Source: https://www.ag.state.mi.us/opinion/datafiles/1980s/op06589.htm
Timestamp: 2020-05-28 22:46:18
Document Index: 657340898

Matched Legal Cases: ['art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9', 'art 9']

Opinion #6589
Opinion No. 6589
Const 1963, art 9, Sec. 31--approval of electors for levy of taxes by downtown development authority
Levy of taxes for operating and other purposes
Approval of levy of taxes by electors residing in downtown development district
The levy of taxes by a downtown development authority for operating purposes only does not require a prior vote of approval of the electors under Const 1963, art 9, Sec. 31.
The electors residing in a downtown development district must approve the levy of taxes by a downtown development district for purposes other than operations of the district as required by Const 1963, art 9, Sec. 31.
Honorable M.L. Mickey Knight
You have requested my opinion on two questions concerning the Headlee Amendment and levy of taxes for downtown development authority purposes.
Does the Headlee Amendment, Const 1963, art 9 Sec. 31, require a vote of the electorate of the city before levy of all or part of the two mills authorized by Sec. 12 of the downtown development act?
The Headlee Amendment was ratified and became effective on December 23, 1978. Const 1963, art 9, Sec. 31, provides:
"Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon...." (Emphasis added.)
When the downtown development act was enacted, 1975 PA 197, MCL 125.1651 et seq; MSA 5.3010(1) et seq, effective August 13, 1975, Sec. 12(1) provided for a tax levy in the following language:
"An authority with the approval of the municipal governing body may levy an ad valorem tax on the real and tangible personal property not exempt by law and as finally equalized in the downtown district. The tax shall not be more than 1 mill if the downtown district is in a municipality having a population of 1,000,000 or more, or not more than 2 mills if the downtown district is in a municipality having a population of less than 1,000,000. The tax shall be collected by the municipality creating the authority levying the tax. The municipality shall collect the tax at the same time and in the same manner as it collects its other ad valorem taxes. The tax shall be paid to the treasurer of the authority and credited to the general fund of the authority for purposes of financing only the operations of the authority." (Emphasis added.)
The term "operations" is defined by MCL 125.1651; MSA 5.3010(1):
" 'Operations' means office maintenance, including salaries and expenses of employees, office supplies, consultation fees, design costs, and other expenses incurred in the daily management of the authority and planning of its activities."
Although the authority to levy the tax was enacted prior to the effective date of the Headlee Amendment, and would appear to be excepted from the prohibition of Const 1963, art 9, Sec. 31, the authority was confined to the levy of a tax for the "operations" of the downtown development authority. The Legislature made it clear in Sec. 12 that no authority was conferred for the levy of a tax for purposes other than "operations." Several methods of funding for the activities of an authority are provided for in MCL 125.1661; MSA 5.3010(11), such as borrowing, with the proceeds from the issuance of revenue or general obligation bonds, tax increment financing, and special assessments. These other methods of funding are available for purposes of an authority. See, for example, the purposes which may be funded by revenue bonds or notes. MCL 125.1663a; MSA 5.3010(13a).
Section 12 was amended by 1983 PA 86, to remove the words "financing only the operations of," thereby lifting the restriction upon the use of the revenues of a tax levy and broadening the authority for the tax levy to all purposes of a downtown development authority. However, this taxing authority for all purposes was not "authorized by law or charter when [art 9, Sec. 31] was ratified," and would not be excepted from the Headlee vote requirement. To the extent that a downtown development authority utilizes tax revenues, levied under Sec. 12, for operations only, no vote of the electors would be required because the authority to levy the tax pre-existed the Headlee ratification. However, to the extent that a downtown development authority may wish to utilize tax revenues, levied under Sec. 12, for purposes other than its operations, a vote of the electors is required because the authority for the tax levy was not authorized pre-Headlee.
It is my opinion, in answer to your first question, that the Headlee Amendment, Const 1963, art 9, Sec. 31, would not require a vote of the electorate for a levy of the millage authorized by Sec. 12 of the downtown development authority if the use of the tax revenues is confined to the operations of the downtown development authority. It is my further opinion that the Headlee Amendment, art 9, Sec. 31, requires a vote of the electorate for a levy of the millage authorized by Sec. 12 if the downtown development authority utilizes any of the tax revenues for purposes other than its operations.
If so, who are the electors eligible to vote thereon? Are they the electors of the entire city, or are they the electors who reside in the downtown development district as established pursuant to Sec. 3 of the downtown development act?
Const 1963, art 9, Sec. 31 provides that "[u]nits of Local Government are hereby prohibited from levying any tax ... without the approval of a majority of the qualified electors of that unit of Local Government voting thereon."
(Emphasis added.) Const 1963, art 9, Sec. 33, defines the term:
" 'Local Government' means any political subdivision of the state, including, but not restricted to, school districts, cities, villages, townships, charter townships, counties, charter counties, authorities created by the state, and authorities created by other units of local government." (Emphasis added.)
For purposes of Const 1963, art 9, Sec. 31, a downtown development authority is within the definition of a "unit of local government." The unit of local government levying the tax authorized by Sec. 12 is the downtown development authority: "[a]n authority with the approval of the municipal governing body may levy an ad valorem tax on the real and tangible personal property not exempt by law and as finally equalized in the downtown district." (Emphasis added.) The term "downtown district" is defined in Sec. 1 of said act, MCL 125.1651; MSA 5.3010(1):
" 'Downtown district' means an area in a business district (1) which is specifically designated by ordinance of the governing body of the municipality pursuant to this act."
The authority exercises its powers, and the tax is levied, within the boundaries of the downtown district. In the language of Const 1963, art 9, Sec. 31, the electors are the "qualified electors of that unit of Local Government," namely the qualified electors of the downtown development authority district. Since the downtown development authority only exercises its powers within the boundaries of the downtown district, the qualified electors would be those residing within the boundaries of the downtown district, for purposes of the Headlee vote requirement. (2)
It is my opinion, in answer to your second question, that the electors qualified to vote on a tax levied under Sec. 12 would be the electors residing in the downtown district established pursuant to MCL 125.1653; MSA 5.3010(3).
(1 Section 1 also defines "Business district" as "an area in the downtown of a municipality zoned and used principally for business)"
(2 It should be noted, however, that in the public hearing on the adoption of an ordinance creating the authority and establishing the boundaries of the proposed downtown district, "[a] citizen, taxpayer, or property owner of the municipality has the right to be heard in regard to the establishment of the authority and the boundaries of the proposed downtown district)" (Emphasis added.) MCL 125.1653; MSA 5.3010(3).