MAPLEVIEW ESTATES INC V CITY OF BROWN CITY
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
MAPLEVIEW ESTATES, INC.,
Plaintiff-Appellee/Cross-Appellant,
v
UNPUBLISHED
July 1, 2003
APPROVED FOR
PUBLICATION
September 11, 2003
9:00 a.m.
No. 236366
Sanilac Circuit Court
LC No. 00-027282-CZ
CITY OF BROWN CITY,
Defendant-Appellant/CrossAppellee.
Updated Copy
November 7, 2003
Before: Owens, P.J., and Bandstra and Murray, JJ.
PER CURIAM.
Defendant Brown City appeals as of right a grant of summary disposition in favor of
plaintiff Mapleview Estates, Inc. We reverse and remand for entry of summary disposition in
favor of defendant.
Plaintiff, the developer of a manufactured housing community, sued after defendant
raised the fees for connecting new homes to its central water supply and sewer systems. Plaintiff
argued that the fee was actually a disguised tax and, under the Headlee Amendment, Const 1963,
art 9, § 31, should have been submitted to a popular vote. The trial court agreed and granted
plaintiff 's motion for summary disposition but denied plaintiff 's motion for an award of costs
and attorney fees pursuant to Const 1963, art 9, § 32.
Defendant argues that under controlling law its tap-in fees are a user fee, not a tax, and
therefore not subject to the Headlee Amendment, and that the amount it set for the fees is
reasonable. We agree. Whether the tap-in fees are a "tax" or a "user fee" is a question of law
that this Court reviews de novo. Bolt v City of Lansing, 459 Mich 152, 158; 587 NW2d 264
(1998). The Headlee Amendment reads, in relevant part, as follows:
Units of Local Government are hereby prohibited from levying any tax not
authorized by law or charter when this section is ratified or from increasing the
rate of an existing tax above that rate authorized by law or charter when this
-1-
section is ratified, without the approval of a majority of the qualified electors of
that unit of Local Government voting thereon. [Const 1963, art 9, § 31.]
This section "adds the requirement of voter approval of new taxes." American Axle & Mfg, Inc v
Hamtramck, 461 Mich 352, 356; 604 NW2d 330 (2000).
The Supreme Court, in American Axle & Mfg, supra, concluded:
"The plain language of Headlee prohibits a local government from levying
a tax in excess of that permitted by law or charter and it prohibits increasing the
authorized tax rate without approval of the electors. But nowhere does Headlee
require a direct vote of the electors in order to permit a local unit of government
to increase taxes if the local unit of government has the authority by law or
charter to levy the increase." [Id. at 358, quoting Smith v Scio Twp, 173 Mich
App 381, 386; 433 NW2d 855 (1988).]
A tax imposed without voter approval "unquestionably violates the Headlee
Amendment." Bolt, supra at 158. Conversely, a charge that is a user fee, "is not affected by the
Headlee Amendment." Id. at 159. The Headlee Amendment does not define either "tax" or
"fee," so "[t]here is no bright-line test for distinguishing between a valid user fee and a tax that
violates the Headlee Amendment." Id. at 160. A fee is generally "'exchanged for a service
rendered or a benefit conferred, and some reasonable relationship exists between the amount of
the fee and the value of the service or benefit.'" Id. at 161, quoting Saginaw Co v John Sexton
Corp of Michigan, 232 Mich App 202, 210; 591 NW2d 52 (1998). Taxes are for the purpose of
raising revenue. Bolt, supra at 161.
There are three factors to consider when deciding if a charge is a fee or a tax. Id. To be
considered a fee, a charge must: (1) serve a regulatory purpose rather than a revenue-raising
purpose, (2) be proportionate to the necessary costs of the service, and (3) be voluntary, in the
sense that the payor may choose not to avail himself of the benefit and thereby avoid the charge.
Id. at 161-162. The inquiry into the first two factors is closely intertwined:
"To be sustained [as a regulatory fee], the act . . . must be held to be one
for regulation only, and not as a means primarily of producing revenue. Such a
measure will be upheld by the courts when plainly intended as a police regulation,
and the revenue derived therefrom is not disproportionate to the cost of issuing
the license, and the regulation of the business to which it applies." [Id. at 162,
quoting Vernor v Secretary of State, 179 Mich 157, 167; 146 NW 338 (1914).]
Defendant's increased fees for tapping into the water and sewer systems are not wholly
out of proportion to its actual costs of supplying the services. According to an engineering report
commissioned by the city, the fee for connecting a single site to the water system should be $706
and the fee for connecting a single site to the sewer system should be $1,630. The fees actually
set by the city council were $600 and $800. These fees are in fact less than the actual costs of
providing the services, so they are not excessive and cannot be regarded as a means of producing
revenue.
