So You Received a Notice of Eligibility to Incorporate as a Charter Township, Now What?
In early January, many townships across the state received a Notice of Eligibility to Incorporate as a Charter Township from the Michigan Secretary of State. If your township received such a notice, below are some answers to frequently asked questions and some helpful information to assist you with determining what your options are.
What is the Notice of Eligibility and Why is my Township Receiving One?
Under the Michigan Charter Township Act (Public Act 90 of 1976), a general law township having a minimum population of 2,000 inhabitants is authorized to adopt the Charter Township Act and incorporate as a charter township. The Office of the Great Seal is required to notify all townships with a minimum population of 2,000 (excluding the population of any incorporated village) that they are eligible to incorporate as a charter township. The certifications and notices of eligibility being received by many townships in early 2022 are being issued to certify that those townships have a population of greater than 2,000 according to the recent decennial United States census.
Does My Township Need to Do Anything After Receiving a Census Notification?
Yes! Even if your Township has no present intention of incorporating as a charter township, the Act requires the clerk of an eligible township to prepare a Notice of Eligibility to Incorporate and Right of Referendum for publication in a newspaper of general circulation within the township. The notice must be published twice – the first time within 15 days following receipt of the notification from the Office of the Great Seal, and the second time 7 days after the first notice. As a practical matter, the publication requirement seems somewhat pointless because the right of referendum would only arise if the Township Board elected to adopt a resolution of intent to incorporate as a charter township (as discussed below). Nevertheless, the way the statute is written and interpreted by the State of Michigan, and the Michigan Townships Association, the publication requirement is mandatory.
Beyond preparing and publishing the mandatory notice, townships have the following options once they receive a certificate of eligibility from the Office of the Great Seal:
- Adopt a resolution opposing incorporation as a charter township.
- Adopt a resolution of intent to incorporate, wait at least 60 days, and then, if no valid petition of disagreement is submitted (signed by not less than 10% of the number of electors of the township voting for the township supervisor in the last election), adopt a second resolution actually incorporating as a charter township.
- Adopt a resolution submitting the question of incorporation to the electors.
- Take no action.
Significantly, the option to incorporate by resolution (with the right of referendum based on a petition of disagreement), is available at any time during the subsequent decade. There is no legal requirement to re-publish the notices discussed above after the initial two publications triggered by the Office of the Great Seal notice. However, it is advisable that if a long time has passed between the publication and when a township adopts a resolution of intent to incorporate, that repeat notices be published.
Should My Township Incorporate as a Charter Township?
The decision of whether to incorporate as a charter township or not is a value judgment which can only be made by each township after considering the facts, circumstances and implications of the Charter Township Act. Generally speaking, charter townships and general law townships are very similar in organizational structure and powers. However, there are some key differences:
1. Organizational Structure and Operation
In a charter township, all legislative authority and powers are vested in a seven-member township board comprised of a supervisor, clerk, treasurer and four trustees. A quorum of four members must be present at a meeting to conduct business. If an eligible general law township incorporates as a charter township and has only two trustees, the additional two trustees must be elected at the first general election held following incorporation. The Charter Township Act also affords supervisors with broader authority than in a general law township, as it allows the township board to delegate certain legislative powers/duties to the supervisor (or a superintendent). For example, in a charter township, police and fire officers could be appointed by the supervisor, as opposed to the township board, if the board has delegated that that authority.
A charter township can operate in essentially the same manner as a general law township without any additional costs, with the exception of adopting ordinances. State law requires additional publication of an ordinance before and after it is adopted. A charter township is also authorized to adopt any state law as an ordinance by reference. General law townships, by contrast, can only adopt certain codes such as the Uniform Traffic Code or the International Property Maintenance Code by reference.
2. Protection from Annexation
The Charter Township Act grants enhanced protection from annexation to any adjacent village or city if certain statutory criteria are met. These criteria include: 1) State equalized valuation of at least $25 Million; 2) a minimum population of 150 persons per square mile (not including any incorporated village); 3) the township must provide fire and police protection, solid waste disposal, and water and/or sewer services by contract or some other method; and 4) the township must have a comprehensive zoning ordinance and master plan. The statutory exemption from annexation in the Charter Township Act, however, does not prevent township territory from being annexed if the action is initiated by citizens themselves.
3. Taxing Authority
Charter township taxes are not subject to allocation or to the same constitutional tax limitations as general law township taxes. Article IX, Section 6 of the Michigan Constitution, which imposes the 15 and 18 mill tax limitations on real and personal property taxes, specifically exempts charter township taxes from those limitations. The Charter Township Act requires the township board, in adopting its budget for the next fiscal year, to provide a levy of taxes upon real and personal property that cannot exceed 1/2 of 1% of the assessed valuation of all real and personal property subject to taxation in the township. This is often referred to as the “5-mill charter millage.” The Act also authorizes the electors of a charter township to vote to increase the township’s total tax levy, not to exceed a total of 1% of the assessed value of all real and personal property subject to taxation in the township, which is often called the “10-mill limit.”
Any township discussing the merits of converting to a charter township should be aware of a recent major change in the law with respect to charter township status and taxing authority. Last September, the Michigan Court of Appeals issued its decision in Oshtemo Charter Township v. Kalamazoo County, which rejected a long-standing interpretation of the Headlee Amendment and Charter Township Act. Prior to this decision, it had been accepted that if a general law township converted to charter township status by resolution, without a vote of the electors, it was limited to the tax rate previously authorized for it as a general law township, not the higher 5 mill tax rate authorized for charter townships. The Court of Appeals refused to follow the Attorney General Opinion which established that interpretation, and instead held that Oshtemo Charter Township, which converted to a charter township by resolution after adoption of the Headlee Amendment, was entitled to levy up to 5 mills without a vote of the electors. Presumably, that 5 mills would be reduced by successive operation of the Headlee Amendment from the time it incorporated. The Oshtemo Charter Township case was a published decision which is binding precedent in Michigan and has not been appealed to the Michigan Supreme Court.
This ability to levy up to 5 mills without a vote of the electors may factor into a township’s decision to incorporate as a charter township because it could allow a township board to levy a sufficient millage to cover funding for various things like fire or police services without having to seek voter approval.
If your township received an eligibility notice from the Office of the Great Seal and is considering its options, Mika Meyers’ municipal attorneys are available to offer advice and assist you throughout the process.