CLAM LAKE TOWNSHIP v DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS
TERIDEE LLC v HARING CHARTER TOWNSHIP
Docket Nos. 151800 and 153008
Michigan Supreme Court
July 3, 2017
Argued December 8, 2016 (Calendar No. 3). Chief Justice: Stephen J. Markman. Justices: Brian K. Zahra, Bridget M. McCormack, David F. Viviano, Richard H. Bernstein, Joan L. Larsen, Kurtis T. Wilder. Reporter of Decisions: Kathryn L. Loomis.
Syllabus
This syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
CLAM LAKE TOWNSHIP v DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS
TERIDEE LLC v HARING CHARTER TOWNSHIP
Docket Nos. 151800 and 153008. Argued December 8, 2016 (Calendar No. 3). Decided July 3, 2017.
In Docket No. 151800, Clam Lake Township and Haring Charter Township (the Townships) appealed in the Wexford Circuit Court the determination of the State Boundary Commission (the Commission) that an agreement entered into under the Intergovernmental Conditional Transfer of Property by Contract Act, 1984 PA 425,
In Docket No. 153008, as the Commission proceedings in Docket No. 151800 were ongoing, TeriDee brought an action in the Wexford Circuit Court against the Townships, seeking a declaratory judgment that the Act 425 agreement was void as against public policy because it contracted away Haring‘s zoning authority by obligating Haring‘s zoning board to rezone pursuant to the agreement. The court, William M. Fagerman, J., struck down the agreement, holding that the agreement required Haring to enact specific zoning ordinances, which was an impermissible delegation of zoning authority. The Townships appealed, and the Court of Appeals affirmed in an unpublished per curiam opinion, issued December 8, 2015 (Docket No. 324022). The Townships sought leave to appeal both cases in the Supreme Court, and the Supreme Court granted the Townships’ applications. Clam Lake Twp v Dep‘t of Licensing & Regulatory Affairs, 499 Mich 896, as amended 499 Mich 949 (2016); TeriDee LLC v Haring Charter Twp, 499 Mich 896, as amended 499 Mich 950 (2016).
In a unanimous opinion by Justice VIVIANO, the Supreme Court held:
Because Casco Twp v State Boundary Comm, 243 Mich App 392 (2000), improperly concluded that
- Under
MCL 24.306(1) , a decision by the Commission will be set aside if substantial rights of the petitioner have been prejudiced because the decision or order is in violation of the Constitution or a statute, in excess of the statutory authority or jurisdiction of the agency, or affected by other substantial and material error of law.MCL 123.1011a grants the Commission jurisdiction over petitions or resolutions for annexation as provided inMCL 117.9 , andMCL 117.9 tasks the Commission with determining the validity of the petition or resolution and endows it with the powers and duties it normally has when reviewing incorporation petitions. While these statutes furnish broad powers concerning annexations, none mentions Act 425 agreements or purports to grant the Commission authority over them. - Act 425 provides that two or more local units may conditionally transfer property for a renewable period of not more than 50 years for the purpose of an economic development project.
