Atlas Valley Golf and Country Club, Inc. v. Village of Goodrich, Docket No. 193580

• Decision Date: 12 December 1997
• Docket Number: Docket No. 193580
• Citation: 575 N.W.2d 56,227 Mich. App. 14
• Parties: ATLAS VALLEY GOLF AND COUNTRY CLUB, INC., Plaintiff-Appellant, v. VILLAGE OF GOODRICH, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 56

575 N.W.2d 56

227 Mich.App. 14

ATLAS VALLEY GOLF AND COUNTRY CLUB, INC., Plaintiff-Appellant, v.VILLAGE OF GOODRICH, Defendant-Appellee.

Docket No. 193580.

Court of Appeals of Michigan.

Submitted Aug. 7, 1997, at Lansing.

Decided Dec. 12, 1997, at 9:25 a.m.

Released for Publication March 10, 1998.

Bellairs Dean Cooley Siler & Moulton, L.L.P. by John P. Siler, Flint, for plaintiff-appellant.

Kohl, Secrest, Wardle, Lynch, Clark and Hampton by Thomas P. McKenney, Farmington Hills, for defendant-appellee.

Before CORRIGAN, C.J., and MARKEY and MARKMAN, JJ.

CORRIGAN, Chief Judge.

In this action challenging defendant's practice of charging nonresidents a sewer connection fee equal to 1.5 times the fee charged residents, plaintiff appeals by right from the orders granting defendant's motion for summary disposition regarding count I and count II of plaintiff's complaint under MCR 2.116(C)(10).We affirm in part, reverse in part, and remand for further proceedings regarding whether the additional amount that defendant charges nonresidents is reasonable.

DefendantVillage of Goodrich charged plaintiff, the owner of a country club and golf course in neighboring Atlas Township, a $96,000 fee to connect its facilities to the sewer system financed by defendant.Genesee County constructed the sewer within the village limits and extended the sewer through Atlas Township in order to connect it to the existing county sewer mains.Atlas Township declined to participate in the project.Genesee County is the owner of the sewer system, but defendant is responsible for all construction and operational costs under the terms of its contract with the county.

Defendant calculates connection charges using the method detailed in Village of Goodrich OrdinanceNo. 52-B.Defendant charges a nonresident such as plaintiff $6,000 a "unit" for each of the first two units of a connection and $3,000 for each additional unit or fraction thereof.This fee is 1.5 times that charged village residents.Defendant determines the number of units assigned to a sewer user using a table of unit factors, which establishes different unit factors for categories of users.The number of units defendant assigns to a country club is based on membership, with .10 units assigned for each member.In accordance with this method, defendant assigned plaintiff thirty units because plaintiff had 298 members at the time it connected to the sewer system.

Plaintiff initiated this action to challenge the validity of the connection fee.In count I of its complaint, plaintiff asserted that defendant's connection fee violates the constitutional guarantees of equal protection, Const. 1963, art. 1, § 2;U.S. Const., Am. XIV, and due process, Const. 1963, art. 1, § 17;U.S. Const., Am. XIV, because it is based on an arbitrary table of unit factors.In count II, plaintiff claimed that defendant lacked statutory authority to charge nonresident users a higher connection fee than resident users and that the fee defendant charges nonresidents is unreasonable.The parties eventually agreed that plaintiff would connect to the sewer without prejudice to its claims.Thereafter, they filed cross-motions for summary disposition under MCR 2.116(C)(10) on stipulated facts.The trial court granted defendant's motion regarding count II because it determined that defendant had the authority to charge nonresidents a connection fee 1.5 times that charged residents.The court reasoned as follows:

It's clear both in the Constitution and the statutory authority that villages have the authority to operate a sewage treatment facility both inside and outside of its corporate limits.And implicit in that is the power to prescribe fees for those services.

It would be ludicrous to suggest that a municipality has the authority to provide the service but couldn't charge for rendering that service.

The case of Plymouth versus Detroit, 423 Mich. 106[, 377 N.W.2d 689(1985)], indicates that the municipality may charge a reasonable fee.Reasonableness is the standard that is to be applied in determining whether the fee schedule is appropriate or constitutional.

So, the Court rejects the contention that the defendant does not have the authority to charge a reasonable fee.

Further, the Plymouth case also stands for the proposition that within the context of reasonableness there may be a differentiation between the fee assessed to residents as opposed to the fee assessed to nonresidents.

So, on the section issue, the defendantVillage of Goodrich prevails.

The court denied the parties' respective motions regarding count I because the motions were premature.

