September/October 2004

Operations Reclamation

Can Mining Land Make
 It Worth More Than Before?

One operation increased the land value of a Michigan  residential development from $3 million to $60 million.

by Anthony M. Bauer

Hidden Lake residential community is unique. It is pedestrian-friendly with its several miles of paved paths, boardwalks, and nature trails meandering through the development. Water quality of a 110-acre lake on the site is protected by a water-management system that filters surface water through portions of the 100 acres of open space. Shoreline amenities include a beach, an amphitheater, a replica of a Michigan lighthouse, a future restaurant in the form of a dredge, and a marina. But there is one particularly unique aspect of this upscale community: It is being built in an active sand and gravel pit.

Although mining will be completed this year, and residential construction is only in the third year of an eight-year build-out plan, the project has already received planning and design awards from a local building association, state planning association, and state landscape architecture association.With all these awards and a seemingly picture-perfect backdrop, this brings up the question: Is it possible for property value to be greater after the reserves are removed than before the mining began? As far as this case history is concerned, the answer is an unequivocal yes!

Contrary to general public opinion, mine operations can and do increase the development potential and, therefore, the value of the land. Unfortunately, based upon the practices of many mining companies, negative attitudes regarding the development potential of their sites also exist within the mining community.

A growing list of successful end-use developments in pits and quarries clearly demonstrates that these old mine sites do have significant value. There is a caveat, however. When no plans have been prepared to guide a mine operation the full development potential and value of the site is seldom realized. Consequently, profitable development opportunities are lost. There are typically three development problems associated with unplanned mining practices. They are as follows:

Mined-out areas are not shaped to accommodate the desired uses. Land areas are often too narrow, too shallow, too unstable, or inaccessible.

Unique features that can be created by mining, such as interesting land forms, water areas, and distinctive rock formations are often rendered un-useable for development. Shorelines are unstable and inaccessible, water areas may be too shallow and rock formations are covered.

Earth-moving costs related to reclamation are significantly increased when the shaping of these lands is not part of a planned mining and land-shaping program. Typically, overburden and topsoil is stockpiled or deposited in a location that has no relation to good land development practices. Even more detrimental, this material is often removed from the site, meaning that additional material will need to be returned to the site in order to achieve the same results. The Hidden Lake site contained many of these limitations. However, the development company felt these limitations could be overcome by undertaking a planned and well-organized approach to their mining and land-shaping activities.

The Hidden Lake vision

Hidden Lake is located in a rapidly developing area about 20 miles northwest of Detroit, Michigan. Sand and gravel mining has existed in this area for more than 60 years. This 400-acre site was one of the last active mines in the region at the time it was purchased by Earl and Steve Lafave, owners of Beck Development. This is their second award-winning mine reclamation and development venture. The first was Blue Heron Pointe, a 100-acre, water-oriented condominium development.

As new owners of this partially mined, torn up, and scarred site, Earl and Steve envisioned a new landscape few people thought possible for such an environment. They proposed to turn the sand and gravel pit into a high-quality water-oriented residential community that included significant open space and site amenities. The Lafave’s also had a clear understanding how they were going to build their vision. It evolved out of their experience in aggregate mining, trucking, earth moving, and land development. Bringing together all these components, the Lafave’s set in motion a process that used the mining operation to achieve three objectives:

First, produce and sell aggregate products. Second, use the mining operation as the earth-shaping operation to reclaim scarred land and water areas. Third, produce aggregate products for the Hidden Lake development.

Their vision was illustrated in a master site plan. This plan provided the footprint for where the aggregate material was to be extracted, where the shoreline was to be expanded, what aggregate reserves were to remain in order to create more valuable housing sites, and how the mining and land-shaping activities were going to be combined. The plan was also the basis for identifying the location of general fill versus constructed fill areas and the alignment of all residential streets. The prime development objectives were to maximize the amount of buildable land, the number of water-oriented building sites, and the length of the shoreline.

Values and costs

When development is complete, Hidden Lake will contain 425 residential units, including attached and detached condominiums as well as single-family and estate units. Lot prices range from $110,000 to $400,000 with the price of residential units ranging from $400,000 to $2million. Waterfront property is selling for $3,000 to $4,000 per lineal feet of shoreline. The 110-acre lake is a major factor in sustaining the unit values. The quality of the landscape, amenities, and residential units that prevail throughout the site is another very important factor. Even though mining continues in a portion of the site and large stockpiles of material can be seen from any point around the lake, buyers view the image and lifestyle projected by this development as significant attractions.

A typical development cost per residential unit for utilities, roads, and land balancing is $30,000 to $35,000. However, unit costs for this project were double the standard costs because of extra earth-moving expenses due to the site conditions left by the previous mining company. “Most of these earth-moving costs can be eliminated or significantly reduced in similar mining operations if mining companies consider end use requirements in planning their earth handling and excavation activities,” Earl Lafave says.

Site difficulties

The partially mined-out site presented numerous physical problems that would have discouraged many developers. The Lafave’s recognized these problems from the beginning and planned their mining, earth-moving, and land-shaping operations to resolve them in the most cost-effective manner. These problems include the following:

Shallow water areas that made portions of the lake hazardous to boating. This was resolved in two ways. First, aggregate material in these areas were excavated and processed. Secondly, non-aggregate material was excavated and used to build up land areas around the lake.

The useable shoreline was very limited because of low land adjacent to the lake and because of the shore length. The solution was to mine areas to create a series of bays and peninsulas. Some of the mined aggregate was processed for sale and some used as fill to create more developable land. In addition, some reserves were left in place. This increased the length of the buildable lakefront property, which is the most valuable property on the site

Topsoil and overburden were removed from the site by the former operator, meaning that topsoil had to be trucked back into the development.

Economic success

Why has the Hidden Lake project been successful thus far? There are operational reasons, physical reasons, design reasons, and social reasons, all of which were integrated into the vision maintained by Earl and Steve Lafave. The following six are some of the most significant:

1. The mining operation was an integral part of the land-shaping program to minimize earth-moving and land-shaping costs and to maximize the creation of valuable land.

2. Aggregate products for the installation of utilities and roads were produced and stockpiled on site, thus significantly reducing construction material costs. This also included sand and boulders for shoreline stabilization.

3. The site is near a major freeway system.

4. The shoreline was modified to create as many shoreline lots as possible.

5. Materials and details of the landscape, buildings, and amenities provided a sense of quality and continuity that identified Hidden Lake as a special place.

6. A sense of community was created during the initial stages with the development of the amenities such as a hard-surfaced path system that connected neighborhoods to the beach, amphitheater, and nature areas.

Building value as reality

Mining aggregates to enhance property values is not a dream. It is a practical and cost-effective approach to increase the total value of many mine sites. Often mining operations are only a few acres, a few feet, or a few cubic yards away from enhancing or depreciating the end use potential of a mine site.

Says Earl Lafave: “From my point of view, while it is important to extract as much aggregate as possible from a site, it is equally important to maximize the potential profit from the property. This may mean that a mining company needs to balance the profit potential of aggregates mined with the profit potential of developable land created by leaving portions of the reserves.   

 Anthony M. Bauer, FASLA, is a principal with Bauer-Ford Reclamation, Lansing, Michigan.

Reprinted from Aggregates Manager Magazine
September/October 2004