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Report: Saugatuck Dunes Sale Could Trigger Land Rush

Public meeting to spotlight findings, local development trends

July 25, 2007 | By Keith Schneider
Great Lakes Bulletin News Service

Marge Beaver
  An Oklahoma oilman wants to develop a 400-acre site where the Kalamazoo River meets Lake Michigan. It contains rare freshwater sand dunes, wetlands, and coastal marshes and forests.

SAUGATUCK—The sale last year of an expanse of globally rare, undeveloped Lake Michigan beach and dunes at the mouth of the Kalamazoo River signals an unmistakable and possibly momentous shift in the Saugatuck and Douglas real estate markets, according to a new report by the Saugatuck Dunes Coastal Alliance and the Michigan Land Use Institute.

If the 400-acre parcel is developed by its new owner, an oil and natural gas industry executive from Oklahoma, it will almost certainly trigger a housing and retail construction boom, said the new report. Such a boom would cause the same kind of dramatic changes in development patterns that occurred in the Petoskey region in the mid-1990s, when the Bay Harbor resort community was built, or in the Traverse City region after 1992, when the Grand Traverse Mall opened.

The new report, Fever of Development, Frontier of Recovery was commissioned by the Saugatuck Dunes Coastal Alliance to help the new non-profit environmental group better understand market and demographic trends along Allegan County’s Lake Michigan shoreline, and develop a strategy to defend the region’s natural resources and small-town quality of life.

The report, and other issues influencing development in the region, will be the focus of a public meeting the Alliance is holding on Thursday evening, July 26, at Oval Beach in Saugatuck, starting at 7 p.m.

Coastal Alliance Gaining Momentum
The Saugatuck Dunes Coastal Alliance, formed earlier this year, is a statewide coalition of individuals and organizations that are seeking to protect the environment and better manage growth in two small coastal towns and several coastal townships in Allegan County. The alliance plans to use effective communications and dissemination, coalition building, and expertise in best practices in planning, economic development, natural resource conservation, and policy making.

Talk of forming the Alliance started last year, when Aubrey McClendon, a prominent Oklahoma City energy company executive and co-owner of the Seattle Supersonics and Seattle Storm basketball teams, completed the purchase of 402 acres of Lake Michigan shoreline in Saugatuck Township. Mr. McClendon paid $39.3 million to purchase the land from the Denison family, which had owned it since 1955.

According to the Alliance’s new report, Mr. McClendon purposely outbid the State of Michigan, the City of Saugatuck, and two land conservancies that were seeking to buy and preserve the property. Interest in protecting the rare sand dune landscape is long-running: As early as 1982, the Michigan Department of Natural Resources had expressed interest in acquiring the land as part of the nearby Saugatuck Dunes State Park.

Even if the purchase had involved no issue other than the price— the most ever spent for a large expanse of undeveloped coastal land in the Lake Michigan basin—it would have attracted strong public interest.

But the land that Mr. McClendon now owns—a magnificent stretch of rare freshwater dunes, wetlands, coastal marsh, and forest along the southern Lake Michigan shore—is indeed an issue in its own right here. The undeveloped area has long occupied the place where the history, culture, environment, and economy of Saugatuck, Douglas, and the surrounding townships converge.

Transformative Investments Open Markets
The Alliance report found there is ample reason to be concerned about Mr. McClendon’s purchase. His attorney, Stephen Neumer, said Mr. McClendon is preparing to make public a development plan for the property in September or October.

Moreover, the impending opening next month of a $400 million casino and hotel in New Buffalo, a beach community of 2,200 residents about an hour south of Saugatuck, has prompted construction of 400 units of new housing in the last two years, valued at $245 million. The New Buffalo housing construction and real estate market is the strongest in Michigan, according to realty statistics. Higher levels of retail and housing construction are expected in New Buffalo in coming years, said Tom Johnson, the city manager.

The Alliance report paid close attention to similar transformative real estate investments in Petoskey and Traverse City. The Bay Harbor development in Petoskey prompted the construction of more than 1,600 new homes in Petoskey and the neighboring townships from 1990 to 2000, more than double the number of homes built in the previous decade.

