Planning & Community Development

The Evolution of an Urban Growth Policy

The Midland Urban Growth Area (MUGA) is a two-mile territorial band that was defined unilaterally beyond the city limits as they existed when MUGA was created in 1969.  Within that band the City of Midland's policy of "no annexation, no water" would be continued in order to promote orderly urban growth.  Outside of the MUGA, the City permitted water sales. 

Read below to find out how this urban growth policy came to be.

A Step Back in MUGA's History

Midland and its surrounding area have been both blessed and victimized by brackish groundwater. Midland has been blessed because an underground sea of brine has contributed greatly to the success of The Dow Chemical Company. It has been victimized because of the lack of a local source of good drinking water. This led to the City entering into a partnership with the City of Saginaw in 1946 to acquire raw water from Lake Huron. This partnership created the Saginaw-Midland Municipal Water Supply Corporation that supplies both cities with raw water that is piped approximately seventy miles from its intake at Whitestone Point to each city’s water treatment plant.

This joint undertaking resulted in Midland’s initial urban growth policy. The policy stipulated that the City would not provide water or other municipal services outside its corporate boundaries. This created an inducement for property owners to annex to the city in order to acquire City water.

Prior to 1969 this City policy of NO ANNEXATION, NO WATER was very successful from our perspective. However, in that year certain out county areas, notably around Sanford Lake, the Village of Sanford and the Averill area were experiencing substantial water quality problems. The City of Midland had the only good source of water supply within a reasonable distance, but the NO ANNEXATION, NO WATER policy prevented consideration of a City water alternative to address the situation.

At that time the City Council was torn between their desire to be helpful in addressing the out county problem, and its concern that outside City water sales would negatively impact Midland’s land use pattern in the same manner as other central cities that provided suburban water service.

The City Council and City staff sought a solution to this dilemma that would address the concerns of the neighboring municipalities while at the same time securing an orderly growth pattern for the city itself. Ultimately, they resolved this dilemma by adopting the Midland Urban Growth Area (MUGA) Policy. Under this policy, a two-mile territorial band was defined unilaterally beyond the existing city limits. Within that band, the City’s policy of NO ANNEXATION, NO WATER would be continued to promote orderly urban growth. Outside of that boundary, the City permitted water sales. The MUGA line itself was described in the County Water District Agreement between the City of Midland and Midland County. This policy addressed concerns of those municipalities that received city water but was very unpopular with those with lands in the MUGA boundary.

In creating the two-mile band, the City was not motivated by desire to acquire territory for the city, but was to manage development in the MUGA area. In 1969, Midland had barely begun to utilize the lands that it had acquired in the 1953 annexation, and was, in fact, prioritizing its resources to provide roads and utility infrastructure in the annexed area. Midland did not, in fact, catch up with the needs in the newly annexed area for roads until 1972 and for water until 1986. From 1969 to approximately 1991, development patterns within the MUGA and without were orderly and maintained the economic vitality of the central city. However, the unilateral nature of the policy continued to cause acrimony with surrounding townships.

In the early 1990s, Midland Mall was being developed within the city limits on the city’s north boundary. Its location near the Eastman Avenue/U.S.-10 interchange lured other commercial development in the area immediately north of the mall in Larkin Township. The other commercial development interest involved the Meijer store that petitioned for annexation to the city. During this annexation process, Larkin Township initiated contact with the City to determine if the City was interested in negotiating a mutually acceptable arrangement involving the area petitioned for annexation.

The negotiations that followed resulted in the first Urban Cooperation Act Agreement between the City of Midland and a surrounding township. This trailblazing concept resulted in three such agreements with Larkin Township, culminating in an agreement on June 24, 1991 in which the following was determined:
 

• The MUGA line in Larkin Township was modified and defined by both municipalities

• Larkin Township agreed to support annexation within the MUGA through the joint resolution process or the State Boundary Commission process

• The City agreed to share revenue generated from the annexed properties

• The City agreed to enter into water negotiations with Larkin Township for an area outside the revised MUGA boundary
  

This pioneer effort by Larkin Township became the model that led to other Urban Cooperation Act Agreements between the City and Midland Township, Lincoln Township and Homer Township. For the first time in Midland’s history, its unilateral annexation policy gave way to the “bilateral move to institute controls to protect the boundary interests” of the city and four of its surrounding townships.

While Midland chose to leverage its water supply for long-term land use control, most other cities, like Saginaw, chose instead to focus on revenue enhancement by offering treated water to customers outside of its corporate boundaries. The various cities, townships and villages in the vicinity of Saginaw became water customers of the Saginaw municipal water system. Following the decision to sell water outside its boundaries, the City of Saginaw saw significant commercial and industrial growth in the areas immediately surrounding the city. At the same time, Saginaw experienced a reduction in its economic base due to the flight of business and residential growth to areas such as Saginaw Township (Fashion Square Mall and commercial development on Bay and Tittabawassee roads), Thomas Township, Freeland, Bridgeport, Buena Vista, etc. Consequently, Saginaw’s decision to acquire short-term revenue gains resulted in long-term revenue losses due to the lack of land use control.

