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Michigan is blessed with abundant natural resources, many of which are located within Michigan’s townships. Of those natural resources, Michigan is home to over 11,000 inland lakes. As Michigan’s townships encompass approximately over 95% of the state’s land area, most lakes are located within townships.

Inland lakes offer numerous benefits to townships. They: (1) can attract visitors; (2) enhance a township’s tax base with development; and (3) offer important recreational opportunities for township residents. If any inland lakes are located within your township, you may be approached at some point by a group of property owners inquiring whether the township can assist with a “lake improvement project.” Typically, a township (or other governmental entity) facilitates these projects, but the improvements are funded by property owners. Improvements under the three statutes relate to many lake-related issues such as aquatic weed control, dredging, augmentation wells, and lake level control structures.

This E-Letter outlines three common statutes used for lake improvement projects. It explains what improvements each statute permits as well as the governmental entity responsible for projects under a particular statute. As our firm is uniquely positioned to assist with lake improvement projects given our extensive work with both townships and county drain commissioners, this E-Letter will also address considerations of how to choose a particular statute for a particular project.

Inland Lake Improvement Projects – Statutory Authority

As introduced above, there are three primary statutes that authorize inland lake projects in Michigan. All three statutes generally outline a framework to fund lake improvement projects by establishing a special assessment district and imposing special assessments on property owners (and sometimes other entities) that benefit from a particular inland lake. Special assessments are levies upon properties benefited from a project (a special assessment district) to defray the costs of the improvements. Kadzban v City of Grandville, 442 Mich 495, 500; 502 NW2d 299 (1993). Unlike a tax, special assessments may not be used to raise general revenues and must be used towards specific improvements. Id.

Of the three statutes addressed in further detail below, the first is Act 188 of 1954, MCL 41.721 et seq., (“Act 188”). Act 188 is the township special assessment statute, and it authorizes a wide variety of inland lake special assessment projects. Id. Act 188 gives a township complete control over forming a special assessment district and levying assessments.

For inland lake projects other than lake level control (e.g., dams), a lake improvement board can improve a lake under Part 309 of Michigan’s Natural Resources and Environmental Protection Act, Act 451 of 1994, MCL 324.30901 et seq., (“Part 309”). Part 309 is regularly used for aquatic weed control and dredging projects. As stated above, Part 309 forms a “lake improvement board” to generally consider and administer lake improvement projects; however, Part 309 requires these boards to have township representatives. MCL 324.30903(1)(a).

Last, Part 307 of Michigan’s Natural Resources and Environmental Protection Act, Act 451 of 1994, MCL 324.30701 et seq., (“Part 307”) details a unique process for a circuit court to establish a “normal lake level” and a corresponding special assessment district to fund lake level improvements (e.g., augmentation wells, dams, and lake level control structures). Often, a county and county drain commissioner administer the Part 307 process, including assessments. Yet, a township may receive requests for lake level control improvements, and in many cases, it is beneficial to work collaboratively with a county for lake level improvements under Part 307.

Act 188 – The Township Special Assessment Statute

Act 188 is the township special assessment statute. Unlike the others addressed in this E-Letter, the Act 188 process is completely driven by a township both with forming a special assessment district and related to imposing special assessments.

The other unique aspect of Act 188 is it authorizes many different inland lake improvements. Specifically, it allows: (1) aquatic weed control; (2) dredging and general lake improvements; and (3) building dams and other structures to retain waters for recreational purposes. See MCL 41.722(1)(l), (n), and (o).

As with all the statutes in this E-Letter, a township is able to pass through fees to retain attorneys, engineers, and other consultants to assist with the Act 188 special assessment process to the property owners in a special assessment district. See MCL 41.721. Similarly, this also allows townships to pass through required notice costs (mailings and publications) to the district to avoid using monies from the general fund towards an Act 188 lake improvement. For improvements such as dredging that require a substantial investment upfront (rather than annual expenses such as for weed management projects), Act 188 allows a township to issue bonds (repaid with assessments) or to create a revolving fund (repaid with assessments) to pay for a project. See MCL 41.735 and MCL 41.735a.