MCL 124.29 , the only provision in Act 425 that implicates the Commission, provides that while a contract under this act is in effect, another method of annexation or transfer shall not take place for any portion of an area transferred under the contract. Therefore, all that is required to preempt an annexation petition is for the Act 425 agreement to be “in effect.” Because an Act 425 agreement conditionally transfers property, it is “in effect,” or operative, when the property has been conditionally transferred.MCL 124.30 provides that a conditional transfer of property occurs when the parties enter into the contract and file the appropriate documents with the county clerk and Secretary of State. At that point, the agreement is “in effect” and preempts any other method of annexation. Act 425 does not condition preemption on a finding that the contract is otherwise valid, and it does not expressly grant to the Commission the power to determine the agreement‘s validity; instead, the Commission may only make an initial determination of whether the Act 425 agreement is in effect, i.e., whether the contract was entered into by the parties and filed in accordance withMCL 124.30 . Casco Twp, 243 Mich App 392, which improperly concluded thatMCL 124.29 authorized the Commission to examine the validity of an Act 425 agreement, was overruled. In this case, there was no dispute that the parties had entered into the Act 425 agreement and that it was properly filed at the time the Commission considered the annexation petition. Accordingly, the Townships’ agreement was “in effect” and preempted TeriDee‘s annexation petition. - A zoning ordinance is an “ordinance” under
MCL 124.26(c) .MCL 124.26(c) provides, in relevant part, that a contract under Act 425 may provide for the adoption of ordinances and their enforcement by or with the assistance of the participating local units.MCL 124.26(c) authorizes local units to bargain over the adoption of ordinances, which includes bargaining over their content and substance; i.e., it authorizes contract zoning. The Legislature can empower—and has empowered—municipalities to zone or take other action by agreement even though the agreement will bind those municipalities in the future and constrain their legislative discretion. Accordingly,MCL 124.26(c) authorized the Townships’ zoning provisions.
Circuit court judgment in Docket No. 151800 reversed; Court of Appeals judgment in Docket No. 153008 reversed; both cases remanded to the circuit court for further proceedings.
©2017 State of Michigan
CLAM LAKE TOWNSHIP and HARING CHARTER TOWNSHIP, Appellants, v DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS/STATE BOUNDARY COMMISSION, TERIDEE LLC, and CITY OF CADILLAC, Appellees.
TERIDEE LLC, JOHN F. KOETJE TRUST, and DELIA KOETJE TRUST, Plaintiffs-Appellees, v HARING CHARTER TOWNSHIP and CLAM LAKE TOWNSHIP, Defendants-Appellants.
No. 151800; No. 153008
STATE OF MICHIGAN SUPREME COURT
FILED July 3, 2017
VIVIANO, J.
Chief Justice: Stephen J. Markman. Justices: Brian K. Zahra, Bridget M. McCormack, David F. Viviano, Richard H. Bernstein, Joan L. Larsen, Kurtis T. Wilder.
BEFORE THE ENTIRE
VIVIANO, J.
These consolidated cases present two issues. First, in Clam Lake Twp v Dep‘t of Licensing & Regulatory Affairs, we must decide whether the State Boundary Commission (Commission), when reviewing an annexation petition, has authority to determine the validity of a separate agreement entered into under the Intergovernmental Conditional Transfer of Property by Contract Act, 1984 PA 425,
Second, in TeriDee LLC v Haring Charter Twp, we must decide whether an Act 425 agreement can include requirements that a party enact particular zoning ordinances. The plain language of
I. FACTS AND PROCEDURAL HISTORY
This case involves an undeveloped parcel of roughly 241 acres of land surrounding
Undeterred, TeriDee filed a petition to have the land annexed by Cadillac in 2011. About the same time, Clam Lake Township and Haring Charter Township entered into an Act 425 agreement to transfer the land to Haring. The Commission reviewed both the annexation petition and the Act 425 agreement, which, if effective, would have preempted the petition.3 In its decision, the Commission rejected the petition and also invalidated the Act 425 agreement, finding, among other things, that the agreement failed to define any economic development project and was instead a ploy to prevent Cadillac‘s annexation.
The current round of disputes began in 2013, when the Townships learned that TeriDee was again planning to file for annexation. Cadillac, the proposed annexor, had public water and sanitary sewer services available near the proposed annexation area. In 2013, neither of the Townships could provide those services. However, that year Haring obtained financing for a new wastewater treatment plant that would enable it to extend water and sewer lines to the property. In light of this development, as well as TeriDee‘s impending petition, the Townships entered into an Act 425 agreement on May 8, 2013, transferring the land to Haring. The agreement was signed by the Townships and filed with the Wexford County Clerk and the Secretary of State on June 10, 2013.
