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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)



Opinion No. 6469

September 30, 1987


Contract for property transfer between governmental units


Contract for property transfer between governmental units

A city and a township may enter into a contract to transfer to the city governmental jurisdiction over a parcel of land located wholly within the township and noncontiguous to the city for the purpose of establishing an industrial park as authorized by 1984 PA 425.

Honorable Ralph Ostling

State Representative

The Capitol

Lansing, Michigan 48913

You have requested my opinion on the following question:

May a city enter into a contract with an adjoining township to transfer governmental jurisdiction over a parcel of land in the township under 1984 PA 425 upon which the city plans to establish an industrial park where the parcel is located entirely within the township and is noncontiguous with the boundaries of the city?

Your letter of request for opinion indicates that the proposed industrial park would be located upon a multi-acre parcel adjoining the city airport. Both the parcel and the city airport are noncontiguous to the boundaries of the city.

1984 PA 425, MCL 124.21 et seq; MSA 5.4087(21) et seq, authorizes the transfer of property by contract between cities, townships, or villages for the purpose of an economic development project.

Act 425, Sec. 2, provides:

"(1) Two 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.

"(2) A contract under this act may be renewed for additional periods of not to exceed 50 years upon approval of each legislative body of the affected local units."

The Legislature has carefully prescribed the standards that must be observed before a contract transferring jurisdiction for such purposes may be effected. Before the governmental units may enter into the contract, each must hold a public hearing after notice of the meeting is provided to the public as required by the Open Meetings Act, 1976 PA 267, MCL 15.261 et seq; MSA 4.1800(11) et seq. The decision to enter into the contract must be approved by a majority vote of the members elected and serving upon the legislative body of each governmental unit. Act 425, Sec. 4. The resolution approving the contract may be made expressly subject to a referendum by the electors of the governmental unit. In the absence of such a condition, the electors of the governmental unit may, upon petition signed by 20 percent or more of the registered electors of the governmental unit, make such contract subject to referendum and approval of the electors. Act 425, Sec. 5.

The contract must also specify the length of the contract, the specific sharing of taxes and other revenues by the governmental units, and the local unit which has jurisdiction over the transferred area upon expiration, termination, or nonrenewal of the contract. Act 425, Sec. 7. During the term of the contract, the property conditionally transferred is under the jurisdiction of the local unit to which it is transferred, unless the contract otherwise provides. Act 425, Sec. 8.

Finally, no other "annexation or transfer" of the property transferred shall take place while the contract is in effect. Act 425, Sec. 9.

The Legislature has imposed no express requirement in Act 425 that jurisdiction over property contiguous to a city, township, or village only may be transferred. A study of the legislative history of Act 425 reveals that this was a deliberate omission. HB 4995 was introduced by Representatives Emerson, Cherry, Fitzpatrick, Scott, Griffin, and Clack. It is noted that Representative Emerson's district is the eighty-first, composed of portions of the City of Flint and the Township of Flint, Genesee County, Michigan.

House Legislative Analysis, HB 4995, June 11, 1984, is most instructive:


"In 1979, officials at the General Motors plant in Flint wanted to expand their plant, but there was no vacant land within the city to accommodate such plans. Genesee Township had a vacant industrial park about a mile from the city which was adequate to accommodate the proposed new plant, and General Motors decided to pursue the possibility of getting that land. The ensuing effort by General Motors resulted in the city and township getting together and working out a contractual arrangement whereby the township would transfer the land to the city in exchange for a share in the tax revenue. Although many persons agreed that this unique cooperative approach to the transfer of property between local units of government was laudable, some questioned the legality of such an arrangement and believed the agreement could have been challenged in court on the grounds that the agreement skirted the authority of the State Boundary Commission, which has statutory jurisdiction over matters pertaining to municipal boundary adjustments, and also because statute does not specifically provide authority for such arrangements between local units. Although these problems never materialized because the recession made it necessary for General Motors to abandon the expansion plans, some persons believe Michigan law should provide for such arrangements."




"Annexation has historically been a controversial issue among local units of government, with townships often feeling prey to cities seeking to expand their tax bases. In spite of the involvement in recent years of the State Boundary Commission in the annexation process, and the commission's statutory obligation to consider questions of equity and efficiency before approving a proposed annexation, townships often feel victimized by this process since an encroaching city usually succeeds in taking the valuable portions of the township's land, and the township ends up with disjointed boundaries and a reduced tax base that makes it harder than ever to supply needed services to township residents. The bill would create a new approach to the allocation of limited resources among local units of government that would avoid the problems traditionally associated with annexation, by allowing two or more local units to work out mutually agreeable contractual arrangements for the transfer of land from one unit to another, to the benefit of all parties concerned. Most importantly, the bill would allow the parties to the agreement to decide for themselves how and to what extent taxes and other revenues deriving from the transferred land would be shared."

This legislative history demonstrates that the purpose of Act 425 was to permit a governmental unit such as a city to acquire by contract with another governmental unit such as a township jurisdiction over a parcel of property which is noncontiguous to the city. Although the Legislature was aware of the annexation of territory of one governmental unit by another, it chose to authorize conditional transfer of property without limitation of contiguity of the parcel to the governmental unit seeking jurisdiction over the parcel. The legislative intent gleaned from the facts and events surrounding the purpose of Act 425, Wilkins v Ann Arbor City Clerk, 385 Mich 670, 691; 189 NW2d 423 (1971), foreclose any reading of Act 425 to require, by implication, that contiguity is a necessary prerequisite to the transfer of property between local governmental units for the establishment of an industrial park.

Because Act 425 deals with transfer of jurisdiction for a limited period and not annexation of territory to become a permanent part of the governmental unit, the decision of the Michigan Supreme Court in Genesee Twp v Genesee County, 369 Mich 592, 601-602; 120 NW2d 759 (1963), that annexation of noncontiguous property of a township to a city was impermissible because the statute failed to confer the authority in clear terms, is inapplicable.

The Legislature is free to require that jurisdiction over contiguous lands only be transferred under Act 425. Until it does so, the intent of the Legislature must be observed.

It is my opinion, therefore, that a city and a township may enter into a contract to transfer a noncontiguous parcel of property for the purpose of establishing an industrial park in accordance with 1984 PA 425.

Frank J. Kelley

Attorney General

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