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
JENNIFER M. GRANHOLM, ATTORNEY GENERAL
Taxes levied on same property by two district libraries with overlapping boundaries
After the enactment of 1997 PA 160, the same parcel of real property may be taxed for operating costs by each district library in which the property is situated only if the remedial provisions of that statute are not implemented.
After the enactment of 1997 PA 160, the same parcel of real property may be taxed by more than one district library for the payment of principal and interest on bonded indebtedness outstanding as of December 29, 1997.
Opinion No. 7049
March 28, 2000
Honorable Judith L. Scranton
You have asked whether the same parcel of real property may be taxed by multiple library districts in which the property is situated.
Information accompanying your request indicates that because of overlapping district library boundaries, a property owner was billed for tax levies simultaneously imposed by two library districts.
The establishment of district libraries was first authorized by 1955 PA 164. This statute permitted governmental units, including school districts, to "cooperatively develop a plan and unite with any other municipality or municipalities for the establishment and operation of a district library." Section 1. The statute defined "municipality" to include "cities, villages, school districts, townships and counties." Id. In sections 3 and 4, the Legislature provided for the creation of a library board and specified, in general terms, the powers of the board. The statute did not authorize a library board to levy taxes for establishment and maintenance of a district library. Instead, district libraries depended on moneys appropriated to the library board by the governmental units which cooperatively formed the library district. Section 5.
For the next 34 years, the same statute guided municipalities seeking to establish and maintain libraries. But critics claimed that the law failed to address many issues surrounding establishment and maintenance of district libraries and district library districts. Senate Legislative Analysis, SB 140-141, March 8, 1989, p. 1. "Some people contend that the Act is inadequate in setting up mechanisms to follow when establishing a library district." Id. As a result of the perceived inadequacies of 1955 PA 164, "situations have arisen over the years in which municipalities have taken steps on their own to implement certain provisions of the Act." Id. Such implementation of 1955 PA 164 occurred without oversight by the state librarian, and apparently included voter approved millage levies by participating municipalities.
In 1989, the Legislature addressed these perceived problems by enacting the District Library Establishment Act (DLEA), 1989 PA 24, MCL 397.171 et seq; MSA 15.1779(1) et seq. The DLEA required that district library agreements and amendments to those agreements had to be approved by resolution of the governing bodies of the municipalities participating in a district library district, and by the state librarian. Sections 3 and 5. While section 3 of the DLEA was designed to eliminate overlapping district library districts, it did not eliminate the type of overlap created when school districts with boundaries in two or more townships or cities joined other governmental units to form district library districts.
School districts are separate and distinct governmental units. MacQueen v Port Huron City Comm, 194 Mich 328, 336; 160 NW 627 (1916); People ex rel Prosecuting Attorney v Munising Twp, 213 Mich 629, 633, 635; 182 NW 118 (1921). A Michigan school district may be fractional, meaning that its territory may be located in two or more governmental units. Citizen Research Council of Michigan, School District Organization in Michigan (Detroit & Lansing, MI: Report No. 298, 1990), p 5. As expressed in section 3(1) of the DLEA, which permitted fractional school districts to join other governmental units to form a district library, the Legislature was aware that district library boundaries might overlap into other existing district libraries. The only safeguard was the necessary consent of a public library receiving state aid or penal fund distribution, if it was located in the proposed district library district.
1997 PA 160 amended the DLEA for the express purpose of ensuring "that a proposed district library district may not overlap any portion of another district library district." Senate Legislative Analysis, SB 520, March 30, 1998. As this analysis observed, "13 counties that have libraries with legal service area population overlap. The overlap population totals 36,669. . . . Local units will lose State aid to the extent of current per capita overlap. The impact on individual areas will be minimal." Id. Amendatory 1997 PA 160 created a mechanism for the establishment of proposed district libraries which avoid the overlapping of district library boundaries. Under this mechanism, district library boards with overlapping territory must revise their boundaries so as to avoid overlapping boundaries and submit to the state librarian new maps "demonstrat[ing] that no parcels of taxable property remain within more than 1 district library district." Id. Section 3(4). The statute expressly prohibits the establishment of a district library district that overlaps any portion of another district library district. Section 3(1)(c). Moreover, as a condition for approval of a new district library, proponents must file with the state librarian a map or drawing of the proposed district library "unambiguously show[ing] the relationship of the proposed district library district to the adjacent and constituent units of government, which include counties, cities, villages, townships, school districts, and district libraries." Section 3(5)(b) and (c).
As to existing district library districts with overlapping boundaries, the boards of these district libraries must, on or before October 1, 1998, exclude territory from one or the other district and submit maps to the state librarian demonstrating no overlapping of the boundaries of the affected districts. Section 3(4), as amended by 1997 PA 160. If these district library boards fail to act by the statutory deadline, the legislative council1 shall approve a change in the boundaries of those district libraries, eliminating the overlapped territory. Id. This remedial provision, however, is not self-executing. By its terms, this provision requires affected district library boards to adopt resolutions eliminating territorial overlap. In the absence of these resolutions, the legislative council must implement the provisions of section 3(4).
The amended statute, at section 3(12), addresses the problem of multiple district libraries levying debt retirement taxes on the same property for bonded indebtedness. It provides that where such indebtedness is outstanding as of December 29, 1997,2 the overlapped territory shall:
[R]emain a part of the district library district from which it has been excluded for the purpose of levying debt retirement taxes for bonded indebtedness of the district library district . . . until the bonds are redeemed or sufficient funds are available in the debt retirement fund of the district library for that purpose.
Principal and interest on bonds issued by a district library with the approval of its electors must be paid from proceeds of taxes levied by the district library board on taxable property in the library district. Section 8 of the District Library Financing Act, MCL 397.281 et seq; MSA 15.1780(11) et seq. If the bonds are issued by the district library board without elector approval, principal and interest on the bonds are payable from taxes authorized by the electors under sections 13-23 of the DLEA. These statutory provisions are part of the bond contract which cannot be impaired by statutory change. City of Pontiac v Simonton, 271 Mich 647, 651; 261 NW2d 103 (1935). Thus, territory in a previously overlapped district library district that has now been excluded from it remains subject to tax levies for principal and interest on bonds issued on or before December 29, 1997, by that district library until the bonds are paid in full.
It is my opinion, therefore, that after the enactment of 1997 PA 160, the same parcel of real property may be taxed for operating costs by each district library in which the property is situated only if the remedial provisions of that statute have not been implemented. Because this law requires both the district library board and the legislative council to revise their boundaries so as to eliminate overlapping territory, the example you pose of a single parcel of real property being taxed by two district library districts should not occur.
It is my further opinion that after the enactment of 1997 PA 160, the same parcel of real property may be taxed by more than one district library for the payment of principal and interest on bonded indebtedness outstanding as of December 29, 1997.
JENNIFER M. GRANHOLM
1 The legislative council is created by the legislative council act. 1986 PA 268, MCL 4.1101 et seq; MSA 2.138(101) et seq.
2 December 29, 1997, is the effective date of amendatory 1997 PA 160.