Opinion ID: 4183371
Heading Depth: 3
Heading Rank: 1

Heading: act 425 agreements

Text: 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 20 Bank of America, NA v First American Title Ins Co, 499 Mich 74, 85; 878 NW2d 816 (2016). 21 Ronnisch Constr Group, Inc v Lofts on the Nine, LLC, 499 Mich 544, 552; 886 NW2d 113 (2016). 22 MCL 8.3a. 23 Madugula v Taub, 496 Mich 685, 696; 853 NW2d 75 (2014). 24 Id. 25 Appellees argue that the Townships did not properly preserve this issue and are otherwise estopped from raising it. We disagree and find that we may reach this issue because the Townships properly preserved it. Indeed, in the Townships’ initial challenge to the annexation petition, they argued that the Commission had no authority because the Act 425 agreement had already transferred the land. Their basic argument—that the Commission lacks power to make certain determinations—has remained unchanged throughout the proceedings. 9 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 authority over annexation petitions, MCL 123.1011a grants the Commission “jurisdiction over petitions or resolutions for annexation as provided in [MCL 117.9].” That statute, in turn, tasks the Commission with “determining the validity of the petition or resolution” and endows it with the powers and Appellees have also claimed that the Townships are judicially estopped from challenging Casco Twp, 243 Mich App 392, because in TeriDee, the Townships successfully relied on Casco to obtain partial dismissal under the primary jurisdiction doctrine. A party is judicially estopped from asserting a position inconsistent with one it successfully and unequivocally asserted in a prior proceeding. Paschke v Retool Indus, 445 Mich 502, 509; 519 NW2d 441 (1994). There is nothing inconsistent in the Townships’ positions. In TeriDee, they claimed that Casco required the Commission, rather than the circuit court, to have the first opportunity to review the Act 425 agreement. In Clam Lake, the theory they offer, and prevail on, is that Casco gave the Commission too much authority to review Act 425 agreements, and that the statute limits review to determining whether an agreement is “in effect” under MCL 124.29. In both cases, the Commission can examine the agreement; the pertinent argument here, and the one that the Townships have consistently made, concerns the scope of that examination. Therefore, the Townships are not estopped from challenging this aspect of Casco. 26 Coffman v State Bd of Examiners in Optometry, 331 Mich 582, 590; 50 NW2d 322 (1951); see also Soap & Detergent Ass’n v Natural Resources Comm, 415 Mich 728, 736; 330 NW2d 346 (1982) (“It is beyond debate that the sole source of an agency’s power is the statute creating it. If a certain power . . . is withheld in the statute, the agency may not act.”). 27 Midland Twp, 401 Mich at 650. None of the statutory provisions regarding the Commission’s authority over incorporation, consolidation, or reannexation expressly or impliedly pertain to Act 425 agreements. See, e.g., MCL 123.1008 (granting the Commission power over incorporation); MCL 123.1009 (listing criteria for incorporation); MCL 123.1012 to 1012a (addressing consolidation); MCL 123.1012b (addressing reannexation). 10 duties it normally has when reviewing incorporation petitions. 28 Those powers include the ability to consider, among other things, population statistics, the need for governmental services in the incorporated area, and the general effect on the entire community. 29 While these statutes furnish “broad powers concerning annexations,” 30 none mentions Act 425 agreements or purports to grant the Commission authority over them. 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 28 MCL 117.9(2). 29 MCL 123.1009. 30 Owosso Twp v City of Owosso, 385 Mich 587, 590; 189 NW2d 421 (1971). 31 MCL 124.22(1). The “local units” refer to cities, townships, and villages. MCL 124.21(b). 32 MCL 124.21(a). 11 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. MCL 124.29 states that “[w]hile 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.” Thus, all that is required to preempt an annexation petition is for the Act 425 agreement to be “in effect.” The ordinary meaning of “effect” is “the quality or state of being operative.” 36 33 MCL 124.23. 34 MCL 123.1009. 35 Compare MCL 123.1008(3) (“At least 60 days but not more than 220 days after the filing with the commission of a sufficient petition proposing incorporation, the commission shall hold a public hearing at a convenient place in the area proposed to be incorporated.”), with MCL 124.24(1) (providing that the “legislative body of each local unit affected by a proposed transfer of property under this act shall hold at least 1 public hearing before entering into a contract under this act”). 36 Merriam-Webster’s Collegiate Dictionary (11th ed). See also Black’s Law Dictionary (10th ed) (defining “effect” as the “result that an instrument between parties will produce on their relative rights, or that a statute will produce on existing law, as discovered from the language used, the forms employed, or other materials for construing it”). 12 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 37 MCL 124.30. The statute goes on to state: 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.] 38 MCL 124.30. 13 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 MCL 124.29 authorizes the Commission to examine an Act 425 agreement’s validity rather than simply to determine its effectiveness. The Court interpreted MCL 124.29 to “expressly require[] an Act 425 agreement that is ‘in effect’ and, therefore, necessitates a valid agreement. Consequently, this statutory bar to the commission’s consideration of an annexation petition requires an agreement that fulfills the statutory criteria . . . .” 42 Accordingly, the Commission could canvass the agreement for violations of the Act 425 “criteria.” 43 The problem with this analysis is that an Act 425 agreement preempts annexation when the agreement is “in effect.” The statute makes no mention of validity. The Legislature could have employed this potentially broader term had it intended the Commission to wield more expansive review powers. For example, the Legislature expressly provided the Commission power to examine “the validity of the [annexation] 39 Casco Twp, 243 Mich App at 399. 40 Id. at 396. 41 Id. at 395. 42 Id. at 398-399. 43 Id. 14 petition . . . .” 44 No such language appears in Act 425; instead, as mentioned above, the agreement must merely be “in effect,” and effectiveness occurs when the local units have entered into and properly filed the agreement. 45 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 44 MCL 117.9(2). 45 Our opinion in Shelby Charter Twp v State Boundary Comm, 425 Mich 50; 387 NW2d 792 (1986), does not, as Casco asserted, support a contrary conclusion. There we addressed MCL 42.34, which exempted charter townships from annexation if they met certain statutory criteria. Id. at 53. One criterion was that the charter township provide water or sewer services. MCL 42.34(1)(f). We framed the issue narrowly as “whether the lower courts correctly construed [this statute] to require only the provision of any water or sewer services” rather than a non-de minimis amount. Shelby, 425 Mich at 72. We determined that the Commissioner correctly construed the statute to require more than a de minimis level of services. Id. at 72-77. As we do in this case, Shelby merely specified what the Commission had to consider in order to determine whether the annexation was preempted. Accordingly, Shelby does not implicitly stand for the proposition that the Commission has expanded authority over statutes related to annexation. 46 The Commission’s decision noted this filing, and the record contains a letter from the Department of State acknowledging receipt of the filing and assigning an effective date of June 10, 2013. 15 agreement was “in effect” and preempted TeriDee’s annexation petition. 47 We reverse the circuit court’s decision to the contrary. 48