Michigan Court of Appeals Strikes Down Local Ordinance Mandating Contractors Pay Prevailing Wage Rates

Shared with permission of Miller Canfield who authored the write-up. This message is for general information only and should not be used as a basis for specific action without obtaining further legal advice.

Can a Michigan municipality require contractors to pay union-level wages when they are awarded government contracts? On December 8, 2022, a 3-0 panel of the Michigan Court of Appeals answered the question in the negative. The court found that a policy adopted by Meridian Township, Michigan violated a 2015 state law known as the Local Government Labor Regulatory Limitation Act (LGLRA), which forbids local governments from requiring contractors to pay their own employees union-level wages.

A prevailing wage is the basic hourly rate of wages and benefits paid to similarly employed workers in a given trade or profession, usually tied to a specific geographical area. One of the principal reasons for prevailing wage laws is to ensure that government dollars do not weaken existing local wage and benefit rates and to attract a certain level of skilled workers.

In 2021, Meridian Township adopted guidelines that purported to require any contractor doing work relating to projects, property, and expenditures over $50,000 for the Township to pay “the prevailing wages and benefits…for corresponding classes of craftsmen, mechanics, and laborers as determined by the United States Department of Labor for the Ingham County area.” A trade association filed a lawsuit alleging that these guidelines violated Michigan state law.

The trial court entered judgment in favor of the trade association, finding that the Guidelines inappropriately required employers working on Township projects to pay a prevailing wage, in violation of the LGLRA. The Court of Appeals affirmed in a published opinion. The court explained that although a local government may adopt a policy or resolution setting forth the terms and conditions of its own contracts, it cannot “requir[e] an employer to pay to an employee a wage or fringe benefit based on wage and fringe benefit rates prevailing in the locality” (citing to MCL 123.1386). To be sure, the court noted that Michigan law does not forbid a municipality from entering into a contract with an employer who voluntarily pays employees the local prevailing wage. Nor does state law prohibit municipalities from deciding—on a case-by-case basis—to give a contract to an employer that pays the prevailing wage. But a township’s requirement that all employers working on township contracts pay prevailing wages runs afoul of state law.

Municipalities across the State should be vigilant to ensure that their ordinances and resolutions fully comply with state law, including LGLRA.

Should you have any questions or concerns about this how the Court of Appeals decision may affect your organization, please contact your municipal attorney.

 

Jennifer Rigterink is the League’s assistant director of state and federal affairs handling economic development, land use and municipal services issues. She can be reached at jrigterink@mml.org or 517-908-0305.

Helpful Information as Extreme Weather Begins to Impact Michigan

Extreme weather has already been affecting parts of the nation and is quickly moving into Michigan.

Rain, heavy snowfall, bitter cold and high winds are in the current forecast for Michigan beginning today, Thursday, Dec. 22. This winter weather event may cause power outages throughout state.

The state’s two largest energy providers have been closely monitoring this severe weather and are ready to mobilize for customer restoration. As you’re preparing to keep your communities and residents safe, we want to share a couple of pieces of information that may be helpful should you encounter an outage in your community.

Below, please find contact information that corresponds to your community for Regional Managers with DTE and Area Managers with Consumers Energy.

DTE Regional Manager Map

Consumers Energy Area Manager Map

Consider:

  • Providing a 24/7 contact to the appropriate area or regional manager in the event they need to contact you.
  • Providing contact information to the appropriate area or reginal manager for your Department of Public Works contact and/or Road Agency primary contact for the holiday weekend in the event there are situations where roads need clearing to restore power.

As you work through what may be a challenging few days over the holiday weekend, please stay safe as you manage the impacts of this winter storm.

John LaMacchia is the League’s director of state & federal affairs. He can be reached at jlamacchia@mml.org or 517-908-0303.

Trainings Set and New Schedule for Live with the League in 2023

There are several upcoming trainings and an update to our Live with the League schedule for 2023 that we want our members to know about.

Starting in January 2023, our regular Live with the League conversation with the Michigan Municipal League’s Lansing legislative team will take place at noon on the second and fourth Mondays of each month. This is a slight change from the previous schedule of every other Monday. This change is expected to help our members better plan to attend the show on a regular basis knowing the dates are set for the calendar year. The next several Live with the League discussions are on our events calendar here. The conversation is free to attend, but we do ask that you preregister here.

