MI Supreme Court Finds Agreement was “In Effect” and Preempted Annexation Petition

This case centered around an undeveloped parcel of roughly 241 acres of land surrounding the interchange of M–55 and US–131 that was zoned for forest-recreational use in Clam Lake Township. Approximately 141 acres were owned by appellees TeriDee LLC, the John F. Koetje Trust, and the Delia Koetje Trust (collectively, TeriDee), who wished to develop a mixed-use project on the property, including stores and other commercial entities. To that end, TeriDee sought approval of an Act 425 agreement between appellant Clam Lake Township and appellee city of Cadillac, to transfer the property to Cadillac’s jurisdiction to facilitate its commercial development. But a voter referendum rejected the agreement. TeriDee filed a petition to have the land annexed by Cadillac in 2011. About the same time, Clam Lake Township and Haring Charter Township entered into an Act 425 agreement to transfer the land to Haring. The Commission rejected the petition and invalidated the Act 425 agreement, finding that the agreement failed to define any economic development project and was instead a ploy to prevent Cadillac’s annexation. TeriDee sued the Townships, seeking a declaratory judgment that the Act 425 agreement was invalid. The Townships appealed, and the Court of Appeals affirmed, finding the “the plain language of the agreement improperly contracts away Haring’s zoning authority over the undeveloped property by providing how Haring must zone the property.”
As to the Commission’s authority over annexation petitions, MCL 123.1011a granted the Commission “jurisdiction over petitions or resolutions for annexation as provided in [MCL 117.9].” The court found that while these statutes gave “broad powers concerning annexations,” none mentioned Act 425 agreements or purported to grant the Commission authority over them. Act 425 did not condition preemption on a finding that the contract was otherwise valid, and did not expressly grant to the Commission the power to determine the agreement’s validity. As such, the Commission may only make an initial determination of whether the Act 425 agreement was operative, and whether the contract was entered into by the parties and filed in accordance with the statute. Here, there was no dispute that the parties had entered into the Act 425 agreement and that it was properly filed with the Wexford County Clerk and the Secretary of State at the time the Commission considered the annexation petition. Accordingly, the agreement was “in effect” and preempted TeriDee’s annexation petition.
The court next analyzed whether the Townships’ Act 425 agreement was void as against public policy for impermissibly contracting away Haring’s legislative zoning authority. The court interpreted MCL 124.26(c) to authorize local units to bargain over the adoption of ordinances, which included bargaining over their content and substance. Moreover, the court found State Constitution encouraged legislation that allows local governments to “enter into contractual undertakings or agreements with one another … for the joint administration of any of the functions or powers which each would have the power to perform separately … [or to] transfer functions or responsibilities to one another ….” Accordingly, the Legislature in Act 425 properly enabled local units to contract for zoning. The Court of Appeals’ contrary conclusion was therefore reversed.
Clam Lake Township v Dept. of Licensing and Regulatory Affairs/State Boundary Commission, 2017 W: 2853480 (MI 7/3/2017)