Clam Lake Township v. Dep’t of Licensing and Regulatory Affairs
Teridee v. Haring Charter Township
Docket Nos. 151800 and 153008
Trial Lawyers' Bottom-line: State Boundary Commission cannot rule on validity of Act 425 agreements; municipalities may include zoning provisions in Act 425 agreement.
These consolidated cases involve so-called “425 agreements.” A 425 agreement—which gets its name from the enacting statute, Public Act 425 of 1984—is also called an “intergovernmental conditional transfer of property.” It is an agreement whereby two municipalities agree to conditionally transfer a piece of property from one municipality to the other for the purpose of economic development. The two municipalities then share the tax revenue raised from the land.
These two cases also involve a different form of municipal land transfer: annex by petition. This process entails a person petitioning for the annexation of land by a neighboring county. The petition must be voted on and then submitted to the State Boundary Commission for approval. Under MCL 124.29, an Act 425 agreement precludes a later petition for annexation if the Act 425 agreement is “in effect.”
In the first case, two trusts and a corporation, TeriDee LLC, owned land in Clam Lake Township that was zoned for forest-recreational use. The landowners wanted to develop the land for commercial use instead. To that end, the landowners filed an annexation petition to transfer the land to Cadillac. Around the same time, Clam Lake and Haring Charter Township entered into an Act 425 agreement to transfer the land to Haring.
When the landowners’ annexation petition reached the State Boundary Commission, the Commission’s statutory duty was to determine whether an Act 425 Agreement was “in effect.” The Commission, in carrying out this duty, determined it had the authority to declare the Act 425 Agreement “invalid” (using a number of statutory criteria) as opposed to just determining whether the agreement was “in effect.”
The Supreme Court reversed, holding that the Commission did not have this authority. Instead, the Commission could merely determine whether “the contract is filed in the manner required by [the statute].” The Commission did not have the power to analyze the agreement itself. The Court held that the validity of an Act 425 agreement must be challenged in the circuit court, not before the Commission.
In the second case, the landowners sued Clam Lake Township and Haring Charter Township, seeking a declaratory judgment that their Act 425 agreement was invalid. The landowners argued, among other things, that the agreement “contracted away Haring’s zoning authority by obligating Haring’s zoning board to rezone pursuant to the agreement.” The circuit court bit on this argument and held for the landowners.
The Supreme Court reversed on this issue as well. The statute itself, MCL 124.26(c), authorizes municipalities to bargain “over the adoption of ordinances.” From this, the Court reasoned that a zoning regulation is such an “ordinance.” Municipalities may therefore specify the content and substance of zoning ordinances in their Act 425 agreement.
Justice Viviano drafted the unanimous opinion.
Full opinion here.