michigan R ecreatio n Plan 1 974,” op c l t . , p. 74.
2 I b i d . , p. 78.

161

r e la tiv e l y more a t t r a c t i v e spot fo r resid e n ts and vacationers in these
two counties as compared to Cheboygan in Cheboygan County and Traverse
City in the Grand Traverse County.1
The 1976 Parks and Recreation Plan fo r the City o f Petoskey
points out th a t th is c ity serves as a recreatio n center fo r people
from a l l surrounding regions Including those from the adjoining
Charlevoix and Cheboygan counties.

2

The area of influence of Petoskey

for supplying recreation al services to resid e n ts and h o s p ita lity
services to v is i to r s to the region is not lim ited to county confines
alone but extends beyond into other development regions and counties,
too.
Emmet County's population increased by 15.3 percent between
1960 and 1970.

3

So did the population o f i t s major c i t y , the City of

Petoskey, which experienced an increase of 3.3 percent during the same
4
period—from 6,138 persons in 1960 to 6,342 persons by 1970.
From
1970 to 1975, Emmet County's population increased further by 15.7
percent--from 18,331 in 1970 to 21,211 by 1975^ and population projec­
tion s of the Michigan Department of Management and Budget indicates th a t
Emmet County's population w ill increase a t approximately 2.2 percent
C
to 2.4 percent per annum into the near fu tu re.
V arans e t a l . , op c i t . , pp. 113-114 and 142.
2
3

"Parks and Recreation Plan For The City of Petoskey," op c i t . , 40.
Community and Regional Facts, op c i t . , p. 3.

4 Ibid.
^Bureau of Census, U.S. Department of Commerce, "Population E s ti­
mates and P ro jection s," Series P-25, No. 670 o f May 1977, p. 15.
^"Economic Report of the Governor: 1976," Department o f Manage­
ment and Budget, Lansing, Michigan.

162

This growth in county population is l i k e ly to be shared by
the City of Petoskey even though i t appears th a t t h i s c i t y experienced
a 2.5 percent d ec lin e in population during th e period 1970 to 1975.
What i s more important than the Impact of population growth, however,
i s th a t o f the p o te n tia l expansion in the trav e l and t o u r i s t industry.
All in d ic atio n s are th a t the volume and value o f se rv ic e a c t i v i t i e s
in Petoskey are lik e ly to grow s te a d ily .

This seems to be a reasonable

inference from the various studies which in d ic a te growth in trav el
and tourism e s p e c ia lly in t h i s p a r tic u la r region o f the lower peninsula
of Michigan.

The Michigan Department of Commerce rep o rts th a t th is

industry has grown a t "12.4 percent yearly during most recen t d i f f i c u l t
t i m e s . T h e Department im p lic itly holds out high promise o f fu tu re
growth in trav el and tourism in Michigan.

2

Township growth ra te s

id e n tifie d by the U niversity o f Michigan's study on w aterfron t liv in g
in Emmet and Cheboygan counties show th a t a l l o f the townships in these
counties with lake or r i v e r sh orelin es will grow during the period
1971-73 a t r a te s ranging from 22 percent to 116 percent.

3

Growth in

w aterfront liv in g and w aterfro n t a c t i v i t i e s in these two counties is
lik e ly to increase the pressure on the City o f Petoskey fo r the provi­
sion of an increased volume o f services in the fu tu re .

The Upper Great

Lakes Regional Recreation Planning Study of 1972 s ta te s th a t

1"Michigan Travel and Tourism Facts: 1975-76," compiled by the
Travel Bureau of the Michigan Department of Commerce.
2

I b id ., also see the Travel Bureau's "Sumnary o f the Travel
Product Market Analysis Study" of March 1976 and data gathered from
Market Opinion Research (mimeograph).
3

Marans e t a l , op c i t . , Chapter VI.

163
T rips to the Upper Great Lakes c o n s titu t e 26 percent o f
t o t a l t r i p s . Among th e fam ilies surveyed, 11 percent
took one or more s h o rt t r i p s ( la s t in g 2-4 days) to the
region and 13 percent took one o r more long t r i p s ( l a s t i n g 5
days o r more) to the r e g io n .1
I t f u r th e r shows an imposing amount o f data on th e p o p u la rity of
r e c re a tio n a l a c t i v i t i e s id e n tif ie d in the Michigan Recreation Plan
the supply o f which f a c i l i t i e s Emmet County is id e a lly s u ite d f o r.
All in a l l , the evidence is a growing pressure on the City of
Petoskey to supply a m ultitude of se rv ic es and f a c i l i t i e s to t h i s
growing stream of v i s i t o r s .

The p o p u la rity of the c i t y as a place

where most v i s i t o r s are l ik e ly to stay fo r s h o rt periods a t a time may
n e c e s s ita te envisaging the supply of sp o rts goods and equipment, various
kinds of r e p a ir m a te ria ls and f a c i l i t i e s and a whole host of e n t e r ­
tainment and h o s p it a li ty in d u stry r e la te d item s.

And, as already

pointed o u t in Chapter I I I , the to ta l value o f r e t a i l sa le s in Petoskey
have been growing q u ite s te a d il y in the p a st.
Opportunity Costs of the P ro je ct and th e F i r s t Hypothesis
I f these be the tr e n d s , the opportunity c o sts o f c i t y land on
an economically non-viable fairgrounds p ro je c t are lik e ly to be
extremely high both in a c u r r e n t as well as long run c o n te x t.

In terms

o f Ricardian r e n t th eory , the derived demand f o r City o f Petoskey land
f o r the conduct o f various types o f economic a c t i v i t y is l i k e l y to be
pushing s te a d ily upwards on account o f i t s r i s i n g economic u se -c a p a c ity .
^"Upper Great Lakes Regional Recreation Planning Study: P a rt 2:
Recreation Demand Survey and F o re casts," 1974. Recreation Resources
Center, U niversity of Wisconsin, Extension. A cooperative P u blication
o f th e I n s t i t u t e for Environmental S tu d ie s, U niversity of Wisconsin,
Madison and the Recreation Resources Center, U niversity o f W1sconsinExtension, p. 20.

164

This tendency towards an upward p re ssu re 1n economic r e n t in v a ria b ly
im plies in c re a sin g o p p o rtu n ity lo s s e s to th e Emmet County community by
v i r t u e o f i t s conmltment to an a rc h a ic i n s t i t u t i o n a l arrangement w ithout
m o d ificatio n o r change.

In terms o f Von Thunen's model, market fo rc e s

a re tending to unambiguously d e fin e the C ity o f Petoskey as th e c e n tr a l
zone fo r th e lo c a tio n o f Emmet C o un ty 's, and perhaps o f Region 1 0 's ,
tra d e and se rv ic e i n d u s t r ie s to serve the growing t o u r i s t , v ac atio n ,
sp o rts and second-home markets a t the l e a s t economic and so c ia l c o s ts
o f t r a v e l , tr a n s p o r ta tio n and inform ation d if f u s io n .

The unexploited

economic o p p o r tu n itie s appear to be high.
In Chapter I I I , an economic e v a lu a tio n o f th e p o te n tia l n et
re tu r n s from in v e stin g th e a v a ila b le land and o th e r resou rces in a
r e t a i l shopping c e n te r were worked o u t.

This e v a lu a tio n shows t h a t th e

minimum o p p o rtu n ity c o s t values on th e b a s is o f s e le c tin g such a p r o je c t
a t t h i s s i t e range from $10.4 mln. to $24,0 mln. in the case of
A lte r n a tiv e I, $11.2 mln. to $26.3 mln. i f A lte rn a tiv e II were chosen,
and $12.0 mln. to $28.5 mln. in the case o f A lte rn a tiv e I I I . 1

Whatever

th e a l t e r n a t i v e se le c te d and whatever d isc o u n t r a t e i s considered
a p p r o p r ia te out o f th e range given t h e r e i n , we have to add in the average
annual lo s s e s p r e s e n tly being incurred on the fairg ro u n d s p r o je c t to the
r e s p e c tiv e n e t p re s e n t value so as to a r r i v e a t th e f in a l n e t o p p o rtu n ity
c o s t f ig u r e .
That th e fairg ro u n d s p r o je c t involves annual o p era tin g lo ss e s
y e a r a f t e r y ea r has been c l e a r l y shown in Appendix E a f t e r a d e ta ile d
a n a ly s is o f six te e n y ea rs o f poorly m aintained s e ts o f accounts.
^ e e Tables I I I - 8 b , 111-9b and III-IQ b , r e s p e c tiv e ly .
i

These

165

accounts were c a r e f u l l y s c r u tin iz e d and re-worked on th e b a s is o f
g e n e ra lly accepted accounting p r in c ip le s (GAAP) to i d e n t i f y th e n e t
o p e ra tin g lo s s e s in c u rre d by th e Emmet County F a ir Board during
each and every one o f th e se six te e n y e a r s .

During th e p ro c e ss, i t was

observed t h a t th e accounting system o f th e F a ir Board was found wanting
in many r e s p e c ts .

I t i s considered a p p o s ite to make some comments

thereon a t t h i s s ta g e .
J u s t l i k e any "system ," an accounting system, to o , has to be
judged with r e fe re n c e to th e o b je c tiv e s i t i s expected to ach iev e.
The o b je c tiv e s f o r the accounting system a re derived from th e o v e ra ll
o rg a n iz a tio n a l goals w ith in which th e system has been i n s t a l l e d .

In

s e t t i n g up an accounting system, th e paramount c r i t e r i o n i s t h a t the
b e n e fits derived from t h a t system do not f a l l s h o r t o f th e c o s ts
o f o p e ra tin g i t .

In o th e r words, i t i s not a q u estio n o f m aintaining

a p e r f e c t s e t o f accounts 'p e r s e . '
th e ch eap est accounting system.

Nor should i t be the aim to adopt

I t i s r a t h e r a m atter o f adopting a

s e t o f accounting p r a c tic e s which f a c i l i t a t e the achievement o f the
o r g a n iz a tio n 's s h o r t and long run goals and o b je c tiv e s a t a
commensurate c o s t .

The Emmet County F a ir Board, however, does not

have a rig o ro u s accounting system.

This system is l i k e l y to have been

a major cause o r a t l e a s t has perm itted continued o p e ra tin g lo s s e s .
The re a l c o s ts o f th e accounting p r a c tic e s adopted a re l i k e l y to have
been high e s p e c i a lly because th e re does no t appear to have been any
check even a t th e le v e l o f the county a d m in is tra tio n .

More s p e c i f i c a l ­

l y , th e follow ing d e f ic ie n c ie s 1n th e accounting system o f th e F a ir
Board were observed.

166
In some y ears, even the expenditure and re c e ip ts sides have not
been c o rre c tly added up {see, for example, the account for the years
1973 and 1960).

Secondly, the closing balances of one year have not

been entered as the opening balances of the next year.

Nor has any

attempt been made to reconcile the previous y e a r 's closing balances
with the opening balances of the ensuing year.

Perhaps, some tr a n s ­

actions did take place between the drawing up o f the accounts per­
tain in g to one f a i r and the next but they are not shown in the s t a t e ­
ments of re c e ip ts and disbursements.

Discrepancies in the opening and

closing balances along with inaccuracies in the adding up o f the
accounts leads to the question whether some inflows have been omitted
and whether "fu ll disclosure" has taken place.

F ailure to t a l l y opening

and closing balances also leads to doubts whether the income of one
year was matched against the expenditure of th a t year.

All these

shortcomings in the accounts involve v io latio n of the generally accepted
accounting p rin cip le (GAAP) rela ted to the "matching concept" which
requires th a t the revenue realized during one accounting period be
matched ag ain st the costs incurred during th a t year.
Thirdly, the financial statements of the Fair Board were not
constructed on an accrual basis but only on a cash b a s is, i . e . , only
cash rece ip ts and cash disbursements were recorded in the books.

The

"p e rio d icity concept" requires th a t expenses and revenues re la te d to a
sp e cific period must be accounted fo r.

I f one is to judge performance

and financial position during the year accurately and make appropriate
managerial and policy decisio n s, i t is very necessary to comply with
the p erio d ic ity requirement.

Even i f the accounts were maintained on

a cash b a s is, i t was necessary th a t the account balances be reconciled

167

by linking them with fin a n c ia l flows during th a t p a r tic u la r y ea r.

This,

too, is a p ra c tic e th a t has been neglected.
Fourthly, expense and r e c e ip t items are seldom c l a s s i f i e d in
c o n s iste n t groups.

Where some c l a s s i f i c a t i o n has been done, i t has

n e ith e r been done with any uniformity from one year to the next nor with
a view to f a c i l i t a t i n g managerial decision making with regard to the
future a c t i v i t i e s o f the p r o je c t.

I f proper management control and

evaluation were to have been maintained, i t was necessary to have
c l a s s i f ie d the types of r e c e ip ts and categ o ries of expenses so th a t
management information could be drawn out o f the accounts.

Id e a lly ,

i t should be po ssib le to a n tic ip a te standard co sts and standard retu rns
fo r s p e c ific groups o f co sts and to compare standards with ac tu a ls a t
the conclusion o f the event so as to id e n tify p ro je c t shortcomings by
analyzing variances from the standard c o s ts .

Members of the Fair

Board are lik e ly to have had some co n trib u tio n s to make i f these
variances were made c le a r by a t le a s t following c o n s is te n t and orderly
accounting p ra c tic e s.
Other departures from GAAPP have been observed.

The accounting

period has not been held uniform.

There is some overlap as well as

some gap in the rep o rtin g period.

In 1971, the accounts p erta in to

the period o f the calendar y ear.

The next s e t of accounts, however,

are shown in resp e ct o f the twelve month period October, 1971 to
October, 1972 (presumably up to September 30, 1972).

T h e re a fte r,

October, 1972 to December, 1972 accounts have been omitted.

Some

items appear on the r e c e ip ts sid e as well as on the expenses side
whereas the proper system o f accounting is to show tra n sa c tio n s per­
ta in in g to one kind of a c t i v i t y on the same sid e year a f t e r year with

168

an expense item shown as an o f f s e t to a revenue item and/or v ic e versa.

The "consistency concept" re q u ire s th e com parability o f f in a n ­

c ia l statem ents over a period o f y e a rs .

This re q u ire s adherence to

rep o rtin g p ra c tic e s which a r e c o n s is te n tly followed.

And* the

grouping o f s im ila r kinds o f a c t i v i t i e s in one block f a c i l i t a t e s the
quick understanding of the n e t r e s u l t s f o r the year o f the p a r tic u la r
kind of incomes and expenses.

