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Is state ownership of a hotel/conference center a proper function of state government? The services governments provide, and the assets they own, have expanded to such a degree in the last century that many people are shocked to find out exactly what government has gotten itself into. The Ralph A. MacMullan Conference Center is a case in point. Michigan legislators should remove the state from this largely unnecessary government operation by selling it to a private citizen or organization.
Located in Roscommon, the MacMullan Conference Center is a hotel/conference center whose clientele is effectively limited by state statute, to be run as a semi-exclusive facility. Even though it is backed by all taxpayers, only those who are favored by state law can actually use it. These include: environmental and conservation education groups; government agencies; education institutions; nonprofit corporations and associations; handicapper groups; and organizations hosting an event that has a natural resources or environmental agenda. (Ironically, it was private sector companies that lobbied for these restrictions to limit the state's ability to take away their business.)
Located on 30 wooded acres along beautiful Higgins Lake, MacMullan plays host to nearly 15,000 guests annually. The facility charges $64 to $75 per person per night depending on which lodge guests stay in. The rates include three meals daily and use of meeting rooms and audio-visual equipment. There are six lodges for overnight accommodations and nine classrooms on the site. The lodges can sleep up to 135 people each night. The lodge also maintains 660 feet of beachfront access for swimming and fishing, as well as such amenities as volleyball, horseshoes, shuffleboard and basketball.
The only good news about MacMullan is that it usually raises enough money to cover its own direct costs, which helps avoid direct subsidies from state taxpayers. The bad news is that, according to MacMullan manager Jim Scott, roughly 60 percent of those paying to stay at the hotel/conference center are from other government institutions, excluding public schools and universities. In other words, taxpayer-funded state agencies are footing the bill for most of MacMullan's upkeep - so it might as well be state subsidized.
Wouldn't it be more efficient simply to hold meetings between state officials in a state-owned office in Lansing? If officials want to explore an idea or consider the advantages of new legislation, do they really need to do so at a state-owned, lakefront conference center?
State involvement with this operation is wrong on several levels. First, it falls under no legitimate function of limited government. It is essential neither for purposes of public safety (such as police) enforcing the law through court actions, nor any other government function.
Second, if the citizens of Michigan pay state taxes and are thereby required to indirectly contribute to MacMullan's operations, they should have access to the facility.
Lastly, because MacMullan is a government entity, it has no real "bottom line." Unlike other conference facilities it won't "go out of business" if it fails to satisfy its customers. It therefore competes unfairly with other businesses, which must operate efficiently to survive. According to American Business Directories, there are 36 private, for-profit businesses in Michigan that describe themselves as "conference centers" and provide some or all of the services provided by MacMullan. Countless other hotel/conference center combinations operate in Michigan, as well. When the state indirectly subsidizes its own conference center it taxes businesses from whom it is also taking customers.
What might MacMullan sell for if it were sold openly on the market? It is impossible to say precisely, but a comparative analysis can give us a general idea. Coldwell Banker currently has a pending sale of a 7.4 acre unimproved parcel on Higgins Lake with 460 feet of frontage for $2.3 million. Imagine what four times the acreage and almost one-third more lake frontage would go for if MacMullan were sold? It is conceivable that the state could reap a one-time, $10 million payday.
And the taxpayers of Michigan could stop indirectly subsidizing a facility many of them are excluded from using. The state should wash its hands of this business by selling the Ralph A. MacMullan Conference Center to the highest bidder.
Eric Neuman is a mathematics and mathematical economics major at Brown University in Rhode Island and a summer research intern with the Mackinac Center for Public Policy. Michael LaFaive is an economist and a senior managing editor of Michigan Privatization Report.
