Sonal Hope Mithani (P51984) | Miller, Canfield, Paddock and Stone, P.L.C. | 101 N. Main Street, 7th Floor | Ann Arbor, Michigan 48104

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

The city has the broad authority to recover through its building department fees and costs related to services performed. The Michigan Constitution expressly recognizes the power of local governments. Section 22 of the Construction Code Act (CCA)confers authority upon the city to use its fee revenue to cover not only current fiscal year expenses, but past year expenses (including incurred debt), as well. The overarching goal of Section 22(1) of the CCA is to ensure that the city is permitted to recover its costs for the building department services that it is required to provide under the authority of the Act itself. Limiting an entity to recovering costs related only to a “present state of functioning” would foreclose the entity from ever being able to use debt to leverage performance. The city’s building department fees are lawful under Headlee, which does not authorize unfettered challenges to the municipal rate-making process. Here, there is no question that the permit fees are tied to the costs of service because there is no evidence that shows that these fees are not being used for costs associated with the city’s building department activities. Invalidating the building permit fees would disincentivize municipalities from exploring privatization as a cost saving measure and undermine a municipality’s authority to self-govern.