Balance sh e et items have o fte n been

shown in the revenue accounts.
In summary, the accounts of the Emmet County F air Board have
not been ac c u ra te ly maintained nor maintained in a manner conducive
to the performance o f th e minimum fu n ctio n o f showing the proper s t a t e
o f a f f a i r s a t a given moment in tim e.

In any c a se , i t would seem th a t

even a t the level o f th e county ad m in istra tio n the p ra c tic e has been
to w r i te - o f f annual lo sses w ithout ap p ra isa l and a u d it o f th e y early
F air Board accounts and to im p lic itly approve whatever accounting
p ra c tic e s were adopted.
To retu rn to th e q uestion of the opportunity c o s t o f continuing
the fairgrounds p r o je c t in i t s p rese n t lo c a tio n , we could reckon
the lo ss incurred during th e l a s t year o f the p r o je c t ($30,378),
o r take the annual average d uring , say, the l a s t fiv e years o f the
p r o je c t ($22,202) as a proxy fo r the p o te n tia l n et o peratin g lo ss in
the ensuing y ea r o f o peratio n so as to a s c e r ta in the p re se n t value o f
opp ortunity c o s t.

I f we use th e more co n serv ativ e annual average lo ss

fo r the l a s t fiv e y ea rs o f the p r o je c t, the to ta l annual opportunity
co s t under th e th re e a l t e r n a t i v e shopping c e n te r p r o je c ts shown in
Chapter I I I a re as given in Table V-7 below.

Needless to say th a t i f

we reckon the operatin g lo ss during 1976 as a more re p re s e n ta tiv e

169

Ta*le V-7.

Present Value o f Opportunity Costs of the Emmet County
Fairgrounds P ro je c t Under the Three A lte rn a tiv e Sizes
o f Shopping C enter1

The Present Value o f Opportunity Costs
Under th e Respective A lte rn a tiv e ($s mln.)

Discount
Rate

I
.10
.12
.14
.16
.18
.20

24.03
19.89
16.66
14.09
12.04
10.38

II
26.34
21.76
18.19
15.36
13.10
11.26

III
28.55
23.51
19.57
16.47
13.98
11.97

fig u re o f fu tu re o perating l o s s e s , the opportunity c o s ts would be higher.
What i s more im portant, however, is t h a t the magnitude o f the oppor­
tu n ity c o s ts whether we added on a f iv e y ear average annual lo s s or
th e lo ss incurred during the l a s t year o f operation i s t h a t they are
su b sta n tia l.
The minimum o pp ortu n ity c o s t according to Table V-7 i s $10.38
mln.

This is a t a f a i r l y high r a te o f d iscou nt.

Yet, when we

compare t h i s fig u re a g a in s t fig u re s such as Emmet County's to ta l
earnings during 1969 o f $45.5 m ln J or the to ta l value o f a g r ic u ltu r a l
products sold by Emmet County in 1974 o f $2.66 mln., e t c . , i t would be
c le a r th a t the op portunity c o sts r e la te d to the co n tin u atio n o f the
c u r r e n t p r o je c t in the p resen t lo c a tio n a r e , indeed, l i k e l y to be
s u b s t a n tia l.

Obviously, the lower the r a te of discount reckoned and

the la r g e r the s iz e o f shopping ce n te r chosen, the higher the oppor­
tu n ity c o s t involved.
^This ta b le i s a co n so lid atio n o f Tables I I I - 8 b , III-9 b and
III-1 0 b .

170

I t may be noted t h a t the o pp ortun ity c o s ts r e f e r r e d to above
do n ot take in to c o n s id e ra tio n th e p o te n tia l i n d i r e c t b e n e fits t h a t
a r e l i k e l y to accrue to th e community i f th e fairgrou nd s land were
t r a n s f e r r e d to a h ig h e r economic use.

On the one hand, th e re a re th e

p o te n tia l "induced" b e n e fits^ which may r e s u l t on account o f th e i n ­
creased u t i l i z a t i o n o f lo c al reso u rce s such as lo cal la b o r. On the
2
o th e r , th e r e a re th e l i k e l y "stemming from" b e n e f its as sup po rtive
s e rv ic e s fo r a growing tr a d e and se rv ic e in d u s t r ie s develop.

The

e lim in a tio n o f an adverse e x t e r n a l i t y in the form o f an u n sig h tly
s e t o f d ila p id a te d b u ild in g s and s tr u c t u r e s in the middle of the City
and a e s t h e t i c enhancement of the landscape may in c re a se the c o u n ty 's
t o u r i s t a t t r a c t i o n c a p a c ity as w ell.
The people o f Emmet County may fin d i t advantageous to f a c i l i ­
t a t e a higher degree o f economic growth w ithin the reg io n .

According

to th e 1970 Census o f P op ulatio n, 8 .3 p erc e n t o f the male c i v i l i a n
la b o r fo rc e in Emmet County was unemployed in 1969, 10.3 p erce n t o f th e
f a m ilie s were below th e poverty l i n e as compared to th e s t a t e average
o f 7 .3 p e rc e n t; mean fam ily income was 17.6 percen t l e s s than the
s t a t e av erag e, 3.6 p erce n t o f th e fa m ilie s in the county were re c e iv in g
p u b lic a s s is ta n c e and 23.1 p erce n t o f a l l fa m ilie s in the county were
on s o c ia l s e c u r ity .

D espite th e in c re a se in per c a p ita money income

recorded f o r the period 1969 to 1974,

3

per c a p ita income s t i l l remained

^ e e Otto E c k s te in 's "Water Resource Development: The Economics o f
P ro je c t E v alu a tio n ," 1971, Harvard U n iv ersity P re ss, Cambridge,
M assachusetts, p. 205.
2 Ib id .
3
Bureau o f the Census, U.S.D.C.: "Population Estimates and Pro­
j e c t i o n s , " May 1977.

171

19.7 percent

j^ l- H ’fgy? x 100 J le ss than the average for the State

of Michigan.
On the basis of the above evidence, i t seems reasonable to
conclude th a t the diversion of high value urban land and un der-u tilized
buildings and s tru c tu re s for a county fairground complex, and the
income earning o pportunities lo s t to the community by committing
th is high value land to such uses, c o n s titu te s a misal location of
scarce economic resources of the community.

Not only are the oppor­

tu n ity costs o f conducting th is p roject a t the present location and in
i t s present form extremely high, the unexploited economic opportunities
foregone on account of the continuation o f t h i s p ro je c t are lik e ly to
r a is e opportunity costs fu rth e r in the fu tu re .
A ttitu des o f the People of Emmet County
and the Second Hypothesis
I t has been shown in the e a r l i e r p art of th is chapter th a t
the environmental conditions th a t prevailed a t the time when the f a i r ­
grounds p roject came to be accepted as an integral p art of community
l i f e has changed s ig n ific a n tly .

The tra d itio n a l economic and social

functions the fairgrounds served have changed.

Today, i t seems to be

viewed by the community more as a place for some form of e n te r ta in ­
m ent/recreation; esp e c ia lly in terms of the Annual County F air.

Such

a contention is supported by the f a c t th a t p ra c tic a lly a l l of the
financial tran sa ctio n s made by the Fair Board are in connection with
the Fair and th a t much of I t s e f f o r ts are d irected towards the conduct
of th is event.
Data from the survey of a ttitu d e s o f the people of Emmet County
towards th is p ro ject and i t s sub-projects reveal th a t th e ir preferences

172

'v is a v is ' t h i s p ro je c t are s t i l l heavily weighted towards the
continuation of the tr a d itio n a l a c t i v i t i e s and the perpetuation o f the
fairgrounds p ro jec t in the present lo c a tio n , and b a s ic a lly in i t s
present form.

Sixty-seven percent o f the respondents considered the

tr a d itio n a l F air an important event in the l i f e o f the community
and 71.5 percent attended the l a s t F a ir.

S im ilarly , 51.6 percent

thought the same way about the y early Farmers' Markets held w ithin the
fairgrounds premises and 44.6 percent attended a t l e a s t one such
market during the l a s t year the markets were conducted.

With regard

to 4-H a c t i v i t y , 48 percent considered them important and a t l e a s t one
person from 25.9 percent o f the households did atten d them during the
l a s t year.
With regard to the question of changing the fairgrounds lo c a tio n ,
59 percent o f the population opted to r e ta in the p ro je c t in the same
place with many o f them agreeing to c e rta in marginal changes in organi­
zation as w ell.

Compared to t h i s , only 35 percent expressed the d e sire

to change the location and add new a c t i v i t i e s and f a c i l i t i e s .

I t would

seem, th e re fo re , th a t our second hypothesis th a t the community’s local
recreatio n al needs and t h e i r perceptions o f e n tertain m en t/re creatio n
requirements have changed s u b s ta n tia lly from those epitomized by the
tr a d itio n a l fairgrounds p ro je c t cannot be s u b sta n tia te d .
I t i s argued herein th a t d esp ite the above data th e re are reasons
to support the view th a t th i s hypothesis cannot be r e je c te d .

F irstly ,

the community has had in s u f f ic ie n t information and knowledge about the
pros and cons of continuing the fairgrounds p ro je c t in i t s present form
and lo c a tio n .

As a consequence, they seem to view the new s e t o f pro­

positions to change the fairgrounds p ro je c t as a 're d h e rrin g ' which

173

clouds manoeuvres by a d m in istra to rs and business I n te r e s t s fo r the
withdrawal o f t h i s community f a c i l i t y f o r the b e n e fit o f some small
group.

Such an a t t i t u d e has alre ad y been engendered by th e e a r l i e r

attem pt to dispose o f the fairground land to an in d u s tria l firm pro­
ducing automotive p a rts w ithout th e p r io r approval o f or s u f f i c i e n t
c o n s u lta tio n with members o f th e community.

As a consequence, the

perceptions o f th e people o f Emmet County have been obscured by f e a r s ,
suspicions and rumors of the lik e lih o o d of lo sin g the a v a i l a b i l i t y of
c e r ta in " fre e" o r r e l a t i v e l y "cheap" public f a c i l i t i e s they have the
option o f using f o r c e r t a in purposes.

Stated d i f f e r e n t l y , th e re 1s

some form o f option demand f o r th ese f a c i l i t i e s .

The f a c i l i t i e s a re

believed to come in handy when the community wants to conduct c e r ta in
public events or hold re c re a tio n /e n te rta in m e n t ev en ts.

There i s also

th e co n sid eratio n t h a t th e option already e x i s ts fo r the p r iv a te h ire
o f these b uild ing s a t very economical r a t e s .

Since these f a c i l i t i e s

a r e in the h e a rt o f the C ity , t h i s i s an option t h a t some members of
th e community d i s l i k e lo sin g .

So long as the members o f the community

are unaware how much i t c o s ts them and the various forms in which they
are bearing lo s s e s , they a r e l i k e l y to r e s i s t changes in the e x is tin g
fa c ility .
A ttitu d e s which flow from these im p l ic i t b e l ie f s in the pro­
f i t a b i l i t y o f r e ta in in g the p r o je c t in th e same place and form flow
from the c o g n itiv e component o f these a t t i t u d e s .

B e lie fs about the use­

fu ln ess or importance of th e e x is tin g p r o je c t remain on account o f
ignorance about the fin a n c ia l as well as economic u n p r o f i t a b l l i t y of
th e c u r r e n t p r o je c t.

R e lativ e advantage in changing th e p r o je c t to

b e t te r s u i t c u rre n t needs as well as to in c re a se p r o je c t v i a b i l i t y

174
i s not a u t o m a t ic a lly perceived.

Communication programs which help

eva luate and understand t h e i r Im p lic atio n s may be necessary before
perceptions change.
The a f f e c t i v e component o f t h e i r a t t i t u d e s f u r t h e r confounds
p e r c e p tio n s .

Emotional a t t i t u d e s towards t h i s p r o j e c t would continue

to be perpetuated so long as d e c is io n makers r e l a t e d to t h i s p r o j e c t
remain to be those with stro n g a g r i c u l t u r a l o r i e n t a t i o n s .

The Coopera­

t i v e Extension o f f i c e i s c l e a r l y p a r t o f t h a t d e c isio n s t r u c t u r e .
The lack o f accounting data to analyze each s u b - p r o j e c t s e p a r a t e l y
c r e a te s problems in i d e n t i f y i n g th e indiv idual p r o f i t a b i l i t y o f events
and, t h e r e f o r e , compounds th e problem o f f a c i l i t a t i n g the e v a lu atio n
process f o r members o f the comnunity.

In view o f a l l the reasons

enumerated above, they a r e u n lik e ly to perceive the need f o r change
and the p o t e n t i a l p o s s i b i l i t i e s fo r f u l f i l l i n g t h e i r new e n t e r t a i n ­
m e n t/re c re a tio n needs through an a l t e r e d community p r o j e c t .
^ c o n d l y , t h e r e i s th e l i k e l y bias introduced by the survey
rese arch technique adopted.

In as much as people tend to l i s t e n

only to those messages which a r e compatible with t h e i r needs and
i n t e r e s t s , i t i s p o s s i b le t h a t non-respondents were those l i t t l e
concerned with th e f airgrounds p r o j e c t and, t h e r e f o r e , u n i n t e r e s t e d in
completing the survey q u e s t i o n n a i r e .

I f a la r g e number of such respon­

dents a ls o f a i l e d to perce ive th e o p p o rtu n ity provided to render t h e i r
support f o r the new r e c r e a t i o n a c t i v i t i e s which they need and d e s i r e
and, t h e r e f o r e , f a i l e d t o respond to t h e survey q u e s t i o n n a i r e , th e r e
i s th e p o s s i b i l i t y t h a t the data a r e biased in favor o f those having
some i n t e r e s t 1n the e x i s t i n g p r o j e c t .

Unlike in the personal

in te rview survey te chnique , th e mail survey re s e a r c h technique i s

175

u n s u i t a b l e f o r a t te m p tin g t o overcome th e problem o f s e l e c t i v e
exposure.

There 1s p r a c t i c a l l y no way t o induce th e u n i n t e r e s t e d to

overcome t h e i r I n e r t i a and respond to th e q u e s t i o n n a i r e e x c e p t , perhaps,
by means o f sending r e g u l a r reminders.

Where no reminders a r e s e n t even

th e marginal c a se s f a l l to be induced t o r e p l y .

S e l e c t i v e exposure

to th e pre-surve y a d v e rtis e m e n t as well a s th e covering l e t t e r and the
q u e s t i o n n a i r e could have r e s u l t e d 1n th e p r e s e n t c a se .