Also, for the first half of the New Year, the League has several webinars and events planned to assist our members. Here’s the schedule of key events for the first half of 2023:

Also, for your planning purposes our annual Convention is taking place in 2023 in Traverse City from Oct. 18-20. Mark your calendars!

We’re looking forward to seeing returning members and new members at our many events in the New Year!

Join Us for Live with the League at Noon Monday, Dec. 12

As the state Legislature wraps up the current legislative session and a new class of lawmakers get ready to take office, the Michigan Municipal League is here for you to break it all down.

Our next Live with the League discussion at noon Monday, Dec. 12, we will cover legislative activity during this Lame Duck period of the state Legislature and what to expect heading into 2023. Register here for the free event.

Other discussion topics include a package of housing bills that cleared the House and Senate, changes to Public Act 33 regarding special assessments for police and fire, short-term rentals, and more.

We also will have a guest on the show to discuss upcoming events you won’t want to miss.

While Live with the League is free to attend, we do ask that you preregister at this link.

Successful Legislative Session Capped with Uneventful Lame Duck

The legislative session that came to an end early in the morning on December 8th capped a very successful stretch for municipalities over the past two years. In recent months we have secured billion of dollars in funding for water and sewer projects, parks and recreation, housing, economic development, revenue sharing and legacy costs. Important policy changes have been put into place to give us more tools to develop attainable housing, fund public safety costs, and respond to the impacts of covid.

Lame duck added to this success as we once again held off legislation that would erode the ability for municipalities to reasonably regulate short-term rentals. For six years we have fought this battle, and our members, through their voice and advocacy on this issue, have prevailed again in protecting local control.

We also completed an eight-year journey to improve waste management, increase recycling rates, accommodate for new forms of materials management, and prioritize local input within the planning process. In a surprising post-election pivot, the Part 115 solid waste and materials management rewrite was revived from Senate Regulatory Reform and swiftly discharged to the Senate floor on Wednesday morning. On the Senate floor, amendments were adopted to accommodate advance recycling and meet the needs of our members to manage the location of materials management facilities by protecting local zoning authority. The bills were passed with minimal opposition and concurred with strong support in the House. The full package will now move to the Governor’s desk and it is expected she will sign it.

After an election that saw both the House and Senate flip control to democrats, the consensus was that lame duck activity would be minimal. That proved to be true as the legislature only met for three days during lame duck. The amount of potential activity was predicated on the ability for the Governor and legislative leaders to negotiate one final budget supplement. Negotiations ebbed and flowed over the course of the last week, but eventually fell apart late in the evening on Wednesday. With a deal unable to be secured, many of the bills scheduled for legislative action were shelfed for the year. This included a few pieces of legislation the League was supporting.

On the Personal Property Tax front, the League had worked collectively with the Administration, the Senate, the House, and other stakeholders to create a mechanism to reimburse locals for lost revenue that will now occur do the expansion of the small taxpayer exemption from $80k to $180K. These bills passed the Senate unanimously and were on the House agenda to be passed in lame duck but received no action after the budget negotiation ended. Senate Bills 1060, 1061, and 1062 will need to be reintroduced next session.

One other item that was also a casualty of the failed budget negotiations was shifting the cost of the disabled veteran property tax credit from the locals to the state. Last week Senate Bills 783 and 1184 passed the Senate with broad bipartisan support. It was anticipated that these bills would also receive similar support in the House. On the last day of session, these bills were amended on the House floor to expand the exemption, increasing the cost by over $150M. While the bills were able to pass the House with the expanded exemption, agreement with the administration could not be reached to cover this additional cost. These bills did not receive the needed concurrence vote in the Senate and this issue will have to be address in the next legislative session.

As 2022 comes to a close, and we begin to look forward to 2023, there will be a tremendous  opportunity to build on the success of the last two years. We will continue to focus on issues that improve our communities, address structural issues within our municipal finance system, and protect local decision making so municipalities can create specific solutions to meet their individual needs.

John LaMacchia is the League’s director of state & federal affairs. He can be reached at jlamacchia@mml.org or 517-908-0303.

Grant Funding Available to Add Fitness Courts to Your Communities

The Michigan Municipal League wanted to let our members know about an exciting grant opportunity that could enhance the existing recreation areas in your communities by adding a fitness court. More than two dozen Michigan communities have already added these fitness courts to areas in their communities and your community could be next.

