OFFICE OF CORPORATION COUNSEL
220 North Main, P.O. Box 8645
Ann Arbor, Michigan48107-8645
(734) 222-6745
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Attorney-Client Privilege
To:Felicia Brabec, Chair, Washtenaw County Board of Commissioners
From:Curtis N. Hedger, Office of Corporation Counsel
Re:Legal Analysis Concerning the Mechanism to Implement the Various Development Options for Platt Road
Date:September 30, 2015
At the May 20, 2015 Board of Commissioners meeting, the Board passed a Resolution (“Resolution #15-0090) accepting the recommendations from the Community Advisory Committee on the disposition of the County-owned property on Platt Road. In addition, the Resolution directed the County’s Office of Community and Economic Development (“OCED”) and Office of Infrastructure Management (“OIM”) to develop recommended strategies, to be presented to the Board of Commissioners prior to final action on the property. Finally, the Resolution directed my office to complete a review of potential uses for the County-owned property on Platt Road and provide an exhaustive legal analysis on the mechanism which would allow the site to be developed in a manner consistent with those design principles.
I have been meeting with Deputy County Administrator, Greg Dill, Director of the Office of Infrastructure Management, Dave Shirley, Senior Projects Manager Jason Fee and OCED Director, Brett Lenartto discuss the three most common proposed uses for this site. This group has submitted its reportunder separate cover. My analysis looks at the uses recommended by the CAC as stated in the May 20, 2015 Resolution as well as the proposed uses suggested by the OCED/OIM discussions and discusses the legal mechanism for implementing each of the suggested option.
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September 30, 2015
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Proposed Uses for Platt Road Listed in the May 20, 2015 Resolution
The May 20th Resolution listed a number of proposed development strategies for the Platt Road property. These include the following: (1) integration with the neighborhood; (2) mixed income development, comprised of affordable and moderately-priced housing including non-
residential uses that would be accessory and supportive to the neighborhood; (3) varied types and forms of housing for people of different ages; (4) use of green technologies and sustainable design (stormwater management, green energy, limiting use of impervious surface); and (5) reduced auto-dependency, embracing alternative transportation (walking, biking, transit) and promoting a pedestrian-oriented development pattern.
Developing the Platt Road property in conjunction with the above-stated goals would require different legal mechanisms depending upon whether the County retained ownership of the underlying land. I will address each scenario to explain what mechanism/process would have to be followed to accomplish the stated goal depending upon whether the County sells the land or retains ownership.
County Sells Land to Developer
The mechanism for developing Platt Road under this scenario is fairly straight-forward. The County could issue a Request for Proposals (“RFP”) for the sale and development of Platt Road. The RFP would contain a detailed description of how the County would expect the property to be developed once a respondent was chosen. The County could, as part of the RFP, indicate that the various types of development expected, i.e. mixed used housing, housing for different age groups, integration with the neighborhood, use of green technologies and reduced auto dependency, would be contingencies to the sale and transfer of the land. Similarly, the County could use restrictive covenants in the deed of sale to insure that these development goals were met.
County Retains Ownership of Land to be Developed
It becomes much more complicated and legally problematic if the County retains ownership of the underlying land that it is trying to develop for any type of housing. The Michigan Housing Facilities Act, MCLA 125.651 et. seq., (“HFA”)states the conditions a governmental entity must follow if it intends to own, operate or maintain a housing development. Section 2 of the Act, provides, in part, that a county may, “purchase, acquire, construct, maintain, operate, improve, extend or repair housing facilities and eliminate housing conditions which are detrimental to the public peace, health, safety, morals or welfare.” MCLA 125.652
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September 30, 2015
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Before a county may undertake such actions, however, it must create, by ordinance, a housing commission. MCLA 125.653(a). Once created, a county housing commission only has original jurisdiction in the unincorporated areas of the county. A county housing commission
created for land in an incorporated part of the county shall only have such, “functions, rights, powers, duties and liabilities as may be provided by contractual agreement between the county and such incorporated area. MCLA 125.653(d).
In the present situation, Platt Road is located in the City of Ann Arbor which is an incorporated area of the County. In addition, the City has already created its own Housing Commission to address various types of housing developments.
