Land Ho! Should Government Be Landlord?

State-Owned Recreational Lands

The state of Michigan owns more than four million acres of land, and 590,000 acres of it is devoted to recreational uses such as hunting, fishing, snowmobiling, and pleasure boating. Massive land holdings are a drain on the state treasury. For instance, in 1997, Michigan's state forests and parks were over $20 million in debt. Selling off just a portion of the available acreage in the state's portfolio could more than offset the entire debt, with money left over for improving roads or cutting taxes.

Another option would be for the state to donate or sell parks and forestland to private conservatories such as the Little Traverse Conservancy in Harbor Springs. At the very least, it would be cheaper than maintaining these lands at a loss. Nonprofit groups such as the Little Traverse Conservancy purchase land and hold it in trust for the public's enjoyment.

Michigan's land holdings have accumulated over the years by direct purchase, transfers, gifts ($1.3 billion worth since 1992), or tax reversions due to private owners' failure to pay property taxes. State-owned lands are classified in nine major categories: state forests, game areas, parks and park sites, recreational areas, public water access sites, fish hatcheries and rearing ponds, administrative sites, and the state fairground. Seventy-five percent of the land controlled by the Michigan Department of Natural Resources (DNR) is property obtained through tax reversion, and much of this property makes up the current state forest system.

While no attempt has been made by the state to ascertain the market value of its four million acres of mostly unimproved land, several rough estimates can put the worth of these lands in perspective. According to state records obtained by Michigan Privatization Report, the state of Michigan held public auctions between October 1990 and October 1992 in an attempt to sell over 9,000 lots of state-owned land. The sale of just 3,962 lots grossed nearly $5 million for the state treasury.

If the state sold off the 590,000 acres (14,312) lots that comprise recreational or recreation-related lands at the per-lot sales price mentioned above, the it could raise more than $18 million in new revenue. Recreational land may include gaming areas, state parks, hatcheries, fairgrounds, and water access sites as highlighted in the DNR's biennial real estate report. MPR includes hatcheries in the "recreation" category because of its relationship to sport fishing, and the fact that these institutions could be privatized.

Another estimate can be made by extrapolating the 1989 work of Reason Foundation analysts Terry Anderson and Donald Leal, who estimated the dollar value of all federal commodity lands (national forests, for instance) for the lower 48 states and Alaska to be $160 billion. The authors used an average cost per acre of $500 for the lower 48 states. Adjusting for an inflation rate of 3% per year, compounded annually, the 1998 average cost per acre of commodity lands would be $652. Multiplying the per-acre price by the 3.8 million acres of commodity-style forestland owned by the state of Michigan yields a total sale value of nearly $2.5 billion.

Finally, the DNR and the state tax commission keep track of the value of more than 900,000 acres of land purchased by the department or the Natural Resources Trust Fund, which was created in 1976 to help preserve Michigan's natural resources. The total cash value of this land as estimated by the state of Michigan is $850.5 million.

It should be stressed that the first two estimates are rough. Auctions held by the DNR will not necessarily result in the sale of every land parcel. In addition, there are so many unimproved acres of land in the farthest reaches of the Upper Peninsula that selling them at the "average" price of $652 per acre might be unrealistic.

Would the sale of some state recreational land deprive Michiganians of opportunities to camp, hunt, fish, and enjoy the wilderness? Reasoned logic suggests otherwise. The worst-case scenario is that user fees for some parks and recreational lands may increase to cover the true, unsubsidized costs of managing land to hunt, access boat launches, or camp. But in other areas, per-use costs may drop: Many private, for-profit camping organizations, hunting grounds, and boat launches already offer recreation at reasonable prices, despite having to compete with state-subsidized lands.

For example, Kampgrounds of America (KOA) is the largest private campsite franchise in the world, and it currently has 15 locations in Michigan. It would be hard to imagine KOA turning away opportunities to make inroads on its state-subsidized competition, and it could easily do so by purchasing state lands at market ratesincluding state campgroundsat government-sponsored sales and auctions.

The Michigan legislature should ask an independent agency to examine the effect of selling a large portion of the state's land portfolio; or giving much of it to private land management trusts. At the very least, there is no reason that state campgrounds couldn't be sold to the private sector.

These state enterprises directly harm the livelihoods of people who voluntarily provide the same services at a reasonable cost, and involve government in recreational programs enjoyed by a few but paid for by nearly everyone.