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Case Study #5: Corporate Welfare

Problem #5 with the Michigan Drain Code

December 1, 1999 | By Patty Cantrell
Great Lakes Bulletin News Service

  • Corporate Welfare

Reform Recommendations

  • Apportion highest cost to source of greatest land use changes.
  • Require substantiation of "public health, convenience, and welfare" purposes.

What A Deal!
Taxpayer Financing

Lon Ullmann has seen many changes in the 25 years it took the metro Detroit suburb of Troy to rise up around his once-rural home. But in April 1998, Ullmann saw something he believed to be impossible. A 175-acre wetland across from his home still full of wildlife because it is too soggy for development was busy, not with blue herons flying in and out of their rookery nests, but with surveyors mapping the terrain.Ullmann was alarmed because construction on the wetland would threaten this urban oasis. He also knew that the absorbent marsh could no longer provide flood control for his neighborhood if it were covered with pavement instead of cattails. "We've had six inches of rain in eight hours before, and even though other parts of Troy have flooded, we've had no problem here."

Free Ride
Most people wouldn't think of buying up swampland for development. It costs too much to keep dry, and environmental laws are supposed to prevent wholesale wetland destruction anyway. But that did not stop the Troy developer behind the marsh disturbance. He simply asked the City of Troy, and the city then asked the county drain commissioner to provide better drainage to the developer's water-logged properties.

Ullmann was incredulous when he learned that local government was a party to the plan to drain the vital wetland for new, upscale housing. But he was completely shocked when he also learned that he and his neighbors were scheduled to pay more than 80 percent of the nearly $900,000 cost of drying out the marsh by "improving" an old county drain that runs through it.

Development Loophole
This outright giveaway to a private developer is not only legal but quite common across the state under the Michigan Drain Code. This law, which governs drainage in Michigan, dates back to the turn of the last century, when settlers needed drainage ditches to turn marshes into farms. Today, however, it is a convenient loophole for real estate speculation.

Developers can shift their stormwater management costs onto area residents because the Drain Code allows drain commissioners to tax area landowners for the work. The Drain Code also allows developers to bypass the regulatory permitting process because the vast majority of drains in Michigan are exempt from most environmental laws. The only drains subject to wetland and other permits are those established after 1973. But nearly all Michigan drain work occurs on waterways that were designated as drains long before this belated restriction.

Public Pocketbook
Shouldn't Mr. Ullmann and his neighbors have some say in this drainage decision? Any fifth-grade student of democratic government would say "yes." But the Michigan Drain Code is not democratic.

The only thing this frontier-era law allows citizens to contest is whether something —anything — needs to be done, not why it should be done, how much it will cost, or who will pay. The Drain Code assumes that when cities request drain work, they want it for "public health, convenience, and welfare." But the law requires no explanation and no public hearings on exactly how the project will benefit the public.

As a result, Ullmann and his neighbors will have no say in the project. But they will pay in several ways for the developer's drainage. First, to "improve" the drain. Second, to maintain it. And third, through likely flooding damage in the future.

Add Insult to Injury
Ullmann's concern for the wetland has spread well beyond his neighborhood. People around the city and the state are rallying to save the marshy refuge and its large heron rookery, a rare feature in the suburban snarl of southeast Michigan.

But the public is defenseless against tax injustice and environmental damage under the Michigan Drain Code. The only resort is to raise enough money to try to buy the land from the developer. To save their wetland, however, Troy citizens will likely have to pay enough to make sure the developer does not "lose" any of the high profits he stands to gain on the upscale housing he plans to build, in part, with their money.

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