Priority Health has continued their statewide partnership with National Fitness Campaign (NFC) to launch $500,000 in grant funding for future-ready cities and schools across Michigan. The goal of this partnership is to support the funding of healthy communities throughout the state of Michigan.

Visit www.nationalfitnesscampaign.com/michigan to learn more and qualify for funding and partnership opportunities.

This grant funding will be allocated to support municipalities across the state in joining the growing NFC wellness campaign building healthy infrastructure to smart cities and schools of the future. NFC’s award-winning initiative is now planning its 500th Healthy Community in America and is poised to deliver vital outdoor wellness programs helping to fight the obesity epidemic across the country.

If you are not yet familiar with the campaign, the program is designed to bring world-class healthy infrastructure to public spaces, along with consulting, funding, and community programming support, and was formed in response to the growing health crisis in America caused by sedentary lifestyles. Please watch the National Fitness Campaign 3-minute video describing the program: Campaign Video.

A number of Michigan communities already have these fitness courts, including Big Rapids, Saginaw, Roseville, Kalamazoo, Canton, and Grand Blanc.

Through the continued partnership, Priority Health and NFC will work with municipalities who believe wellness is a priority, to bring the campaign to cities and schools across Michigan in 2023, with the goal of making free, world-class fitness accessible to all. Click here to get started.

National Civility Summit for Local Government is Dec. 7 – Free for All Attendees

Sharing this from our partners at the National League of Cities. This is a free webinar about civility in local government. We thought our members may be interested in attending virtually. While it’s geared toward NLC members, your community does not have to be an NLC member to attend for free.

National Civility Summit for Local Government

 

In partnership with the National League of Cities and the Iowa League of Cities, the Center for Public Democracy at Drake University will host the first annual National Civility Summit for Local Government on Wednesday December 7, 2022.

 

Join online Wednesday, December 7 from 11:00am – 3:00pm EST for a discussion on the civility and leadership challenges impacting communities.

 

Municipal government is closest to the people, literally and figuratively. Local government officials are connectors and leaders in their community and often the most accessible to the constituents they serve. Local leaders are the best conduit to carry the message of civility forward. The National Civility Summit for Local Government will provide local government officials, elected and appointed, with the tools and best practices needed to lead an engaged and participatory government.

 

Register Here: Webinar Registration – Zoom.

Veteran Property Tax Exemption Bills Pass Senate

The Senate on Tuesday approved legislation that would provide municipalities financial relief for providing military veterans’ property tax credits, while ensuring eligible veterans continue to receive the tax relief through the current process.

Senate Bills 783 and 1084 would maintain the same level of tax relief for 100% disabled veterans and would transform the benefit from a property tax exemption to an income tax credit to ease the burden on local governments. The process for eligible veterans to claim their credit would remain the same, while cities, villages, townships, and counties would get much-needed financial relief from the state.

The legislation now advances to the House for consideration next week when they are in session. We are actively engaging with legislators to secure passage and get this important legislation to the governor’s desk for signature.

 

Jennifer Rigterink is the League’s assistant director of state and federal affairs handling economic development, land use and municipal services issues. She can be reached at jrigterink@mml.org or 517-908-0305

Senate Concurs in Housing Bills

Two weeks ago when the legislature was in session the House took up and passed four housing bills. Yesterday, the Michigan Senate voted to concur with the House, and the bills now head to Governor Whitmer for her signature!

The legislation expands programs to allow local units of government to work with developers, builders and non-profits to rehabilitate and expand workforce housing in their area.

The Housing Michigan Coalition, led by the Michigan Municipal League, Home Builders Assoc. of Michigan, Grand Rapids Chamber, and Housing North, have worked for two years to get these bills through the process. Special thanks to Senators Winne Brinks, Ken Horn, Jeremy Moss, Wayne Schmidt, and their teams, for their leadership on this important issue.

 

SB 362Attainable Housing Facilities Act – Senator Winnie Brinks
Local governments may create an “attainable housing district” where property owners can apply for partial tax exemptions, reducing real property taxes to 50% of the average statewide commercial, industrial, utility for up to 12 years if they meet certain affordability criteria determined by the local unit of government. That criteria would include providing units at a price point that does not exceed 120% of the county-wide median income threshold for at least 30% of units in a multi-unit development. Local governments will have the flexibility to negotiate more than the listed thresholds to align with their housing needs and goals. This tool can only be used for 4 or less rental units and requires a minimum of $5,000 investment.

