Eric Williams (P33359) | 524 N State Street | Big Rapids MI 49307 | 231-796-8945

1. Michigan Townships Association 2. Michigan Bar Association Public Corporation Law Section

There is the potential for an unintended disastrous outcome if the Supreme Court rules in a way that weakens, dilutes, or invalidates water service liens created by state law under the Municipal Water and Sewer Lien Act, MCL 123.162 et seq, or the Revenue Bond Act, MCL 141.101 et seq. There are billions of dollars worth of outstanding bonds for municipal public improvements, and a ruling that invalidates or calls to question the liens authorized by MCL 141.121 will send shockwaves through municipal bond holders and the municipal bond financing market in Michigan. Michigan municipalities administer and operate water and sewer utilities for the benefit of millions of people through facilities that are designed and constructed to provide service through structures on real property. The statutorily authorized liens for water and sewer services are attached to the real property where the services are provided, regardless of the identity or status of the specific users. The water and sewer service liens impose a statutorily determined risk of loss for unpaid service charges on the real property where the services are delivered to the owner, or the owner’s family, guests, and invitees, including tenants. This risk of loss hierarchy was determined by the Michigan legislature, recognizing that all of the water and sewer service customers must pay the total operational cost of the systems, not the municipality or the taxpayers of the municipality. This case also presents the question of what legal consequence should result from Livonia’s failure to follow its own ordinance in 2011 regarding placement of delinquent water service charges on the tax roll. The legal consequence was the absence of delinquent water service charges on the Plaintiff-Appellant’s tax bill, with no prospect of collection by foreclosure for nonpayment. The legal consequence of Livonia’s action in 2012 was the placement of delinquent water service charges on the tax roll and Plaintiff-Appellant’s tax bill, with the prospect of collection by foreclosure for nonpayment. The imposition of a water service lien by operation of state law, and the enforcement of the water service lien by a municipality as authorized by state law, cannot be a tort by which the water service charges are damages suffered by the property owner. The Legislature determined that the property owner bears the primary risk of loss when the tenant fails to pay the water bill.

pending

At the request of the water service customer and upon recommendation of the Livonia Water and Sewer Board, Livonia officials did not certify delinquent water service charges to the tax assessing officer for placement on the tax roll and against Plaintiff-Appellant’s real property in 2011. The following year, 2012, Livonia officials certified the delinquent water service charges to the tax assessing officer, and the charges were entered on the tax roll and against Plaintiff-Appellant’s real property. Plaintiff-Appellant did not avail itself of the statutorily prescribed process in the Municipal Water and Sewer Lien Act and the Revenue Bond Act for avoiding the water service liens.
Plaintiff-Appellant filed suit, claiming Livonia was prohibited from placing the delinquent water service charges on the tax roll in 2012 because Livonia did not place the delinquent water service charges on the tax roll in 2011. Plaintiff-Appellant characterized the delinquent water service charges as damages, because Plaintiff-Appellant would have to pay them when the liens were enforced and collected like property taxes.