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Opinion No. 5289

April 7, 1978


Interest charged on future payments


Interest charged on special assessments in the future

In the absence of a clear expression of legislative intent, a local governmental unit may not charge a full year's interest on special assessments due in the future, but may only charge such interest that may have accrued at the time of payment.

Honorable Perry Bullard

State Representative

53rd District

The Capitol

Lansing, Michigan

You have requested my opinion on the following question:

'May townships, villages or cities charge for a complete year of interest on future special assessments where payment is made prior to the expiration of the year in question, or must interest charges be prorated on either a monthly or daily basis?'

The general rule regarding special assessment procedures is set out in 17 Michigan Law & Practice, Municipal Corporations, Sec. 161, p 148, as follows:

'The selection of the method and manner of making an assessment for a local improvement is primarily for the legislature, but the power to prescribe a method may be delegated. . . .'

See also 70 Am Jur 2d, Special or Local Assessments, Secs. 4-8, pp 845-849.

The obligation to pay taxes is not a matter of contract; consequently, unpaid taxes do not draw interest unless the statute establishing tax so decrees. State ex rel Todd v Thomas, 127 Neb 891; 257 NW 265; 96 ALR 1470 (1934).

The relevant statutes in reference to cities and villages are: 1909 PA 279, Sec. 4(d)(1); (1); MCLA 117.4d(1); MSA 5.2077(1) (home rule cities); 1895 PA 215, c XXIVa, Sec. 2; MCLA 104A.2; MSA 5.1854(2) (fourth-class cities); 1909 PA 278, Sec. 24(e); MCLA 78.24(e); MSA 5.1534(e) (home rule villages); 1895 PA 3, c VIII, Sec. 32; MCLA 68.32; MSA 5.1370(2) (general law villages).

Each of the above-cited statutory provisions delegates to cities and villages the authority to select the appropriate method and manner of making their special assessments. Such authority is to be exercised by virtue of either a charter provision or ordinance. None of these provisions, however, authorize or prescribe a method of collecting interest on future due installments, or deal with the question of pro-ration. This is in marked contrast to former statutory provisions which either mandated pro-ration of interest charges on special assessment installments (1895 PA 215, supra, C XXIV, Sec. 17, repealed by 1974 PA 345, Sec. 2) or provided for the payment of a full year's interest thereon (1895 PA 3, supra, C VIII, Sec. 22, repealed by 1974 PA 4, Sec. 2).

With regard to townships, the legislature has provided a variety of statutes which establish varying procedures for assessing for local improvements. Research has revealed only one such statute which authorizes the payment of a full year's interest on future due special assessment installments, i.e., 1954 PA 188, Sec. 7; MCLA 41.727; MSA 5.2770(57), which provides in pertinent part:

'. . . All unpaid installments prior to their transfer to the township tax roll as hereinafter provided shall bear interest, payable annually on each installment due date, at a rate to be set by the township board, not exceeding 8% per annum, from such date as shall be fixed by the township board. Future due installments of an assessment against any parcel of land may be paid to the township treasurer at any time in full, with interest accrued to the due date of the next installment. . . .' [Emphasis added]

It is therefore my opinion that, in the absence of a clear expression by the legislature authorizing local governmental units to charge a full year's interest on special assessments due in the future, local governmental units have no such authority and may only charge interest that may have accrued at the time of payment.

Frank J. Kelley

Attorney General