Interestingly, the “Saginaw Experience” is feared equally by the City of Midland and its surrounding townships. As a result of the Urban Cooperation Act Agreement negotiations, both the townships and the City have a new understanding and respect for their respective roles in the larger Midland community. The townships understand that it is important to maintain the economic vitality of the central city by having the City provide for commercial and industrial development along with higher density residential development. On the other hand, the City understands that low density residential development provided by the townships is desired by many community residents and is not possible without City water. Quality low density residential development in the township is important in providing the full range of housing choices to maintain the community’s competitiveness and quality of life which is not possible without City water. It is also not cost-effective for the City to provide such development with the full range of urban services. This mutual understanding is imperative to any bilateral policy of land use control.

Since water has been the driving force behind the land use policy of the City, it comes as no surprise that water is a subject of the various Urban Cooperation Act Agreements. As was mentioned earlier, the last agreement with Larkin Township stipulated that the City would enter into negotiations for providing water to that part of Larkin Township beyond the MUGA line. Although the provision for such negotiations exists in the agreement, the township had not approached the City for water until a parcel of land owned by Cherryview Development located at the intersection of Sturgeon and Monroe roads needed water for development.

The Cherryview Development request for water was unique in that the parcel of land to be developed straddled the MUGA line. Therefore, part of the parcel was inside the MUGA and part was outside the MUGA. This request prompted the City and township to enter into discussions on how to solve this problem. Based upon those discussions, the City and township negotiating committees recommended that the Township Board and the City Council amend the MUGA line to exclude the Cherryview Development property from the MUGA. This was done in an amendment to the Urban Cooperation Act Agreement, which was executed at a joint meeting of the two legislative bodies on October 22, 1996. This action paved the way for further discussions on providing water to the Cherryview Development project since the parcel could now be served by a single water supply.

Representatives from Larkin Township then approached the City with a request to enter into negotiations for a water agreement to serve a wider area. The township representatives met with City staff to discuss such items as land use in Larkin Township, an engineering plan for supplying water to the township, and service and cost options for City water which would be available to the township.

The service and cost options offered by the City included a wholesale option in which the township would purchase water at a wholesale rate as a single customer, and a retail option in which township residents within the township water district would purchase water through the auspices of the township at the city resident rate directly from the City as a retail customer of the City. The following table describes the attributes of each option.

RETAIL SERVICE WHOLESALE SERVICE

Township pays for the construction of its water distribution system

Township customers pay same rate as City customers Township pays a wholesale rate plus surcharge to the city and passes that cost onto its customers

City operates and maintains the township water distribution system Township operates and maintains its own water distribution system

City bills and collects water revenue from the township customers Township bills and collects water revenue from the township customers

Specifically defined water system boundary Township water system

Better management of the water system under a single entity Difficult management of the water system when managed by two separate entities

City provides operations & maintenance and billing through existing staff Township hires its own operations & maintenance and billing staff

Although both options were analyzed and discussed, both parties preferred the retail option. The township determined that its residents could purchase water at a lesser cost as a retail customer of the City as opposed to the increased costs of duplicating staff and equipment to operate its own water department. The City determined that it could add the township customers to its system since it has the appropriate billing software, staff and equipment to manage the township system without additional staff. From a cost perspective, the retail option provides the most efficient and cost-effective manner to deliver water to the Larkin Township customers for both the City and the township.

Another aspect of the retail option has to do with land use control. Both parties agreed that land use planning and implementation is a very important component of a water agreement. Based upon the premise that the City and township should not be competing with each other, but instead should be complementary, it was agreed that the City should provide urban services characteristic of high density development and the township should provide low density (rural) residential services. To protect this premise, the proposed water agreement stipulates a mutually agreed upon development density level within the township’s water district as allowed by Larkin Township’s current zoning map and ordinance. Additionally, the Township’s consulting engineer indicated that the soil conditions in the Township’s water district with respect to the current environmental regulations of the Michigan Department of Environmental Quality (MDEQ) prohibit a higher density of development than what is specified in the number of anticipated water connections in Exhibit B of the proposed water agreement.

As the City’s urban growth policy evolved, a missing aspect has been land use controls outside of the MUGA, which are complementary to the central city. This has been, perhaps, the only weakness of the MUGA policy. Although land use protection exists within the MUGA by not allowing City utility services without annexation, the City has faced potential development competition over the years within the immediate vicinity of its surrounding townships outside the MUGA. The proposed water contract with Larkin Township resolves this weakness in a manner of mutual agreement as opposed to a unilaterally imposed policy. Therefore, the existing MUGA policy and the mutual agreement of development density outside the MUGA in Larkin Township combined with the City’s control of water connections as a retail supplier of water ensure that the interests of the greater community are not compromised by the individual interests of speculators.