Land Use: Markets, Mandates, or Both?

Cherry Trees
Cherry Trees on the Harold "Jolly" and Joyce McManus farm on Old Mission Peninsula are often harvested by family members, as shown here. The value of the McManus farm, which has been in the family for more than a century, has skyrocketed in recent years.

Nowhere in Michigan is a clearer picture being drawn between competing land-use interests than on Old Mission Peninsula near Traverse City.

Jutting into Grand Traverse Bay, the Peninsula has some of the most beautiful views in Northern Michigan. It has been a magnet for tourists for over 100 years and has attracted an increasing number of both part-time and full-time residents.

And that is the problem. Increasing demand for housing on the Peninsula has made farm land extremely expensive. Many farmers are choosing big paydays by selling out to private, for-profit residential builders. This has made many environmentalists nervous as they see some of their favorite acreage mowed down in favor of other peoples' favored uses of roads and buildings.

Balancing the Constitutional rights of citizens to own and use their property with the concerns of outdoor enthusiasts, environmentalists, and lawmakers is not an easy task. Still, activists are trying to keep land from being developed on Old Mission Peninsula and elsewhere. Some of their methods (described below) lean toward private, voluntary, market-oriented solutions; others lean more in the direction of government mandates and coercion.

Charitable Easements. An easement is a private contractual agreement that restricts development rights, except those specifically allowed by the easement. There are 40 charitable land trusts in Michigan today that accept charitable easements. A charitable land trust is a private, nonprofit organization that buys or receives in donation land or easements that will be used according to the trust's mission. One of those trusts, the Grand Traverse Regional Land Conservancy in Traverse City has preserved 845 acres through 20 such easements on Old Mission Peninsula alone.

Purchase of Development Rights. Often, nonprofit organizations or other private parties, or local governments, will buy the legal right to develop property in the future, for purposes of preserving the land from development by others. The right to develop is typically not exercised. Many times, local governments will set aside a fund specifically for the purpose of buying development rights on an ongoing basis.

Old Mission Peninsula offers a case in point, and a warning.

In 1994, Peninsula Township voters approved a special millage (a tax on property) which raised $7 million to purchase the development rights for 9,000 acres on the Peninsula. Unfortunately, Peninsula Township has been able to purchase less than 25% of the acreage it had hoped to with the tax money it took.

It is estimated that an additional $25 million will be needed to purchase the development rights of the remainder of earmarked land at an average price of $3,500 per acre.

Why? Supply and demand influence the amount of land available for purchase. When the voters of Peninsula Township chose to use tax dollars to finance the purchase of development rights, they took large tracts of land out of the available stock on which to build. This helped drive up prices of the lots that were available, as well as the prices of future homes, and made construction on the Peninsula even more attractive and profitable to developers. The resulting bidding up of land prices gave farmers even greater incentive to sell their land to developers.

The implication of this process is that the purchase of development rights to save land from development can actually result, over time, in greater land development than might have taken place otherwise.

Statewide, local governments have experienced similar disappointment. Far less land has been saved than planners had hoped. Yet, the decrease in the supply of land drives up property values and simply attracts developers with bigger bank rolls. Environmentalists will continue to call for more federal and state involvement to stop the process. Measures to restrict development will likely be much debated in the forthcoming election cycle.

Two more ways to limit development are zoning and impact fees. Each of these methods uses more government coercion than the previous examples. The jury is still out on their effectiveness; however, both have been cited as possible solutions to resolving land-use conflicts in Michigan.

Zoning. Peninsula Township is fairly limited in its power to zone growth out of the peninsula. Currently, it does not have the right to draw "growth lines"—boundaries beyond which development is prohibited by law—but that could change as state legislators work to give local governments more power to deal with land-use issues.

Impact Fees. Impact fees punish businesses for directly creating a certain number of new jobs above a pre-determined threshold. For instance, if a community government decreed that Intel could not augment its workforce above the number of employees currently working at its headquarters, but Intel chose to violate that limit, the community would fine Intel $1,000 per job as a way to limit growth. Although there is no legislation in support of such a concept for Michigan, it is being tried elsewhere and has been discussed as a legal tool for the Great Lakes State.

Zoning and impact fees have been in the media spotlight recently as communities across America grapple with land-use issues. But their coercive and punitive natures make them far less attractive solutions than charitable easements or voluntary purchase of development rights. No solution is perfect, and because of that, land-use issues have become a hot topic for politicians who want to exploit the legitimate hopes, fears, and interests of all parties involved. The more the citizens of Michigan can keep their focus on private solutions that do not violate anyone's legitimate interests, the better for the future of land use and civil society in our state.