One nuance of Act 188 is it does not specify a time limit requirement (e.g., number of years) for the existence of an Act 188 special assessment district to collect assessments towards a particular improvement. This makes Act 188 attractive for long-term reoccurring projects such as aquatic weed control. The other important nuance of Act 188 is that townships can initiate projects without a property owner petition. MCL 41.724(1). But, when a project is initiated without a property owner petition, a minority of impacted property owners (most cases above 20%) can submit an “objection petition” requiring a property owner petition from a majority of impacted property owners. In most cases, it is beneficial for a township to require a supporting petition before initiating a project to avoid a project stalling from an objection petition. See generally, MCL 41.723.

Below is a summary of the public hearing process to initiate an Act 188 lake improvement project. It is not meant to be all-encompassing and to contain every detail in the Act. Remember, a township can also pass along costs for help to ensure it follows the process below to protect the validity of any assessments.

1. Petition: (Optional): A township receives property owner petition (optional). MCL 41.724.
2. Costs and Plans: A township board directs the development of project plans and estimates of costs. MCL 41.724(1).

• • These may be provided from a lake association (e.g., weed management proposal).

3. Set Public Hearing #1: A township board would review the plans and costs and tentatively declare its intent to proceed with a project and tentatively outline a special assessment district. It would then set a public hearing to review: (1) project plans and costs; (2) objections to any property owner petition; and (3) the tentative special assessment district. MCL 41.724(2).

4. Notice Public Hearing #1: A township must provide notice of the first public hearing by mail to each property within the proposed special assessment district (10 days before the hearing) and two newspaper publications (first 10 days before the hearing). MCL 41.724a.

5. Hold Public Hearing #1: A township board would hold the first public hearing to address the topics identified above. If a township desires to continue forward with a project it would determine by resolution: (1) plans and costs of the project; (2) the sufficiency of any property owner petition; (3) the special assessment district including any term; and (4) the township supervisor to prepare a draft special assessment roll for review. MCL 41.725(1).

6. Arrange and Notice Public Hearing #2: After a supervisor prepares a proposed assessment roll, the township board would then set a public hearing date to review the roll. This second public hearing is subject to the same mailing and publication requirements above. MCL 41.726(1).

7. Public Hearing #2: After hearing public input on a public hearing, a township board could then approve a special assessment roll to collect assessments for a lake improvement project.

Part 309 – Inland Lake Improvement Boards and Improvements

In many instances, an inland lake may have reoccurring projects (e.g., weed management or dredging of inlets) and the lake has an active and involved lake or property owners’ association. In those cases, a township may want to have some limited role in lake improvement projects, but also may believe it is appropriate to create a separate political entity to facilitate reoccurring projects designed especially for a lake (rather than giving the township all of the responsibility). In those cases, Part 309 becomes an attractive option for lake improvement projects.

Part 309 creates “lake improvement boards” that have the authority to consider and approve inland lake improvement projects on a lake other than lake level control (e.g., dam; Part 307 governs lake level control structures). If a lake is solely within a township, a township board can either: (1) upon receipt of a request of 2/3 of property owners abutting an inland lake; or (2) on its own motion, require the establishment of a lake improvement board. See MCL 324.30902. A lake improvement board usually has the following members: (1) a county commissioner; (2) two township representatives appointed by the township; (3) the county drain commissioner; and (4) a public member selected from recommendations by a lake association. See generally, MCL 324.30903 (based on the location of the lake, the make-up of the board may change slightly).

Once a lake improvement board is established, it can proceed with a lake improvement project when directed by a township board (unless a lake is a private lake, which would then require a petition by 2/3 of property owners abutting the lake). MCL 324.30906 and MCL 324.30904.

Process-wise, levying special assessments under Part 309 is like Act 188. It requires two public hearings. One requires approving, among other things, project plans and costs. MCL 324.30912. The other requires approval of a special assessment roll. MCL 324.30913. Like Act 188, the public hearing process requires mailing notice to those within a proposed special assessment district and publication notice of the hearings. See MCL 324.30912 (note no mailing notice is required for the first hearing) and MCL 324.30913. Although townships have limited direct involvement in most Part 309 public hearings, a township assessor is often responsible for generating a draft assessment roll. See MCL 324.30913.

Part 309 can be a great tool for dredging and aquatic weed control projects on inland lakes. If a lake has involved stakeholders, creating a separate “lake improvement board” for inland lake project assessments can be a permanent solution for reoccurring lake projects. Moreover, unlike Act 188, a township board can typically direct the initiation of a project without the possibility of a property owner objection petition stalling an improvement project.

