Jackson County v. City of Jackson
302 Mich. App. 90
| Mich. Ct. App. | 2013Background
- Jackson City adopted Ordinance 2011.02 creating a storm water utility and imposing an annual storm water management charge on all city parcels to fund street sweeping, catch-basin cleaning, leaf pickup/mulching, and other storm system costs.
- Historically the city funded those activities from general and street funds (property taxes, gas taxes, registration fees); declining revenues prompted the shift to a dedicated charge.
- The charge is calculated using Equivalent Hydraulic Area (EHA) based on impervious/pervious area; most single-family parcels (≤2 acres) pay a flat EHA-based rate, larger/commercial parcels are measured individually.
- The ordinance places revenues into a dedicated storm water enterprise fund, limits fund use to storm water system costs, allows limited credits for on-site best-management practices, and authorizes enforcement remedies including liens and discontinuing water service.
- Plaintiffs (property owners and Jackson County) sued under the Headlee Amendment arguing the charge is a disguised tax imposed without voter approval; the Court of Appeals consolidated the cases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the storm water management charge is a tax or a user fee | Charge is a disguised tax because it raises revenue for preexisting services and broadly benefits the public | Charge is a user fee for storm water services and regulatory compliance, deposited in a dedicated enterprise fund | Held to be a tax, not a valid user fee |
| Whether imposition violated Headlee Amendment §31 (voter approval) | Because charge is a tax, it required voter approval under §31 but was not submitted | City argued no Headlee violation because charge is a fee, not a tax | §31 violated; charge invalid for lack of voter approval |
| Whether the charge meets fee characteristics (regulatory purpose, proportionality, voluntariness) | Charge fails fee criteria: minimal regulation, not proportionate, compulsory | City asserted regulatory and user-fee attributes, credits and appeals show regulation and choice | Court found minimal regulatory element, poor proportionality (flat rates, administrative convenience, reserves), and lack of voluntariness—factors support tax characterization |
| Remedy and relief available | Plaintiffs sought declaratory/injunctive relief and refunds | City sought to continue collections or limit relief | Court entered declaratory judgment for plaintiffs, ordered cessation of charge and reimbursement to plaintiffs for amounts paid; costs and reasonable attorney fees allowed |
Key Cases Cited
- Bolt v. City of Lansing, 459 Mich 152; 587 NW2d 264 (1998) (establishes multi-factor test distinguishing user fees from taxes in storm-water context)
- Durant v. Michigan, 456 Mich 175; 566 NW2d 272 (1997) (§31 prohibits new taxes or tax increases without voter approval)
- Adair v. Michigan, 470 Mich 105; 680 NW2d 386 (2004) (plaintiff bears burden to prove unconstitutionality)
- Bolt v. City of Lansing (On Remand), 238 Mich App 37; 604 NW2d 745 (1999) (remedy discussion following Bolt)