September 18, 1991

CERTIFIED MAIL

Mr. John G. Bacon
Attorney at Law
44 First St., P.O. Box 2301
Mt. Clemens, MI 48043

Mr. John Arnsman
Department of Natural Resources
Land & Water Management Division
P. 0. Box 30028
Lansing, MI 48909
 

RE: Great Lakes Submerged Lands Act 247
Appeal of Huron Pointe Yacht Club
Proposed Marina Lease
File No. 83-14-509G

Dear Parties:

Please be advised that in the above referenced case no pleadings or exceptions to the Proposal For Decision were received by the Natural Resources Commission.

In the absence of such additional pleadings and exceptions, the Proposal for Decision as submitted by the Administrative Law Judge (enclosed) becomes the final decision of the Commission without further review or action.

Should you have any questions, please do not hesitate to contact this office.

Sincerely,

Dennis A. Conway
Commission Liaison
517-373-2352

DAC:ks
Enclosure
cc: Mr. Dennis Hall, DNR

This matter is an appeal concerning the administration of the Great Lakes Submerged Lands Act. Huron Pointe Yacht Club (HPYC) has a boat docking area on Lake St. Clair bottomlands at Mount Clemens, Michigan. The Petitioner previously received a permit to construct a bulkhead and boat slips at the above location. It then made application to the Department to lease the bottomland area. The application was granted and lease conditions were established. The Petitioner contests the amount of annual lease payments the Department determined to be payable.

The hearing was conducted pursuant to the Great Lakes Submerged Lands Act (the Act), 1955 PA 247, MCL 322.701 et seq; MSA 13.700(l) et seq, and the promulgated rules.

The professional staff of the Michigan Department of Natural Resources (MDNR) is charged with the day-to-day implementation of the Act. Huron Pointe Yacht Club requested the hearing pursuant to the Act and it was represented in this matter by Attorney John G. Bacon. The Departnent was represented by John Arnsman of the Submerged Lands Unit, MDNR.

The Parties do not question the activity is a regulated Great Lakes bottomland occupancy. It is stipulated the Petitioner is the proper person to apply for the lease. HPYC, is a private not-for-profit corporation and owner of a parcel of land on the shores of Lake St. Clair. It is located at Town 2 North, Range 14 East, Harrison Township, Macomb County, Michigan. HPYC currently operates a private yacht club on Lake St. Clair, immediately south of the mouth of the Clinton River. Access to the Club is from South River Road. Upland development includes a gravel parking lot enclosed by a chain link fence and lockable gate. There is also a clubhouse with restrooms. The portion of the harbor adjoining the upland is reinforced by a sheet steel bulkhead. The harbor itself is enclosed by a L-shaped, filled bin breakwater. The finger perpendicular to the shoreline measures approximately 110' x 10' while the finger parallel to the shoreline is 190' x 10'. The breakwater and harbor area occupy 0.68 acres of State owned Lake St. Clair bottomland. [Exhibits 1 and 2, aerial photographs of the facility].

The boat slips are divided by six 15' docks off the upland and seven 181 docks off the breakwater, for a total of 27 slips. Because the club members back their boats into the slips, boats up to 301 can be accommodated by the docks. Water and electricity are available to the slips along the upland only.

The yacht club does not provide any other boat related services such as; haul-out, repairs, holding tank pump-out or fuel. At the time of the hearing eleven slips were available for lease to the public. The remaining slips are available exclusively to the Club's 144 members. The members use the slips for mooring when the Club has meetings or other events.

Based upon this information, the Department proposed and the State Administrative Board approved a lease with annual payments in the amount of $1,720.00, stated along with other conditions.

The Petitioner's objection to the annual lease amount is that the Department based the fee upon the assumption HPYC was operating a "marina." The Petitioner asserts it is not operating a marina and, therefore, the lease amount is not properly calculated. The issues of this appeal are: 1) whether the HPYC facility is a "marina" for purposes of the Great Lakes Submerged Lands Act, and 2) whether the annual lease amount set by the Department is just and equitable.

During the hearing there was considerable testimony and other evidence presented regarding whether HPYC was operating a marina. HPYC argues it is not a marina and supports this position by asserting it is a private, non-profit Michigan corporation. It maintains no gas docks or other facilities for use by the general public. It provided a Michigan Department of Public Health "Marina Inspection Report" dated July 8, 1988, indicating the facility is not a marina for the Public Health Department's purposes. [Exhibit 12].

The Department maintains the Petitioner is using the bottomlands for marina purposes by virtue of its use and occupancy of the submerged bottomland of Lake St. Clair. Exhibit 7 is the Petitioner's "Application for Conveyance" on which the purpose for conveyance is indicated to be "Marina." See, item 9. Exhibit 6 is a copy of the required Public Notice For Conveyance, dated March 26, 1984, providing that the purpose is for a "marina lease" of State owned bottomlands. Both Parties stipulated to the introduction of Exhibits 8, 9, 10 and 11 which are dictionary pages containing definitions of the terms harbor, harborage and marina.

One major use of Great Lakes bottomland is by marinas. Although the Act does not define "marina;" it does define "marina purposes" as:

The term 'marina purposes' as used in this act shall be construed as an operation making use of Great Lakes submerged .bottomlands or filled bottomlands for the purpose of service to boat owners or operators which may restrict or prevent the free public use of the affected bottomlands or filled in lands. MCL 322.705(d).