The Bay Harbor development, currently valued at roughly $600 million, also helped to prompt Wal-Mart, Meijer, and several other large retailers to build big-box stores in Bear Creek Township, just north of the development. In addition, the Little Traverse Bay Band of Odawa Indians is building a 290,000-square-foot casino in Resort Township, south of Petoskey, that includes 1,500 slot machines, an entertainment and multipurpose room, a sports bar, night club, buffet, deli, and sit-down restaurants.

The new casino replaces the nearby and smaller Victories casino. Bay Harbor and the out-of-scale big-box, casino, and subdivision construction that now surrounds it prompted the Emmet County Road Commission and the state to add two new lanes to US 31, the primary north-south corridor.

Bay Harbor, in short, has dramatically changed the rural landscape and small town culture of the Petoskey coastal region. It introduced a massive new scale to development, and with it levels of traffic congestion and highway construction never experienced in the region. The neighborly small-town feel of the Petoskey region eroded, the report found.

Similarly, the Grand Traverse Mall, which opened in 1992, was the start of a construction boom that from 1997 to 2006 added 1.1 million square feet of retail space in Garfield, East Bay, and Blair, the once-rural townships outside of Traverse City. That in turn caused levels of traffic congestion that are still rising, as well as new housing construction, much of it 10 to 30 miles from Traverse City.

The mall and the new construction prompted the Grand Traverse County road commission to propose a 30-mile, $300 million highway bypass designed, the agency said, to ease congestion by cutting an ecologically damaging corridor through the wild Boardman River valley and hundreds of acres of state forest. The highway and bridge were defeated after an eight-year public interest campaign.

A Clear Strategy to Protect Environmental and Lifestyle Values
The Alliance report recommended a multi-faceted strategy to preserve the former Denison property and to galvanize citizens, business leaders, and local government officials to modernize land use policy.

Specifically, the report called for a public interest campaign based on the following principles:

1. Enforcing state law to preserve the Denison property.
In addition to protections for sand dunes, state environmental law also provides restrictions on development that would harm wetlands or the quality of Michigan’s natural resources. Both apply to the Denison property. Citizens have ample opportunity to intervene in the DEQ’s permitting process associated with each of these statutes. In addition, as noted earlier, the state Legislature has the authority to hold hearings on significant public decisions involving Michigan’s environment.

Saugatuck Township also oversees its own sand dune protection ordinance. Last year the township approved a new zoning measure to further protect critical dunes as it begins to align its zoning with the goals and policies of the Tri-Community Plan.

2. Making the case for a regional land use strategy.
The Saugatuck Dunes coastal region has shown itself capable of initiating planning approaches that are the vanguard of wise land use and smart growth, the report found.

Three local governments—Saugatuck, Douglas, and Saugatuck Township—have embraced a cooperative master planning process since 1989. The Tri-Community Comprehensive Plan was updated in 2003 and 2004 and forms the seed from which a regional comprehensive plan will germinate.

The Tri-Community Comprehensive Plan speaks precisely to guiding future development to advance a common vision around environmental goals that "preserve the existing small town/rural character of the area," and "achieve sustainable development, which meets the needs of the present generation without compromising the ability of future generations to meet their needs."

3. Building the capacity for much more focused citizen and civic leadership.
It is possible to conserve all of the Denison property as a natural area. It is also possible to fashion a regional land use plan and effective safeguards that preserve environmental values, farmland, and the region’s cultural heritage, the report found.

The essential ingredient in conserving the Denison property and the region’s other assets is cultivating those shared values among local residents. The report suggested establishing a convening organization, similar to those in other regions, to bring together civic leaders and citizens to talk through their differences and then reach consensus on a sound strategy that combines conservation safeguards with sustainable development incentives in the Saugatuck Dunes coastal region.

Convening organizations fill the space that exists between governments that resist change and advocates that are impatient for improvement, the report said, and offered some examples: Convening organizations helped Grand Rapids redevelop its downtown, led to a regional land use and transportation planning process in Traverse City, and assisted Detroit in redeveloping its downtown in anticipation of the 2006 Super Bowl.

Disagreement and conflict impede progress, said the report. Convening organizations help civic leaders resolve differences that block their ability to see the values and principles they actually do share.

Keith Schneider, a journalist and editor, is the Michigan Land Use Institute’s director of program development and author of "Fever of Development; Frontier of Recovery," which is available for downloading here. Reach him at keith@mlui.org. Read Keith’s blog, Mode Shift, at http://www.modeshift.org/.

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