William J. Danhof (P24169) | Don M. Schmidt (P20005) | Jeffrey S. Aronoff (P67538) | Miller, Canfield, Paddock and Stone P.L.C. | 150 West Jefferson Suite 2500 | Detroit, MI 48226 | 313-963-6420

1. State Bar of Michigan Public Corporation Law Section (PCLS)
2. Michigan Townships Association (MTA)
3. PROTEC

This case will help determine whether the scope of Section 31 of the Headlee Amendment, Const 1963, art 9, § 31″ will
remain true to its original intent, or whether it will be expanded to a realm that may lead to absurd results while threatening vital municipal revenues generated from proprietary enterprises
that fall outside the purview of the traditional “user fee” versus “tax” debate sparked by Bolt v City of Lansing, 459 Mich 152; 587 NW2d 264 (1998). In this case, the court below granted summary disposition for the Defendant City of Ann
Arbor based principally on the conclusion that the Plaintiffs do not have standing because the City does not impose the fees on the Plaintiffs, but rather on private companies who have chosen to do business with the City and are willing to negotiate and pay consideration for rental of the right-of-way for that business. The circuit court opinion properly characterizes the Plaintiffs’ reliance on Bolt as misplaced. The court’s opinion notes that Bolt involved user fees, imposed directly upon the users pursuant to ordinance. The charges at issue in this case are franchise fees, pursuant to contract, for which only the cable companies are ultimately responsible. The circuit court properly observed that in this case “there is no fee legislatively imposed directly on the cable user.”

Court of Appeals:
Plaintiffs appeal by right the trial court’s order granting summary disposition in favor of defendant city of Ann Arbor pursuant to MCR 2.116(C)(5) and (C)(8). We affirm.

This case involves a dispute arising from the “franchise fee” charges included in plaintiffs’ Comcast cable bills. Plaintiffs assert that the portion of their bills designated as a “franchise fee” is in reality a tax levied by defendant on cable subscribers. Plaintiffs further allege that defendant levied this “tax” without voter approval and incorporated excess revenue into its general fund, in violation of the Headlee Amendment to the Michigan Constitution. Defendants contend that the franchise fee is paid by the cable provider, not the cable subscribers, and is not a tax. Plaintiff filed the instant suit on November 18, 2003, seeking to recover the excess “franchise fees” collected by defendant. The trial court granted summary disposition to defendant, finding that plaintiffs lacked standing to bring the claims alleged and failed to state a claim on which relief could be granted. Specifically, the trial court concluded that the franchise fee is not an impermissible tax under the Headlee Amendment.