Michigan trust fund buys new parks as old ones languish
Dimondale — On a hot and humid June morning, a man walked his dogs through Danford Island Park, a short distance from where a kayaker pushed off from the Grand River shoreline.
Less than a decade ago, the 7-acre Dimondale park bordering the river was contaminated, abandoned, a literal junkyard. Now, bright blue picnic tables fill the wooded area, brown wood chips mark winding trails and the Grand River flows freely where it was once stymied by an abandoned dam.
“If it weren’t for grants, we wouldn’t have this,” said former Dimondale Village Manager Denise Parisian.
The park’s comeback was aided by a nearly $170,000 grant from the Michigan Natural Resources Trust Fund in 2013, funding the Lansing area village officials have been unable to secure for a second round.
The state Department of Natural Resources awarded roughly $49.8 million to state park acquisitions and projects last year, but denied the village’s request for more funding for a new restroom, gazebo and Americans with Disabilities Act-accessible paths. The trust fund money is intended to promote the growth of publicly owned land for resource protection and recreational opportunities.
An Upper Peninsula lawmaker sees rejected requests like Dimondale’s as casualties of a complicated funding formula for one of the state’s most successful grant programs. Fixing the issue is more daunting because it requires a constitutional amendment approved by two-thirds of the Legislature and a majority of statewide voters.
While acquisition “gems” come along occasionally, the greater need now is to develop and maintain properties, said trust fund board member Bill Rustem. The Dimondale project would have had more of a competitive chance if the board wasn’t tied down by the funding formula, said Rustem, a former chief strategist for Gov. Rick Snyder.
But the rules governing the trust fund money are tilted more toward buying land instead of developing it. They require at least 25 percent of any funding to go toward park land acquisition and less than 25 percent for development.
After more than 40 years, the formula needs to change, Rustem said.
“Because we have to spend 75 percent on acquisitions, we’re basically approving nearly every acquisition project that comes through the door,” said Rustem, who was former Gov. William Milliken’s chief environmental affairs adviser.
“I’m not sure we’re funding all of the best acquisitions in the state because we already bought all of the best acquisitions in the state.”
Sen. Tom Casperson, R-Escanaba, hopes to get a proposed funding solution on the November ballot. But with lawmakers on a 10-week summer break, Casperson faces an uphill battle because legislators would have to approve such a ballot measure by Sept. 6.
$1 billion in 40 years
Funded by oil and gas royalties, the trust fund has paid for more than $1.1 billion in public land purchases and land development since the program started in 1976 through 2016. About 80 percent or $871 million went to land acquisition and 20 percent or $246 million to development.
The buying spree over four decades has added roughly 108,902 state acres to the nearly 4.6 million acres managed by the DNR.
Between 2012 and 2016, the grant program helped local communities purchase 2,647 acres.
The DNR is in the process of converting paper records from prior years to determine how many total local acres the grant program has aided communities in purchasing. The tally is likely to be substantial, said Jon Mayes, recreation grants manager for the DNR.
“Hardly a park has not been funded with it, it seems like,” Mayes said.
The bias toward buying property was apparent during last year’s grant awards. The DNR granted all 34 requests for land acquisition funding, but approved 97 of the 132 development projects — a 27 percent rejection rate.
For 2018, the DNR has received 184 applications requesting a total of $88.2 million. More than 60 percent or $53.4 million of the requests are for acquisitions.
When the trust fund reached a half billion dollars in 2011, oil and gas royalties were diverted to a separate parks endowment fund that currently is at $255 million. The Natural Resources Trust Fund’s ending balance in 2018 was $636 million.
Now, the trust fund relies chiefly on investment income to finance projects and cannot touch the capped $500 million in the trust fund. In the 2017-18 fiscal year, the fund generated about $51.5 million in investment income, an 8.8 percent return.
In recent years, ideal land acquisitions have not necessarily included acres of sprawling property but the small pieces that complete a park, Mayes said.
“If you look at some of the maps for the property boundaries of our state rec areas, our state forests, our state game areas and our parks, you will see on many, many of those maps there are still holes in the footprint,” he said.
Casperson wants to change the land buying funding bias by amending Michigan’s Constitution to allow for at least 25 percent acquisition and at least 25 percent development.
His proposal also would allow trust fund grants for the replacement of old facilities that have reached the end of their life cycles; lift the natural resource trust fund cap so it could capture royalties again when the $255 million State Parks Endowment Fund hits its $800 million limit; and change the endowment fund’s spending formula.
Currently, half of the endowment fund earnings go toward the endowment principle and half toward state parks acquisition and development.
The new plan would increase the share of state parks acquisitions and development to 55 percent, drop the endowment principle allocation to 30 percent and give 15 percent to local parks.
Environmental groups support the proposal to greater and lesser degrees.
The Michigan branch of The Nature Conservancy supports the plan, but wants to put it to a vote when the ballot isn’t as crowded with proposals and stands a better chance of victory, said Rich Bowman, the conservancy’s director of government relations. Casperson said he is open to the idea.
“This is a very solid, clearly defined section of the Constitution, and these are changes that keep it that way,” Bowman said.
The Michigan League for Conservation Voters is not opposed to changes to the trust fund formula, Deputy Director Bob Allison said.
The Michigan League for Conservation Voters has concerns about the proposal’s decrease in the percentage of money going toward the endowment fund’s principle and its failure to include more money for a $250 million backlog in park improvements and maintenance.
“If we’re going to put something before voters, let’s make it a comprehensive proposal, not slicing up the same pie over and over again,” said Deputy Director Bob Allison.
After looking at the changes “holistically,” the Michigan Environmental Council supports the plan, said Deputy Policy Director Sean Hammond. But the plan lacks ways to “add more money to the system,” he said. Both Allison and Hammond supported changes to the state’s recreation passport, transitioning it from an opt-in program to an opt-out program, a change that would generate an estimated $15 million annually.
Casperson said he welcomes the bipartisan support.
“To get to the point we’ve gotten to today, we have had a vast majority of groups that have come together that don’t traditionally agree on these things,” he said.
“That’s what you need. You need everyone working together in a bipartisan way.”
Lawmakers seek input
Casperson’s proposal comes on the heels of a failed attempt by the GOP-controlled Senate to fund projects the natural resources trust fund board had not recommended.
Attorney General Bill Schuette ruled legislators could only vote to approve or deny the funding, not make specific changes to who received funding and who didn’t.
Shortly after Schuette’s ruling, Sen. David Hildenbrand, R-Lowell, introduced and got passed legislation that would create an “advisory council” to oversee the natural resources trust fund board.
The trust fund board, made up of Gov. Rick Snyder appointees, will be counseled by a representative from the governor’s office, the Treasury Department, the House speaker, the Senate majority leader and a board appointee.
The advisory council will keep legislators “in the loop” when the trust fund board recommends project funding each January.
“I think the biggest disconnect between the Legislature and the trust fund is how much should be spent and how much should be saved,” Hildenbrand said. “Some in the Legislature would argue more of the trust fund should be spent.”