r "a {fift‘ 9 OJO‘I I . g . J ‘2." ‘5 '1 . . , n... A. At'f 1,0,‘ll'" PLACE IN RETURN BOX to remove this checkout from your record. To AVOID FINES return on or before date due. MAY BE RECALLED with earlier due date if requested. DATE DUE DATE DUE DATE DUE 6/07 p:/CIRC/DaIeDue.indd-p.1 -4 an- . _._- a an” ..— -r- -__.;,~—_.-rfi‘ H'— .~_ '_-'_’-_ . --_V—-__‘._go*sz ;-_-H—Zl_‘;-.ae!| “A. I L. "Elan 3 Paper * ” _', Agyekun, Therea H. 1987. Michigan Natural Resources Trust Fund: A Program Analysis BY Theresa H. Agyeknm A Plan B Paper Submitted in partial fulfillment of the requirement for the degree of Master of Science Department of Geography School of Urban Planning and Landscape Architecture Michigan State University 1987 _ J... ’3') m “C I '\ O DGEHENTS The author acknowledges with gratitude the cooperation and contribution of numberous individuals at the Michigan Department of Natural Resources in granting interviews and supplying materials for this paper. Special thanks is offered to the staff of the Division of Recreation Facilities, of the Department, where the author is employed as a student assistant, fo use of data materials and literature of the NRTF projects. The author also gratefuly acknowledges Professor Theodore Haskell and Mark Wyckoff for their assistance and guidance, and most especially to Dr. Carl Goldschmidt for his encouragement and assistance at all times. Last but not least, my heartful thanks go to my family especially my mother Nancy and children Ekow, Aba and Papa for their love, encouragement, patience and understanding during the preparation of this paper as well as the seemingly endless years it took to obtain this degree. T OF 0 ENTS Table of Contents List of Tables and Figures Definitions Chapter 1 History Chapter 2: Analysis: NRTF Act: Goals and Acquisition Analysis and Procedure Chapter 3: Recommendations and Conclusion Summary Footnotes List of References Appendix ii iii 24 29 32 35 36 37 Table Table Table Table Table Figure Figure List of Tables and Figures (Acreage & Cost of NRTF Projects) (Local Government Land Acquisition & Cost) (NRTF State Projects: Urban & Non-Urban Area Acquisitions) (Approved Acres and Cost 1985 & 1986) (NRTF Land Acquistions by DNR Division) (Most Populated Urban Counties in Michigan) (Michigan's 14 Regions) ii 11 11 12 13 23 21 26 DEFINITIONS "NRTF ACT" means the Michigan Natural Resources Trust Fund Act established in Section 35 of article IX of the state constitution of 1963. "Board" means the MNRTF board established in section 7 of PAlOl, 1985. "DNR" means Michigan's Department of Natural Resources. "Local Unit of Government" means a county, city, township, village or school district or any combination thereof, which authority is legally constituted to provide public recreation. "Program" means the implementation of the NRTF, by the Michigan DNR, as provided. iii CHAPTER ONE Motion Michigan has a legislation - the Natural Resources Trust Fund Act PA 101 1984 (NRTF)- which appropriates by means of a constitutional provision, revenues from oil, gas and mineral leases and extractions in the Pigeon River Country State Forest as well as all other state lands for the acquisition of recreational land and its development for public use. The trust fund was set up to compensate for the use of non-renewable resources, such as oil and gas, drilled from Michigan lands, by placing the revenues from these activities in a special fund. The trust fund program is administered by a Board of Trustees composed of five members appointed by the Governor. The board receives staff assistance from the Recreation Services Division of the Michigan Department of Natural Resources (DNR). The NRTF funding assistance is directed toward six goals and objectives which are based in part on Michigan's statewide recreation plan. These goals are intended to guide the Board in making decisions on the purchase and development of 1 2 land for the Trust Fund purposes. The six goals of the Trust Fund program are to acquire lands that promote and enhance: 1) Urban Recreation, 2) Water Access, 3) Economic Development, 4) Community Recreation, 5) Wise Investment and 6) Resource Protection. This paper will study and analyze three of the above goals which in the author's opinion are the most significant. The goals will be reviewed to determine whether or not they uphold the intent of the NRTF Act. In addition, the actual acquisitions will be evaluated to determine how they relate to the goals of the program. The three selected goals are the Resource Protection, Urban Recreation and Water Access goals. The study will consist of evaluation of the lands acquired, to establish if they fit the categories of land that the program intends to protect and acquire, and whether or not the acquisitions and the implementation of the program has upheld the objectives of the Trust Fund act and program. The analysis is based on the review of published materials on NRTF program and its