The agreement, as subsequently amended, describes the Townships’ desired economic development project as having two components. First, the project would include “the construction of a mixed-use, commercial/residential development . . . in order to balance the property owners’ desire for commercial use with the need to protect the interests of surrounding residential property owners[.]” Second, the project required “the provision of public wastewater services and public water supply services to the Transferred Area, so as to foster the new mixed-use, commercial/residential development . . . .” Further, the agreement provides that the forest-recreation zoning would remain in effect only until Haring could enact various zoning standards, including numerous minimum requirements. The agreement also states that the area‘s residential portions “shall be zoned in a Haring zoning district that is comparable” to the Township‘s existing zoning. The remaining property “shall be rezoned” according to the agreement‘s minimum
TeriDee subsequently filed its annexation petition. Though the petition mirrors TeriDee‘s 2011 attempt, the Commission this time found the petition legally sufficient. On review, the Commission concluded that the Act 425 agreement was invalid because it “was created solely as a means to bar the annexation and not as a means of promoting economic development.” It cited five factual findings supporting this conclusion: (1) the economic project was “not believed by the Commission to be viable” because the Townships did not consult TeriDee, the landowner; (2) Clam Lake received no tax revenues from the agreement; (3) e-mails between Township officials indicated that the agreement was meant to prevent annexation; (4) the Commission questioned Haring‘s “ability to effectively and economically provide the defined public services“; and (5) the agreement‘s timing, shortly before TeriDee‘s annexation petition, suggested that it was a sham.
The Townships appealed in the circuit court, which upheld the Commission‘s determination. Relying on Casco Twp v State Boundary Comm,4 the court held that the Commission had the power to determine the validity of the agreement. The court then found that competent, material, and substantial evidence supported the Commission‘s determination that the agreement was an invalid sham. Next, the court found sufficient evidence supporting the Commission‘s decision to grant the annexation petition. The Court of Appeals denied the Townships’ application for leave to appeal.
As the Commission proceedings were ongoing, TeriDee sued the Townships, seeking a declaratory judgment that the Act 425 agreement was invalid. It argued that the agreement was a contrivance meant to block the annexation. Alternatively, it asserted that the agreement was void as against public policy because it contracted away Haring‘s zoning authority by obligating Haring‘s zoning board to rezone pursuant to the agreement. The circuit court declined to consider the first argument, finding that the Commission had primary jurisdiction over that contention. However, the court struck down the agreement based on TeriDee‘s alternative argument. It found that the agreement required Haring to enact specific zoning ordinances, an impermissible delegation of zoning authority.
The Townships appealed, and the Court of Appeals affirmed.5 It agreed that “the plain language of the agreement [improperly] contracts away Haring‘s zoning authority over the undeveloped property by providing how Haring must zone the property.”6 The Court of Appeals also concluded that
whether Casco Twp v State Boundary Comm, 243 Mich App 392, 399; 622 NW2d 332, 335 (2000), correctly held that the State Boundary Commission (SBC) has the authority to determine the validity of an agreement made pursuant to the Intergovernmental Conditional Transfer of Property by Contract Act, 1984 PA 425,
MCL 124.21 et seq. (Act 425)[.]9
In TeriDee LLC, two of the issues we asked the parties to address were
whether Inverness Mobile Home Community v Bedford Twp, 263 Mich App 241; 687 NW2d 869 (2004), applies to the defendant townships’ Agreement pursuant to the Intergovernmental Conditional Transfer of Property by Contract Act, 1984 PA 425,
MCL 124.21 et seq. (Act 425); . . . [and] if so, whether the challenged provisions of the Act 425 Agreement were nevertheless authorized by Section 6(c) of Act 425,MCL 124.26(c) [.]10
II. STANDARD OF REVIEW AND INTERPRETIVE PRINCIPLES
Our Constitution requires that we review administrative agency decisions to determine whether they “are authorized by law.”11 The Administrative Procedures Act12 also governs our review of the Commission‘s final decisions.13 We will set aside a Commission decision “if substantial rights of the petitioner have been prejudiced because the decision or order is any of the following,” including “[i]n violation of the constitution or a statute,” “[i]n excess of the statutory authority or jurisdiction of the agency,” or “[a]ffected by other substantial and material error of law.”14 An agency‘s statutory interpretations are entitled to “respectful consideration,” but they “cannot conflict with the plain meaning of the statute.”15 We must also determine whether the decisions, findings, and rulings “are supported by competent, material and substantial evidence on the whole record,”16 remaining sensitive to the deference owed to administrative expertise and not invading exclusive administrative fact-finding.17
