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.

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

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 362: Attainable 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 364: Neighborhood 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 422: Residential 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 432: PILOTS 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.

Last week the House passed four bills to assist municipalities, developers and builders to address the state’s housing crisis. The legislation is aimed at creating partnerships between stakeholders to build and rehabilitate affordable and attainable housing.

SB 362: Attainable 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 364: Neighborhood 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 422: Residential 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 432: PILOTS 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.

Housing Michigan, a 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. The legislation now heads back to the senate for a concurrence vote and then 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.

**Update – HB 4722 was voted out of committee and now sits on the senate floor awaiting a full chamber vote. It passed 6-3 with Senators Ruth Johnson, Dayna Polehanki, and Paul Wojno opposing. Senator Jeremy Moss was not in attendance.

Moments ago the Senate Regulatory Reform Committee added House Bill 4722 to its 9:30 a.m. meeting agenda happening in approximately 30 minutes. Contact your state senator and urge them to oppose HB 4722 should it be brought up for a vote!

The legislation seeks to eliminate a municipality’s ability to regulate short-term vacation rentals. It does not include any compromises local government groups have put forth seeking a middle ground. As the market proliferation of short-term rentals continues unabated, it is clear Michigan needs a balanced compromise. House Bill 4722 is not it! HB 4722 only exacerbates Michigan’s housing crisis.

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305

**UPDATE – The Governor signed HB 5981 on October 7, 2022. It is now Public Act 206 of 2022 and has IMMEDIATE EFFECT. Details to review bolded below:

• “Qualified residential treatment program” means that term as defined in section 1 of 1973 PA 116, MCL 722.111.
• Sec. 206. (1) Except as provided in subsection (2), each of the following is a residential use of property for the purposes of zoning and a permitted use in all residential zones and is not subject to a special use or conditional use permit or procedure different from those required for other dwellings of similar density in the same zone:
  (a) A state licensed residential facility.
  (b) A facility in use as described in section 3(4)(k) of the adult foster care facility licensing act, 1979 PA 218,
  MCL 400.703.
  (c) A qualified residential treatment program that provides services for 10 or fewer individuals.

*UPDATE – The House took up HB 5981 the same day it was returned from the Senate for a concurrence vote. It overwhelmingly passed 90-18. The bill now heads to the Governor. If signed into law, municipalities will be preempted, and qualified residential treatment programs (QRTP) housing 10 individuals or less will be a permitted use in all residential zones, not subject to any special use or conditional use permit.

Thank you for answering the call to engage yesterday and contacting your state Senator! Unfortunately, we were not successful in holding off passage of House Bill 5981. It now heads to the House for a concurrence vote. Please talk to your state Representative about why they should oppose HB 5981 even if they supported it previously.

The legislation is part of a multi-bill package prioritizing the placement of children under the care of relatives and close family friends as well as other foster care reform measures. HB 5981 is not that and it is not tie-barred to any of the other bills. It was tucked in with the package to provide cover. It is not being done because of any federal requirements, nor is it necessary because there aren’t enough qualified residential treatment programs (QRTP) in our state. HB 5981 is about one entity refusing to go through its local government process.

An amendment was adopted yesterday limiting the number of children in a QRTP to 10. This is inconsistent with existing state law that states six or fewer (for example, adult foster care facilities in residential), so the League opposed the amendment. Having a requirement of 10 individuals for some facilities and six for other licensed facilities will cause confusion and possibly unintended discrepancies in practical application.

A big thank you to Sens. Betty Jean Alexander, Jon Bumstead, Jeff Irwin, Jeremy Moss, Jim Runestad, Lana Theis, Paul Wojno, Doug Wozniak and Dale Zorn for standing strong with local government and understanding this bill is not like the others.

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.

House Bill 5981 is to be taken up for a vote on the Senate floor today (this morning). Call your State Senator and urge them to vote NO on the bill as reported from committee!

HB 5981 will preempt local zoning authority and require residential treatment programs to be a permitted use in all residential zones, not subject to any special use or conditional use permit.

Qualified residential treatment programs (QRTP) provide trauma-informed treatment for up to 25 children per location and require staffing 24 hours a day / 7 days a week by medically licensed personnel. This bill becoming law would permit a use that does not fit into a residential setting given the type of facility, requirements, and intensity of use. HB 5981 will stop your municipality from providing compatible uses within a zone and it will not allow you to have buffering or adequate parking standards apply to the QRTP.

This bill IS NOT being done because of a federal requirement. It is being pursued by one company that refuses to go through the local process and apply for a special land use permit with their local unit of government.

The MML has testified in opposition to the bill and has worked on an amendment to put these programs in line with other state-licensed facilities.

If an amendment is adopted on the Senate floor limiting the number of individuals to six or fewer (mirroring existing law for adult foster care facilities), the MML will be neutral on the bill. While not ideal, it is a fair compromise to avoid the all-out preemption being pushed for.

Please call now and tell your Senator you oppose HB 5981 as reported from committee and why they should oppose it too.

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.

The Marijuana Regulatory Agency (MRA) issued a notification today that the adult-use establishment licensing process will be modified regarding the touchpoints between the MRA and municipalities.

As a result of proposed updates to the administrative rules for marijuana business licensing (which are expected to take effect in early March) changes will be made to the process in which the MRA confirms municipal compliance for adult-use establishment applicants and licensees.

The MRA requests confirmation of compliance from a municipality via a signed attestation. Currently, the applicant must have this attestation completed before submitting their establishment license application. Once the updated administrative rules are effective, the MRA will request confirmation of municipal compliance from the municipality after a complete license application is submitted to the MRA. This confirmation request will come via an email and will be the opportunity for the municipality to notify the MRA if an applicant is not compliant with municipal ordinances.

If a municipality does not notify the MRA that the proposed applicant is out of compliance with municipal ordinances, and the applicant otherwise qualifies for the license, the MRA will issue a state license to the applicant.

The new process will not take effect until the updated administrative rules go into effect. The MRA will notify municipal officials when the rules and new process for adult-use licensing take effect. No changes have been proposed to the medical marijuana facilities existing touchpoints with municipalities at this time.

Questions regarding this upcoming change should be sent via email to MRA-AdultUseLicensing@michigan.gov

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.

The Revitalization and Placemaking (RAP) Program is an incentive program that will deploy $100 million in American Rescue Plan funding to address COVID-19 impacts in Michigan communities.

The draft PDF application is now available for viewing on the RAP program website, along with the expanded Frequently Asked Questions document.

More information on the program can be found at michiganbusiness.org/rap. Reach out to cdincentives@michigan.org with any questions or comments about the RAP program.

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305.