I f so, th e

da ta may not be t r u l y r e p r e s e n t a t i v e o f t h e c h a r a c t e r i s t i c s o f th e
t o t a l p o p u la tio n .

In such an e v e n t , to o , th e data may n o t be s u i t a b l e

enough f o r a v a l i d t e s t o f th e second h y p o th e sis.
The Need f o r New R ecreational F a c i l i t i e s
and th e ThTrtT ffypothesis'
The response to th e proposals f o r change^ i n d i c a t e t h a t 35 p e r ­
c e n t o f th e p o pula tion have agreed to a r a d i c a l change in th e f a i r grounds p r o j e c t ;

2

v i z . , to a r e l o c a t i o n o f th e p r o j e c t and th e in c lu s io n

o f new f a c i l i t i e s and a c t i v i t i e s .

Independently o f th e choice o f

a l t e r n a t i v e change p r o p o s a l s , 73.8 p e rc e n t respondents have in d i c a t e d
3
t h e i r a g r e e a b i l i t y to th e payment o f u se r f e e s f o r a swimming pool
with 58.2 p e r c e n t o f th e p o p u la tio n i n d i c a t i n g t h i s a g r e e a b i l i t y q u i t e
4
strongly.
S i m i l a r l y , over 50 p e rc e n t o f t h e respondents i n d i c a t e
t h e i r a g r e e a b i l i t y ( " q u i t e a g r e e a b le " plus "somewhat agree able "
responses) to pay u se r fe e s f o r each o f t h e s i x o t h e r new r e c r e a t i o n a l
^Question number C28 o f the survey q u e s t i o n n a i r e a t Appendix B.
2Table IV-10.
3Table IV -15 .
4 Ib id .

176

a c t i v i t i e s posed 1n the questionnaire.*

According to d iffu s io n theory,

only 2.5 percent of a given social system generally belong to the
"Innovator" category who generally are inclined to adopt an innovation
2
when i t f i r s t comes to t h e i r notice.
The "Early Adopter" category
which comes next c o n s t i t u t e a f u r th e r 13.5 percent followed by the
3
"Early Majority" o f 34 percent both within the same population.
In the present case, we have 35 percent of the Emmet County people
agreeing to a radical change in the fairgrounds p r o je c t, a proposal
which can be considered an "innovation" in terms of Rogers' d e f i n i t i o n
t h a t i t is ". . . an id e a, p r a c t ic e , or object perceived as new by
an individual. . . .

I f the idea seems new to the in d iv id u a l, i t is

an innovation."4 Not only have 35 percent agreed to a r e lo c a tio n and
reorganization o f the p r o je c t, over 50 percent of the respondents have
accepted the idea o f paying user fees for each of the seven recrea tio n a l
a c t i v i t i e s suggested.

Despite the f a c t th a t accepting a proposal in

the form o f a positive response to a survey questionnaire d i f f e r s
from the actual adoption of a new idea to which d iffu s io n theory in
general and "Adopter Categories" in p a r t i c u l a r referre d to above i s
a pplicable, we find th a t the degree of acceptance of these new ideas is
quite s i g n i f i c a n t .

Though d iffusion theory prognosticates t h a t

approximately 2.5 percent will only f i r s t accept an innovation, with the
percentage increasing to 16 percent of the community in the second
1 Ibid.
2

Rogers with Shoemaker, op c i t . , p. 182.

3Ib1d.
4 I b id . , p. 19.

177

wave and to 51 percent with th e t h i r d wave of adoption, we have 35
percent of the Emmet County community responding to an Innovative
Idea regarding the t o t a l fairgrounds complex, and over 50 percent
agreeing to Innovative Ideas regarding the new components in a r e ­
organized community p r o je c t involving the payment o f fees f o r using the
f a c i l i t i e s to be provided.
This evidence may be reckoned to be some in d ic a tio n t h a t
d e s p ite the possible bias with regard to the type of person who
responded to the survey q u e s tio n n a ire , there i s in f a c t a f e l t need
f o r new r e c r e a tio n a l f a c i l i t i e s and a c t i v i t i e s within Emmet County
o f the type proposed in the questionnaire and t h a t the community's
. . perceptions o f e n te r ta in m e n t/re c r e a tio n have changed substan­
t i a l l y from those epitomized by the t r a d i t i o n a l county fairground."^
This evidence i s f a i r in d ic a tio n t h a t the two s e t s of innovative propo­
s a l s are compatible with the d e s i r e s , i n t e r e s t s and needs o f t h i s commu
n ity and t h a t with proper information, evidence and communication pro­
grams, more of the members of t h i s community are l i k e l y to accept
the new ideas within a r e l a t i v e l y sh o rt period o f time.

Incomes within

the community have been increasing in the recent p a s t; from 1969 to
1972, per c a p ita income in Emmet County increased by 21.2 perce nt,

2

a r a t e which was higher than the s t a t e average of 19 percent for the
3
4
same period, and by 16.5 percent from 1972 to 1974.
The increased
1
See the second hypothesis posed in Chapter I a t p. 12.
2
Bureau of the Census, U.S.D.C., "Population Estimates and
P ro je c tio n s ," op c i t . , p. 15.
3I b i d . , p. 9.
4 I b id . , p. 15.

178

urb an iz atio n o f t h e comnunity as well as the high degree o f exposure o f
the people 1n the county to members from o t h e r communities both from
within the s t a t e and from o u t s i d e Is l i k e l y to have r a i s e d the general
level o f cosmopollteness o f the Emmet County people and, the re fore*
more r e sp o n siv e, perhaps, to new Ideas e s p e c i a l l y 1n r e l a t i o n to
r e c r e a t i o n a l a c t i v i t i e s f o r which the county i s developing a strong
comparative advantage.

The rap id acceptance of snowmobiling by a

f a i r number o f the Emmet County people i s a case 1n p o in t about t h e i r
i n t e r e s t in new r e c r e a t i o n a l a c t i v i t i e s .

Several members o f t h i s

community have e x h i b ite d t h i s I n t e r e s t by banding themselves into
a c l u b , b u ild in g a clu b house and by organizing weekly b r e a k f a s ts and
t r a i l r i d e s , "bean-pot" s a f a r i s , formal snowmobile racing events and an
annual landowners' p a r ty .

Also, 52.8 percent of the respondents on the

survey have i n d ic a t e d t h e i r d e s i r e f o r snowmobile r acin g a t the
proposed new community p r o j e c t by showing t h e i r a g r e e a b i l i t y to pay
user fees f o r the purpose.^
A Summary o f the Findings and Recommendations
One o f the c e n t r a l assumptions on which t h i s study i s based

is

t h a t the community needs a community f a c i l i t y f o r th e conduct of
various events o f an e d u c a t i o n a l / r e c r e a t i o n a l n a tu re .

This i s a view

which was expressed q u i t e s tr o n g ly by the people o f Emmet County who
attended the Fairgrounds Hearing o f November 29, 1973.

This study

does not question the r a t i o n a l i t y o f the community's need for such a
facility .

I t p o i n t o u t , however, t h a t t h i s fairgrounds p r o j e c t does

not cover even i t s v a r i a b l e s c o s t s l e t alone o f f s e t the c a p i t a l
1Table IV -15.

179

Investments made thereon and s t i l l continue to be inc u rred time and
again.

More s p e c i f i c a l l y , the study has shown 1n terms o f s t a t i c

micro-economic theory t h a t the op p o rtu n ity c o s t o f continuing the
fairgrounds p r o j e c t a t the same l o c a ti o n and with the same type and
org a n iz a tio n o f a c t i v i t i e s i s q u i t e high.

The magnitude o f these

o p portunity co s ts were shown 1n the form o f an economic ev a lu a tio n o f
an hypothetical shopping c e n t e r p r o j e c t a t t h i s l o c a t i o n .

Based on

p a s t r e t a i l s a le s growth in the City o f Petoskey, the p r o je c te d s a l e s
have been evaluated to y i e l d a p o t e n tia l stream o f earnings over a
period o f twenty y e a r s .

The n e t p r e s e n t value of t h i s stream of

earnings was shown not only to be p o s i t i v e , b u t a ls o to be q u i t e l a r g e .
When the annual o p eratin g l o s s e s on th e c u r r e n t p r o j e c t a r e added
t h e r e t o , the p re se n t value o f th e proposed a l t e r n a t i v e p r o j e c t i s
shown to be even higher.
This i s not a l l .

I t has been in d ic a te d t h a t in a dynamic sense

of long run growth o p p o r t u n i t i e s , t h e r e appear to be signs for the
City o f Petoskey to become th e hub o f a wide area o f in flu e n c e in
the f i e l d o f tourism and r e c r e a t i o n .

The p o t e n t i a l economic oppor­

t u n i t i e s t h a t are l i k e l y t o a r i s e i f t h i s trend i s f a c i l i t a t e d through
a p p r o p r ia te p r o j e c t planning and implementation seems to be wide.
There appear to be r i s i n g t r e n d s in demand f o r f a c i l i t i e s in areas with
b e a u tifu l surroundings which o f f e r peace and t r a n q u i l i t y e s p e c i a l l y to
c i t y fo lk i n t e r e s t e d in s h o r t escapes from t h e i r busy urban enviro n­
ments.

Rising incomes and phenomenal improvements in communication,

t r a n s p o r t a t i o n and highways, e t c . , in th e U.S. a r e paving the way f o r
such a growth in demand f o r n a tu ra l resource based r e c r e a t i o n a l /
entertainm ent a c t i v i t i e s and f a c i l i t i e s .

Increased i n t e r e s t in

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environmental Issu e s i s adding to t h i s t r e n d .

Already Region 10 in

general and Emmet County In p a r t i c u l a r have shown a s tr o n g e x p o r t
c a p a c i t y f o r se veral such r e c r e a t i o n a l a c t i v i t i e s judged in terms o f
data on user days.

Emmet County's b e a u t i f u l bay on Lake Michigan* th e

several inland la k es and r i v e r s and ski s lo p e s c l o s e a t hand* and
most o f a l l the a t t r a c t i o n t h a t the C ity o f Petoskey has a l r e a d y b u i l t
up as a t o u r i s t and h o s p i t a l i t y s e r v i c e c e n t e r w ith c l o s e proxim ity
to a l l such a c t i v i t i e s , i s paving t h e way f o r th e county t o develop a
comparative advantage in t h e f i e l d o f tourism and r e c r e a t i o n .

The

F a i r Board seems to have recognized some of t h e s e p o t e n t i a l i t i e s as
observed from i t s i n t e r e s t in s e t t i n g up a convention c e n t e r / e x h i b i t i o n
arena complex in i t s new f a i r g r o u n d s program.^

All t h e s e f a c t o r s

i n d i c a t e t h a t i t would be h ig h ly r a t i o n a l a c t i o n to r e l e a s e th e
p r e s e n t f a ir g ro u n d s la nd t o a s e t o f economic a c t i v i t i e s t h a t can
g e n e ra te t h i s economic growth; th o se a c t i v i t i e s which would be geared
t o th e supply o f f a c i l i t i e s , a m e n itie s and s e r v i c e s f o r t h i s growing
t r a d e and r e c r e a t i o n / e n t e r t a i n m e n t s e c t o r s .
Despite t h i s seeming r a t i o n a l i t y f o r the county a d m i n i s t r a t i o n
to change th e l o c a t i o n and a c t i v i t i e s o f th e c u r r e n t f a i r g r o u n d s p ro ­
j e c t , th e annual s u b s i d ie s o f th e s t a t e Department o f A g r i c u l t u r e
changes the b e n e f i t - c o s t r e l a t i o n s h i p s a s seen by th e in d iv id u a l county
f a i r organization.

Each o f th e s e county f a i r o r g a n i z a t i o n s c o n s id e r s

i t r a t i o n a l to maximize th e in d iv i d u a l sh a re i t r e c e i v e s from the s t a t e
each y e a r i r r e s p e c t i v e o f whether th e s o c i a l b e n e f i t i s the re b y
^See the Report o f the Emmet County F a i r Future Development
Committee dated January 23, 1975, and t h e news item "Unveil $500,000
New Fairgrounds Program" in th e Petoskey News Review o f January 24, 1975.

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adversely a f f e c t e d .

In other words, t h i s t r a d i t i o n a l I n s t i t u t i o n o f

annual Department of Agriculture grants to communities operating a
fairground encourages behavior which 1s Inimical to the best i n t e r e s t s
o f the county, the s t a t e , o r the t o t a l economic system.
Even counties within which a g r ic u ltu r a l a c t i v i t y is r e l a t i v e l y
unimportant today continue t o receive such monies from the Department
by way of premiums for presenting e x h i b its la rg e ly of an agro -related
nature.

The reasons why horse-breeding, horse-racing and race

courses in Michigan should be subsidized and encouraged by the s t a t e
are not a t a l l c l e a r .

Capital expenditures on fairgrounds are sub­

sidized to the value o f $8,000 per annum per fairground.

The to ta l

cost to the taxpayers o f the s t a t e o f Michigan on account of such
subsidies during 1975/76 alone amounted to $3,234,400.
t h i s figure was $2,412,700.

During 1974/75,

These data r e l a t i n g to subsidies given as

matching funds for capital investments, premiums for e x h i b i t s , purses
to winners of horse races and awards to race horse breeders since
1966/67 were co lla te d from the books of the s t a t e Department of
Agriculture in Lansing and summarized in Appendix F.
In the case of Emmet County, the r e c e i p t of these subsidies
re g u la rly has encouraged a strong r e s i s ta n c e aga inst the abandonment of
the fairgrounds p r o je c t despite i t s u n p r o f i t a b i l i t y or even a change
in i t s location to reduce costs.

In tu r n , the county adm inistration

has been compelled to incur additional local costs each year to
continue i t s operation.

County appropriations in t h i s connection are

shown for the years beginning 1960 to 1975/76 in rows B(a) and B(b) of
Appendix D-2.

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S tate grants received by the Emmet County Fair Board since
1960 on the basis o f o p e r a tin g a fairgrounds, too, are itemized and
ta bulated in the same Appendix.

I t would be seen t h a t even though

th e county has been re c e iv in g s t a t e grants to i t s Fair Board to the
tune o f $18,718 during 1975/76, and $22,504 during 1974/75, e t c . , the
people o f Emmet County, to o , have had to foot a b i l l each year o f
$11,660 and $7,547, r e s p e c tiv e ly .

The annual net operating lo ss on

the Emmet County fairgrounds operation during 1975/76 of $30,378 and
the net operating lo ss during 1974/75 of $30,051 were a l l met by s t a t e
grants and county ap p r o p r ia tio n s.
s i t u a t i o n has been s i m i l a r .