Plaintiff renewed its motion for summary disposition regarding count I after further discovery.The trial court denied the motion and granted summary disposition in favor of defendant because plaintiff did not present evidence to overcome the presumption that defendant's use of the table of unit factors in determining connection fees was reasonable.

I

Plaintiff first argues that the trial court erroneously determined that defendant had statutory authority to charge nonresidents 1.5 times the connection fee charged residents.This Court reviews questions of law de novo.In re Lafayette Towers, 200 Mich.App. 269, 273, 503 N.W.2d 740(1993).Villages, such as defendant, enjoy only those powers that the state grants them through constitutional provision or statute.Sebewaing Industries, Inc. v. Village of Sebewaing, 337 Mich. 530, 543, 60 N.W.2d 444(1953).Under Const. 1963, art. 7, § 24, a village may "acquire, own or operate" public service facilities for supplying sewage disposal.A village may also "provide sewage disposal services outside of its corporate limits in such amount as may be determined by the legislative body of the ... village...."Const. 1963, art. 7, § 24.However, this constitutional provision is not self-executing, but, rather, requires statutory implementation.Sebewaing, supra at 544, 60 N.W.2d 444.

Genesee County constructed the sewer involved in this case under the County Public Improvement Act, M.C.L. § 46.171 et seq.;M.S.A. § 5.2767(1) et seq.Under the act, defendant village contracted to pay the county for sewer services, including the cost of construction and maintenance.The act provides in pertinent part:

The county agency and a unit of government may enter into agreements for a term up to but not exceeding 40 years whereby the unit of government shall pay the county for the services provided by any improvements and facilities authorized by this act, including the cost of construction and maintenance of the same, from funds collected as rates, charges, or assessments from the users and beneficiaries of the improvements, facilities, and services, or from any other fund available which may be validly used for such purposes.Any contracting unit of government may raise the amounts required to be paid under such agreements by collecting connection charges, and rates, charges, or assessments from the users and beneficiaries of the improvements, facilities, and services within that unit of government, or by levy upon the taxable property of any contracting unit of government having the power to tax in accordance with the same procedure as provided under the general tax laws of the state. ...The rates, charges, or assessments for water, sewage, and sewage disposal services may be fixed in accordance with the amount of water used as measured by water meter readings or by such other methods as may be deemed equitable.[M.C.L. § 46.175;M.S.A. § 5.2767(5)(emphasis added).]

Under the plain language of M.C.L. § 46.175;M.S.A. § 5.2767(5), defendant village may impose a connection charge.

The Legislature also granted villages the general authority to "purchase, acquire, construct, improve, enlarge, extend or repair" a sewer, to "own, operate and maintain the same, within or without its corporate limits," and to furnish the services to users within and without its corporate limits.M.C.L. § 141.104;M.S.A. § 5.2734,M.C.L § 141.103(a), (b);M.S.A. § 5.2733(a), (b).¹A village is authorized to fix the "rate" for the service.M.C.L. § 141.121;M.S.A. § 5.2751;Seltzer v. Sterling Twp., 371 Mich. 214, 219-220, 123 N.W.2d 722(1963).For purposes of the statute, the term "rate" means "the charges, fees, rentals, and rates that may be fixed and imposed for the services, facilities, and commodities furnished by a public improvement."M.C.L. § 141.103(e);M.S.A. § 5.2733(e).A connection charge clearly falls within the ambit of a village's authority to fix the rate for services.Defendant accordingly had the authority to fix and impose a connection charge under the circumstances of this case.The question is whether defendant may charge nonresidents a higher fee than residents.We hold that it may, provided that the charge is reasonable and does not subsidize resident users.

We reject plaintiff's contention that because M.C.L. § 46.174;M.S.A. § 5.2767(4) requires defendant to establish a uniform charge, defendant may not charge nonresidents a higher connection fee.The statute provides:

When the county board of commissioners of a county has authorized and directed the establishment of any of the improvements, facilities, or services authorized by this act, the county agency shall establish just, equitable, and uniform rates, charges, or assessments to be paid to the county for the services rendered thereby.The complete and actual cost of improvements and financing thereof may be included in the amounts fixed for rates, charges, or assessments for services rendered by the county.Where the improvements or facilities are to be acquired, constructed, and financed pursuant to the provisions of [M.C.L. §§ 46.175a,46.175b,46.175c;M.S.A. §§ 5.2767(5.1),5.2767(5.2),5.2767(5.3) ], the rates, charges, or assessments for services rendered by the improvements or facilities shall be set and thereafter changed in...