STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6589

June 20, 1989

CONSTITUTIONAL LAW:

Const 1963, art 9, Sec. 31--approval of electors for levy of taxes by downtown development authority

DOWNTOWN DEVELOPMENT AUTHORITY:

Levy of taxes for operating and other purposes

ELECTIONS:

Approval of levy of taxes by electors residing in downtown development district

The levy of taxes by a downtown development authority for operating purposes only does not require a prior vote of approval of the electors under Const 1963, art 9, Sec. 31.

The electors residing in a downtown development district must approve the levy of taxes by a downtown development district for purposes other than operations of the district as required by Const 1963, art 9, Sec. 31.

Honorable M.L. Mickey Knight

State Representative

The Capitol

Lansing, MI 48913

You have requested my opinion on two questions concerning the Headlee Amendment and levy of taxes for downtown development authority purposes.

Your first question is:

The Headlee Amendment was ratified and became effective on December 23, 1978. Const 1963, art 9, Sec. 31, provides:

When the downtown development act was enacted, 1975 PA 197, MCL 125.1651 et seq; MSA 5.3010(1) et seq, effective August 13, 1975, Sec. 12(1) provided for a tax levy in the following language:

The term "operations" is defined by MCL 125.1651; MSA 5.3010(1):

Although the authority to levy the tax was enacted prior to the effective date of the Headlee Amendment, and would appear to be excepted from the prohibition of Const 1963, art 9, Sec. 31, the authority was confined to the levy of a tax for the "operations" of the downtown development authority. The Legislature made it clear in Sec. 12 that no authority was conferred for the levy of a tax for purposes other than "operations." Several methods of funding for the activities of an authority are provided for in MCL 125.1661; MSA 5.3010(11), such as borrowing, with the proceeds from the issuance of revenue or general obligation bonds, tax increment financing, and special assessments. These other methods of funding are available for purposes of an authority. See, for example, the purposes which may be funded by revenue bonds or notes. MCL 125.1663a; MSA 5.3010(13a).

Section 12 was amended by 1983 PA 86, to remove the words "financing only the operations of," thereby lifting the restriction upon the use of the revenues of a tax levy and broadening the authority for the tax levy to all purposes of a downtown development authority. However, this taxing authority for all purposes was not "authorized by law or charter when [art 9, Sec. 31] was ratified," and would not be excepted from the Headlee vote requirement. To the extent that a downtown development authority utilizes tax revenues, levied under Sec. 12, for operations only, no vote of the electors would be required because the authority to levy the tax pre-existed the Headlee ratification. However, to the extent that a downtown development authority may wish to utilize tax revenues, levied under Sec. 12, for purposes other than its operations, a vote of the electors is required because the authority for the tax levy was not authorized pre-Headlee.

It is my opinion, in answer to your first question, that the Headlee Amendment, Const 1963, art 9, Sec. 31, would not require a vote of the electorate for a levy of the millage authorized by Sec. 12 of the downtown development authority if the use of the tax revenues is confined to the operations of the downtown development authority. It is my further opinion that the Headlee Amendment, art 9, Sec. 31, requires a vote of the electorate for a levy of the millage authorized by Sec. 12 if the downtown development authority utilizes any of the tax revenues for purposes other than its operations.

Your second question is:

Const 1963, art 9, Sec. 31 provides that "[u]nits of Local Government are hereby prohibited from levying any tax ... without the approval of a majority of the qualified electors of that unit of Local Government voting thereon."

(Emphasis added.) Const 1963, art 9, Sec. 33, defines the term:

For purposes of Const 1963, art 9, Sec. 31, a downtown development authority is within the definition of a "unit of local government." The unit of local government levying the tax authorized by Sec. 12 is the downtown development authority: "[a]n authority with the approval of the municipal governing body may levy an ad valorem tax on the real and tangible personal property not exempt by law and as finally equalized in the downtown district." (Emphasis added.) The term "downtown district" is defined in Sec. 1 of said act, MCL 125.1651; MSA 5.3010(1):

The authority exercises its powers, and the tax is levied, within the boundaries of the downtown district. In the language of Const 1963, art 9, Sec. 31, the electors are the "qualified electors of that unit of Local Government," namely the qualified electors of the downtown development authority district. Since the downtown development authority only exercises its powers within the boundaries of the downtown district, the qualified electors would be those residing within the boundaries of the downtown district, for purposes of the Headlee vote requirement. ⁽²⁾

It is my opinion, in answer to your second question, that the electors qualified to vote on a tax levied under Sec. 12 would be the electors residing in the downtown district established pursuant to MCL 125.1653; MSA 5.3010(3).

Frank J. Kelley

Attorney General