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News from the Keweenaw Peninsula October 2, 2001 Text © 2001 Michele Anderson

Legislature approves Trust Fund projects, including potential Keweenaw Tip sale

LANSING -- Governor John Engler lauded the Michigan House and Senate on Monday, Oct. 1, for swift passage of Senate Bill 291, which included appropriations totaling more than $37 million in Michigan Natural Resources Trust Fund (MNRTF) projects statewide. The Governor signed the bill last Friday, Sept. 28.

Included in the recommendations for 10 land acquisition projects is the potential Department of Natural Resources (DNR) Keweenaw Tip purchase of nearly 6,000 acres, including about six miles of Lake Superior shoreline. On Sept. 12, 2001, the Trust Fund Board recommended $5 million for the Keweenaw Tip project -- nearly 40 percent of the anticipated costs to the state to acquire the acreage and ensure availability for public recreation and use. The Trust Fund Board also committed to recommending the remaining $7.5 million in 2002 to complete the purchase.

This view of Keweenaw Point taken from Bare (or Bear) Bluff shows some of the Lake Superior shoreline to be included in the potential Keweenaw Tip land purchase by the State of Michigan. Manitou Island is visible at upper left. (Photo courtesy Jeff Buckett of Minnesota, former Keweenaw resident)

Meanwhile The Nature Conservancy (TNC), as broker in the sale, is negotiating with landowner International Paper/Lake Superior Land Co. (/IP/LSLC) to arrive at a final price based on appraisals.

"Certainly good news," said Jeff Knoop, TNC director of land protection for the Upper Peninsula, concerning the legislature's approval of the appropriations.

TNC has agreed to pay for the purchase and hold it for the state until the funds are available. While it helps to know the legislature has officially approved the funds, the biggest hurdle appears to be the task of arriving at a purchase agreement with the landowner, according to Knoop.

Walt Arnold, IP/LSLC director of marketing and sales, said the legislative approval should help TNC's position, since they now know the money is available from the state.

"We still do not have a contract with The Nature Conservancy to make this happen, but we're working hard on that," Arnold said on Oct. 1. "Negotiations are hot and heavy here."

One obstacle mentioned by DNR officials last month was the question of whether the company would retain mineral rights to the property or sell them to the state as part of the purchase.

Said Arnold, "We in the (IP) Forest Resources Division cannot convey those (mineral rights). (The state) will have to work with the Minerals Division of the company after closure on the surface sale."

Arnold noted both TNC and IP/LSLC were in agreement that mineral rights could be negotiated separately but that possibly the DNR had not agreed.

Knoop said the DNR hasn't officially stated a position on the mineral rights.

"I don't think it's going to be a deal killer," Knoop said, "but basically the DNR is going to have to negotiate with the IP Minerals Division after the purchase happens."

Adrian Jentoft, property specialist for the DNR Office of Property Management in Marquette, one of a DNR team reviewing the appraisals, had said in September that the state would like to purchase the mineral rights with the land. Because of illness, Jentoft could not be reached for comment on Oct. 2.

Arnold pointed out that mineral rights were not included in the recent Trust Fund grant to Eagle Harbor Township for acquisition of 169 acres for recreation, public access and preservation of natural features.

Arnold said IP/LSLC has seen "no evidence in writing that they (the state) have to have the mineral rights." He noted IP's Minerals Division can't negotiate this issue until after the surface is sold.

"They just don't have the time and resources to devote to it right this minute," Arnold said. "We're hoping the state will agree to the surface sale without mineral rights."

Split rights, another issue in the potential purchase, are still being negotiated with TNC, Arnold added. The DNR position is that split rights under the Michigan Land Division Act affect the fair market value of the land, even if the state has no intention to split the acreage.

Said Knoop, "The state (DNR) has the final call on these issues, including the final purchase amount, and that's still under review."

Other than giving staff time to negotiations and working hard to obtain the Trust Fund money, TNC will contribute about $800,000 of their own funds in interest for the project, Knoop explained.

"We have to fundraise for it," he added.

TNC is also negotiating with IP/LSLC to add an additional 250 acres on Keystone Bay to the Keweenaw Tip purchase deal. This area was not included in the present acreage approved by the Trust Fund Board.

"If we can negotiate a price that also includes Keystone Bay east, we will try to get it for the state in the final purchase," Knoop said. "We're hopeful that we can work something out so it will be included in the final package."

The land acquisition and outdoor recreation development projects are funded with proceeds from state-owned mineral resources. The Governor submitted the recommendations, made at the Sept. 12 MNRTF Board meeting, to the legislature for appropriation of funds immediately following the Board meeting. In reviewing the recommendations, the Governor noted the critical role of revenues from State-owned oil and gas resources in both state and local natural resources and recreation efforts.

"Through the Natural Resources Trust Fund, Michigan's oil and gas resources are transformed into a financial tool that allows us to purchase and protect valuable land resources for current and future generations of Michigan residents to enjoy," Engler said. "The variety of projects supported with our oil and gas resources ranges from protection of natural and wild areas in the northern most tip of the Upper Peninsula to the creation and enhancement of new parks and public recreation facilities in the highly populated southern tier of the state. The value of this fund to future generations is immeasurable."

Record high oil and gas revenues during Fiscal Year 2001 allowed the MNRTF Board to recommend more than $37 million for 41 state and local natural resources projects.

The Michigan Natural Resources Commission recently approved a resumption and expansion of slant drilling (directional drilling from the shore) for oil and gas under the Great Lakes. While not affecting Lake Superior at the present time, slant drilling under Lake Huron, Lake Michigan and Lake St. Clair is opposed by U.S. Rep. Bart Stupak (D-Menominee), Lt. Governor Dick Posthumus, a number of state legislators and all the Democratic candidates for Governor, including Michigan Attorney General Jennifer Granholm.

The MNRTF accepts applications from local governments and the Department of Natural Resources annually. The program is administered by the DNR on behalf of the MNRTF Board of Trustees. The next application cycle will begin in April 2002.

A detailed list of Board recommendations and approved projects is available on the DNR Web site. To learn more about the negotiators in this project see the Web sites of The Nature Conservancy and International Paper.

For previous stories on the Trust Fund Board's recommendation of the Keweenaw Tip purchase, see Pasty.com's Keweenaw Issues Land Use Forum.