City seeks NRTF grant
ALPENA – The Department of Natural Resources Natural Resources Trust Fund has paid for lots of recreational lands and development around Northeast Michigan, and may provide funds to build a new trailhead in Alpena.
The city has applied for a $350,000 grant, including a $105,000 local match, with backing from the Besser Foundation, Northeast Michigan Community Foundation, Alpena Lions Club and others, City Manager Greg Sundin said. It’s the second time the city has applied for the grant, with the first try falling short in 2012.
If the city is successful, the money would build a pavilion, restrooms and parking near the North East State Trail’s Woodward Avenue crossing, as Sundin described the project in the past.
“I’m cautiously optimistic that this time around we’ll make it,” he said.
In Sundin’s 15 years with Alpena, the city has received several NRTF grants, he said. Two were used to build a walkway on the city marina breakwall, one paid for Starlite Beach’s pavilion and restrooms, and parts of the Alpena bi-path were developed with trust fund money. Overall, the city has received $2,479,266, including local matches, for nine trust fund grants dating back to 1982, according to DNR documents.
Grant coordinators score these applications based on a number of criteria, including what kind of recreational value the development or acquisition would provide, according to DNR information. Christie Bayus is one of four grant coordinators in the state, and she’s responsible for visiting the site for every application from their geographic area, she said. She works with local units to improve their plans to get better application scores.
“If there are ways that we can help a local unit improve their score, we’ll make changes in the proposed development of the application,” she said.
Bayus and other coordinators then give a ranked list of the applications to the NRTF Board of Trustees, she said. The board decides which projects get the funding and pass their decision along to the state, as they will on Dec. 4. The grants must be approved by the state legislature and governor before they’re awarded.
Michigan’s constitution stipulates that each year, 75 percent of trust fund grants must go to land acquisition, with the remainder for developing existing recreational lands, Bayus said.
“Originally, (the fund) was just for acquisition, then it was amended to allow development,” she said.
The origins of the trust fund trace back to a dispute in the 1970s over developing oil and gas wells in Pigeon River Country, a large area of state forest northwest of Atlanta. Dave Smethurst is the last original Pigeon River Country Citizens Advisory Council member, and was on the ground floor of the debate on behalf of a number of conservation groups.
Conservation groups successfully sued under the Michigan Environmental Protection Act to block oil and gas development in Pigeon River Country, Smethurst said. They were concerned the lax regulations of the time wouldn’t protect the area, and biologists feared development activities would affect the area’s elk herd.
However, the nation was in the midst of an oil embargo, Smethurst said, so state lawmakers wanted to give oil companies even greater leeway. Gov. William Milliken told the conservation groups he would veto efforts to do so, but the groups needed to reach a compromise with the oil companies.
Tom Washington, then Michigan United Conservation Clubs president, had suggested creating a trust fund with the mineral revenues at one of many negotiations meetings, Smethurst said. The idea stuck, and the state, conservation groups and oil companies reached an agreement: some of the Pigeon River Country would be open to oil drilling, with the royalties going to the fund.
“The whole notion was, ‘let’s buy land with (gas and oil royalties) so that generations of Michiganians forever will have a benefit from this oil and gas resource that took millions of years to develop,'” Smethurst said.
This concept has been credited to Don Inman, DNR deputy director at the time, as well as former State Sen. Kerry Kammer and his legislative aide, Bob Garner, in a Ken Winter column for Dome Magazine. Winter cites Kammer’s recollection of a conversation he and Garner had with Washington, where the three laid out the basis of what Kammer would go on to sponsor in bill form.
The fund gained constitutional protection in 1984 through a ballot initiative, and was changed a handful of times after that, according to information from the DNR.
Oil and gas royalties from state lands no longer go to the NRTF, as it hit its statutory cap in 2011, Joe Frick, assistant chief of DNR Finance and Operations Division, said. This money now goes to the State Park Endowment Fund, which has its own cap of $800 million. Instead of paying grants out of the NRTF’s $500 million, the money comes from interest and investment income it generates. The state treasurer is responsible for investing the money in stocks and bonds, and the yield each year can be considerably different.
“It’s like after you retire, how much do you spend every year, the one exception being, we’re not actually able to spend any of the $500 million,” he said. “So if we had a year where we would have losses, we would not have anything to spend unless we had some saved.”
Not all of this money goes to grants, Frick said. Any payments in lieu of taxes owed for land bought with NRTF grants must, by law, be paid from the trust fund. Interest and investment income also covers administrative costs, continue to grow the fund’s corpus and to curb inflation’s impacts on the trust fund’s purchasing power.
Overall, Bayus said she believes the trust fund has a major impact on the state, especially for its residents and tourism industry.
“If the Michigan Natural Resources Trust Fund didn’t exist, I don’t feel that we would have the quality of life that we do in Michigan, not only for its residents but as well as for its visitors,” she said.