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Chesterfield Township, Michigan’s Water and Sewer Tap fee found to be an unconstitutional tax

On Wednesday March 12, 2012, the Macomb Circuit Court issued a decision finding that the Chesterfield Township, Michigan Water & Sewer Tap fee is an unconstitutional tax in violation of the Headlee amendment of the state Constitution.

In Macomb County. v. Fox, the taxpayer, Rosie O’Grady’s bar, sought to renovate an existing restaurant into its own and add dining space. After securing a building permit, the Township assessed a “water and sewer tap fee” of nearly $40,000. The taxpayer protested as the prior owner installed the water and sewer tap, paid the fee and it was not seeking to install a new tap or enlarge the existing tap. The Township responded that it would not grant the bar a building permit or certificate of occupancy if they did not pay the tap fee. Through negotiations, the bar was able to complete construction and open, however, the tap fee remained and the Township sought foreclosure of the premises. The Macomb Circuit Court found the “fee” to be a tax in violation of the Headlee amendment and ordered the fee to be stricken.

A similar case is currently in litigation in the United States District Court in Detroit. In Daley v. Chesterfield Township, currently pending before the Honorable Nancy Edmunds, the plaintiff, represented by the land use attorney of Dalton & Tomich plc, sought to renovate two units of a strip mall into a Laundromat – a use that is permitted as of right in the zoning district. Daley sought and obtained a building permit to renovate the space, demolish the interior and begin construction of his new business. During construction, the Township imposed a water and sewer tap fee of $27,500 even though Daley was using the same tap for the water and sewer previously secured by the former tenant. After Daley protested the payment of the fee, the Water Department Supervisor directed the Public Works Department to issue a Stop Work Order on the premises, without notice or an opportunity to be heard, that precluded Daley from performing any more work on the property. The Order was removed once Daley paid the illegal fee to the Township, under protest.

The issuance of posting a Stop Work Order, without notice or an opportunity for a hearing, violates state law, which requires both notice and a hearing before posting. In Paeth v. Worth Township, a case involving the same violation of state law, which amounts to a violation of procedural due process of the Fifth and Fourteenth Amendments to the United States Constitution, a jury awarded the Plaintiff’s $600,000 in damages arising out of a similar pattern of vindictive behavior of the Township.

The Daley case is currently scheduled for trial in the United States District Court in Detroit on May 1, 2012.

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