SB 364Neighborhood Enterprise Zone Expansion – Senator Jeremy Moss
Establishing a Neighborhood Enterprise Zones (NEZ) has supported investment for infill revitalization for owner-occupied housing and mixed-use buildings in eligible communities for decades. With so many communities across Michigan facing an urgent shortage of housing, this bill extends the opportunity to utilize this tool in all Michigan cities, villages and townships. Local units of government subject to the expansion may designate an NEZ if the project encourages compact development, is adjacent to existing development and utilizes existing infrastructure. This tool can be used for households up to 120% AMI.

SB 422Residential Facilities Exemption Act – Senator Ken Horn
The creation of a Residential Facilities Exemption would allow a temporary tax abatement on qualified new housing development in districts established by local units of government similar to the attainable housing district legislation. The abatement would enable renovation and expansion of aging residential units and assist in the building of new residential units to support workforce housing supply. The tool is similar to SB 362 with 30% of units required to be income-restricted to no more than 120% AMI. Qualified new housing developments may include multifamily or units in a multi-use structure with assurances that the units are occupied as a principal residence (year-round) to eligible households. This tool shall be used for projects with more than four units and requires a minimum investment of $50,000.

SB 432PILOTS for Housing – Senator Wayne Schmidt
This expansion allows local units of government the discretion to allow a payment in lieu of taxes (PILOTs) agreement for residential development or rehabilitation. The local unit of government would set a policy to establish what conditions it would consider to offer a PILOT. The owner of an approved project would then pay an annual service charge that is the greater of tax for the property for the previous year or 10% of annual shelter rents obtained for new construction. For rehabilitation projects, the charge would be the lesser of the tax on the property the previous year or 10% of annual shelter rents. Currently (without this change), local units of government can only offer PILOTs in conjunction with approved state or federal programs/subsidies in a project.

Jennifer Rigterink is the League’s assistant director of state and federal affairs handling economic development, land use and municipal services issues. She can be reached at jrigterink@mml.org or 517-908-0305.

PA 33 Population Cap on Municipalities Removed With Passage of HB 5248

On Tuesday, the Michigan Senate convened for an action-packed day to move final items of legislation before the conclusion of the 2021-2022 legislative term. Among those bills was HB 5248, sponsored by Representative Steenland.  HB 5248 would eliminate the current 15,500 population cap applied to cities and villages utilizing or seeking to utilize the PA 33 special assessment for police and fire. This change would add a requirement for cities and villages with a  population above 15,500 to first bring the question of raising money by special assessment and the amount of the special assessment to be levied annually, with a majority of electors in the district supporting the special assessment.

The bill passed the House of Representatives in early May 2022 and was brought before the Senate Local Government committee in early November 2022. The Michigan Municipal League offered testimony alongside Representative Steenland in support of the bill, and the City of Roseville also provided testimony.

Limited session days did not allow for a committee vote. Thus, the bill was discharged to the Senate floor on November 29 and was taken up for a vote on the Senate floor the same day. HB 5248 passed with overwhelming support, 31-6-1, and will now go to the Governor’s desk for her signature.

The League has long advocated removing the PA 33 population cap on cities and villages. Legislation to make this change has been introduced but unsuccessful over the last 4 terms. Within the current statute, there is no population cap applied for townships. Most recently, the population cap for cities and villages was extended from 15,000 to 15,500 due to the 2020 Census (HB 4281 from Rep. Garza) . After both the 2010 and 2020 Census counts, the Michigan Legislature was rushed to make adjustments to the statute to accommodate municipalities that stood to immediately lose critical public safety funding. The League was able to point to this occurrence as a clear example of why this change was needed. This fix would address the disincentive for growth that discriminated against cities and villages and ensures the future Census counts did not jeopardize funding for public safety operations. Additionally, this will provide a tool for larger municipalities to seek additional revenue for more reliable services and competitive opportunities for public safety professionals.

Once signed by Governor Whitmer, HB 5248 would incorporate all existing carveouts for communities impacted by population shifts in PA 33.  This will support expanded funding options for local communities, increase available resources, and strengthen collaboration opportunities for critical public safety services.

Herasanna Richards is a legislative associate handling energy, environmental, elections, and external municipal services for the League. She can be reached at hrichards@mml.org or 517-908-0309