Michigan Association of Home Builders v. City of Troy, 331708

Plaintiffs (trade associations) challenged the City of Troy’s handling of building-permit fees, alleging that sizable monthly fee surpluses generated under the City’s contract with SAFEbuilt and deposited into the City’s general fund violated MCL 125.1522(1) and the Headlee Amendment.
The City retained SAFEbuilt to perform building-department functions and set fees that, according to the dissent, included an intentional 20–25% markup above contractor costs.
From 2012–2014 the City deposited roughly $1,083,917 in surplus building-fee revenues into its general fund (annual surpluses of $269,483; $488,922; and $325,512 respectively).
The trial court granted summary disposition for the City, holding as a matter of law that (1) applying fee surpluses to past general-fund shortfalls did not violate MCL 125.1522(1), and (2) the building-department charges were fees (not taxes) for Headlee purposes.
Judge Jansen dissented: she concluded MCL 125.1522(1) limits fees to amounts reasonably related to the cost of providing building services and that the City’s practice of creating and diverting large surpluses to the general fund to recoup prior subsidization violated the statute; she also raised unresolved Headlee concerns.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether depositing building-fee surpluses into the general fund to cover prior shortfalls violates MCL 125.1522(1)	City may not charge current payers more than reasonable cost to recoup deliberate prior deficits; statute limits fees to costs of the enforcing agency	Fees may be set to cover indirect costs and incidental surpluses can be applied to cover past shortfalls	Court majority: No violation as matter of law (affirming trial court). Dissent: practice violates statute and should be reversed
Whether the City’s building-department charges (including any surplus) are fees or taxes under the Headlee Amendment	Excess surpluses are not regulatory-related and are used for general public benefit — thus may function as a tax	Charges are regulatory fees tied to building-department services, not general taxes	Court majority: Charges are fees, not taxes (no Headlee violation). Dissent: Question remains whether surplus constitutes a tax

McCormick v Carrier, 487 Mich 180 (2010) (statutory interpretation: start with plain meaning of the statute)
Johnson v Recca, 492 Mich 169 (2012) (interpret words in statutory context and give effect to every provision)
State Farm Fire & Cas Co v Old Republic Ins Co, 466 Mich 142 (2002) (avoid interpretations that render statutory language superfluous)
Bolt v City of Lansing, 459 Mich 152 (1999) (distinguishing regulatory fees from taxes for constitutional analysis)