Given the above-stated facts, before the County could engage in doing its own housing development while retaining ownership of the land, it would have to draft and adopt a Housing Ordinance creating a County Housing Commission. Even after a County Housing Commission is created and functioning, however, it would not have original jurisdiction over the Platt Road site. Thus, if the County, through its Housing Commission wanted to have control over the property’s development, it would have to negotiate and execute an agreement with the City of Ann Arbor and its Housing Commission outlining what rights, powers, duties and liabilities the County’s Housing Commission would have over the Platt Road development.
Another critical factor which must be evaluated before the County can develop its own property for housing is whether the planned development constitutes a public purpose. Michigan counties only have such powers that are granted to them by the State Constitution or statute. Mosier v Wayne County Board of Auditors, 295 Mich 27. 29 (1940).
MCLA 45.3 states the general purposes for which a county is organized. These include the power to sue and be sued, to purchase and hold real and personal estate for the use of the county, borrow money to erect and repair county buildings, build county bridges and to execute all necessary contracts and to take other necessary actions in relations to the property and concerns of the county. (Italics added). MCLA 46.11(m) authorizes a non-charter county to pass ordinances that relate to county affairs and do not contravene the general laws of the state or interfere with the local affairs of a township, city, or village within the county.
As noted above, the HFA specifically permits a county to adopt an ordinance creating a county housing commission to further the housing purposes states in Section 2 of the Act. Any county housing commission, however, does not have jurisdiction over property located in an incorporated area of the county; in such instances, the county must contract with the other local unit of government in the incorporated area to determine the functions, rights, powers, duties and liabilities as they apply to the property in question. If the local governmental unit chooses not to contract with the county housing commission, the county would be compelled to work with the housing commission in that local governmental unit and the county housing commission would be impotent to undertake, or in any way approve development on that site.
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September 30, 2015
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In the current matter, even if the City of Ann Arbor agreed to contract with a County Housing Commission to allow the County Housing Commission to handle the development of
Platt Road, some of the proposed uses may not rise to the level of a public purpose. For example, one of the suggested development ideas was to build mixed use housing, along with some related uses. Under this proposal, low income and market based housing would be built on County-owned property. While I think a good argument can be made that the development of
low-income housing is a public purpose under Michigan law as it provides housing opportunities that may not otherwise be available to low income citizens, the development of market based housing as part of the development is much harder to justify. It is not clear what public purpose, if any, is served by having County-owned land developed in part with market based housing which would ultimately be placed in direct competition with private developers.
The HFA, provides some guidance on what would constitute a public purpose in the area of housing development. Sec 43 of the HFA (MCLA 125.693) provides the grounds for the immediate implementation of the HFA’s provisions. It states, in part, “[t]he necessity for the immediate effective date of this act lies in the fact that, whereas there is a demand in congested sections of Michigan for housing of families of low income and for the reconstruction of slum areas…” These are the only two purposes stated as justification for immediately implementing the HFA. There is no authorization to include market rate housing in a housing project under the HFA. Moreover, Sec. 44 (MCLA 125.694) provides that when operating or managing a housing project, a housing commission must follow certain guidelines with respect to rentals and tenants. Each of the listed conditions mandates that only low-income individuals may live in such developments. Given these clear statements of intent in the HFA, it is my opinion that if market-based housing is included in a housing development plan to be built on County-owned property, the entire development would no longer serve a “public purpose” and would not be authorized under Michigan law.
OCED/OIM Proposed Uses for Platt Road
Do Nothing-Status Quo Option
The first option listed in the group report for the Platt Road property is to do nothing at the present time. I refer to this as the, “status quo” option. Under this option, no action would be taken concerning this property for the foreseeable future and no legal mechanism would be required at the present time. The first legal advantage of this option is that the County would not have to pay for legal fees which would ordinarily be expended should the property be disposed of in a different matter. Thus, no deeds, restrictive covenants or other legal documents relating to the use of the land would need to be negotiated, prepared and presented to the Board of Commissioners and signed. Likewise, the County would incur no expenditures in advertising or, in any manner, marketing the property. In additional, the County would not have to pay legal
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September 30, 2015
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fees for research to determine if the proposed use of the property is for a public purpose and is permitted under Michigan law. Finally, it should be remembered that the County’s potential
overall liability as it relates to the use of this property would remain unchanged, which can also be seen as an advantage.
