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. 5599

November 29, 1979

MUNICIPALITIES:

Construction of court or jail facility

MUNICIPALITIES:

Abatement or waiver of ad valorem taxes

CITIES:

Construction of court or jail facility

COUNTIES:

Construction of court or jail facility

TAXATION:

Abatement or waiver of ad valorem taxes by a city or county

PUBLIC CONTRACTS:

Competitive bidding

In the absence of a statutory or ordinance requirement, a municipality is not required to seek competitive bids before awarding a construction contract.

A city or county may not abate or waive ad valorem taxes without statutory authority.

The Honorable Robert C. Law

State Representative

The Capitol

Lansing, Michigan 48909

You have requested my opinion on the following two questions:

1. May a construction contractor contract with a city or county to build a court or jail facility without the necessity of using the bidding process?

2. May a builder of the courthouse or jail who leases the facility to the city or county have his property taxes abated, waived or lowered?

In the absence of a statutory requirement, a municipality is not required to seek competitive bids before awarding a construction contract. See Sault Ste Marie City Commission v Sault Ste Marie City Attorney, 313 Mich 644; 21 NW2d 906 (1946), City of Saginaw v Consumers Power Co., 213 Mich 460; 182 NW 146 (1921), 63 CJS 'Municipal Corporations,' Sec. 1148, p 813.

As to your first question, there are statutes that require competitive bidding; for example, a board of public works in a fourth class city is required to bid projects over $500.00 for water works, lighting plants, sewage systems and other public improvements placed under their control, management and supervision, 1895 PA 215; MCLA 108.1 et seq; MSA 5.1904 et seq. Careful research, however, has failed to disclose any statute relating specifically to the use of the bidding process by a county or city for the construction of a courthouse or jail which would require competitive bidding.

City charter provisions or ordinances may require the use of competitive bidding procedures. If there are such provisions, they are controlling, Sault Ste Marie City Commission v Sault Ste Marie City Attorney, supra.

Addressing the second question, in Foote Memorial Hospital, Inc v City of Jackson Hospital Authority, 390 Mich 193, 214-215; 211 NW2d 649 (1973), the court stated:

'5. Does Act 38 violate Const 1963, art 9, Secs. 2, 3? These sections read in part:

"Sec. 2. The power of taxation shall never be surrendered, suspended or contracted away.

"Sec. 3. The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law.'

'Section 50 of Act 38 exempts from all taxation any hospital authority's property, income and operation. Section 51, with exceptions, gives a state and local tax exemption to holders of notes and bonds issued by authorities pursuant to the act. Rather than abandoning its power of taxation, the Legislature has acted affirmatively and has exercised its power and discretion as explicitly authorized in art 9, Sec. 3 by granting an exemption 'by law' in Secs. 50, 51.

'Such a grant is properly within the exercise of legislative wisdom and is sustained by this Court.'

The court also stated in General Motors Corp v City of Detroit, 372 Mich 234, 238; 126 NW2d 108 (1964), that a city charter could not confer taxing powers beyond those authorized by constitution and statute.

It is therefore my opinion that a city or county may not abate or waive ad valorum taxes without statutory authority. See for example the statute authorizing tax abatement for industrial projects, 1974 PA 198; MCLA 207.551 et seq; MSA 7.800(1) et seq. Inasmuch as there is no statutory authority for cities or counties to abate or waive taxes where a contractor leases a court or jail facility to a municipality, they may not do so.

Frank J. Kelley

Attorney General