activities obtained from DNR, interviews with DNR personnel who are involved with the Trust Fund program, the statutes, and other publications relevant to the study. The study will be limited to acquisition projects only. Development projects will not be 3 reviewed since that portion of the program was introduced only in 1985; there is therefore inadequate information for any meaningful evaluation at this time. HISTORY The idea that Michigan's natural resources must be held and managed as a kind of trust has prevailed from years back. Citizens have zealously guarded their land and water and their right to use and enjoy it. It is therefore easy to understand the furious debate that was touched off in the 1970's by the proposal to drill for oil and natural gas in the Pigeon River Country State Forest. This forest is home to the largest elk herd east of the Mississippi and the effect of drilling activities on those elk was unknown. People resented the intrusion on their land, as well as the drilling proposal while others felt strongly that drilling could take place safely with minimum impact while bringing in huge profits which can benefit the public. This led to a lengthy court battle from which emerged a new perspective on the issue of resource development on public lands. It was felt that as nonrenewable resources were used, something tangible must replace them. Thus revenues from leasing state land for oil and natural gas exploration and from royalties on successful wells were placed in the state's general fund. However, the money was spent as fast as it 4 was earned, providing little evidence of permanent public benefit. This led to the advancement of a new idea that revenues from drilling activity be placed in a special fund and interest from that money would be used to purchase recreational land for public use. This will ensure that although nonrenewable resources would continue to be depleted, the public would benefit forever from the temporary intrusions on public land. This idea led to the birth of the Kammer Recreational Land Trust Fund Act (see Appendix A--PA 204 1976), which provided that money received from the drilling activity be placed in a fund for the acquisition of recreational lands and protection of resources. One reason for deciding to use the Trust Fund revenues for land acquisition rather than other purposes was that land is the ultimate nonrenewable resource. Other reasons were that although Michigan's public land base is extensive, there are deficiencies in many areas. In 1984, less than 10% of Great Lakes shoreline property was publicly owned. Southern Michigan, where 90% of the residents live, has less than 10% of the state's publicly owned land. Michigan's wetlands, though ecologically significant, are disappearing rapidly due to development. 5 Access to inland waterways, especially near urban areas, state parks, recreational areas and game areas is bounded by private holdings. Another big reason the Trust Fund was earmarked for public land acquisition was that the oil and gas resources in question are the fruit of existing public lands. The Trust Fund Act provided that all revenues from oil, gas and mineral leases and extractions in the Pigeon River Country State Forest, (PA 204, 1976, Section4(1)) as well as revenues from any new leases and extractions on state lands outside that forest, would be deposited in the Land Trust Fund. Each year the interest from the fund was to be expended, along with $2.5million (Act204,Sec5) of the revenue it received that year. The Trust Fund's ceiling was set at $100 million.(Act204,Sec4(2)). The Trust Fund has a good record in terms of acquiring quality recreation property; however, in terms of preserving a trust as a source of continuing revenue for future generations the fund has suffered several setbacks. Trust Fund revenue averaged $191,000 a month in its first fiscal year. In the following year, revenue rose to $490,000 a month, increasing to $857,000 a month in the third year. By fiscal year 1979-80, revenue had risen to $1.4 million a month. That was the year that the Trust Fund Program started suffering setbacks. Through legislation, $6 million of the funds destined for the Trust Fund were borrowed to cater to other activities. The legislation also raided the Trust Fund when it required that $20 million per year be transferred to the Michigan Economic Development Authority (ArticleIX,Sec35) and again on two separate occasions money from the Trust Fund was taken to balance the state budget. Despite good intentions and a legislative mandate for repayment (Act 101 Sec 14), the money from the Trust Fund was never repaid, but to compensate for this the ceiling on the Trust Fund was raised to $200 million(Act 101, Section 6). This constant use of the Trust Fund revenues for other purposes led the Senate in 1981 to create a special committee to identify the best and wisest use for oil and gas revenue. The committee members came up with a resolution proposing a constitutional amendment to protect the Trust Fund. In 1984, an effort was undertaken to protect the Trust Fund by introducing a joint resolution--- Proposal B---to constitutionally create a Natural Resources Trust Fund. This proposal was easily passed by the required two-thirds majority in both houses. 