Most Money Goes To Land Least Likely To Be Developed

MIDLAND – At a time when Gov. Jennifer Granholm’s land-use council is preparing to recommend more land acquisitions to restrict development — reportedly to include a bond issue for as much as $1 billion — a study released Thursday by the Mackinac Center for Public Policy shows that the state’s existing land preservation program has failed to achieve its goals. 

Under Michigan’s principal land preservation program, P.A. 116 (1974), tax credits totaling more than $800 million already have been granted to owners of 45 percent of farmland statewide in an attempt to preserve open space in Michigan.  But an analysis of program data has revealed that the bulk of credits granted between 1982 and 2001 were applied to farmland distant from development pressures.

"These tax credits have had little effect on stemming the conversion of farmland to other uses. Instead, the program mostly benefits the farmers already least likely to develop their land," said Diane Katz, director of science, environment and technology policy for the Mackinac Center.  "This program failure casts doubt on government’s ability to devise so-called market based mechanisms to improve the environment," Katz added.  "Increasing the state’s already huge debt load by $1 billion can’t be justified."

No assessment of the farmland preservation program has been undertaken by the Michigan Department of Agriculture, which administers the program, or by any other state agency.

Specifically, the study found:

  • Between 1982 and 2001, only 28.5 percent of all tax credits awarded annually went to farms in high-growth counties.

  • Some 54 percent of these credits were allocated to farms in counties classified as "rural" by the U.S. Census Bureau, and thus distant from development pressure.

  • 17.5 percent of credits were applied to farmland in "central city counties" where development pressure is low.

  • Five of the 17 highest-growth counties — Livingston, Macomb, Midland, Oakland and St. Clair — had zero enrollments in the farmland preservation program in 1997, 1998 and 1999.

  • Five of the six counties with the highest levels of program participation — Huron, Tuscola, Saginaw, Sanilac and Gratiot — are located in low-growth areas as defined by the U.S. Census Bureau.

  • Huron County, which accounted for 8.5 percent of the tax credits overall — the largest number statewide — contains only 2.5 percent of the state’s farmland.  Still, the credits did not prevent 10.6 percent of that county’s farmland from being converted to other uses between 1992 and 1997.

  • More preservation agreements have expired than have been renewed in the past six years.

  • The Michigan Department of Agriculture does not monitor whether program participants are abiding by the preservation agreements or maintaining the environmental integrity of the enrolled properties.

  • The Michigan Department of Treasury only estimates the number of credits issued annually, although the total value of credits is calculated.

  • The average price paid by the state to purchase permanent conservation easements — $3,260 per acre — far exceeds the national average of $1,789 per acre.  Both the lowest and highest prices paid in Michigan — $1,939 per acre and $6,493 — were for farmland situated in the same county (Grand Traverse).

"When government attempts to manipulate land use through programs such as farmland preservation tax credits, a host of unintended consequences result.  A well-ordered approach to public policy does not assume that more governmental control is the solution.  It is far better to consider how best to harness the power of private property rights to enhance environmental quality," Katz said.

"This becomes particularly important in light of Michigan’s budget constraints and the state’s inability to manage adequately its already huge land inventory," she added.

The study “Michigan’s Farmland Preservation Program: An Assessment” can be found at: www.mackinac.org/5644.

The Mackinac Center for Public Policy is a nonprofit, nonpartisan research and educational institute headquartered in Midland.

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