Information and Statutory Provisions

PROPERTY TRANSFERS

INFORMATION AND STATUTORY PROVISIONS

REVISED 2004

MICHIGAN DEPARTMENT OF EDUCATION

OFFICE OF ADMINISTRATIVE LAW

FOREWORD

Students sitting in our classrooms today are the leaders of tomorrow. It is up to all of us to ensure that we provide them with every opportunity to enrich their lives. As Michigan continues to move ahead and provide quality education for our children, we realize that many resources are used to enhance quality programs in our public schools.

Parents also play an important role in their child’s education. The transfer of property from one school district to another in Michigan has a long history - one that many parents have taken advantage of for more than 100 years.

Transfer of property dates back to 1874, when the Michigan Supreme Court ruled on a dispute involving a boundary change between school districts – Clement v Everest, 29 Mich 19 (1874). The transfer of property is one way that parents can pursue the quality education of their choice for their child.

This document provides a general overview of the present statutory provisions on property transfers as they appear in the Revised School Code. In addition to explaining the property transfer process, it delineates the roles and responsibilities of local and intermediate school districts, and the Superintendent of Public Instruction.

In short, the information in this document should provide helpful information to those who wish to know more about the property transfer process.

Michael P. Flanagan

Superintendent of Public Instruction

The general overview of the property transfer statute was prepared by the staff of the Office of Administrative Law. Information in the article reflects the understanding of the Office of Administrative Law staff regarding provisions of the property statute, and not necessarily those of the Superintendent of Public Instruction.

GENERAL OVERVIEW OF THE PROPERTY TRANSFER STATUTE

The statutory provisions covering the procedures for transferring a parcel of property from one school district to another contiguous school district are found in the Revised School Code, MCL 380.951 et seq.; MCL 380.612; and MCL 388.1010(b). The statutory provisions are included at the end of this document.

Action to seek a transfer of property from one school district to another school district may be initiated by several different means. The most frequently used method, is when a resident property owner (or group of resident property owners) files a petition with an intermediate school district requesting that the property be detached from one school district and attached to another. Another method is initiated by a local board of education or a board of a condominium association filing a resolution with the intermediate school district seeking to have property transferred into or out of the district.

Requirements for Seeking a Property Transfer

When a petition to transfer property is filed, the terms of the statute clearly limit the right to petition to persons who both own and reside on the land to be transferred. Consequently, nonresident property owners do not meet the legal requirements to file a petition to have property transferred. It is not uncommon, however, for property owned by nonresident owners to be transferred from one school district to another. This occurs when a property transfer petition filed by a resident property owner, or a group of resident property owners, includes property owned by nonresident property owners. Petitions filed by a group of resident property owners are often referred to as block transfers.

Another requirement of the statute governing property transfers concerns the number of signatures of resident property owners needed to have a valid petition. The statute requires that two-thirds of the persons who own and reside on the land to be transferred must sign the petition. Thus, if the property is jointly owned by a husband and wife, both must sign the petition in order to meet the two-thirds requirement. If a petition is filed by a group of resident property owners, at least two-thirds of the resident owners whose property is to be transferred must sign the petition. Given this requirement, it follows that in a block transfer up to one-third of the resident property owners who do not sign the petition also may have their property transferred to another district – even against their will. Property belonging to nonresident property owners also may be included in property transfer petitions, provided the petition is signed by at least two-thirds of the resident property owners.

Contiguity is another statutory requirement that must be met; the territory to be transferred must be contiguous to the school district to which it is to be attached. A parcel belonging to resident owners must be contiguous to the district to which it is attached. In a block transfer petition, the territory to be transferred is considered in its entirety when determining contiguity. The Attorney General has issued opinions on the issue of contiguity: territory which touches only at a corner is contiguous; territory separated by a river or a road is considered contiguous.

Meeting of ISD Board(s) to Consider Property Transfer Petitions or Resolutions; Requirements and Responsibilities

It sometimes happens that a property transfer petition may involve more than one intermediate school district. In cases where transferred property would become part of another intermediate school district as well as another local district, the boards of education of both intermediate school districts must sit as a joint board of education to act on the petition or resolution. The superintendent of the intermediate school district where the property transfer petition, or resolution, is filed is responsible for calling and giving proper notice for a joint meeting of the affected intermediate school boards.