During the previous y e a rs , too, the

Accordingly, we may conclude t h a t the

perpetuation o f the system o f s t a t e subsidies f o r the operation o f the
Emmet County fairground and for the a c t i v i t i e s conducted th e re in
without the r e - e v a lu a tio n o f c u r r e n t needs and environmental changes
has been an important f a c t o r in Emmet County continuing to operate an
uneconomic p r o je c t w ithout su b sta n tia l modifications and changes.
To examine whether t h i s was the case with another county f a i r
within the Region, the accounts of the Northwestern Fair in Grand
Traverse County fo r th r e e years^ were obtained and analyzed.

Grand

Traverse County was chosen because members of the Enmet County Fair
Board indicated t h a t :
1.

Grand Traverse had made a success of r e lo c a tin g and
reorganizing i t s a c t i v i t i e s , and

2.

The Emmet County Fair Board considered i t a good idea to
emulate the p a tte r n of changes adopted by the F a ir
Board o f the Northwestern F a ir.

V o r the years 1973, 1975 and 1976.

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These accounts of th e Northwestern F air Board were re-worked on the
b as is of gene ra lly accepted accounting p r i n c i p l e s .

These workings

(Appendix E) in d ic a t e t h a t c o n tra ry to the b e l i e f s of the members of
the Emmet County F a ir Board, the Northwestern F air incurs heavy net
o perating lo ss e s as w ell.

During the year ending October 15, 1976,

the operating lo ss c a lc u la te d was $89,962.
lo ss was as high as $125,657.

In 1975, the operating

For 1973, the lo ss was $29,583.

The absence of proper supervision of the accounts o f these two
F air Boards by e i t h e r the County Administration or the Department of
A g ricu ltu re which doles out large sums of money to maintain these
i n s t i t u t i o n s , is shown by the to ta l avoidance of generally accepted
accounting p r i n c i p l e s in the preparation o f the annual income and
p o s itio n statements of these Fair Boards.

Not only have the North­

western Fair Board f a i l e d to follow these generally accepted accounting
p r i n c i p l e s , a spurious facade of r e s p e c t a b i l i t y of i t s accounts seem
to have been attempted.

I t has had i t s accounts examined by another

org an iz atio n c r e a tin g an impression t h a t i t s accounts have been audited
by an independent body.1
page o f the accounts t h a t :

This firm has made a statement on the cover
"The Financial Statements are f o r inte rna l

management purposes only, and t h e re fo r e do not n e c e s s a r ily include a l l
d is c l o s u r e s t h a t might be requirded for a f a i r p r e s e n ta ti o n ."
statements in f a c t a r e d isc la im e rs.

These

The firm i s careful to s t a t e in

t h i s note t h a t the Position and Income statements of the F air Board
were not audited by them.

The only i n t e r p r e t a t i o n t h a t can be given to

H he name o f the firm i s given as "Management Systems."
Presumably i t i s a professional firm o f management accountants or
auditors.

184
t h i s covering note 1s t h a t what the F a ir Board purchased was not a
proper re-working and rearrangement o f I t s accounts so as to f a c i l i t a t e
managerial d e c is io n making, but some form o f le gitim acy o f I t s a c tio n s
during the previous twelve month period in the eyes o f the members o f
t h a t community.

The question remains whether such p r a c t i c e s a r e

w ithin the law.

Another important question a r i s e s about whether the

Department o f A g r i c u ltu r e e v a lu a t e s th e e f f e c t i v e n e s s o f i t s subsidy
programs through th e examination and co n tro l o f individual F a ir Boards
and t h e i r a c t i o n s .

In any e v e n t, i t w ill be c l e a r t h a t the e x i s t i n g

subsidy system and the accounting p r a c t i c e s t h a t have developed in
th e se two cases encourage the p e r p e tu a tio n of i n s t i t u t i o n s inimical to
economic e f f i c i e n c y in th e a l l o c a t i o n o f scarce resource s.
So long as th e subsidy scheme o f th e Michigan Department o f
A g ri c u ltu r e continues to o p e r a t e , i t pays the people of Emmet County to
op erate a fairground so t h a t th e incidence of a t l e a s t p a r t of the
c a p i t a l c o s t s o f a community c e n t e r can be s h i f t e d o u t s i d e .

One

means o f c u t t i n g down on r e a l c o s t s to th e community measured in
terms o f economic o p p o r t u n i t i e s foregone i s to r e l o c a t e th e f a ir g ro u n d s .
I t s l o c a ti o n w ill need to be t r a n s f e r r e d to land commanding a lower
economic r e n t .

Another a s p e c t o f c o s t reduction would be t h a t o f

minimizing th e u n i t c o s t s o f production.

This involves an expansion

o f th e uses to which th e physical f a c i l i t i e s a r e put t o .
Use-expansion becomes p o s s ib le only i f the c o n s tr u c tio n of
physical f a c i l i t i e s i s in a modular fashion such t h a t they could be
t r a n s f e r r e d from one use to ano th er and from one season to another with
r e l a t i v e e a se .

Secondly, use expansion involves p r i o r arrangements and

agreements, both in the planning and th e designing and c o n s tr u c tio n o f

185

the f a c i l i t i e s as well as In the timing o f uses, with Interested
p a r tie s within the area.

Thirdly, use expansion is rel'ated to the

market comprised o f two broad market segments, v i z . , th a t within the
comnunity and v i s i t o r s to the region.

All these factors connected

with cost reduction are I n te r - r e l a te d ; trade -offs are involved in
making decisions to achieve the most p r o fitab le mix of a c t i v i t i e s , siz e
of physical f a c i l i t i e s and the location of the project.
The f i r s t c onstra int 1n the Implementation o f a new community
center program 1s th a t a fairgrounds sub-project has to be operated to
qualify for the matching funds referre d to above.

A crucial assump­

tion herein is th a t these funds will continue to be provided by the
s t a t e over a future period of years.

However, s h if tin g the location

of the p ro jec t far away from the market center so as to b e n e fit from
land with low or no economic re n t may mean a lo ss of a high proportion
o f (a) the local community market and (b) the potential external v i s i t o r
market which is e s s e n ti a ll y a t t r a c t e d to the City of Petoskey and
its facilities.

I f , for example, the county owned Conway s i t e 1 is

selected, the gain in the choice of a location with near zero oppor­
tu n ity costs to land may be far outweighed by a loss in the market and
a r e s u lt a n t increase in the unit costs of production.

Not only are

large s li c e s o f the local community and the external v i s i t o r market
lik e ly to be l o s t , i t will mean a s a c r i f i c e o f jo in t - u s e opportunities
which will be discussed below.

The net r e s u l t may be th a t the comnunlty

project is confined to a fairgrounds project only and one which is
^This is one of the a lte r n a ti v e locations referred to in the
"Emmet County Fair: Future Development Committee Study and Survey
Report" o f January 23, 1975.

186
l i k e l y to be much more u n d e r-u tiliz e d than even the e x is tin g p ro je c t.
A decline 1n use would tend to r a i s e u n it production c o s t a t such a
d i s t a n t location even f u r t h e r also because supervision and vandalism
costs r i s e with movement away from p o p u l a t io n /a c ti v ity concentrations.
Limiting the reorganized p r o je c t purely to a fairgrounds
venture may not be a locical solution though, no doubt, 1t remains as
one possible a l t e r n a t i v e .

I t i s not the declared I ntention of the

decision makers o f Emmet County to confine the new program merely to
an annual f a i r and a few horse racing events^ from which only a few
would tend to b e n e fit e s p e c i a lly i f the p r o je c t i s moved far out of
the c i t y l i m i t s .

Furthermore, the survey data does in d ic a te t h a t

most o f the recreation a c t i v i t i e s r e f e r r e d to are desired by a s i g n i f i ­
cant proportion of the people o f Emmet County even though such data do
not represent an economic demand.

Willingness to pay for the use of

such f a c i l i t i e s has also been expressed by a s i g n i f i c a n t proportion of
the respondents.

I t has been Indicated

2

t h a t c e r t a i n organized sports

groups are anxious to jo in in on j o i n t - u s e arrangements.
The needs o f the North Central Michigan College (NCMC)
which i s s itu a te d within the City o f Petoskey has prompted the college
a u t h o r i t i e s to search for ways and means of building i t s own stadium
and/or r ecrea tio n f a c i l i t i e s .

I t i s also watching the progress o f the

Fair Board's attempts a t constructing such a f a c i l i t y and has even
cooperated with the l a t t e r 1n discussing location p o s s i b i l i t i e s within
See the Report r e fe rre d to in footnote 1, page 185, and the
news item in the "Petoskey News Review" of January 24, 1975.
2
At an Emmet County F air Board meeting during the e a rl y p a r t of
1977 a t which the author was present.

187

the c o lleg e campus or a d ja c e n t to 1t.

However, one r e s e rv a tio n o f the

NCMC Is t h a t I t s ad m in istra tio n should have f u l l control o f such a
f a c i l i t y i f jo1nt-use e f f o r t s a r e to be e f f e c t i v e . ^

Obviously, the NCMC

d e s ir e s to elim inate any u n c e rta in ty with regard to conducting I t s own
schedule o f events and a c t i v i t i e s during a given y ea r as i t wishes.
Hence the d e s ire to control the terms under which th e l a r g e r community
may be permitted to use such f a c i l i t i e s .
Thus, d es p ite the f a c t t h a t the resources o f the co lle g e are
financed a t l e a s t in p a r t by the Emnet community, and t h a t considera­
tio n s of social c o s ts and social b e n e f i ts would warrant the shared use
o f a c a p ita l inte nsive r e c r e a tio n a l f a c i l i t y such as the one proposed
between the education a u t h o r i t i e s and the recre a tio n /c o u n ty f a i r
agencies, some obsta cle s to j o i n t - u s e do seem to e x i s t .

Joint-use

arrangements and u n it c o s t reduction in the production and use of
f a c i l i t i e s which a r e l i k e l y to r a i s e the level o f comnunity welfare
s i g n i f i c a n t l y are considered so important t h a t i t i s a pposite to
draw a t t e n t i o n to a research study by Richard A. King and G. Bryan
Wall o f the U n iv e r s itie s of North Carolina S tate and Florida respec­
t i v e l y on c o s t - q u a l i t y - q u a n t i t y r e l a t i o n s h i p s in the j o i n t - u s e of
a gymnasium.

2

Using economic-engineering techniques, they have shown

t h a t there are s u b s t a n tia l economies of s c a le in the c o n s tru c tio n of
such c a p ita l in te n siv e physical s t r u c t u r e s and t h a t :
As expressed by the P re sident, NCMC a t a d isc u ssio n the author
had with him.
2

Richard A. King and G. Bryan Wall, "Estimation o f CostQuality-Quantlty R elationships," Department of Economics and Business,
North Carolina S tate U niversity, 1976, mimeograph.

188

The shared use o f gymnasium f a c i l i t i e s i s a f e a s i b l e
a l t e r n a t i v e for funding both a v ia b le physical education
program in the public schools and a community r e c r e a t i o n
program while conserving public monies. 1
In the l o c a ti o n o f the new fairgrounds program, the twin con­
s i d e r a t i o n s r e l e v a n t to th e choice o f a s i t e are land involving low
opp o rtu n ity c o s ts but with a high degree of access to th e r e l e v a n t
market segments f o r new r e c r e a t i o n / e n t e r t a i n m e n t events and o th e r uses
o f t h i s physical f a c i l i t y .

"Prima f a c i e , 1' the p o te n tia l market seg­

ments c o n s t i t u t e four groups, v i z . , ( i ) members o f the local
comnunity d e s i r i n g p a r t i c u l a r r e c r e a t i o n a l events and a r e w i l l i n g to pay
user f e e s , ( i i ) v i s i t o r s to th e r e g io n , ( i i i ) organized bodies such as
clubs and ind u stry groups, and ( iv ) th e f a c u l t y and s t a f f o f the NCMC.
J o i n t - u s e arrangements w ith, say, the NCMC, a public agency supplying
education s e r v i c e s , and p r i v a t e o r g a n i z a t i o n s , could c o n s t i t u t e a
s t a b l e demand f o r these f a c i l i t i e s and go a long way in use expansion
and r e s u l t a n t low u n i t production c o s t s .
Another a s p e c t o f use expansion i s r e l a t e d to the range o f
a c t i v i t i e s t h a t can be designed fo r and supplied w ithin one c e n tr a l
facility .

The survey o f a t t i t u d e s o f members of the Emmet County

community has i t s e l f c r e a te d some awareness o f the p o t e n tia l fo r the
community to organize and provide i t s e l f with these new r e c r e a t i o n a l
facilities.

But, these survey data on the choices o f various r e c r e a ­

tio n events d esire d and the w illi n g n e s s o f comnunity members to pay
f o r such f a c i l i t i e s do not c o n s t i t u t e an economic demand.
^ I b i d . , p. 23.

More

189

d e t a i l e d demand s t u d i e s w ill be n e c e s s a r y .

They may be s t u d i e d once

th e proposed new Ideas have come t o be more f ir m ly accepted by th e
people.

S i m i l a r l y , s t u d i e s o f th e types and p a t t e r n s o f demand o f

the v i s i t o r s to t h e region w i l l be nec essary to determine f a c i l i t i e s to
be provided.
While i t would seem t h a t t h e Department o f A g r i c u l t u r e ' s subsidy
scheme i s not in keeping w ith economic e f f i c i e n c y c r i t e r i a in th e
a l l o c a t i o n o f s c a r c e r e s o u r c e s , i t may be r a t i o n a l behavior f o r an
in d iv id u a l county to u t i l i z e such funds to o f f s e t p a r t o f i t s
capital costs.

I t may be added t h a t in o p e r a t i n g a complex s e t o f

a c t i v i t i e s such as t h a t envisaged f o r th e new fair g ro u n d s program,
competent management e x p e r t i s e w ill have t o be purchased u n lik e in
th e o p e r a t io n o f t h e p r e s e n t f a c i l i t y .

The more complex t h e p r o j e c t

designed, th e more competent th e s k i l l s n e c e ss a r y and t h e more expensive
such s e r v i c e s a r e l i k e l y to be.
I m p l i c i t in t h e summary d i s c u s s i o n s above i s th e recommenda­
t i o n t h a t in accordance with economic e f f i c i e n c y c r i t e r i a th e e x i s t i n g
fa irg ro u n d land should be r e l e a s e d f o r economic a c t i v i t i e s t h a t a r e in
keeping w ith developing economic t r e n d s .