“We review de novo a trial court‘s determination regarding a motion for summary disposition.”18 “Summary disposition
Similarly, we review de novo the interpretation of statutes.20 We interpret statutes to discern and give effect to the Legislature‘s intent, and in doing so we focus on the statute‘s text.21 Undefined terms are presumed to have their ordinary meaning, unless they “have acquired a peculiar and appropriate meaning in the law,” in which case we accord them that meaning.22 The statute must be considered as a whole, “reading individual words and phrases in the context of the entire legislative scheme.”23 Unambiguous statutes are enforced as written.24
III. ANALYSIS
A. ACT 425 AGREEMENTS
We first address the scope of the Commission‘s power to review Act 425 agreements when considering an annexation petition.25 The Commission, like other administrative agencies, only has the powers expressly granted to it or necessarily implied.26 The Commission has authority over the incorporation and consolidation of local governments as well as over various alterations of those governments’ boundaries.27 With respect to the Commission‘s
Next, we must consider whether Act 425 provides the Commission authority to review agreements created under that statute. Act 425 provides that “[t]wo or more local units may conditionally transfer property for a period of not more than 50 years for the purpose of an economic development project. A conditional transfer of property shall be controlled by a written contract agreed to by the affected local units.”31 An “economic development project” is defined, in relevant part, as the “land and existing or planned improvements suitable for use by an industrial or commercial enterprise, or housing development, or the protection of the environment, including, but not limited to, groundwater or surface water.”32
Local governmental units must consider various factors when entering into an Act 425 agreement, including the natural environment, population statistics, the need for and cost of government services, existing services, and the general effects of the transfer.33 These factors are very similar to the ones the Commission must consider when reviewing proposed incorporations and annexations.34 And like the Commission, the local units must hold public hearings on their proposed actions.35 This indicates that, with respect to conditional land transfers under Act 425, the local units do much of the same work that the Commission does in its areas of assigned responsibility.
Only one provision in Act 425 implicates the Commission, but it does so in a manner that circumscribes the Commission‘s involvement.
Because an Act 425 agreement conditionally transfers property, it is “in effect,” or operative, when the property has been conditionally transferred. The statute designates when this occurs: “The conditional transfer of property pursuant to a contract under this act takes place when the contract is filed in the manner required by this section.”37
Thus, the conditional land transfer takes place when the parties enter into the contract and file the appropriate documents with the county clerk and Secretary of State. At that point, the agreement is operative, or “in effect,” and the agreement preempts any other method of annexation. Act 425 does not condition preemption on a finding that the contract is otherwise valid, and it does not expressly grant to the Commission the power to determine the agreement‘s validity. Instead, the Commission may only make an initial determination of whether the Act 425 agreement is operative, i.e., whether the contract was entered into by the parties and filed in accordance with the statute.38
Only one Court of Appeals case has essayed a serious interpretation of Act 425. In Casco Twp, landowners in Casco and Columbus Townships petitioned to have Richmond City annex their lands; however, Lenox Township had shortly before acquired the land through two Act 425 agreements.39 As in the present case, the Commission suspected the agreements were a ploy to avoid annexation and rejected them as invalid.40 The Court of Appeals affirmed.41
In Casco Twp, the Court of Appeals erred by concluding that
The problem with this analysis is that an Act 425 agreement preempts annexation when the agreement is “in effect.” The
In sum, Casco misinterpreted Act 425, and we take this opportunity to overrule it. The plain language of the Act provides that the Commission must find any annexation petition preempted if a relevant Act 425 agreement is “in effect.” In that situation, the Commission lacks the power to make any further determination of the agreement‘s validity.
