The Conditional Land Transfer Agreement Act, P.A. 425, 1984 (MCLA 124.21-124.29) is a public policy tool designed to promote community economic development and minimize the use of annexation in Michigan. Academic research to evaluate the impact of P.A. 425 on communities executing such contracts had not been conducted. Therefore, the question of whether the Act had accomplished its intended objectives remained unanswered. Data were collected from 26 units of governments that executed P.A. 425 agreements since 1984. The methods used to gather information in the research were mail surveys and phone interviews. Descriptive statistics were used as the main tool of analysis in this research. The results obtained indicate that infrastructure is a precondition for economic development to occur. However, the analysis of the data also indicates that once infrastructure is built, economic development does not necessarily follow.