More s p e c i f i c a l l y , th e sug­

g e s tio n has been t h a t r e t a i l t r a d e and the supply o f v ariou s s e r v i c e
f a c i l i t i e s to t h e v i s i t o r s to t h e are a in t h e form o f t o u r i s t s ,
v a c a t i o n e r s and r e c r e a t i o n e n t h u s i a s t s , a t t h i s c e n t r a l l o c a t i o n 1s
l i k e l y to f a c i l i t a t e t h e economic growth o f th e region as well as give
t h e C ity o f Petoskey th e edge in developing a s th e hub o f Region 1 0 ' s
recreation/entertainm ent center.

Many s t u d i e s , in c lu d in g t h a t o f th e

Michigan Department o f Natural Resources seem t o have i d e n t i f i e d such
a poten tiality of th is c ity .

I f th e planning and c o n s t r u c t i o n o f th e

190

physical f a c i l i t i e s to serve such needs from t h i s location 1s done
with a concern for a e s t h e t i c aspects, the c i t y ' s a t t r a c t i o n may be
f u r th e r enhanced.

Petoskey's ce n tral position with close proximity

to a v arie ty o f natural resource based recreational a c t i v i t i e s may
enable Emmet County to strengthen the comparative advantage 1t has
already developed in the export o f such recreational a c t i v i t i e s and
facilities.

Economic growth 'c e te r u s paribus' is l i k e l y to increase

the level o f community welfare.
From the point of view o f the s t a t e , i t would seem very necessary
to re-examine and re-ev alu ate the current program o f subsidies given
by the Department o f Agriculture without regard to whether the goals
and objectives sought to be achieved are in f a c t relevant in today's
context; whether horse breeding, horse racing and race courses should
be supported by the s t a t e i s , indeed, a question t h a t needs to be r e ­
examined.

Communities such as Emmet where there is a " d e f i n i t e
1
p
shortage o f (playing) f i e l d s , " "no s a t i s f a c t o r y swimming f a c i l i t i e s "
and, th e re fo r e , a r e s u l t a n t lack of swimming s k i l l s among school chi 1 dren

e x i s t s , the need i s there for a range of recrea tio n a l f a c i l i t i e s .

The local people may, th e re fo re , be b e t t e r served by s t a t e grants which
help them to develop those needed f a c i l i t i e s which are in keeping
with the c a p a c itie s of the area to supply with advantage.

This

study has made i t c l e a r th a t the Department of A g ric u ltu r e 's subsidy
^"Parks and Recreation Plan for the City of Petoskey," June 1976,
by the Michigan Department of Natural Resources, p. 40.
2 I b i d . , p. 42.
3Ibid.

191

system has, on the co n tra ry , crea ted pressures f o r the pursuance o f
c e r t a i n a c tio n s which makes the county lose additional funds o f i t s
own as well as d e te r s them from t r a n s f e r r i n g high value urban
land to t h e i r appro p riate economic use in t h e i r e f f o r t s to reach out
for such s t a t e funds.

While i t r e - e v a lu a te s these programs, i t would

do well for the Department o f A griculture or the r e le v a n t s t a t e
department to compel f a i r org an iz atio n s to adopt gene ra lly accepted
accounting p r in c ip l e s in the preparation of t h e i r accounts.

For,

perm itting improper accounting p r a c t ic e s encourages fraud as well as
discourages proper management decision making and m isallo catio n of
resources as w ell.
The people o f Emnet County seem to be r e l u c t a n t to give up the
present fairgrounds p r o j e c t , perhaps, because they are unaware of
the u n p r o f i t a b i l i t y of the p r o j e c t .

I t may also be t h a t they are

suspicious o f lo sin g t h i s land without t h e i r approval as
nearly happened in the e a r l y p a r t o f t h i s decade.

they claim

I f th e Fair Board

and the county adm inistra tion were to conduct a program o f communica­
ti o n to educate the community with regard to the o p p o r tu n itie s l o s t
and the y e a rly lo ss e s on account of continuing with t h i s p r o j e c t , such
fears may be allayed and open discussion o f the problem o f a new pro­
gram of ac tio n including the t r a n s f e r of the land to a higher economic
use may become acceptable.

The evidence provided by t h i s study w ill

serve useful in conducting such a program o f problem c l a r i f i c a t i o n and
evaluation by the members o f the community i t s e l f .

This

will be a

f i r s t ste p in the process of obtaining popular support so necessary
a t t h i s stage.

192

In so f a r as a choice o f a new lo c a tio n 1s concerned, 1t may
be an e r r o r to move f a r o u t o f the c e n t r a l market a r e a .

On the con­

t r a r y , jo 1 n t- u s e arrangements with the NCMC i s an important Issu e which
th e county and c i t y f a t h e r s may need to pursue.

Undoubtedly, the

reduction o f u n c e r t a i n t y may be an Important c o n s id e r a ti o n f o r a
c o l le g e which follows a r e l a t i v e l y r i g i d t i m e - t a b l e o f events and has
several o b j e c t i v e s to achieve through i t s phycial education programs.
However, th e l a r g e r community which pays f o r a t l e a s t p a r t o f these
educational resources a l s o have an i n t e r e s t in in c re a s in g i t s w elfare
through the expansion o f t h e i r o p p o r tu n iti e s for r e c r e a t i o n / e n t e r t a i n ­
ment events.

Furthermore, a reduction in u n i t c o s ts and, t h e r e f o r e ,

the b e t t e r u t i l i z a t i o n o f s c arce r e s o u r c e s , cannot but b e n e f i t every­
body w ithin the community as well as the NCMC.
More evidence o f demand and demand p a t t e r n s from various market
segments r e l a t e d to t h i s p r o j e c t i s necessary before a p p r o p r ia te
l o c a t i o n , mix o f a c t i v i t i e s and design o f physical f a c i l i t i e s issues
a r e determined.

T h is, however, i s not an argument f o r d elay in g a

dialogue between d e c is io n makers and the community or for delaying the
t r a n s f e r o f the land resource s to more important economic a c t i v i t i e s .
The G eneralizab11i t y o f the Case Study o f the
Etwret county Fairgrounds P ro je c t t o Other
"“Sim ilar P r o j e c t s in MTcfrigan and Related
P r o j e c t s I n v o lv in g comnunlty F a c i l i t i e s
F i n a l l y , th e q u es tio n a r i s e s as to how the p r e s e n t approach
to the study and a n a l y s i s o f the problem o f the Emmet County fairgrounds
p r o j e c t could be a p p lie d to th e study o f s i m i l a r p r o je c ts w ithin
Michigan.

Even though t h i s r e se a r c h e f f o r t has been s p e c i f i c to Emmet

County, t h e a n a l y t i c a l approach adopted and o th e r i n s i g h t s gained may

193

be f r u i t f u l l y used In the study of a l l county fairground-s projects 1n
Michigan and elsewhere as well subject to minor modifications In terms
o f the p a r t i c u l a r circumstances of each case.

They could apply as

well to other types o f projects being considered by public e n t i t i e s .
This research e f f o r t i s specific to Emmet County la rge ly because the
fairgrounds p ro jec t i s located on c i t y land the economic value of
which has r is e n rapidly during the l a s t few decades.

The wide

divergence between the p r o j e c t 's present worth and the opportunity cost
o f an a l t e r n a t i v e s e t of economic a c t i v i t i e s a t the location has become
apparent.

The opportunity costs of sim ilar projects in other

counties may not be so high.

Nevertheless, micro-economic as se ss­

ment of the opportunity costs of a given fairgrounds p r o jec t is impor­
ta n t not only because 1t enables the i d e n t if ic a tio n of the potential
value of the opportunities the local community is losing by continuing
with the p ro jec t but also because i t provides evidence to break down
resistan c e to emotional b e l ie f s associated with such tr a d it io n a l
institutions.

I t also provides planners and decision makers with

important information about potential new a c t i v i t i e s a t such locations
as well as a measure of t h e i r value.
Measurement of the opportunity costs of fairgrounds projects
in Michigan involves examination of the accounting p ractices of the
respective Fair Board.

Accounting records provide proxy measures of

net economic returns of the project during the past and a perspective
o f the financial p r o f i t a b i l i t y of each such project.

Examination of

the accounts o f the two f a i r organizations r e la te d to the present
study indicated serious shortcomings in accounting methods and practices
adopted.

I t also brought to l i g h t the lack of e f f e c tiv e follow-up

194
and control of the monies given by the s t a t e Department o f Agriculture
as well as the automatic approval o f annual losses by the Emmet County
adm inistration without question or v e r i f i c a t i o n of the accounts.

I t 1s

possible th a t the l a t t e r p r a c tic e Is being followed by oth e r counties
as well.

Analysis o f the accounting systems and practice s o f local

f a i r organizations would help focus on weaknesses o f s t a t e and local
county contro ls and formulate guidelines for the Improvement o f subsidy
operations.

The improvement of data gathering processes which proper

accounting procedures also r e p r e s e n t, in t u r n , f a c i l i t a t e not only
managerial decision making in the operation of these micro projects but
in the processes o f evaluation as well.
I t would seem important t h a t fairgrounds p ro jec ts in Michigan
should be re-evaluated.

The Department of Agriculture spends large

sums o f money on these p r o je c ts .

But, i t i s not a t a l l c l e a r what

goals and objectives i t 1s attempting to achieve by such subsidy
programs.

Even i f i t were possible for the Department to specify these

goals and objectives fo r the s t a t e c l e a r l y , i t may be t h a t they are not
relevant to today's conditions.

I f the financial support given by

the Department for horse racing in Michigan i s f o r recrea tiona l purposes,
obviously the objectives have changed.

And, so has the proper s t a t e

au th o rity t h a t should handle such a subsidy program.

Diverting such

resources t h a t a r e being o s te n s ib ly used for a g r ic u ltu r a l purposes, to
r e c rea tio n a l a c t i v i t i e s , may c o n s t i t u t e a b e t t e r a l l o c a tio n of resources
e s p e c ia lly in the counties 1n the north o f lower peninsula Michigan.
Horse breeding, horse racing, e t c . , are no longer o f much Importance in
several counties within t h i s a r e a .
stantially.

Agriculture has declined sub­

In any event, evaluation of the subsidy program o f t h i s

195

Department would be an I n teg ral p a r t of the evaluation of fairgrounds
p r o je c ts in Michigan.
A given fairgrounds p r o j e c t needs to be understood a l s o in
terms o f the a t t i t u d e s and perceptions of the comnunity within which
th e p r o j e c t i s operated.

A survey of a t t i t u d e s and perceptions of the

p r o j e c t by the local community i s l i k e l y to in d ic a t e the reasons for
the commitment of the people to the given p r o j e c t , and also provides
guidelines to community le a d e rs f o r devising communication s t r a t e g i e s
d ir e c te d towards changing i n c o r r e c t b e l i e f s and to modify values which
stand in the way o f change towards an improved level o f l i v i n g .
Again, guidelines are necessary with regard to p r o j e c t r e lo c a ­
tio n (or otherw ise), new a c t i v i t i e s t h a t may be incorporated in to an
a l t e r e d comnunity p r o j e c t , the types of management organization neces­
sary to make i t a viable comnunlty i n s t i t u t i o n , e t c .

This would, among

oth e r th in g s , involve assessment of the growth trends within the county
and the region.

Not only do local needs and requirements change over

time, so does the external economic environment within which a p r o je c t
operates.

In the present ca se, the evidence was o f a s h i f t away from

farm a c t i v i t y into the export of rec re a tio n a l a c t i v i t i e s within the
region.

An assessment of the regional s e t t i n g would c o n s t i t u t e a

component o f such a study.

The c a lc u l a ti o n of c o e f f i c i e n t s o f l o c a l i ­

z a tio n , l o c a l i z a t i o n curves and r a t i o s , ^ e t c . , would provide useful

^Walter Isard e t a l , Methods of Regional Analysis: An Introductio n to Regional Science (Cambridge, Massachusetts: The tolT Press,
i960), chapter 7.

196

evidence o f th e underlying economic s t r e n g t h s and the market segments
t h a t could be served t o make a community p r o j e c t a f i n a n c i a l l y v ia b le
one.
Following upon the above d i s c u s s i o n , i t 1s argued t h a t the
e v a lu a tio n o f an on-going comnunlty p r o j e c t Involves th r e e broad
problem a r e a s .

F i r s t l y , t h e r e 1s th e question o f f in a n c ia l (as well

as economic) p r o f i t a b i l i t y o f the p r o j e c t .

Secondly, th e r e i s the

problem o f r e s i s t a n c e to change which i s p a r t i c u l a r l y complex where
la r g e group a c t i v i t y i s involved.

F i n a l l y , th e r e i s the problem of

s u i t a b l e a l t e r n a t i v e p r o j e c t arrangements t h a t can f u l f i l l new local
needs and requirements as well as supply new market segments so as
to ensure the v i a b i l i t y o f the lo c al community p r o j e c t .

Related to t h i s

problem o f new market segments i s th e question o f j o i n t - u s e o f
f a c i l i t i e s by d i f f e r e n t local a g e n c ie s , as f o r example, between a
F a ir Board and an Education A uthority which a r e financed l a r g e l y by
th e given lo c a l community.

Analysis o f the p o te n tia l for sharing the

use o f such a community f a c i l i t y by d i f f e r e n t agencies so as to
reduce u n i t s c o s t s and, t h e r e f o r e , so c ia l c o s t s , would form a p a r t o f
any useful re s e a r c h endeavor.

