A two-year legal challenge by Grand Traverse County commissioners to prevent 159 acres in Acme from being placed into federal trust has been rejected by the U.S. Department of the Interior.

County officials learned Monday that the Interior Board of Indian Appeals (IBIA) rejected their appeal to keep the vacant parcel – owned by the Grand Traverse Band of Ottawa and Chippewa Indians on M-72 near Bates Road and Traverse Bay RV Park – on county tax rolls. Though the property only generates an estimated $20,000 annually in taxes, officials are concerned about future lost tax revenues as well as increased demands on county infrastructure and services should the Band develop the site.

“The taxes are small now because it’s vacant property – that’s not the issue,” says County Planning Director John Sych. “It’s what happens when the property gets developed and needs things like fire and police protection that we have concerns about.”

In the legal appeal, county attorneys argued that the Indian Reorganization Act of 1934 – which allows lands to be placed into federal trust – doesn’t apply to the Band because the Band wasn’t under federal jurisdiction in 1934. The IBIA rejected that argument, citing historical records showing the Band was indeed under jurisdiction.

The IBIA also ruled that the Band wasn’t compelled to submit a business plan for the property, as is required for trust lands acquired for business purposes. IBIA noted the Band has no “plans in the foreseeable future to develop the property,” and determined that a “general interest” in economic development isn’t enough to demand a business plan.

The legal dispute reflects a years-long debate between the Band and Grand Traverse County over property status. The parties have struggled to balance the Band’s right to pursue trust status for its land – qualifying parcels for federal incentives and freeing them from taxing and zoning restrictions – with county officials’ concerns over lost tax revenues and diminished planning control.

“Once (property) goes into trust, there’s no way the community can mitigate the impact of the development,” says Sych. “Zoning and regulations are taken off the books. It’s hard to plan for a community when you don’t have the ability to zone properties.”

But Tribal Attorney Bill Rastetter says the Band works closely with local jurisdictions and offsets lost tax revenues from lands placed into trust with two-percent allocations – contributions that have totaled over $15 million since 1994. The Band has also developed its own infrastructure for developments, Rastetter says – such as water and sewer systems for Turtle Creek Casino & Resort – and has negotiated service agreements with governments for other needs, including law enforcement and zoning administration.

“If the (Acme) property were to become highly developed, the Tribe would certainly want to have some type of arrangement for services,” says Rastetter. “They have made a serious effort to cooperate with local governments and work with them jointly. There’s no reason that couldn’t continue with Grand Traverse County.”

Acme Township Supervisor Jay Zollinger also says “the Tribe has been good partners and neighbors” with the township, one of the primary reasons his board didn’t oppose the Acme property being placed into trust. “We’re aware we have less control and we don’t get the (tax) revenue...but (the Band) has been so good to us in other ways,” Zollinger says.

The topic is one that’s likely to come up in county commission discussions again soon. After commissioners recently reviewed another Band request to place 73 acres on Herkner Road into trust for a housing development, Chairwoman Christine Maxbauer said she planned to set up a meeting with Band and county representatives to discuss a payment-in-lieu-of-taxes (PILOT) for the site. Commissioners will also need to decide whether to accept the IBIA decision for the Acme property, or appeal the ruling in federal court.

“That is not my call – it’s up to the board of commissioners,” says County Prosecuting Attorney Bob Cooney of a possible appeal. “We will probably have a closed session to discuss the (IBIA) opinion.”

Pictured above (in yellow, left): The 159-acre Acme parcel considered for federal trust.