Opinion #6958

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

APPROPRIATIONS:

COUNTIES:

TAXATION:

Use of county accommodations tax revenue for fairs and fairgrounds

A county may lawfully appropriate its accommodations tax revenue collected under 1974 PA 263 to purchase, maintain and improve county fairground properties.

A county may lawfully appropriate its accommodations tax revenue collected under 1974 PA 263 to fund county fairs and festivals if, in the judgment of the county's board of commissioners, such activity promotes and encourages tourist and convention business in the county.

Opinion No. 6958

October 15, 1997

Honorable Paul T. Baade
State Representative
The Capitol
Lansing, Michigan

You have asked whether a county may lawfully appropriate its accommodations tax revenue collected under 1974 PA 263; MCL 141.861 et seq; MSA 5.3194(371) et seq, to purchase, maintain and improve its county fairground properties, and to fund the operation of county fairs and festivals. Your question arises as the result of concerns relating to the appropriation by a county board of commissioners of tax revenue collected under 1974 PA 263, supra, for the construction and maintenance of facilities (e.g., parking areas) at county fairgrounds and for funding fairs and festivals.

A county has only such powers as have been granted it by the Michigan Constitution or the Legislature. Brownstown Twp v Wayne County, 68 Mich App 244, 247; 242 NW2d 538 (1976). Alan v Wayne County, 388 Mich 210, 245; 200 NW2d 628, reh den, 388 Mich 626; 202 NW2d 277 (1972). Const 1963, art 7, � 1; art 7, � 8.

Under 1974 PA 263, supra, a county may, by ordinance, impose an accommodations tax which is collected from "all persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes, except in hospitals or nursing homes, to transient guests, whether or not membership is required for use of the accommodations." Section 2(1). Section 7 of 1974 PA 263 further provides that revenues derived from this accommodations tax must be used for certain specific purposes, including convention and entertainment facilities.

Sec. 7. The revenues derived from the taxes imposed pursuant to this act shall be deposited in a special fund to be used by the county or by an authority that is organized pursuant to state law, together with other available funds only to pay:

(a) The cost of administration and enforcement of the ordinance.

(b) The financing of the acquisition, construction, improvement, enlargement, repair, or maintenance of convention and entertainment facilities, including, except as provided in subdivision (e), the payment of principal and interest, when due, on bonds or other evidence of indebtedness issued by the county for convention and entertainment facilities.

(c) Except as provided in subdivision (e), current or future annual rental payable by the county to an authority organized pursuant to state law for the purpose of acquiring, constructing, improving, enlarging, repairing, or maintaining the convention and entertainment facilities and leasing them to the county.

(d) The promotion and encouragement of tourist and convention business in the county.

(e) The principal and interest, when due, on bonds or other evidence of indebtedness issued by or on behalf of the county for the purpose of financing the construction of a museum, or the current or future rental payable by the county to an authority organized pursuant to state law for the purpose of constructing a museum and leasing it to the county, only if the museum is located in a city with a population of 180,000 or more.

(Emphasis added.)

The terms "convention and entertainment facilities" are defined in section 1(c) of 1974 PA 263 to mean:

[A]ll or any part, or any combination of convention halls, auditoriums, stadiums, music halls, arenas, meeting rooms, exhibit areas, and related public areas.

It is reasonable to conclude that county fairground facilities fall within the section 1(c) definition of "convention and entertainment facilities."

Accordingly, section 7(b), supra, authorizes a county to appropriate its accommodations tax revenue for the acquisition, construction, improvement, enlargement, repair or maintenance of county fairgrounds. A county's expenditure of its accommodations tax revenue on county fairs and festivals is also authorized by section 7(d), supra, if such activity constitutes "the promotion and encouragement of tourist and convention business in the county."¹ That decision is a matter of judgment to be exercised by a county board of commissioners. The courts will respect such judgment unless there has been a clear abuse of discretion. See, OAG 1977-1978, No 5402, p 714, 715 (December 13, 1978), citing and quoting from Advisory Opinion re Constitutionally of PA 1966, No 346; 380 Mich 554, 563-564; 158 NW2d 416 (1968).

It is my opinion, therefore, that a county may lawfully appropriate its accommodations tax revenue collected under 1974 PA 263 to purchase, maintain and improve its fairground properties. It is my further opinion that a county may also appropriate such tax revenue to fund county fairs and festivals if, in the judgment of the county's board of commissioners, such activity promotes and encourages tourist and convention business in the county.

FRANK J. KELLEY
Attorney General

¹ There are several other statutes which authorize a county board of commissioners to expend public monies for the purchase and improvement of county fairground facilities, 1911 PA 228; MCL 46.111 et seq; MSA 5.411 et seq; 1917 PA 36; MCL 46.141; MSA 5.441; 1929 PA 11; MCL 46.151 et seq; MSA 5.451 et seq; or advertising or otherwise engage in the promotion of agricultural advantages of the county tourism and resort, 1913 PA 88; MCL 46.161; MSA 5.461.