APPENDICES

APPENDIX A

CORRESPONDENCE RELATING TO THE VALUATION OF THE EMMET COUNTY
FAIRGROUNDS LAND BY BRUCE W. HORNIMAN, REAL ESTATE
APPRAISALS, IN 1971 FOR THE PETOSKEY
ECONOMIC DEVELOPMENT COMMISSION

197

APPENDIX A

N U C tW . HORNIMAN
« U l UTAH W N AIM U

T*V m :

NO h ) l

A * ,O tfr* l« .2» 9*K

Hrttatqr, Mwh*oi 17TH)

D*c**fc«r 17, l f 7 i
Mr. h r l f tu t*
M lo ik tx C ;o iw !e
P tto sk c y , M ichigan 17770

C orporation

0**r H r, l u t* t
In * « o rd * n c * w ith poor rs q u e st T have p e rs o n a lly 1 ni>p in ts'!
th e & > « t County F airgrounds P roperty In S e c tio n 1, Township 3 t
N orth, Range 6 West, thm el County, M ichigan In o rd e r t h a t I
w ight outw it to you ay o p in io n aa t o a f a i r market v a lu e Tor th e
p ro p e rty <« a t t h le d a le ,
I a tta c h herew ith th e l e e ol d e s c rip tio n , a survey ea n ro ri
t o ea by P r , Jaire* H, Q rean, U eS rilered Lund S urveyor, l o g 't n i r
' w ith a ev o ral pages .o f p e r tin e n t in fo rm a tio n In clu d in g enepahota,
! t w ill t* noted t h a t th e re a re a p p aren tly y _ 0 -TlPC- ’ C J l l T I
c re i aec i y ^ i n the t i t l e to th e p ro p e rty tu e h ■■ encitM c h a n t s !
an I n ii e a tlo n lh<it th e " ra n d Ilapids k Indian* R u l l m d M .ill hoU s
p ro p e rly through the s u b je c t » it* i end o th e r IteMs wentlonMl by
th e surveyor* I e l m a tta c h in th j* re p o r t a «ej>y o f n o te s r« g ird ln g th e survey aa p rovided by Pr* Green* It, ap p ears th a t
th e je Ite e s c m no doubt be s tra ig h te n e d ou t and, f o r purposes of
t h i t a p p ra isa l* I CM aasuning th a t th rv can he cor r e c t e d . fn the
ev en t th a t th e G ranl Pay id s A In lian a R aU ro a T H rh i^ e f-w iiy la
s t i l l pmi? I by the BaUma-S* th la co u ld causa a s e rio u s d iffe re n c e
i n th e value o f th e acreage* Those, o f c o u rs e , a re n a tte r * fo r
an a tto rn e y to resolve*
I have a ls o given c o n s id e ra tio n and th o u fh t t o th e f a c t th a t
fh* r " —
i" -.i * ^ * l i |V jfw.M
and* a g a in , in
ry t r i n i" n
‘>n » f lor*.
t o chicze
r‘. v - - r * i n,-~»r Lr.ftt en.< o r ’iraU ow In
tn e er

» - g r t.i r ta .n f

. c e o n f r t r w ould n o t b e SUCH

t h a t i t v jr V J J j v e a ser io u s adverse a f f e c t on tit# r e s i d e n t i a l i
y a m w r w i fr* "propet ty*
:
_
”*
Hr', H s rU L u t*
D *ewb*r 17, 1771
prtosVcy Econoal* Orw lopm snt Corp.
P t |* two
I I 1* ry opin io n * f t« r Ih i* In s p e c tio n *nd • c o rr o lo llo n or
th * known f s c to r v lh » t Iho p ro p o rty would h * w o f a i r ■ o rk rt voluo,
oo or t h i s d o t* . I n omount a r t

c m mnrauD s im - T H im

thousand

[1163,000.00]

oollmis

1 u n i f y thw t I h o n no i n l * r « i l , pr**«nt o r r u tu r * , In th *
o u b jM t p ro p s rty *M th » t my to p lc y n e n t o r com pensation o r* in **
m y o a * tl(« * n t upon th * value* im ported,
R e s p e c tfu lly »ubm ltl*d,

Mtl*t

th is

I

g fa *

n.

H*ml**n, * w « l w

/

198
W1WT3*L .BFKWT-lffl. ITTPUTT IWCSWg BBKMWCTr CChpqUTTW
U K t o r t 0 . 8 . 91 fro n ta g e
a 800 ( M i d e p th

•

180.00 f a r ( M i

-

1118,910.00

* 3 ,3 5 0 .0 0 p a r a a r a

»

8 - tt .1 3 3 .0 0

SO.) m m [with 66* access]
•

lltJ .O J J .O O

B nm no

total talus

[sounded]

^ i t ] | ipro.oo

t f f M l W L J m W (0 0 PETMUT ECOilCHIC DEVElO fW u r CQgPChATIOH

.

2!XLJWSgMPTIOT

I

Th* a u b ja c t a l i a c o n ta in s a t o t a l o f 21,77 acre* on th * S o u th e rly
a id * o f u . S . 31 p lu a a a a a ll tr i a n g u la r p a rc e l on th a N o rth e rly aIda
o r II. 3 . 91 c o n ta in in g 0 .6 7 a c r a a .

The t r i a n g u la r p a r c e l on th a N orth-

e r l y a ld a o f th a highway would have no p a r t i c u l a r u io a a th a

blurr dropa

a b ru p tly a t th e highway rlghL -or-w ay and I t l a In d ic a te d o n .th e eurvey
aap th a t th e C A O R a ilro a d tr a n r r a e a th a low er l e v e l o f tlkC p rn p a rty .
There a r c a ltu a te d on th e S o u th e rly p o rtio n o f th a p ro p e rly a nunber o f
o ld rre n e b u lld ln g a , a ra c e tr a c k w ith fe n c e , and a newer b u ild in g o f
cewant b lo ck c o m tr u c tlo n .

The a o s t N o rth e rly p o rtio n o r th a p ro p e rty

l a n e a rly le v e l w ith th a S o u th erly r o r t l o n r l i l n g q u ite a ta e p ly bu t h a d n i
■on* p la te a u a on th e upper le v e l.

The S o u th e rly p o rtio n l a n ic e ly wooded

and a good roadway e n l r r a th e p ro p e rty a t th e W eaterly boundary and n in e
a a tn a ld e r a b la d la ta n c e I n to th e p ro p e rty . Tha p ro p e rty l e aerv ed by a l l
c i t y u t i l i t i a a and 11. 3* 31 l a paved b u t h a . no eurb o r g u t t e r . The
p ro p e rty l a toned L ight I n d u s t r i a l .
,

The v a lu e o f la n d , euclr ae th * a u b je r t s i t e , la based on th e h ig h e st
and b e a t uee f o r th* p ro p e rty end by u se o f n a rk a t d a ta o r e o ap a ra b la a a le a
a d ju s te d s a to lo c a tio n , topogroidiy, ti n * and te rw i o f a a l* .
Tha a p p ro la e r c o n s id e rs th e h ig h e s t and b e s t us* fo r th * a u b ja c t a lt*
t o be c o u n tre I a l frc itage along U. S. )1 on th e N o rth e rly boundary w ith a
d epth o f ap p ro*laiately 300 f e e t and u t i l i s i n g th* b a la n ce o f th * a c re a g e ,
South o f th l a c c m se re ls l a r e a , f o r w u lllp le - r a e lly dw ellin g s, auch aa a p a r t• a n t houses o r condonlnluai u n i t s .

I t appears th a t f r c n th e aw rs S o u th e rly

p o r tio n s o f t h i s p ro p e rty b u ild in g s o f t h i s ty p e would have a f in e view o f
L i t t l e T ra v tra * Day and, I n p a r t i c u l a r , on th* upper p la te a u .

I t l a ap p aren t

w ith th e eaount o f acreage c o n ta in e d I n th e S o u th e rly p o r ti o n t h a t c o m
d is ta n c e c o u ld be k e p t betw een th * e o a m r c la l a lt* * and th * r e s i d e n t i a l a re * .

I t appear* t h a t th e aost s u ita b le a m to h a w sees** t o t h e S o u th e rly por­
tion ef t h e p ro p e rty would be the app r o s ie s t* location of th e precent roadway
a n ta r lM th* ground* a t th * W este rly boundary.

Thla would allo w ua* o r

th * p r e s e n t roadway and would n o t c u t up th a fro n ta g e a lo n g th * highway.
a f t e r re s e rv in g a 8 6 -fo o t a ec e s* road f o r th e S o u th e rly p o r tio n ,
th e r e would b e r e a a l a t i g 1397.60 f e e t o f fro n tag e on th * highway r e r
eoM aorelal ua* and a p p ro a ln a te ly 3 0 .3 a c r e s o f la n d t o be u t i l i s e d f o r
r e s i d e n t i a l purpose*.
I t l a th * o p in io n o f th * e p p ra la a r t h a t th a rro n ta g e alo n g U. S . 31
w ith a 3 0 0 -fo o t d ep th would have a f r o n t fo o t value o f 190.00 and th*
aoreag* re e e ln ln g I n th * S o u th e rly p o rtio n would hava a v a lu e o r 13,330.00
per a cre.
The a p p ra is e r l a o f th * f u r t h e r o p in io n t h a t th a c o a t o f renew al o f
th * b u lld liv * on th a preadaa* would o f f s e t any value th e y n ig h t hav e. Tt
l a p o s s ib le t h a t th * new er e en e n t b lo c k b u ild in g n ig h t f i t I n to com uae
w ith th a eoaaM rclal fro n ta g e a n d , I n t h l a e a s e , i t would have son* v a lu e .
I n e o n e ld e rln g th * whole p a n e l o f la n d l a t h i s a p p r a is a l how ever, no
vulua l e g iv en f o r th a b u ll d l ng a .

APPENDIX B
SURVEY QUESTIONNAIRE

199

APPENDIX B
Survey o f C itiz e n 's A ttitu d e s Towards the Emmet County Fairground
I. GENERAL
One response is required from your household.
by you or your spouse.
Please check your county of residence:
______________ Emmet
Cheboygan
C2.
Cl. How would you c l a s s i f y your
household? ( c i r c l e response no.)
1 Rural Farm
2 Rural Non-Farm
C3.
3 City or Suburban
4 Other (specify) _______

C4. to C9.

I t may be provided e i th e r

Charlevoix - - ______
How many persons are liv in g
in your household a t
present? __________
Have you or any member of
your household v is ite d or
used the f a c i l i t i e s a t the
fairgrounds in the p ast 5
years ( c ir c le response no.)
1 Yes
2 No
3 Don't Know

I I . CURRENT FAIRGROUND SERVICES
How important is each of th e following functions a t the f a i r ­
ground to your household?

(Place an 'X' in the
appropriate column of
each row.)

Very
Important
1

Somewhat
Important
2

Neutral
3

Somewhat
Negative
4

Very
Negative
5

C4. Annual Fair
C5. Farmers' Market
C6. 4-H A ctiv ity
C7. Snowmobile Racing
C8. Other (specify)
C9.
CIO, to Cl5 . I f any o f the following a c t i v i t i e s a t the fairground were
considered IMPORTANT or SOMEWHAT IMPORTANT to your household, b r ie f ly
describe how i t s d isco n tin u atio n w ill a f f e c t you.
CIO. Annual F air
__________________________________________
C ll. Farmers' Market
__________________________________________
Cl2. 4-H A ctiv ity
__________________________________________
Cl3. Snowmobile Racing
__________________________________________
C14. Other (specify)
Cl 5.
'

200

Cl 6. to C27.
(Place an r X* 1n

each row f o r your
re sp o n se .)

Do you, o r a t l e a s t
one o th e r member o f
your household, plan
to a tte n d any o f
th e se fairground a c ­
t i v i t i e s 1n th e coming 12 month period?
DlilfT
YES
NO
KNOW

Did any member o f your
household atten d the
follow ing a c t i v i t i e s
a t th e fairground
during the l a s t 12
months?
YES

NO

DON'T'"'
KNOW

Annual F a ir C16.

C22.

Farmer's
Market

r i7
L ,/*

C23.

4-H
A c tiv ity

£-io

C24.

Snowmobile
Races

riQ
uy*

C25.

?ther\
( s p e c i,f y ,) . . C20.

C26.
C27.

I I I . PROPOSALS FOR CHANGE
C28. I t has been suggested th a t Emmet County re c o n s id e r i t s support o f
the annual County F a ir and decide on one o f the follow ing courses
o f a c tio n :
1. Abandon the fairground idea t o t a l l y , or
2 . Renovate the e x is tin g bu ild in gs and s tr u c t u r e s and continue
the c u r r e n t p a tte r n o f use, or
3. In a d d itio n to ren ov atio n, reorganize s e rv ic e s and a c t i v i t i e s ,
perhaps add more re c re a tio n a l a c t i v i t i e s , reso lv e th e e x is tin g
problems o f t r a f f i c congestion, parking, e t c . , but continue
to o p erate AT THE SAME LOCATION, or
4. Change to a new lo c a tio n with g r e a te r space, add new func­
t i o n s , combine t r a d i t i o n a l community fu n ctio ns with new
r e c re a tio n a l a c t i v i t i e s , find ways and means o f j o i n t and
m u ltip le use o f physical f a c i l i t i e s to lower u n it c o s ts ,
e tc .
What would your choice o f th e above four a l t e r n a t i v e s be? { c ir c le
response number.
C29. Which o fth e follow ing a c t i v i t i e s would you lik e to see added to
th e fairg ro u n d , i f any? ( c i r c l e response number(s)).
1. Swimming Pool
6. Gym (K arate, W restling, Judo, e t c . )
2. Ice R1nk
7. Snowmobiling
3. V olleyball Ct.
8. Other (sp ec ify )
4. Basketball
9.
5. Tennis Courts
10.

201
C30. to C39.

What 1s your a t t i t u d e towards th e payment o f a u se r fee
f o r p a r t i c i p a t i n g In each o f th e follow ing a c t i v i t i e s ?
Mould you be:
Somewhat Neutral "NToT
S trongly
Quite
D
isagreeable
Agreeable Agreeable
Agreeable
5
2
3
4
1

C30. Swimming Pool
C31. Ice R1nk
C32. Basketball Ct.
C33. V olleyball Ct.
C34. Tennis Courts
C35. Gym, (K arate,
S r e s t l i n g , Judo)
C36. Snowmobi1ing
C37. Other (s p e c ify )
C38.
C39.
NOTE:

I t i s help fu l to have general income data so as to understand
the r e la tio n s h i p s between income and se rv ic e d e s ir e s . There­
f o r e , please be kind enough to answer th e follow ing question as
w e ll.

C40.

What was your approximate fam ily income before ta x e s during 1976?
(C irc le response number).
1.

Less than $5,000

2.

$5,000 to $9,999

3.

$10,000 to $14,999

4.

$15,000 to $19,999

5.