Information contained in the notice of the meeting should include: the time and place of the meeting and the proposed alterations in the school district boundaries to be considered by the board. This notice is to be published once at least 10 days before the meeting in newspapers of general circulation in the territory of the affected school districts. It is important to note that the statutory provisions of the Open Meetings Act (MCL 15.261 et seq) about posting notice of board of education meetings should also be followed. The meeting of the intermediate school district(s) should be scheduled in a timely fashion, so that final action on the property transfer is taken before 60 days have passed from the time the petition, or resolution, was filed.

If the territory under consideration for transfer extends into two or more intermediate districts, it must be acted upon by at least a quorum of each of the affected intermediate boards. When intermediate boards meet jointly, they must elect one of their members chairperson and another secretary of the meeting. Further, some board members may not be eligible to participate in the proceedings. Section 612 of the Revised School Code (MCL 380.612(2)) prohibits a member of an intermediate school board who is a member of a constituent district board from participating in proceedings conducted to detach territory from, or attach territory to, the constituent district of which he or she is a board member. Thus, if an intermediate school board (or joint board) had a member or members who also served on the board of the district that would lose or receive property as a result of the property transfer action, the member(s) would not be eligible to vote or participate in the proceedings.

The statute places a limit on the amount of property that may be transferred by intermediate school district board action in any one transfer. That limit is ten percent of the latest assessed valuation of the entire school district from which the territory is to be detached. A transfer that involves over ten percent of the latest assessed valuation of the entire school district must be approved by an affirmative vote of a majority of the school electors of the district from which the territory is to be detached after the intermediate school board(s) approves the transfer. The Michigan Supreme Court has held that the statute requires a vote of the electors only when the area involved in a single transfer exceeds ten percent of the latest taxable valuation of the school district. It held that the statute cannot be read to require voter approval of transfers which, cumulatively with previous transfers, exceed the limit. Owendale-GagetownSchool District v State Board of Education, 413 Mich 1.

Property Transfer Follow-up Responsibilities of ISDs

What happens when a property transfer petition or resolution is approved by an intermediate school district board (or joint board) and no further appeal is taken by the losing district? Several follow-up activities take place, and the responsibility to follow-up rests primarily with the intermediate school district(s) involved in the transfer. There are some responsibilities, however, that rest with the affected school districts. The follow-up activities and responsibilities are found in Sections 954, 955, 961, and 966 of the Revised School Code.

Responsibilities of intermediate school district boards include:

• Determining the effective date of the transfer, which shall be not less than ten days after the date of the determination.
• Determining whether personal property of a school district is to be transferred.
• Determining an equitable payment to be made to an affected school district for the loss of any real property owned by the district.
• Having a map prepared showing in detail the boundaries of the affected school districts before alteration and the boundaries of territory attached or detached.
• Filing a certified copy of the map with the secretary of each affected school district, with each affected township supervisor or city assessor, with the Office of Administrative Law (Form OS-4143), and the Secretary of State.
• Certify to the Department of Treasury the fact of the transfer, the description of the territory transferred, the bonded indebtedness of the school district from which the territory is detached, the assessed valuation of the school district from which the territory is detached, the assessed valuation of the detached territory, and other information the Department of Treasury may require. (This follow-up responsibility of the intermediate school district occurs if the school district to which territory is attached chooses to pay the school district from which the land is detached the present value of the pro rata bonded indebtedness of the detached territory.)

Property Transfer Follow-up Responsibilities of School Districts

The follow-up activities and responsibilities of the local, affected school districts depend in large part on the timing of the transfer, the bonded indebtedness, and taxes levied in each school district. What must be determined at the time of the transfer is the bonded indebtedness of each affected school district -- the district losing property and the district gaining property. The portion of the taxes on the transferred territory that are for paying off bonded indebtedness stay with (continue to be paid to) the losing district. This arrangement continues only for the bonded indebtedness at the time of the transfer and not for bond levies incurred by the losing district after the transfer.