I believe there are few, if any, legal disadvantages to following the status quo option. As noted above, the County’s liability related to the property remains the same under the status quo option. The main disadvantages to the status quo option are programmatic or policy related, not legal. By doing nothing, the County loses the opportunity to develop the property for a number of productive, worthy options, some of which will be discussed more fully below.
Dedicate the Use of the Property for Recreation
The mechanism to use the property for recreational purposes is straight-forward. The Board of Commissioners could direct the Administrator and Corporation Counsel to negotiate a fair price for the Parks & Recreation Commission to pay for the parcel. Once the sale is complete, the Parks & Recreation Commission and its Administrative staff would be in charge of developing whatever recreational uses it saw fit to install. Of course, the County Board of Commissioners could always impose conditions on the type of recreational use at the site as a condition of sale. Once a deal was struck, it would not be necessary to file a deed as the Parks and Recreation Commission purchases land in the name of the County. Cite As such, under this option, the County would retain ownership of the land and a new recreational purpose would be built.
There are a number of legal advantages to using the Platt Road for County Recreation. First, there would be no question that using the property for such purposes would constitute a public purpose under Michigan law. The County, through its Parks and Recreation Commission, already operates a variety of recreational facilities and parks throughout the County. Michigan law specifically permits counties to provide recreational venues for their citizens through parks and recreation commissions which is what Washtenaw County has done for many years. As such, there is little likelihood that someone opposed to the use of the property for this purpose could successfully challenge it on the grounds that it does not fit a public purpose.
Another practical legal advantage of using the property as a park or for some other passive recreational purpose on the site is that the property could still be marketed in the future and converted to another public use with little problem. This advantage, of course, would be minimized or eliminated should a large recreational type facility ever be built on the land.
Finally, use of this property would also not significantly increase either the County’s liability exposure or the cost of procuring liability insurance to cover whatever recreational activity occurs at the site. The County already maintains liability insurance to cover potential
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September 30, 2015
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claims arising out of recreational activity at various County sites, including a water park, recreation center and golf course. Adding a new recreational site, especially if it involves more
passive recreational opportunities such as hiking trails, would not significantly increase the County overall liability concerns or insurance premiums.
- Legal Disadvantages of the Recreation Option
Similar to the “status quo” option discussed above, there are few, if any, legal disadvantages to using the property for additional recreation. The disadvantages are more financial or programmatic. Thus, failing to market the property outside of the County system would most likely result in the County not realizing the most money it could for the use of this property. Likewise, using the property for recreational purposes would forestall, for the foreseeable future, any opportunity to use the property for any other worthy projects.
Pursue Housing Development on the Site
The final option listed in the OCED and OIM report involves developing housing and related uses on the site through a number of different options, including listing the property for sale to an outside party for development, undertaking a Request for Qualifications (“RFQ”) to select a firm with expertise in doing housing developments who could assist the County in developing the property for housing and issuing a Request for Proposals (“RFP”) seeking entities to develop the property according to the County’s expectations. Each of these options would necessitate the County selling the property to another party before the development would occur. The group also listed County’s continued ownership of the property while it was developed.
- Legal Advantages of the Various Development Options
The outright sale, RFQ and RFP processes would involve fairly routine legal work to accomplish the sale and development of the property. Under the RFP and RFQ processes, the County would have the option, after reviewing the responses to pick one of the respondents, reject all of the responses or pick a respondent and continue to negotiate with that entity to insure that what the County envisions for the property is realized.
Under the outright sale option, the County would need to determine what conditions it wanted to impose on the sale of the land, i.e. mixed housing development, green belt, etc., before it would approve the transaction. If no entity was interested in developing the property with those conditions, the Board of Commissioners could change or lessen those conditions and attempt to locate another buyer.
The final option was to have the County continue to own and develop the property in partnership with an outside entity. For the reasons stated at the beginning of this opinion, I do
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not believe this would have any legal advantages and, at best, would be problematic to develop and operate.
2Legal Disadvantages of Various Development Option
I found few legal disadvantages to developing the property using one of the methods where the County would ultimately transfer ownership of the land to another party who then would develop the property in accordance with the County’s designs. It is fairly routine to impose legal conditions on the sale of property which the purchaser must agree to abide by as part of the purchase and development of the property.