$20,000 and above

APPENDIX C
CHI SQUARE TABLE

202
Appendix C.
Row1/ariabie
No. Numbers
1. C3-C4
2. C3-C5
3. C3-C6
4. C3-C7
5. C4-C5
6. C4-C6
7. C5-C6
8. C5-C3
9. C5-C4
10. C5-C6
11. C5-C16
12. C5-C17
13. C5-C22
14. C5-C23
15. C5-C28
16. C6-C3
17. C6-C4
18. C6-C16
19. C6-C18
20. C6-C22
21. C6-C23
22. C6-C24
23. C6-C28
24. C4-C28
25. C5-C28
26. C6-C28
27. C7-C28
28. C30-C31
29. C30-C32
30. C30-C33
31. C30-C34
32. C30-C35
33. C30-C36
34. C31-C32
35. C31-C33
36. C31-C34
37. C31-C35
38. C31-C36
39. C32-C33
40. C32-C34
41. C32-C35
42. C32-C36
43. C33-C34
44. C33-C35
45. C33-C36
46. C34-C35
47. C34-C36
48. C35-C36

Results o f Chi Square Tests Between Variables Defined In
the Survey Questlonnal re a t Appenc 1x B Above
Calculated Degrees of Table Value sig nificance contingency
Value
Freedom
Level
Coefficient
( 9.49
*°51
.OO0b
64.95
4
.5B
21.86
4
9.49
.0000
.38
19.87
4
9.49
.0000
.37
13.13
4
9.49
.32
.0000
16
92.40
26.30
.0000
.64
103.44
16
26.30
.0000
.67
94.29
16
26.30
.0000
.65
4
21.86
9.49
.0002
.38
92.40
16
26.30
.0000
.64
94.29
16
26.30
.0000
.65
4
17.59
9.49
.0015
.35
8
37.85
15.50
.0000
.49
17.13
8
15.50
.0287
.35
40.64
8
15.50
.0000
.51
29.07
12
21.00
.0038
.45
19.87
4
9.49
.37
.0005
103.44
16
26.30
.0000
.67
15.06
4
9.49
.0046
.33
8
35.43
15.50
.0000
.49
8
33.13
15.50
.0001
.47
8
18.27
15.50
.0193
.37
8
49.39
15.50
.0000
.56
12
32.71
21.00
.0011
.47
49.29
12
21.00
.0000
.54
12
29.07
21.00
.0038
.45
12
32.71
21.00
.0011
.47
24.22
12
21.00
.0190
.43
134.15
16
26.30
.0000
.73
103.38
16
26.30
.0000
.69
111.23
16
.0000
26.30
.71
85.91
16
26.30
.0000
.66
138.03
26.30
16
.0000
.74
73.09
16
.64
26.30
.0000
156.85
16
26.30
.0000
.76
131.26
16
26.30
.74
.0000
140.93
16
26.30
.0000
.75
94.56
16
26.30
.0000
.68
71.36
16
26.30
.0000
.63
317.91
16
26.30
.0000
.86
161.92
16
26.30
.0000
.77
201.72
16
26.30
.0000
.81
88.93
16
26.30
.0000
.68
16
179.97
26.30
.0000
.79
158.12
16
26.30
.0000
.77
124.26
16
26.30
.0000
.74
26.30
122.58
16
.0000
.73
16
26.30
82.15
.0000
.66
26.30
124.26
16
.0000
.55

APPENDIX D
OPERATING INCOMES AND SOURCES OF FUNDS
OF THE EMMET COUNTY FAIRGROUNDS PROJECT

Appendix D-l.

Annual Net Operating Incomes From Fairgrounds Operations Worked Out From the Annual
Accounts o f the Emmet County F air Board fo r the Period 1960 to 1976 (in d o lla rs )

1976

1975

1974

1973

1972

1971

1970

1969

1968

REVENUES

27,484

25,060

n .a .

26,943

21,869

22,557

21,687

22,732

20,694

1. Space Rental

4,555
5,047
2,688
7,972
6,752
102
368

4,651
4,892
2,074
7,107
6,337

2,210
5,159
2,118
8,174
9,950
132
101

2,523
4,713
1,591
7,436
4,695

2,382
4,697
2,332
7,048
5,896

1,284
5,006
2,714
7,357
5,165

1,855
4,400
2,175
7,406
6,806

---

n .a .
n .a .
n .a.
n .a .
n .a .
n .a .
n .a .

911

202

161

90

1,131
4,076
3,370
5,699
5,781
660
77

57,862

55,111

n.a.

38,831

38,360

39,507

35,739

37,187

39,206

T rop hies...
2. Race Expenses
3. Maintenance/
Eqpmt. improve­
ments . . .
4. Labor
5. Judges
6. Office & Gen.
7. Taxes (Fed & St)
8. Entertainment/
A ttractio n s
9. Miscellaneous

20,041
1,074

18,895
1,200

n .a.
n .a.

16,924
918

15,797
2,783

17,110
1,787

18,438
1,512

16,100
2,745

18,500
1,902

14,317
11,658
495
4,032
1,957

8,678
15,437
1,059
2,798
3,045

n .a.
n .a.
n .a .
n .a .
n .a .

2,420
6,362
545
5,400
1,370

2,965
7,137
425
4,447

5,653
3,500
370
2,145

—

4,613
5,726
190
3,733
1,282

—

5,055
1,206
345
2,347
1,147

5,606
2,863
350
2,910
1,020

3,999

n .a .
n .a.

4,800
93

3,275
1,531

5,044
23

3,913
208

4,759
3,483

5,882
173

NET OPERATING LOSS

30,378

11,888

16,491

16,951

14,052

14,455

18,512

2.
3.
4.
5.
6.
7.

Carnival/Midway
Race Entry Fees
Gate Receipts
Grandstand
Fairweek Tickets
Miscellaneous
EXPENSES

---

---

--

--

1. Prems/Purses/

4,287
—

—

30,051

—

Appendix D -l.

Continued

1967

1966

1965

1964

1963

1962

1961

1960

REVENUES

16,469

16,659

16,689

14,738

13,536

13,381

13,813

13,337

1 . Space Rental

1,115
3,297
1,945
5,500
4,277
251
83

1,146
3,281
2,175
5,315
4,717

1,237
2,810
1,930
5,132
3,516

853
2,718
1,710
4,915
3,340

627
2,716
1,500
4,608
3,464

618
3,088
1,600
4,545
2,839

609
2,982
1,810
5,147
2,338

25

1,081
3,110
2,240
4,391
4,404
206
1,258

35,132

31,313

33,251

31,180

Trophies
2. Race Expenses
3. Maintenance/
Eqpmt. Improve­
ments. ..
4. Labor
5. Judges
6. Office & Gen.
7. Taxes (Fed & St)
8. Entertainment/
A ttractio n s
9. Miscellaneous

15,995
2,058

14,419
2,319

14,479
1,355

4,504
2,855
220
3,114
966

4,898
3,018
180
2,530
941

5,396
24

NET OPERATING LOSS

18,663

2.
3.
4.
5.
6.
7.

Carnival/Midway
Race Entry Fees
Gate Receipts
Grandstand
Fairweek Tickets
Miscellaneous
EXPENSES

--

- -

--

113

376

1,124

451

30,906

30,001

25,716

22,471

14,000
626

14,479
293

14,284
1,053

13,715
811

13,286
306

6,251
3,645
325
2,384
1,288

6,485
2,033
150
4,179

5,513
3,329
140
3,983

4,302
3,230
155
3,076

3,969
1,573
170
3,303

552
1,546
175
3,564

2,956
52

2,515
1,009

2,170
1,538

2,031
1,138

2,340
661

1,558
617

2,500
542

14,654

16,562

16,443

17,370

16,620

11,903

9,134

---

204

1 . Prems/Purses/

----

--

--

Appendix D-2.

Sources of Funds to the Emmet County Fair Board to Cover Recurrent Annual
Operating Losses During the Period 1960 to 1975/76

NET OPERATING LOSS3

TOTAL GRANTS

1974/75

30,378

30,051

7,260

1972/73

1971/72

—

11,888

16,491

4,634

- -

3,480

8,250
3.208
18.716

8,250
2,204
15.088

- -

5,000
6.660
11,660
--

5,000
2.547
7.547
7,416

—
—

30,378

1973/74f

-—

—

—
- -

19711

1970

1969

16,951

14,052

14,455

3,017

2,932

2,000

2,643

6,750
9,000
386
552
" T3.032 10.153

8,025
1,006

8,775
1,569
12.344

8,250
1,673
12.566

4,319

4,319

4.319
—

4,319

5,000?
?
5,000?
--

TT,963_
4,988?3

5.458
5,458
—

- —

4.9883
--

- -

-----

—

—

16,951

16,663

16,885

—

- -

—

-

—

—

—

—

18,032

15,611

—

w

- -

- -

30,051

.

aTaken from the l a s t row o f Appendix D-l on the operating revenues from fairgrounds operations,
b c
* The d ifferen ce between the two terms "County Appropriation" and "D eficit" is unclear. What is
c le a r is th a t every year the county has to meet a cash d e f i c i t with regard to fairgrounds operation in
addition to other forms of support which are not re fle c te d in the accounts of the fairgrounds complex.
d £
* A sum of $500 received during 1963 has been reported as a 4-H Center Contribution. A sum of
$405 received during 1964 has been refe rre d to as 4-H Conmission. What these revenue flows are is not
c le a r . I t is known, however, th a t the 4-H Center is rented out to non-profit organizations and
p riv a te in dividuals.
^Not av a ila b le.

205

STATE AND COUNTY GRANTS
A. From the S tate of Michigan
a. Premiums
b. Harness Race Purses
& Photo Finish Exps.
c. Matchinq Funds
Sub- total
B. Emmet County Funds
.
a. County Appropriation
b. D eficit Met By County
SUB-TOTAL
C. C.E.T.A.
D. 4-H
.
a. Commission
b. Contribution

1975/76

Appendix D-2.

Continued

NET OPERATING LOSS3
STATE AND COUNTY GRANTS
A. From the S tate of Michigan
a . Premiums
b. Harness Race Purses
& Photo Finish Exps.
c. Matchina Funds
SUB-TOTAL
B. Emmet County Funds
.
a. County Appropriation
b. D eficit Met by County
SUB-TOTAL
C. C.E.T.A.
D. 4-H
d
a. Commission
b. Contribution
TOTAL

1968

1967

1966

1965

1964

1963

1962

1961

1960

18,512

18,663

14,654

16,562

16,443

17,370

16,620

11,903

9,134

2,432

2,511

1,400

1,400

1,637

1,558

946

1,515

1,628

10,720

6,750
3.191
11,341

6,750
3,192
11,342

7,500
3,630
12,767

6,750

6,750

13,152

7,875
281
10,667

8,308

7,696

6,750
—
8,265

7,125
508
9,261

4,319

4,319

4,319

4,319

4,319

4,319

4,319

4,310

- -

—

4,319

—

- -

—

4,319
—

4,319
—

4,319
—

--

—

--

—

—

—

- -

- -

15,660

15,661

—

17,471

14,986

- -

4,319
—
405
-17,491

—

—

—

4,319
-—

500
13,127

—

4,319
—

—

4,310
—

—
—

—
—

—

- -

—

—

—

-

12,015

12,575

-

9,261

The statement o f accounts prepared by the Fair Board on the Michigan Department o f Agricultu re , Fairs D ivision's form "County F airs: Cash Receipts & Disbursements Statement" fo r 1972/73
specified "County Funds" as being $3,841.92. The "Receipts & Expenditure Statement" issued by the
Fair Secretary/Manager sp e c ifie s the "County Appropriation" as being $5,000. I t is not c le a r whether
the to ta l county grant was ac tu a lly $5,000, $3,841.92 or $8,841.92.
’The accounting period has been changed without any explanations being offered.
JThe county grant is not sp ecified in the accounts. I t is highly improbable th a t th ere was no
county grant during th a t year because the accounts in d ic ate th a t there was a d e f i c i t in to ta l income
over expenditure o f $4,988.

APPENDIX E
NET OPERATING INCOMES FROM FAIRGROUNDS OPERATIONS WORKED OUT FROM
THE ANNUAL ACCOUNTS OF THE NORTHWESTERN MICHIGAN FAIR ASSOCIATION,
GRAND TRAVERSE COUNTY, FOR THE YEARS ENDING (1) OCTOBER 15, 1976
(2) OCTOBER 15, 1975 AND (3) OCTOBER 1973

207

Appendlx E
Net Operating Incomes From Fairgrounds O perations Worked Out From
The Annual Accounts o f th e Northwestern_Mich1gan F
A sso c ia tio n ,
Grand t r a v e r s e County, f o r th e Years Ending (1) October 15, 1976
t2 ) October 15, 1975 and (3) October 1973

A.

Net Operating Incomes o f th e Northwestern Michigan F a ir A ssociation
Worked o u t From th e Annual Reports o f th e A ssociation
( in d o l l a r s )
(i)

Net Operating Income f o r th e Year Ended Oct. 15, 1976
INCOME
1.
Gates and Admissions
2.
E ntertainm ent
Midway & Pony Rides
Happyland Shows & Rides
Happyland Kids Day on Bikes
Horse P u llin g Fees
Rabbit Fees
Reimbursement f o r E ntertainm ent
3.
Rental Income
Happyland Midway Space
In sid e Space
S t a l l & Tent
E le c tr ic a l Fees & T r a i l e r Rent
Off Season Rental
4.
5.
6.
7.

Horse Racing—Entry Fees
A d v ertisin g & Program Sales
Membership Fees
L ifetim e
Annual
M iscellaneous Income
I n t e r e s t Income
Sale o f Hay
M iscellaneous

33,972
5,700
6,022
250
630
234
165
1,696
1,239
610
559
2,804
6,908
14,970
352
245
203
448
305
71
129

OPERATING INCOME FORTHE YEAR............................

505
70,156

EXPENSES
Total Expenses as per Schedule o f Expenses
o f th e F a ir A sso ciatio n
231,159
Less
C apital Improvements
12,055
Exp. on Vehicle Purchases
7,280
Loan Payments
51,706
7TTTOT

OPERATING EXPENSES FOR THE YEAR
NET OPERATING LOSS FOR THE YEAR___

160,118

~WM2

208

(11)

Net O perating Income f o r th e Year Ended Oct. 15,1975
INCOME
1. Gates and Admissions
2. E ntertainm ent
Midway & Pony Rides
Happyland Shows & Rides
Happyland Kids Day on Bikes
Horse P u llin g Fees
Rabbit Fees
Reimbursement f o r E ntertain m en t

30,874
3,705
6,269
135
140
455
705
11,409

3.

4.
5.
6.
7.

Rental Income
Happyland Midway Space
In sid e Space
S t a l l & Tent
E l e c t r i c a l Fees & T r a i l e r Rent
Off Season R entals
Horse Racing-Entry Fees
A d v e rtisin g & Program S ales
Membership Fees
L ifetim e
Annual
M iscellaneous Income
I n t e r e s t Income
S ale o f Hay
Reimbursement f o r Damages
Reimbursement f o r Medical Exps.
Telephone Expense Rebate
M iscellaneous

2,072
1,165
1,346
549
55
5,187
15,140
273
1,850
556

2,406

287
147
162
43
82
57

OPERATING INCOME FOR THE YEAR..........................