By the same token, the owners of the transferred territory do not assume the existing bonded indebtedness of the school district to which their property is attached, until the obligation for that bonded indebtedness to the former school district is retired. Of course, bond levies passed in the receiving district after the transfer has occurred are assumed by the owners of the transferred territory. The board of the receiving district, however, may exempt, by resolution, the newly transferred territory from new debt levies for up to three years.

Thus, the main follow-up responsibilities of the affected school districts fall on the district which receives the territory. School officials of the receiving district must certify the required debt retirement levies for the bonds of the losing school district, and the territory over which the levies are to be spread, to the proper taxing officials when certifying other taxes to be levied by the district. Then, when tax collecting officials remit these collections, along with the other tax collections, to the receiving school district, school officials are responsible for immediately transmitting the proper portion for debt retirement to the losing district.

If the receiving school district in a property transfer action chooses to settle the bonded indebtedness of the transferred property, it may pay off the pro rata share of bonded indebtedness to the losing school district. In the event this is done, the transferred territory is subject to the bond debt retirement tax levy for bonded indebtedness of the receiving school district that existed at the time of transfer. The receiving school district may use up to fifteen percent of its state school aid for one year to make a settlement with the losing school district. December tax levies go to the losing school district on property transfers made after September 1 of a given year.

The timing of a property transfer also controls where the school operational millage on the transferred property will go. If the transfer is effective before September 1, it is levied by the receiving district. If the transfer is effective after September 1, it is levied by the losing district. The responsibility for follow-up activities to certify the operational millage for the transferred territory to the proper taxing officials rests with the school district entitled to receive the taxes.

Rights of Certain Pupils in Property Transfers

The statute also speaks to what happens to pupils when a property transfer occurs. Pupils who are in the twelfth grade at the time of the change, or will be entering the twelfth grade at the beginning of the school year immediately following the transfer, may continue to attend school in the losing district without paying tuition. This choice is not within the discretion of either school district. The choice rests with those persons whose property has been transferred, or those living on property that has been transferred.

Property Transfer Appeals to the Superintendent of Public Instruction

What happens when the board of an intermediate school district (or joint board) turns down the request of a petitioner to transfer property to another district, and the petitioner still wants the property transferred? Or, what recourse does a school district have if the action of the board of the intermediate school district on a property transfer petition or resolution means that it will lose property? The statute provides the answer to these questions. An appeal may be made to the Superintendent of Public Instruction to appeal the action or inaction of the intermediate board(s) on a petition or resolution.

Additional ISD Responsibilities

The responsibilities of intermediate school district boards when property transfer requests are granted have been outlined above. Other additional responsibilities occur once decisions have been made by the intermediate board(s). It is the responsibility of the intermediate school district board or its officers to:

• notify all adversely affected parties involved in the property appeal process of their right to appeal the decision of the intermediate school board(s) to the Superintendent of Public Instruction, and to
• notify the parties of the ten day time period in which to file an appeal.

If the intermediate board(s) denies the petition to transfer property, one or more of the resident property owner petitioners (as an adversely affected party) could appeal the decision to the Superintendent of Public Instruction. The board of the school district that failed to have the property attached to it (as an adversely affected party) could also appeal the decision to the Superintendent of Public Instruction. On the other hand, if the intermediate board(s) grants the property transfer, the losing school district (as an adversely affected party) could appeal the decision to the Superintendent of Public Instruction.

Appeal Timelines

The timeline for filing an appeal with the Superintendent of Public Instruction is short. An appeal must be filed and received in the Office of Administrative Law within ten (10) days of the date that the intermediate board(s) took action. In instances where the intermediate board(s) fails to take action on a petition or resolution within 60 days from the date it was filed, an appeal to the Superintendent of Public Instruction may be made. This type of appeal, where no action was taken by the intermediate board(s), must be filed and received by the Superintendent of Public Instruction in a timely fashion, as well. Generally, an appeal on the inaction of the intermediate board(s) would be filed within the ten (10) day period following the 60th day after the original petition or resolution was filed with the intermediate board – or between day 61 and day 70 after filing the petition or resolution. In some cases, however, the intermediate boards may notify the affected parties that it does not intend to take action. If this happens, the affected parties could appeal that decision to the Superintendent of Public Instruction. Again, the responsibility to notify the adversely affected parties of their right to appeal and the time frame in which the appeal, if taken, must be filed rests with the intermediate school district.