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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. 5871 April 9, 1981 CITIES: Filling of vacancies in office of member of city commission State control over financial operations State assistance to relieve financial situation Michigan law does not provide for state action if a majority of the members of a city commission resign. Such vacancies are to be filled in accordance with the city's charter. State law does not authorize the state to take over a city's financial operation. A city suffering financial distress may avail itself of emergency financial assistance from the local emergency financial assistance loan board pursuant to 1980 PA 243. Honorable Lad S. Stacey State Representative The Capitol Lansing, Michigan You have referred to me a mailgram from one of your constituents, a member of the Benton Harbor City Commission, which poses the following questions: '1. If a majority of the City Commission resigned, what would be the State's action? '2. Under what circumstances can the State take over the City's financial operation? '3. What specific assistance can the State provide to correct and stabilize the City's financial situation? '4. Is appointment of a receiver a feasible option? Is is legal? What procedures are necessary to have a receiver appointed?' Your first question asks what state action would be involved if there were resignations by a majority of the nine-member city commission, which is the legislative and governing body of the city. No state action is provided for under the governing law. Under 1923 PA 199, Sec. 7; MCLA 201.37; MSA 6.717, vacancies in city offices are to be filled in the manner provided by law or charter: 'Whenever a vacancy shall occur in an elective or appointive village or city office, it shall be filled in the manner provided by the law or charter governing the filling of vacancies in the village or city in which the vacancy occurs.' The Benton Harbor charter, ch III, Secs. 3.58 and 3.59, provide for vacancies and the filling of vacancies, in pertinent part, as follows: 'Section 3.58. [A] vacancy shall exist when an elected officer . . . resigns . . .. 'Section 3.59. A vacancy in an elective office shall be filled by appointment by the Commission, or by a majority of the remaining members of the Commission, as the case may be. (1) Such appointees shall hold office until the next regular municipal election taking place more than sixty days after such vacancy occurs. Provided, however, that the term of no member shall be lengthened by his resignation and subsequent appointment.' It is my opinion, therefore, that a majority of the remaining members of the City Commission are empowered to fill any existing vacancies in the office of member of the City Commission of the City of Benton Harbor. It is further my opinion that no state action is either authorized or required by law. The second question asks whether there are circumstances under which the state may take over the city's financial operation. The incorporation and powers of cities are provided for the authorized by constitution. Const 1963, art 7, Sec. 21 provides: 'The legislature shall provide by general laws for the incorporation of cities and villages. Such laws shall limit their rate of ad valorem property taxation for municipal purposes, and restrict the powers of cities and villages to borrow money and contract debts. Each city and village is granted power to levy other taxes for public purposes, subject to limitations and prohibitions provided by this constitution or by law.' Const 1963, art 7, Sec. 22 provides: 'Under general laws the electors of each city and village shall have the power and authority to frame, adopt and amend its charter, and to amend an existing charter of the city or village heretofore granted or enacted by the legislature for the government of the city or village. Each such city and village shall have power to adopt resolutions and ordinances relation to its municipal concerns, property and government, subject to the constitution and law. No enumeration of powers granted to cities and villages in this constitution shall limit or restrict the general grant of authority conferred by this section.' The home rule cities act, 1909 PA 279, as amended; MCLA 117.1 et seq; MSA 5.2071 et seq, is a general law for the incorporation of cities. The City of Benton Harbor was originally incorporated as a city by legislation on June 5, 1891. The city adopted a charter under the home rule cities act on June 21, 1921, with various amendments and revisions thereof. Michigan Manual, 1979-1980, p 435. The city's duties and responsibilities are set forth in its charter. No provision is found in the home rule cities act, supra, or in any other state law which would authorize a state takeover of the city's financial operation. In response to your second question, it is my opinion that state law does not authorize a state takeover of a city's financial operation. The third question asks what specific assistance the state can provide to correct and stabilize the city's financial situation. At the present time, an informal state task force, comprised of the state departments of commerce, labor, management and budget, and treasury, is working with the city to assist in addressing its various financial and management problems. It is my understanding that consideration is being given to the possible used by the City of Benton Harbor of interlocal agreements to provide for important city services. See 1967 Ex Sess PA 7; MCLA 124.501 et seq; MSA 5.4088(1) et seq, known as the Urban Cooperation Act of 1967, which regulates interlocal agreements between public bodies, and 1967 Ex Sess PA 8; MCLA 124.531 et seq; MSA 5.4087(1) et seq, which provides for intergovernmental transfers of functions and responsibilities. Any agreements entered under these statutes require approval of the contracting governmental bodies and the Governor. The Municipal Finance Act, 1943 PA 202, as amended; MCLA 131.1 et seq; MSA 5.3188(1) et seq, provides at ch II, Sec. 2, in part: 'The commission is authorized and directed to protect the credit of the state and its municipalities, and to enforce the provisions hereof, and to that end is hereby given the following general powers: '(a) To act by an order issued in the name of the commission and signed by not less than 3 members thereof. The signature of the deputy of any such member when acting for his principal, or of any designated representative of the attorney general or superintendent of public instruction, shall have the same force and effect as the signature of such member. '(e) To serve notice upon any municipality of any order relating thereto issued by the commission, and such municipality shall be deemed to have prima facie notice of and be bound by such action, when such notice shall have been served upon it by registered mail addressed to any officer of such municipality upon whom legal process may be served. '(f) To enforce compliance with its orders or with any provision of this act or with any provisions of any law, charter, ordinance or resolution with respect to obligations subject to its jurisdiction including the levy and collection of taxes for the payment thereof, and the segregation, safekeeping, investment and application of money for the payment of debt. For the purpose of such enforcement the commission may, but not by way of limitation, institute appropriate proceedings in the courts of the state, including those for writs of mandamus and injunction.' It should be noted that the Municipal Finance Commission has been working with the city and has issued to the City of Benton Harbor orders, dated March 29, 1977, December 4, 1979, March 4, 1980 and October 28, 1980, relating to fiscal management. State law provides for emergency financial assistance to certain municipalities, including cities, under 1980 PA 243, as last amended by 1980 PA 324; MCLA 141.931 et seq; MSA 5.3190(5) et seq. A local emergency financial assistance loan board created pursuant to 1980 PA 243, as amended, supra, Sec. 2, has before it an application for a loan by the City of Benton Harbor. It is my understanding that the board has, in accordance with 1980 PA 243, supra, Sec. 4(1)(e), as last amended by 1980 PA 324, requested a long range plan of action to be taken by the city to balance future expenditures with anticipated revenues, as well as other information. The board is still awaiting the filing of the plan. Thus, the state is assisting the City of Benton Harbor in dealing with its finance situation, as indicated above. The final question asks whether it is legal to have a receiver appointed for the city. The question of the authority of a court to appoint a receiver for a school district is before the courts in Petipren v Taylor School District, ---- Mich App ----; ---- NW2d ----, decided March 4, 1981. In that case, the Court of Appeals reviewed a circuit court order appointing a receiver for the Taylor School District. It concluded that, while the circuit court possessed such authority, it was an inappropriate remedy with regard to the facts and circumstances as they relate to the school district. An application for leave to appeal from the decision has been filed with the Michigan Supreme Court. Our research reveals no decision of an appellate court upholding the appointment of a receiver for a city. Nevertheless, I must, pursuant to the longstanding policy of this office, decline to give you my final opinion on this question because the issue of the authority of a court to appoint a receiver for a governmental body is still before the courts and has not been finally resolved. Frank J. Kelley Attorney General (1)
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