778
66,067

EXPENSES
T otal Expenses As Per Statem ent o f Cash Disbursements
And Non-Cash Expenses o f th e F a ir A sso c iatio n
363,717
Less
C a p ita l Improvements
Equipment & V ehicle Purchases
Loan Payments

147,363
3,530
21,100
171,993
OPERATING INCOME FOR THEYEAR
...................191,724
NET OPERATING LOSS FOR THE YEAR............................................ 125,657

209

(111)

Net Operating Income fo r the Year Ended O ct., 1973
INCOME
1. Gates and Admissions
2. Entertainment
Midway & Pony Rides
Happyland Shows & Rides
Happyland K1ds Day on Bikes
Pulling Fees
Rabbit Fees
Grandstand Booths

31,301
1,956
7,292
110
334
170
445
10,307

3.

Rental Income
Happyland Midway Space
S ta ll Rentals
Rental of Bleachers
E lectrical Fees & T ra ile rs
Main Bldg. & T ra ile rs & Eleccty.

2,500
310
1,500
395
1,854

4.

Horse Racing—Entry Fees
Blankets (RaceHorse)

8,045
90

5.
6.

Advertising & Program Sales
Membership Fees
Lifetime
Annual & Entry

6,559
8,135
412
100
484
584
7.

Miscellaneous Income
Delivery Tickets
In te r e s t Income
Miscellaneous

5
340
185

OPERATING INCOME FOR THE YEAR......................

530
57,828

EXPENSES
Total Expenses As Per Statement of Disbursements of
the Fair Association ........................
109,842
Less
H earin g o f New Grounds & Survey
Payment of Principal-New Grounds
No. 2 Bldg.
Bleachers-Grandstand
G.E. Freezers

2,485
2,080
8,400
8,216
1.250

2TMT
OPERATING EXPENSES FOR THEYEAR....................

87,411

NET OPERATING LOSS FOR THE YEAR..................................

29,583

APPENDIX F
STATE GRANTS

Appendix F -l.

S tate Grants Through the Department of A griculture in Support of County Fairs in Michigan
(in $ ,000)

Matching Funds

Racing Purses

Premi urns

Totals

Year
MI
1975/76
1974/75
1973/74
1972/73
1971/72
1970/71
1969/70
1968/69
1967/68
1966/67

445
206
151
151
110
108
113
n.a
63
95

Rgn. 10
35
11
6
3
6
7
8
n .a .
8
8

Emmet MI
3.7 1,029
2.0
750
614
1.6
1.1
483
0.4
448
386
0.7
2.5
351
n .a.
271
2.5
259
2.5
243

Rgn. 10
24
17
15
12
12
12
11
10
10
9

Emmet MI
6.0
3.9
3.5
3.1
3,0
2.9
2.7
2.4
2.1
2.1

1,391
1,140
1,061
760
770
709
658
634
515
477

Rgn. 10
65
53
49
43
48
48
29
40
29
27

Emmet MI
9.2
8.3
9.2
7.2
8.0
8.8
8.3
10.5
7.9
7.5

n .a . = Not Available; n . r . = Not Reckoned; n .c . = Not Collated

2,865
2,096
1,826
1,394
1,328
1,203
1,122
n .r .
837
815

Rgn. 10
124
81
70
58
66
67
48
n .r.
47
44

Breeder
Awards
S tate
Emmet
Total
18.9
14.2
14.3
11.4
11.4
12.4
13.5
n .r.
12.5
12.1

269.4
316.7
312.0
241.0
228.1
192.0
n .c .
n .c.
n .c.
n .c .

Total
fo r
Mich.
3,234.4
2,412.7
2,138.0
1,635.0
1,556.1
1,395.0
n .c.
n .c.
n .c.
n.c.

Appendix F-2.

Matching A ssistan ce to Fair A sso cia tio n s in Michigan Under Regulation 805 o f the Michigan
A dm inistrative Code3 - - 1966/67 to 1975/76

"A sum to be a l lo tte d on a matching b a s is, but not to exceed $8,000 annually to any f a i r ,
fo r the purpose o f equipment ren tal during the f a i r , grounds improvements, constructing,
maintaining, and rep airing buildings and making the racetrack more s u ita b le and safe fo r
racing a t the county f a i r , d i s t r i c t f a i r s , community f a i r s , 4-H f a i r s , and s ta te f a i r s . "
(An e x tra c t from the relevant ru les made av ailable by the Dept, of A griculture, MI.)

im m

1969/70 T W 6 9
1975/76 1974/75 1973/74 "197277T 1971/72"
- 107.6
llZ .5
150.JT 110.4
" Z 0 6 .T 150.7
—
6.9
8.2
3.3
5.5
10.8
5.8
34.6
3. TQTAL-REGION 10(,000)
—
2,500
386
742
1,552
1,130
Enuiet
3,663
2,018
4.
—
296
0
142
200
0
6,842
750
North-Western
5.
—
0
0
0
0
0
0
7,739
Kalkaska
6.
—
2,500
1,298
1,978
2,500
4,000
4,000
8,000
7.
Manistee
2,500
2,500
683
8,000
4,000
Northern Dist.
8.
—
383
2,500
975
883
0
370
0
Missaukee
9.
FOR 15 SELECTED COUNTIES (chosen on the basis of rec ip ie n ts of larg e sums each y e a r)c
—
2,500
2,500
2,500
4,000
4,000
8,000
4,000
Jackson
10.
—
2,500
2,500
4,000
2,500
8,000
Saginaw
4,000
4,000
11.
—
2,500
2,500
2,500
4,000
4,000
12.
St. Joseph
8,000
4,000
—
2,500
2,500
2,500
4,000
4,000
13.
Ingham
8,000
4,000
—
2,500
4,000
2,500
2,500
4,000
4,000
8,000
Ionia
14.
—
2,500
2,500
2,500
Allegan
4,000
4,000
4,000
8,000
15.
—
2,500
2,500
4,000
2,500
8,000
Berrien
4,000
3,751
16.
—
2,500
2,500
1,438
2,500
8,000
4,000
0
Calhoun
17.
—
1,510
2,500
2,500
2,103
4,000
8,000
4,000
H illsdale
18.
- 2,500
2,500
2,500
4,000
4,000
8,000
4,000
Monroe
19.
—
1,404
0
1,197
Eaton
4,000
4,000
1,523
8,000
20.
—
2,500
2,500
1,511
2,500
7,790
4.000
600
21.
Branch
—
2,500
2,500
2,500
4,000
4,000
22.
8,000
4,000
Kalamazoo
—
2,500
2,500
4,000
4,000
2,500
Lenawee
8,000
4,000
23.
—
2,500
2,500
2,500
4,000
4,000
24.
8,000
4,000
Livingston

1 . FISCAL YEAR
2. TOTAL'FOE MICH.(,'00117

m ?r

1967m 1966/67
62.7
7.5
2,500
2,500
0
2,500
0
0

95.5
7.9
2,500
1,444
0
2,500
1,494
0

2,500
2,500
2,500
2,500
2,500
0
2,500
984
0
2,500
330
0
1,740
2,500
2,500

2,500
2,500
2,500
2,500
2,500
0
2,500
2,409
2,373
2,500
2,500
0
2,500
2,500
387

a Includes 50 percent of to ta l Photo-Finish expenditures during the period 1970/71 to 1975/76.
^Not Available
c I t is in te re s tin g to note th a t a l l these counties l i e below an imaginary lin e
running northeastwards from Muskegon to Bay City.

Table F-3.

Premium3 Allotm ents to F air A sso cia tio n s in Michigan by the Department o f A gricu ltu re under
Regulation 811 o f the Michigan A dm inistrative Code: 1966/67 to 1975/76 (in d o lla r s )

1. FISCAL YEAR
2. TOTAL FOR MICH.(,000)
3. TOTAL-REGION 10(,000)
4.
Enmet
North-Western
5.
6.
Kalkaska
Manistee
7.
8.
Northern Dist.
Missaukee
9.
FOR 15 SELECTED COUNTIES
10.
Jackson
11.
Saginaw
12.
S t. Joseph
13.
Ingham
14.
Ionia
15.
Allegan
16.
Berrien
Calhoun
17.
18.
H illsdale
19.
Monroe
20.
Eaton
21.
Branch
22.
Kalamazoo
23.
Lenawee
24.
Livingston

1975/76 1974/75 1973/74 1972/73 1971/72 1970/71 1969/70 1968/69 1967/68 1966/67
1,028.8
23.8
6,010
9,860
655
2,323
3,444
1,556

749.6
17.1
3,884
7,794
42
1,437
2,513
1,398

613.6
14.9
3,527
6,728
0
894
2,201
1,522

39,802
35,068
36,457
27,456
38,294
45,457
28,980
25,020
31,510
26,902*
22,917
23,867
30,419*
20,958
18,669

31,242
27,743
25,798
20,740
24,903
32,499*
21,975
16,250
21,552
16,169
14,912
16,661
22,603
14,913
10,913

33,514
25,708
21,276
19,348
20,377
23,989
17,878*
14,367
16,018
11,535
10,790
8,258
19,572
12,661
9,297

447.6
482.5
12.4
12.3
3,080
3,017
5,868
5,779
0
0
725
1,151
1,321
1,772
899* 1,011

386.1
11.8
2,932
5,480
0
1,012
1,676
717

351.0
11.3
2,700
5,285
0
902
1,657
740

271.0
10.3
2,363
4,808
0
918
1,406
793

259.3
9.5
2,128
4,854
0
940
897
692

243.2
8.7
2,111
4,122
0
902
1,081
479

26,075
21,051
15,988
14,409
10,523
15,430
16,260
10,948
10,594
7,409
4,680
5,580
15,030
8,639
6,845

20,932
20,532
14,901
12,668
8,943
13,672
7,513
9,932
10,604
6,944
4,499
5,031
12,754
9,456
5,385

18,303
19,762
13,905
11,645
8,624
11,714
7,080
10,132
9,084
5,621
4,400
4,513
8,780
8,130
5,640

17,359
20,842
13,136
10,875
7,716
11,071
6,403
6,551
7,804
4,880
4,553
3,737
8,993
8,069
5,354

17,015
18,959
13,081
7,966
7,967
9,483
5,815
7,455
7,899
4,893
4,018
3,772
9,011
6,193
4,947

15,923
18,640
10,804
7,222
7,827
8,634
5,578
7,634
7,584
4,655
4,188
3,482
9,787
5,612
4,905

27,030
21,176
18,155
14,093
14,631
18,844
13,022
10,352*
13,119
9,091
5,646
6,168
15,844
10,844
7,687

aPrtemiums have been defined as "prizes awarded fo r ex h ib its and includes money, ribbons, trophies
and s im ila r items.
★
A penalty had been imposed by the Department on th a t p a r tic u la r F air Association during th a t year.

Appendix F-4.

Purse Monies Paid by the Department of Agriculture for Standardbred Harness Horse Racing
a t Fairs in Michigan Under Regulation 285 of the Michigan Administrative Code:
1966/67 to 1975/763 (in d o lla rs)

1. FISCAL YEAR

1975/76 1974/7S 1973/74 1972/73 1971/72 1970/71 1969/70 1968/69 1967/68 1966/67

2. TOTAL FOR MICH.(,000) 1,391.1 1,140.2 1,061.5
53.2
64.9
49.3
3. TOTAL-REGION 10(,000)
Emmet
9,150
8,250
9,150
4.
North-Western
47,650 27,600 27,600
5.
0
6.
Kalkaska
0
0
0
7.
Manistee
9,100
7,300
8.
Northern Dist.
8,100
8,250
8,250
Missaukee
0
0
0
9.
FOR 15 SELECTED COUNTIES
10.
Jackson
0
0
0
11.
Saginaw
0
0
0
12.
S t. Joseph
58,750 53,350 53,350
13.
Ingham
11,600
7,300 33,650
14.
Ionia
30,396 27,600 27,600
15.
Allegan
68,800 62,400 108,000
16.
Berrien
0
0
0
Calhoun
17.
39,500 34,900 32,200
18.
H illsdale
67,300 58,800 54,250
19.
Monroe
0
0
0
20.
Eaton
29,350 26,650
0
21.
Branch
0
0
0
22.
Kalamazoo
35,450 31,250 28,550
23.
Lenawee
105,450 101,750 28,500
24.
Livingston
32,950 30,350 28,450

709.2
759.6
769.8
42.7
47.8
48.2
7,238
8,025
8,775
20,025 21,900 21,950
0
0
0
6,850
7,788
7,413
8,588 10,088 10,073
0
0
0

657.8
28.7
8,250
4,875
0
7,125
8,438
0

634.2
40.3
10,500
14,063
0
8,250
7,500
0

515.4
28.5
7,875
9,375
0
4,875
6,375
0

477.0
26.6
7,500
7,875
0
5,250
6,000
0

0
0
0
0
0
0
36,250 40,750 41,875
23,356 18,763 12,763
14,775 17,588 14,400
82,028 31,988 38,972
0
0
0
19,563 14,450 14,263
34,988 36,113 38,738
0
0
0
0
0
0
0
0
0
19,700 20,825 25,325
16,025 15,900 19,088
20,263 59,143 55,036

0
0
32,438
12,938
13,500
35,063
0
24,188
33,375
0
18,875
0
19,500
14,250
58,455

0
0
32,350
15,563
15,000
31,125
0
24,000
29,813
0
14,438
0
11,250
47,667
17,250

0
0
25,125
15,750
13,875
28,125
0
24,938
25,125
0
15,188
0
15,000
6,750
15,750

0
0
28,313
10,875
12,000
26,813
0
24,375
24,188
0
14,625
0
15,356
11,625
15,000

a Includes 50 percent o f to ta l photo-finish expenditures during the period 1970/71 to 1975/76.

APPENDIX G
USES OF AND RENTAL INCOME FROM THE 4-H CENTER IN THE
EMMET COUNTY FAIRGROUND COMPLEX
DURING THE YEAR 1976

Appendix G.

Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

Uses o f th e Rental Income From th e 4-H Center 1n the
Emmet County Fairground Complex During th e Year 1976

Uses (In A ddition to Regular Use
For 4-H A c tiv ity and Church Work
Weddings
Snowmobiling, Boy Scouts
Wedding, Blood Bank
Weddi ngs
Weddings, Union Meetings
Weddings, Blood Bank
Wedding, Antique Show, Indian Mtg.
Horse Show, Rock Show, Radio Club
Weddings

Rental
Income ($)
510
165
255
315
425
175
300
120

Wedding, S a lv a tio n Army
Weddings, Boy Scouts

200
200
215

Wedding, X'mas P a rty , Union Mtgs.

315

TOTAL RENTAL INCOME FOR YEAR

3,195

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