The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5402 December 13, 1978 CONSTITUTION OF MICHIGAN: Article 9, Sec. 18 (credit of the state) COUNTIES: Contribution to restore historical landmark HISTORICAL PRESERVATION: Contribution by county to restore historical landmark The county does not offend the provisions of Const 1963, art 9, Sec. 18 which prohibits the grant of the credit of the state in aid of any person, association or corporation by appropriating county funds for the preservation of an historical landmark as authorized by 1957 PA 213. In order to insure the furtherance for purposes and objectives of 1957 PA 213, it is necessary that an agreement be entered into between the parties providing how the funds will be used. Mr. John L. Livesay Prosecuting Attorney Branch County Courthouse 31 Division Street Coldwater, Michigan 49036 You have requested my opinion as to whether the Branch County Board of Commissioners may appropriate $5,000 of its funds to the Tibbits Theater Foundation that proposes to restore a 19th century theater considered to be an historical landmark in the City of Coldwater, Branch County. Const 1963, art 7, Sec. 8, provides: 'Boards of supervisors shall have legislative, administrative and such other powers and duties as provided by law.' 1957 PA 213, Sec. 1; MCLA 399.171; MSA 5.339, authorizes counties, townships and villages to appropriate money for the purpose of fostering any activity or project which is determined to advance the historical interests of the county, township or village. Because the proposed appropriation concerns the payment of public funds to a private nonprofit organization, consideration must be given to Const 1963, art 9, Sec. 18, which states: (1) 'The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, except as authorized in this constitution.' Michigan courts have, on several occasions, examined and defined the prohibition contained in Const 1963, art 9, Sec. 18. The Court, in Advisory Opinion re Constitutionality of PA 1966, No 346, 380 Mich 554; 158 NW2d 416 (1968) at pages 563-564, explained the meaning of this provision: 'The framers of the 1963 Constitution created a pay-as-you-go government for the State of Michigan. In furtherance of that scheme, the State of Michigan is specifically prohibited from becoming a guarantor or surety for anyone. It would be an obviously useless thing for the Constitution to prohibit the State from borrowing money and then permit the State to incur liability by becoming party to the borrowing of others. Thus, article 9, Sec. 18, of the Constitution provides: "The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, except as authorized in this constitution.' 'The purpose of this provision is to make certain that the State, which itself cannot borrow, except as authorized, does not accumulate unauthorized debts by indorsing or guaranteeing the obligation of others.' The Court of Appeals in Sprik v Regents of the University of Michigan, 43 Mich App 178 (1972) affirmed, 390 Mich 84; 210 NW2d 332 (1973) characterized this constitutional prohibition at pages 190-191, as follows: 'This prohibition is violated only when the state creates an obligation legally enforceable against it for the benefit of another. See Bullinger v Gremore, 343 Mich 516 (1955); Dearborn v Michigan Turnpike Authority, 344 Mich 37 (1955); Advisory Opinion re Constitutionality of PA 1966, No 346, 380 Mich 554 (1968).' The Court also construed Const 1963, art 9, Sec. 18, in Advisory Opinion on Constitutionality of 1976 PA 295, 1976 PA 297, 401, Mich 686; 259 NW2d 129 (1977) as prohibiting or barring the guaranteeing of any loans or the pledging of the credit of the state to or in aid of others but excepted its application to those loans guaranteed with constitutionally restricted funds because the full faith and credit of the state is not therein involved. The most exhaustive analysis of Const 1963, art 9, Sec. 18, appears in Alan v Wayne County, 388 Mich 210; 200 NW2d 628 (1972) rehrg den'd 388 Mich 626; 202 NW2d 277 (1972) wherein the Court was asked to restrain defendants from selling or delivering Wayne County stadium authority bonds and from constructing a proposed sports stadium. The Court, in the course of its opinion, dealt with and greatly clarified the nature of art 9, Sec. 18, observing at pages 325-327, that: 'Michigan case law interpreting Const 1963, art 9, Sec. 18 is neither ample nor precise. It is clear the state or its subdivision the county cannot give anything away without consideration. Detroit Museum of Art v Engel, 187 Mich 432 (1915) (salary of employee of private museum, no consideration, no public purpose); Younglas v Flint, 345 Mich 576 (1956) (transfer of city park to US reserve armory) but see contra Sommers v Flint, 355 Mich 655, 663 (1959). See generally 15 McQuillan Municipal Corporations (3rd ed), Sec. 39.30. Note that the constitution as far as the state and county are concerned makes no difference between a public and a private purpose in this regard. When the state acquires or transfers something of value in return for value the state does not offend Const 1963, art 9, Sec. 18. Walinske v Detroit-Wayne Joint Building Authority, 325 Mich 562, 583 (1949) (lease of building); Jackson Broadcasting Television Corp v State Board of Argiculture, 360 Mich 481, 498 (1960) (time-sharing on rental basis of studio); Hays v Kalamazoo, 316 Mich 443 (1947) (Michigan Municipal League membership). 'Now the nub of the problem in all probability is the value received by the state in return for the value transferred. So our inquiry goes to what is the value and who determines it. While the cases definitely describing all the earmarks of the value to be received appear yet to be written, it is probably because any citizen would immediately prescribe full value, and this Court is not going to argue with so logical, reasonable and just a standard. 'This Court will assume that the officers of the Legislative and Executive Branches will do their duty and exercise a proper judgment. The courts will respect that judgment unless there has been a clear abuse of discretion. Obviously, if the state or county were to make a valuable grant for next to no consideration, the courts would be forced to regard that not as an exercise of discretion, but an abuse of discretion.' Also, in Foote Memorial Hospital, Inc v Kelley, 390 Mich 113; 211 NW2d 649 (1973), the court upheld a grant for public health purposes under the test of Const 1963, art 9, Sec. 18. Accordingly, it becomes a matter of judgment and the exercise of sound discretion that lies with the Branch County Board of Commissioners as to whether the restoration and preservation of a 19th century theater located in the City of Coldwater, Branch County, will result in a degree of public benefit so as to constitute adequate consideration for the expenditure of county funds. Based upon the foregoing, and assuming that such a judgment may be made, it is my opinion that the appropriation of $5,000 by the Branch County Board of Commissioners to the Tibbits Theater Foundation for the purposes of restoring and preserving of what is recognized to be an historical landmark, may be accomplished pursuant to 1957 PA 213, Sec. 1, supra. It is clear by virtue of the Court's pronouncements that the county would not offend the provisions of Const 1963, art 9, Sec. 18, if it appropriated county funds to the Tibbits Theater Foundation for the purposes authorized in 1957 PA 213, Sec. 1, supra. It is also my opinion that in order to insure the furtherance of the purposes and objectives of 1957 PA 213, Sec. 1, supra, it is necessary that an agreement be made between the parties providing how the funds will be used by the foundation, and covering such aspects, for example, as the continued existence of the theater and its availability to the public. Frank J. Kelley Attorney General (1)