The second issue of this appeal is whether the annual fee set for the Petitioner's lease of unpatented bottomlands is properly calculated or, is otherwise just and equitable.

The Act provides that the Department:
 

[A]fter finding that the public trust in the waters will not be impaired or substantially affected, is hereby authorized to enter into agreements pertaining. . . . to lease or deed unpatented lands . . . . Quit claim deeds, leases or agreements . . . . shall contain suchterms and conditions and requirements which shall be deemed just and equitable and inconformity with the publictrust as determined by the department." [Emphasis added]. MCL 322.703(1).

The Department may enter into a lease agreement only if the public trust is not impaired and the terms and conditions of the lease are just and equitable. This provision allows the Department much discretion in determining terms and conditions of a lease. However, in setting terms and conditions the Act dates:
 

The consideration to be paid to the state for the conveyance or lease of unpatented lands by such applicant shall be not less than the fair, cash market value of the lands determined as of the date of the filing of such application [Emphasis added]. MCL 322.705 (a).

The Department has the authority and discretion to set terms and conditions of a lease that are just and equitable, subject to the provision the consideration is not less than the fair market value. Determining fair market value of Great Lakes bottomlands can be a difficult task because there are few transactions. See, Superior Public Rights, Inc. v DNR, 80 Mich App 72, 88 (1977). Because marinas are a major use of bottomlands and values are difficult to determine, the Department adopted a rule for determining the consideration to be paid for occupancy of bottomlands for marine purposes. In pertinent part, Rule 7 (4) provides:
 

The consideration for leases to unpatented bottomland for marina purposes shall not be less than 5% of the typical gross dockage and mooring rent in the area . . . Typical gross dockage and mooring rent shall be based on the most efficient use of the area involved.

Exhibit 5, "Estimated Annual Moorage Fee Report" delineates the above formula and the factors utilized by the MDNR to arrive at the annual lease amount. The Department based the "typical gross dockage and mooring rerit in the area" on five marinas of similar size and location to the HPYC facility. The Department considered the various features and services available at these marinas, security provided to boat owners and the availability of slips. All of these factors were compared and contrasted with the HPYC facility to reach an estimated annual moorage value in the amount of $34,425.00. Approximately 5% of this amount is the annual lease amount set for HPYC. This amount is reflective of the rental value of the slips. HPYC does not choose to rent many of the slips out. Nonetheless, the occupancy of the facility is the same as that of a commercial marina. The fact the HPYC chooses not to lease all slips does not affect the nature of the bottomland occupancy.

Services not included in the valuation process were; providing fuel, repairs, haul-out, storage and pump-out facilities. The Department determined these services had little impact on the cost factor analysis.
 

These services were deemed not to be of great importance in determining the estimated annual dockage fees for the subject because a boat owner can have their boat serviced at another nearby marina just as easily as if their own marina offered these same services. [Exhibit 5, Estimated Annual Moorage Fee Report, FACTORS OF IMPORTANCE].

Exhibit 3, "Committee Report to the State Administrative Board," provides that the lease amount is based upon Rule 7(4). Because the Petitioner's facility is a marina for purposes of the Act and the annual lease is computed as required by the applicable Rule, I find, as a Matter of Fact, the annual lease amount is just and equitable as required by the Act.

If the Petitioner's argument that the facility is not a marina is accepted, the facility remains a permanent bottomland use or occupancy subject to regulation. This use or occupancy is analogous to a marina, notwithstanding the fact the facility is not a commercial venture and is nonprofit. There is little physical difference between this facility and the marinas compared to it. The Department's use of the marina formula in determining the annual lease amount is appropriate. I find, as a Matter of Fact, the annual lease amount f or the use of Lake St. Clair bottomlands by HPYC is just and equitable as required by the Act. The Department did not abuse its discretion in using Rule 7 (4) to calculate the annual lease amount.

Based on the foregoing, it is proposed the Natural Resources Commission deny Huron Pointe Yacht Club's Petition and continue the lease as originally issued.

Dated: 8/2/91
William C. Fulkerson
Administrative Law Judge

RE: Great Lakes Submerged Lands Act 247 Appeal of Huron Pointe Yacht Club

1. Aerial photograph, view of Huron Pointe Yacht club, dated April 26, 1989.

2. Aerial photograph, view of Huron Pointe Yacht club, dated April 26, 1989.

3. Copy of The Committee Report to The State Administrative Board, dated February 10, 1988.

4. Memorandum to the Natural Resources Commission, dated December 16, 1987.

5. Estimated Annual Moorage Fee Report, dated October 16, 1987.

6. A copy of the Michigan Department of Natural Resources Public Notice, dated March 26, 1984.

7. Application for conveyance.

8. Copied page number 636 from the Webster's New Collegiate Dictionary with the words "harbor" and harborage" highlighted in yellow marker.

9. Copied page number 799 from The American Heritage Dictionary of the English Language with the word "marina" highlighted in yellow.

10. Copied page number 417, from The American Heritage Dictionary Second College Edition with the word "marina" highlighted in yellow.

11. Copied page number 867 from The New World Dictionary Second College Edition with the word "marina" highlighted in yellow.

12. Copy of the Michigan Department of Public Health Marina Inspection Report, dated July 8, 1988.