Here, there is no dispute that the parties had entered into the Act 425 agreement and that it was properly filed with the Wexford County Clerk and the Secretary of State at the time the Commission considered the annexation petition.46 Accordingly, the agreement was “in effect” and preempted TeriDee‘s annexation petition.47 We reverse the circuit court‘s decision to the contrary.48
B. ZONING ORDINANCES
We next consider whether the Townships’ Act 425 agreement is void as against public policy for impermissibly contracting away Haring‘s legislative zoning authority. The Court of Appeals concluded that it was. To reach this result, it first found that the Act 425 agreement required Haring to enact specific zoning standards, thus restraining the Township‘s discretion in how to zone the property.49 In other words, it held that the agreement contracted away Haring‘s zoning powers. Relying on the general proposition that such contract zoning is prohibited unless specifically authorized by statute,50 the Court then examined whether the Legislature
If applicable to the transfer, a contract under this act may provide for any of the following:
* * *
(c) The fixing and collecting of charges, rates, rents, or fees, where appropriate, and the adoption of ordinances and their enforcement by or with the assistance of the participating local units.52
The Court of Appeals concluded that this provision did not permit the local units to agree to zoning ordinances. A contrary interpretation, it feared, “reads more words into the statute than are present.”53 The plain language only allows the agreement to provide for the adoption and enforcement of ordinances; it does not state that the “agreement may provide for the manner in which the participating local units will adopt ordinances, such as dictating how a local unit must zone or rezone the property.”54 It does “nothing more than determin[e] which local unit has jurisdiction over the property . . . and does not necessarily encompass the right to contract zone.”55
We disagree with this analysis of
The only remaining question is whether a zoning ordinance is an “ordinance” under
From here, completing the statutory analysis is syllogistic.
Neither the parties nor the courts below suggest any reason why the Legislature would be prohibited from authorizing this form of contract zoning. True, the zoning power “constitutes a legislative function” that municipalities may exercise.61 But a township “has no inherent power to zone” and can only do so to the extent the power is granted by the Constitution or Legislature.62 Accordingly, the Legislature can empower—and has empowered63—municipalities to zone or take other action by agreement even though the agreement will bind those municipalities in the future and constrain their legislative discretion. As a leading treatise notes, “Statutes and charters sometimes authorize municipal boards to make contracts which will extend beyond their own official term, and the power of the legislature in this respect is well settled.”64 And, indeed, our Constitution encourages legislation such as Act 425 that allows local governments to “enter into contractual undertakings or agreements with one another . . . for the joint administration of any of the functions or powers which each would have the power to perform separately . . . [or to] transfer functions or responsibilities to one another . . . .”65
Accordingly, the Legislature in Act 425 enabled local units to contract for zoning. We reverse the Court of Appeals’ contrary conclusion.
IV. CONCLUSION
In Clam Lake, we hold that the Commission, when faced with an Act 425 agreement
David F. Viviano
Stephen J. Markman
Brian K. Zahra
Bridget M. McCormack
Richard H. Bernstein
Joan L. Larsen
Kurtis T. Wilder
Notes
After the affected local units enter into a contract under this act, the clerk of the local unit to which the property is to be conditionally transferred shall file a duplicate original of the contract with the county clerk of the county in which that local unit, or the greater part of that local unit, is located and with the secretary of state. That county clerk and the secretary of state shall enter the contract in a book kept for that purpose. The contract or a copy of the contract certified by that county clerk or by the secretary of state is prima facie evidence of the conditional transfer. [Id.]