Commentary
State Fairgrounds to be Sold
Delay cost state millions
Michigan State Fairgrounds Coliseum
Published reports indicate that the state fairgrounds — once home to an iconic Michigan State Fair — may finally be sold to an investment team that includes former NBA star and Michigan native Magic Johnson.
The state, however, should have sold it to the highest bidder immediately when it had a chance.
In 1996, the Mackinac Center for Public Policy began recommending that the state should get out of the state fair business in its entirety. We argued in our first state budget study that fairs were nice, but "not a proper function of government in a civil society."
In March 2003, we reiterated our call for an end to state fairs and specifically to the sale of the property. We ball parked an estimated sales price at the time of $57 million based on the two-time sale of 36-acre piece of property adjacent to the fairgrounds. The second sale came in at $10.5 million and we extrapolated the per-acre value to the fairgrounds, which is 5.5 times larger.
Since that time, the state has taken the Mackinac Center's advice and gotten out of the fair business, though both fairs effectively continue today in different formats. The state fair (now the Great Lakes State Fair) is now operated out of Novi. The Upper Peninsula state fair is still located in Escanaba, but has done so without state support.
Published reports indicate that the property will be transferred at a cost of $4.65 million — just a fraction of what we estimated a decade ago. That, however, is not the end of the story.
Detroit Free Press reporter John Gallagher points out in his article that the actual price could be as low as zero or more than $9 million, depending on the success of the project. In other words, the state (represented by its Land Bank) is still keeping something of a grip on the property and could earn additional revenue not on its own merits but on the backs of private investors. The state also has the option to take the property back if the project falters.
Even at today's land prices, the state should have just shed the property by selling it to the highest bidder, be they a farmer, philanthropist or builder.
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State Fairgrounds to be Sold
Delay cost state millions
Published reports indicate that the state fairgrounds — once home to an iconic Michigan State Fair — may finally be sold to an investment team that includes former NBA star and Michigan native Magic Johnson.
The state, however, should have sold it to the highest bidder immediately when it had a chance.
In 1996, the Mackinac Center for Public Policy began recommending that the state should get out of the state fair business in its entirety. We argued in our first state budget study that fairs were nice, but "not a proper function of government in a civil society."
In March 2003, we reiterated our call for an end to state fairs and specifically to the sale of the property. We ball parked an estimated sales price at the time of $57 million based on the two-time sale of 36-acre piece of property adjacent to the fairgrounds. The second sale came in at $10.5 million and we extrapolated the per-acre value to the fairgrounds, which is 5.5 times larger.
Since that time, the state has taken the Mackinac Center's advice and gotten out of the fair business, though both fairs effectively continue today in different formats. The state fair (now the Great Lakes State Fair) is now operated out of Novi. The Upper Peninsula state fair is still located in Escanaba, but has done so without state support.
Published reports indicate that the property will be transferred at a cost of $4.65 million — just a fraction of what we estimated a decade ago. That, however, is not the end of the story.
Detroit Free Press reporter John Gallagher points out in his article that the actual price could be as low as zero or more than $9 million, depending on the success of the project. In other words, the state (represented by its Land Bank) is still keeping something of a grip on the property and could earn additional revenue not on its own merits but on the backs of private investors. The state also has the option to take the property back if the project falters.
Even at today's land prices, the state should have just shed the property by selling it to the highest bidder, be they a farmer, philanthropist or builder.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.