Zoning permits and property taxes

Asked March 22, 2017, 8:57 AM EDT

is it legal to require a resident to pay their property taxes prior to the issuance of a Land Use permit?

Iosco County Michigan

1 Response

There is no provision in the Michigan Zoning Enabling Act providing such authority and we are unaware of any authority generally allowing that requirement. However, the municipal attorney should be consulted as there may be legal authority that we are unaware of. There has been some interest in this issue in the courts and in the Michigan Legislature, so the issue is likely to evolve over the next few years.

Land use and property taxes are two different issues. In Michigan a unit of local government cannot require a property owner to pay taxes until the taxes are due. A city or a township does not pursue collection of delinquent real property taxes. Such is the authority and process of the county treasurer. The local unit of government only has authority over the current year’s tax roll not the delinquent roll.

There have been municipalities experimenting with the idea that taxes must be paid, or in violation of a zoning or housing code, or otherwise not meeting their obligations on other property, or in some other way, that resulted in a couple of court cases. The legal questions surround whether development approval can be conditioned upon something that is NOT DIRECTLY RELATED to the issue/property at hand.

Two schools of thought are emerging:

  • First, it is lawful to do so as there is a legitimate public purpose associated with ensuring a fiscally responsible development, and why throw good public money after bad, OR why support a project with some type of subsidy if the applicant is not already a responsible party/citizen?
  • Second, is that a community cannot use bad behavior in one setting to disqualify an applicant in another setting as it is mixing an apple and an orange. Courts have long prohibited information on a defendant’s bad behavior in prior settings/circumstances from being admitted as testimony/facts in a case involving a different situation. Prosecutors have to stick to the facts and behavior in the case at hand so as to not bias the outcome. The argument is that this analogy should apply to the instant circumstance (the request for an incentive) as well.

We do not believe the issue has been legally resolved and is likely to take some time and many cases before it is. In the meantime, it is much safer to proceed following the second line of thinking.

There were bills introduced in the last Michigan legislative session that would permit municipalities to take/not take some specific actions if an applicant was not current with his/her taxes. They did not pass.