the “Lake Next Door” Affects Your Property Values
What Happens When Water-Related Value Goes Down the Drain?
By Dana Nutt
Imagine this scenario: You own a wonderful cabin near a crystal-clear, blue-ribbon trout stream. Just a couple of miles up the road, there is a picturesque lake that is home to an incredible variety of wildlife, including turtles, beavers, loons, frogs, and osprey. Your riverside cabin is the stuff that sportsmen’s and outdoorsmen’s dreams are made of, and when you are not using it personally, you rent it out to others who love the outdoors as much as you do.
This cabin means so much to you because of the wonderful family memories you have made there and because of its value. You know that when you are ready to retire, the equity in that property is going to play a big role in your financial security.
Then, you find out something terrible. You learn that the state government’s Department of Natural Resources (DNR) has decided to remove a dam that sits upstream from your cabin. The agency says its sorry, but that the dam is going to need some repairs and the state believes it will be less expensive to simply “drain down” the beautiful reservoir that has stood near your home for more than 80 years than to make the repairs.
This process, by the way, will fill your own riverfront property with sediment, could completely eliminate the fantastic fishing, will certainly result in the departure and death of much of the wildlife (including federally protected nesting loons), and will reduce the appeal of your cabin to short-term renters to nearly zero, which means its value to your financial freedom is heading out the window. For that matter, this catastrophe is going to break your own heart and eliminate your cabin’s appeal for you, as well.
Sound like a nightmare? It is. Worse, it is a nightmare that hundreds of property owners face right now in northern Michigan, where the state is laying out a process for draining down a longstanding, manmade reservoir called Cornwall Flooding and removing the dam that created the reservoir back in the 1960s. This process will not only eliminate the reservoir; it will permanently alter the face of the area downstream as well.
What’s Wrong with the Dam?
The DNR says the dam has to go due to a recent assessment indicating its condition needs work and a failure could cause “serious damage to inhabited homes or infrastructure downstream … where danger to individuals exists with the potential for loss of life.” The fastest solution, and one that is currently under discussion, would be to lower the level of Cornwall Flooding so that the dam would be under less pressure, then reevaluate the total removal of the dam. However, repairs will be far more expensive than removal, and the state has a limited budget.
Casey Nutt, a local business owner who lives in nearby Afton, Michigan, and grew up spending all four seasons outdoors in the Cornwall Flooding area, says he and many others believe there is a way to draw down the reservoir and get the repairs made instead of removing the dam entirely. Nutt emphasized, “There are ways to do those repairs while the lake and the wildlife are unchanged and unaffected. No one wants a dam failure. We just want to preserve this incredible spot on earth.”
Nutt said he believes the DNR and the many people who love Cornwall Flooding and the forest around it can work together to find a solution that does not have to mean the end of the treasured outdoor area.
“This area is very pristine, and there are huge numbers of people who use and love this area,” he said. “We are hoping to see if there is some way to bring the cost of repairs down or locate additional money.”
Curtis Goldsborough, another local businessowner, avid outdoorsman, and organizer for the Save Cornwall group, said that three state politicians, in particular, have taken up the cause of dam repair in recent months. Because of the rising costs of construction since the original project was bid in 2020, it appears likely that the cost of repairs could climb as high as $1.5 million.
Goldsborough explained there are multiple possible routes to raising that money, noting that the state already has about $300,000 in a fund allocated to the dam. Funds could come from a 2024 DNR budget line item. State representative Ken Borton (R) has submitted a 2024 budget line item that would cover the estimated $1.5 million needed to cover the cost of dam repair. “We have to remember that the budget still has to be debated, trimmed, and approved, but we just want to thank the representative for listening,” Goldsborough said.
State representative Cam Cavitt (R) and state senator John Damoose (R) are taking a different route, submitting the project for consideration for the 2023 supplemental appropriations bill. This type of bill is used when Michigan has a budget surplus; this year there is a surplus of about $9.2 billion. “We are so grateful to both of these representatives for listening to our collective voice and taking action,” Goldsborough added.
Water Policy Affects Everyone
At first glance, property owners might think dam removal only affects people living on the water. However, water policy plays a crucial role in home values for all proximal properties, and since the advent of COVID-19, “proximal” has taken on a new meaning. Some studies indicate that houses as far away as four hours from outdoor recreation locations like beaches and lakes gained equity because they represented a drivable option for locked-down individuals. While some of that value may have fallen off as pandemic restrictions diminished, studies dating back as far as the 1980s and published as recently as last year indicate that some proximity to water easily adds between 5% and 30%.
Whether you invest in northern Michigan, where many homes are within a few hours’ drive of the Great Lakes, or in any other state with riparian attractions, you must know not only how those aquatic elements will affect your property values, but what you stand to lose if they are suddenly taken away.