Part 307 – Lake Level Control

The last statute commonly utilized for lake improvement projects is Part 307. Contrary to Act 188 and Part 309, townships typically have little to no direct involvement regarding assessments under this statute. But, townships should be aware of Part 307 as many inland lakes in Michigan have established normal levels and since townships can be assessed “at-large” for lake level projects under the statute. Moreover, a township may field requests from residents on how to establish a normal lake level or a seasonal lake level.

Part 307 establishes a statutory scheme to establish normal lake levels on inland lakes and to maintain those levels. See MCL 324.30708(1). A normal level is a court-ordered elevation for an inland lake to, among other things, best promote recreation and preserve property values on a lake. MCL 324.30701(h). Under Part 307, circuit courts establish normal levels and special assessment districts that include properties that will benefit from an established normal level. MCL 324.30707(5). A court’s lake level order may also establish a seasonal lake level (e.g., lower elevations in the winter) to avoid damage to shoreline improvements. Id.

Once established by a court, a county’s delegated authority (often a drain commissioner) is responsible for maintaining that level.  See MCL 324.30708. Typically, when a level is set, a county will build (or receive) infrastructure such as lake level control structures (including dams) and augmentation pumps to help maintain the established level. Because the Part 307 process has a court establish an elevation for a lake level, we have observed that many dams are constructed under Part 307 rather than Act 188.

Assessments for Part 307 lake level projects require one public hearing before a “delegated authority (usually a drain commissioner)” that includes mailing and publication notice and final approval of assessments by a county board of commissioners at a subsequent meeting. See generally, MCL 324.30714. Assessments for a lake level project can include at-large assessments to a township and/or assessments on properties that a township may own within a lake level special assessment district.

As you may have noticed, townships generally have a limited role in establishing normal lake levels and assessing for lake level improvements. But, townships can play a key role in helping support a county and/or drain commissioner with lake level projects. For instance, it is common that residents may want some form of a lake level control project, but first go to a township. A township can help engage those residents with a county and/or county drain commissioner.

Lake Project Initiation – Considerations

To best assist its residents and visitors with inland lake improvements, a township should be familiar with the lake improvement statutes above. Should a township be asked to assist with improving a lake, it should consider the initial questions below.

1. What type of improvement was requested?

• • For example, if property owners want a reoccurring weed management project, a township should consider Act 188 or Part 309.

2. How much control or responsibility does a township want related to a project?

• • If a township wants to be the entity to solely assist it needs to use Act 188. However, it may be appropriate to form a lake improvement board under Part 309 if a township wants less control and/or responsibility for a project.

3. What consultants are necessary for a particular project?

• • If a township is administering a project under Act 188, it will want to ensure that it meets all of the procedural requirements (which may require assistance from legal counsel) to safeguard the validity of an assessment. In certain cases, property owners can successfully challenge the validity of assessments and/or an improvement if a township did not follow the correct procedural process.
  • It may also want to retain engineers/aquatic biologists etc.… to help develop costs and plans for a project.

4. Is there stakeholder support for a project?

• • Especially as it relates to Act 188, a township may want to make sure that there is support for a proposed project by a majority of lake residents. This may include requiring a property owner petition under Act 188. Otherwise, a township may face an objection petition and spend funds on a proposed project that cannot be passed through to a special assessment district if a district is not formed.

5. What is the timeline for a project?

• • Each statute above has a separate public hearing process. A township should consider planning meeting and public hearing dates in advance to help set a schedule for a particular project.

6. Should I contact the county drain commissioner for input?

• • Part 309 and Part 307 are effective tools to improve inland lakes that do not solely involve townships. Your county drain commissioner may have experience in assisting with other lake improvement projects in your county, which can help you evaluate options for a particular proposed improvement.

7. Does a project require financing/bonds?

• • If a township knows that a certain project (e.g., dredging) will require substantial upfront costs, it may want to consider reaching out to a municipal finance attorney or advisor.

Conclusion

We hope you found the above information useful as a summary of how to improve inland lakes in Michigan. There are many options and ways to assist township residents and to improve inland lakes. Often times, a township could use multiple statutes for the same improvement, but depending on the facts of a desired project, one statute may help more than another. If your township is approached or interested in assisting with a lake improvement project, our firm has a variety of experience implementing projects under all three statutes above and would be happy to address any questions.

– Kyle A. O’Meara

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.