7 Under the act, interest earned by the Trust Fund would be used for public recreational land acquisition and development of public recreation facilities (Act 101, Section 4a,b). Facility development would be limited to a maximum of 25% of expenditures each year. This is made possible through the expanded Trust Fund ceiling. In addition, the trust fund act provides that payments will be made to local governments who lose tax revenue due to sale of land to the NRTF program, to compensate for said revenue since in Michigan the State does not pay taxes on land.(Act 101, Section 4c). CHAPTER TWO Analysis: Analysis: N R T F Act: Goals and Acquisitions Acquisitions and Expenditures The history of recreational funding has not been a very positive one. Programs and funds on both state and federal levels that have provided past support have been drastically cut or eliminated. Recreational programs have thus shifted toward "user-pay" with recreation attempting to support itself without adding to the tax burden. The Michigan Natural Resources Trust Fund Program offers the people of Michigan a unique opportunity and commitment in the provision of recreational facilities. As noted earlier, the MNRTF provides money to buy land for recreation and protection of natural features, and to develop recreation facilities. It's administered by a five- member board appointed by the Governor with staff support from the Department of Natural Resources', Recreation Division. Both DNR and local units of government request Trust Fund money for specific projects. In addition, any private citizen or organization may submit a Trust Fund acquisition proposal. These privately sponsored Trust Fund proposals nominate parcels of land for DNR or local government ownership and propose MNRTF assistance for purchase of the land. The MNRTF Board considers such proposals for funding only if a DNR division or local unit agrees to take ownership of the land and manage it for public recreation or protection of natural features.Local units of government must pay at least 25% of the cost of their projects. Development proposals may also be submitted by a unit of government. This can include school districts, where they are the primary provider of recreation in their geographic area. The Trust Fund Board reviews the proposals for conformance to its goals and requirements (Appendix B) and for the significance and availability of the land and reasonableness of the request. Other factors considered in the final recommendation of a project are cost, availability of the land, state or local unit interest in the project and capability of administering the land or facility as well as public input. 6'7 10 Proposals with the greatest potential, as determined by the Trust Fund Board, are then scored and ranked according to proposal evaluation criteria (Appendix C). This scoring system allows an objective evaluation of the merits of each proposal relative to the goals of the program and assists in prioritizing the proposals. NRTF annual appropriations are derived from a formula provided by the Act stating that "...interest and earnings of the Trust Fund in any 1 state fiscal year, ... 33% of the money, exclusive of interest and earnings of any 1 state fiscal year may be expended..." (Act 101 Secs4 (1&2)). Out of this grant, "not less than 25% of the total expenditures from the Trust Fund in any fiscal year shall be expended for acquisition of land and rights in land, and not more than 25% of the total expenditures from the Trust Fund in any fiscal year shall be expended for development of public recreation facilities." From the inception of the program to the period ending September, 1985, the State Legislature has appropriated the NRTF about $105 million and approved over 137,000 acres of recreation land for both state and local governments. At the state level about 54,000 acres of land out of the approved proposals have been acquired at the cost of about a It 11 $44 million (table 1). Lands acquired for local governments total about 4,700 acres at the cost of $7.4 million. manua1 Acraxxaandtxxm:oflfiflT‘ankxxs Yam: AgtlmpnxmiwuxlggggL Agggg <3x¢:of£fi2me Ammnm: Appnmmd. ' Aamfisiths (x$1000) (State) (State) (x 1000) 1977 362 2288 3140.0 1411.0 1678.7 1978&79 19 18651 22635.0 20881.6 12347.4 1980 130 6126 2509.7 2876.5 3570.5 1981 223 10777 30167.2 10279.4 6317.8 1982 201 17399 15719.1 12071.3 9050.2 1983 429 14372 9698.5 4417.8 5320.8 1984 105 19362 11768.5 1640.8 4082.4 1985 197 16358 15001.0 TOTAL $105,333 110639.0 53578.4 $43367.8 1986 (Hbuse 12298 11396.0 Bill) Thbhaz ZUxalcth.Iandzmqunfitrmmz&