-2-
The Bolt Court quoted the Headlee Blue Ribbon Commission's definition of "user fee" as
follows: "A 'fee for service' or 'user fee' is a payment made for the voluntary receipt of a
measured service, in which the revenue from the fees are [sic] used only for the service
provided." Bolt, supra at 167 n 16, quoting Headlee Blue Ribbon Commission, A Report to
Governor John Engler, § 5, p 30 (September 1994) (emphasis in Bolt). That definition seems to
describe exactly the situation in this case—those who want new homes in Brown City connected
to the municipal water and sewer systems must pay tap-in fees, and the revenue generated by
those fees is used for the maintenance and operation of those systems. There was no
documentary evidence submitted to show that the funds generated by the increased tap-in fees
were to be used for anything other than maintaining and improving the water and sewer systems.
Moreover, as this Court recently stated in Graham v Kochville Twp, 236 Mich App 141, 152;
599 NW2d 793 (1999), "[b]y exacting [a] fee for connection to the water system, the purpose is
clearly to regulate and control the use and distribution of water provided by the municipal
system." The tap-in fee clearly serves a regulatory rather than a revenue-raising purpose.
The increased tap-in fee is also voluntary because plaintiff could choose not to avail itself
of the benefit and thereby avoid the cost. Bolt, supra at 162. A user fee, the Bolt Court stated, is
"'only compulsory for those who use the service, have the ability to choose how much of the
service to use, and whether to use it all.'" Id. at 167, quoting Headlee Blue Ribbon Commission
Report, supra, § 5, p 29. Plaintiff is engaged in a commercial enterprise and has the apparent
desire to earn profit. It need not pay the tap-in fee unless it decides to install a home site in a
particular location. It has the ability to choose whether to use the service at all, and those who
occupy plaintiff 's homes have the ability to choose how much water and sewer they wish to use.
The increased tap-in fee thus meets all three of the Bolt criteria for a user fee rather than a tax:
(1) it serves a regulatory rather than a revenue-related purpose, (2) it is proportionate to the costs
of the service, and (3) it is voluntary. Id. at 161-162. We find that the trial court erred when it
found that the increased tap-in fees constituted a tax.
As defendant obligingly points out, even if the tap-in fees are not a tax, they must still be
reasonable. Atlas Valley Golf & Country Club, Inc v Village of Goodrich, 227 Mich App 14, 24;
575 NW2d 56 (1997). The Revenue Bond Act (RBA), MCL 141.101 et seq., authorizes
municipalities to "purchase, acquire, construct, improve, enlarge, extend or repair" public
improvements such as water and sewer systems, and to "own, operate and maintain" them. MCL
141.104, 141.103(a) and (b). The act also authorizes cities to fix the rate for these services,
which includes "the charges, fees, rentals, and rates that may be . . . imposed for the services."
MCL 141.103(e), 141.121. "A connection charge clearly falls within the ambit of a
[municipality's] authority to fix the rate for services" under the RBA, and must simply be
"reasonable." Atlas Valley, supra at 21. This Court has declined "to attempt to determine with
mathematical precision the relation of the connection to the charge paid by the owner of each
parcel of land, since we presume 'that the amount of the fee is reasonable, unless the contrary
appears upon the face of the law itself, or is established by proper evidence.'" [Graham, supra at
154, quoting Vernor, supra at 168.]
Because the fees actually set by defendant were lower than the actual costs of connecting
to the systems, they are reasonable. The circuit court erred when it granted summary disposition
in favor of plaintiff. Moreover, because the fees were not improperly enacted, they are valid.
We therefore find that summary disposition should have been granted in favor of defendant.
-3-
Plaintiff argues on cross-appeal that it was entitled to actual costs, including attorney
fees. However, under Const 1963, art 9, § 32, attorney fees and costs are only to be awarded
where the suit to enforce Const 1963, art 9, § 31 is sustained. Macomb Co Taxpayers Ass'n v
L'Anse Creuse Public Schools, 455 Mich 1, 8; 564 NW2d 457 (1997). Likewise, under MCR
2.625(A)(1), costs may only be awarded to the prevailing party. Because we find that summary
disposition should have been granted to defendant, plaintiff is not entitled to actual costs. See,
e.g., Meagher v Wayne State Univ, 222 Mich App 700, 729; 565 NW2d 401 (1997) ("prevailing
party" ultimately means "a party who wins on the entire record"); see also MCR 2.625(B)(2).
We affirm in part, reverse in part, and remand for entry of summary disposition in favor
of defendant. We do not retain jurisdiction.
/s/ Donald S. Owens
/s/ Richard A. Bandstra
/s/ Christopher M. Murray
-4-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
