DNR Letterhead

BILL ANALYSIS

BILL NUMBER: SB 917

TOPIC: Land Exchange Facilitation Fund (LEFF)

SPONSOR: Senator Jelinek

CO-SPONSORS: None

COMMITTEE: Natural Resources and Environmental Affairs

Analysis Done: February 5, 2004

POSITION

The Department of Natural Resources (DNR) strongly supports this legislation.

PROBLEM/BACKGROUND

The current cap of $2.5 million on LEFF does not recognize the rapidly increasing value of land on waterfronts and in urban areas. The ability of the DNR to release lands for development and purchase replacement lands is constrained in both amount of a transaction and the timing of transactions by the current cap. An increase to $5 million would allow the DNR to better respond to both sale and acquisition opportunities.

DESCRIPTION OF BILL

The DNR is authorized to sell land and rights in land and place the proceeds of the sale in the LEFF. SB 917 is a proposed amendment to Act 451, Public Acts of 1994, and would raise the maximum amount to be accumulated in the LEFF from $2.5 million to $5 million.

SUMMARY OF ARGUMENTS

Pro

The amendment to Act 451 would significantly improve the DNR’s ability to manage land by expanding the use of a management tool utilized in consolidating State park, wildlife, and forest land.

Since the early part of this century, the State of Michigan has acquired a substantial amount of land through tax-reversion and purchase. These lands now form the basis for State Forests, State Parks and State Game Areas. The lands are of substantial economic value to the State for timber, minerals, hunting, outdoor recreation, and other

purposes. They are a major attraction for millions of residents and visitors, providing an important component of our State’s tourism appeal. Further, these lands provide habitat and protection for abundant wildlife and unique plant species, some of which are globally endangered.

The location of some of these tracts, however, is not the most desirable for natural resource management, efficient maintenance, or public recreational use. Some State land holdings managed by the DNR are isolated by private land or are scattered in a checkerboard fashion.

Under current legislation, the Department is authorized to sell those lands which are no longer suitable for natural resource management. The proceeds of the sale are deposited into the LEFF for future investment in other lands which are more appropriate for natural resource purposes. The LEFF now has a legislative cap of $2.5 million. SB 917 would expand the effectiveness of the LEFF by raising the cap to $5 million. The higher cap would recognize the increasing value of land, and would provide the DNR with increased flexibility in accumulating a cash reserve for more valuable and significant acquisitions.

Con

None

FISCAL/ECONOMIC IMPACT

Are there revenue or budgetary implications in the bill to the --

(a) Department

Budgetary:

None

Revenue:

Proceeds from land sales can be deposited into the LEFF for purchase of replacement lands that have greater resource and public recreation value.

Comments:

None

(b) State

Budgetary:

None

Revenue:

None

Comments:

None

(c) Local Government

Comments:

Larger parcels can be released to communities and private interests when appropriate, for more effective management of the State’s land holdings.

OTHER STATE DEPARTMENTS

This bill will not impact other departments.

ANY OTHER PERTINENT INFORMATION

The LEFF is land neutral in its effect on public land ownership. Replacement lands are acquired when land which is no longer needed for natural resource purposes is sold.

The initial cap of $500,000 on the LEFF was established in the original legislation in 1989, and raised to $2.5 million in 2001. At that time, the DNR proposed a cap of $5 million in recognition of rising land values. A cap of less than $5 million constrains the DNR in its ability to release surplus land in a timely manner. With a cap of even $2.5 million, inputs and outputs of the fund have to be timed carefully for the LEFF to be effective. Sales are delayed until replacement lands have been purchased, making room in the LEFF for additional proceeds. With rising land values, a few sale transactions can quickly put the fund balance at its cap.

ADMINISTRATIVE RULES IMPACT

None.

_______________________________

Rebecca A. Humphries

Director

_______________________________

Date

OLAF