Marposs Corp. v. City of Troy

Citations: 514 N.W.2d 202; 204 Mich. App. 156Docket: Docket 137121

Court: Michigan Court of Appeals; March 18, 1994; Michigan; State Appellate Court

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MARPOSS Corporation filed a lawsuit against the City of Troy challenging its refusal to consent to a tax abatement under the Technology Park Development Act. MARPOSS aimed to relocate its facilities to a technology park in Auburn Hills, which offered the abatement contingent upon Troy's approval. Troy's objection to the move blocked the abatement but not the relocation itself. MARPOSS alleged several claims: waiver of the right to object (count I), abuse of discretion (count II), conflict with legislative intent (count III), and violation of equal protection rights (count IV). 

The trial court ruled in favor of Troy on counts I and IV, but in favor of MARPOSS on counts II and III. On appeal, the court affirmed the trial court's decision regarding waiver, stating that minor procedural missteps by Troy did not constitute a waiver of its objection rights. The key issue was whether the act grants Troy the absolute power to veto tax exemptions for businesses relocating to a technology park. The act's preamble outlines its purpose to establish technology park districts and provide tax exemptions, with specific requirements for approval of tax exemptions. Notably, an application cannot be approved if employment transfers exceed 20 full-time positions without proper notification and potential objections from the local units involved. Troy contended that the statutory language provided it with an unequivocal right to veto the abatement.

Plaintiff argues that granting absolute discretion under the statute renders it unconstitutional and asserts that the statute should be interpreted to allow for a review of the defendant's objections under an abuse of discretion standard. Specifically, the plaintiff contends that since the defendant did not base its objection on job loss, the objection constitutes an abuse of discretion, thus blocking the tax abatement should not be permissible. The document outlines that legislative bodies cannot delegate their lawmaking powers and must provide defined standards for subordinate bodies or officials. A permissible delegation exists when there are adequate standards guiding decision-making; however, unlimited discretion leading to alterations of statewide policies is unconstitutional. 

To assess constitutional validity, the statute must be read holistically, with the provision in question interpreted in context, ensuring standards are precise and that the statute confers administrative rather than legislative power. Due process must also be met. The conclusion drawn is that the statute is unconstitutional because, while it aims to foster technology parks and offers communities the ability to object to tax incentives, it lacks clear guidelines for valid objections or standards for assessing the reasonableness of such objections. Thus, the defendant's claim of having absolute discretion is deemed not irrational.

An absolute grant of discretion under the statute is deemed unconstitutional as it enables favoritism and discrimination. The provision allowing objections does not provide constitutionally sufficient standards, particularly as it limits objections to communities suffering losses of more than twenty jobs, leaving ambiguity on valid criteria for objections. The statute does not clarify the relationship between job loss and population or whether job loss is the sole basis for objections. This lack of clarity results in an unconstitutional delegation of power. Furthermore, the reasons given by the defendant for their objection to tax abatement do not align with the statute's intent, which is to promote high-tech industry development rather than address economic decline. Consequently, the objection is viewed as an abuse of discretion and insufficient to block the tax abatement. A dissenting opinion argues that the Technology Park Development Act is constitutional, asserting that the Troy City Council acted within its legislative authority in objecting to the transfer. The dissent emphasizes that city councils possess legislative functions similar to zoning authority, and the majority's interpretation mischaracterizes the council's role as an administrative agency. The dissent affirms that municipal entities have broad legislative powers as granted by state constitution and statutes.

The Separation of Powers Clause in the state constitution prohibits the executive and judicial branches from encroaching on legislative authority. The Tax Increment Financing Act (TPDA) grants Troy the right to veto tax exemptions without strict standards or guidelines, as this is an authorization from the Legislature to local legislative bodies rather than a delegation of authority to an administrative agency. The constitution allows this delegation, permitting municipalities to execute their legislative will. The central legal question is whether the Troy City Council's objection to a tax exemption was arbitrary and unreasonable.

Judicial restraint in legislative matters is emphasized, with courts allowed considerable latitude in reviewing laws. The critique that Troy acted unreasonably for objecting on economic grounds is dismissed, as the statute requires that tax exemptions must be likely to increase economic activity or employment in the local area. Amendments to the TPDA demonstrate legislative concern for economically distressed areas, further supporting Troy's objection. The argument against the statute's purpose in revitalizing depressed areas is countered by the statute's provisions, which highlight the Legislature’s intent to protect economically vulnerable regions. Overall, Troy's objection is deemed reasonable in light of the legislative framework and the context of economic concerns.

The urban legislative majority would likely support the concept of an unconditional right to object only if it specifically targeted out-of-state high-tech businesses, indicating that such a right was extended solely to Michigan municipalities. The statute clearly provides an unconditional right to object, negating the need to analyze legislative intent. The author supports the constitutionality of the statute and the actions of the Troy City Council, advocating for the reversal of the trial court's summary disposition to the plaintiff regarding issues II and III. A claim under the Freedom of Information Act was dismissed by stipulation, and no opinion is offered on the constitutionality of unrelated statutes. The cited cases by the plaintiff, which questioned the delegation of power regarding tax abatements, differ from the current matter, where the delegation of power is accepted, focusing instead on whether any limits exist. Legislative histories are viewed skeptically, with a reference to Justice Scalia's criticism highlighting their unreliability as indicators of legislative intent, especially given the absence of verbatim records in Michigan's legislative process, making them susceptible to manipulation by legislative staff and special interests.