Michael P. McGee | Jeffrey S. Aronoff | Miller, Canfield, Paddock and Stone, P.L.C. | 150 West Jefferson Suite 2500 | Detroit, MI 48226 | 313-963-6420

Michigan Townships Association (MTA)

Amicus counsel argues that the three-part Bolt test, used to determine whether a charge is a valid user fee or a tax in violation of the Headlee Amendment, is a balancing test in which the failure to satisfy one prong is not dispositive. Furthermore, the City of Detroit’s solid waste inspection fee satisfies all three prongs of the Bolt test, and is therefore a valid user fee, an not a tax in violation of the Headlee Amendment. Additionally, Amicus counsel argues that the Court of Appeals was correct in finding that the inspection fee served a regulatory purpose. The inspection fee is necessary in regulating solid waste, which falls within the regulatory power of protecting the health, safety, and welfare of the public, and is not intended to raise revenue. Moreover, the regulatory program does not create excess revenue because that revenue is part of a broad solid waste regulatory program that is split between the Department of Environmental Affairs and the Department of Public Works. Also, the regulatory purpose prong of the bolt test only requires that the primary purpose of a fee is regulatory; it does not strictly prohibit a user fee from generating revenue. In addition, the reduction in the City’s overall budget deficit resulting from the fee does not demonstrate a revenue-raising purpose. Amicus counsel further argues that the Court of Appeals was correct in holding that the inspection fee was proportionate to the cost of providing the related service, just as is required by the second prong of the Bolt test. Lastly, Amicus counsel argues that the inspection fee was voluntary, as evidenced by the property owners have a choice to opt into City inspection or collection, just as the Court of Appeals held.

Michigan Supreme Court:
On order of the Court, leave to appeal having been granted and the briefs and oral arguments of the parties having been considered by the Court, we VACATE the January 21, 2010 opinion and order of the Court of Appeals. At this time, a material question of fact exists concerning the direct and indirect costs of the services for which the solid waste inspection fee is charged. Such a finding is necessary to determine whether the City of Detroit’s solid waste inspection fee is proportionate to the necessary costs of the inspection service, and may also impact whether the fee serves a revenue-raising or a regulatory purpose. See Bolt v City of Lansing, 459 Mich 152, 161-162 (1998). Accordingly, summary disposition in favor of the defendant was improper. We therefore REMAND this case to the Court of Appeals. Because substantial fact-finding may be necessary, the Court of Appeals should consider a further remand to the circuit court for this purpose. See MCL 600.308a(5).

Plaintiff, Laurence G. Wolf, doing business as Laurence Wolf Properties (Wolf), sought a declaration that a new solid waste inspection fee charged by the city of Detroit to the owners of certain commercial and industrial properties constituted a disguised tax. Wolf asserted that if the new solid waste inspection fee was a disguised tax, then it violated § 312 of
the Michigan Constitution’s Headlee Amendment because the city imposed the tax without a vote of its electorate. Applying the criteria that the Michigan Supreme Court established in Bolt
v City of Lansing, the Court of APpeals concluded that the inspection charge is a valid regulatory fee, not a disguised tax.