On April 19, 2012, the Michigan Court of Appeals released its decision in Stephen Crane v. Director of Assessing for the Charter Township of West Bloomfield, et al (MI Ct. App. No. 301878, April 12, 2012, unpub'd).  In Crane, the Petitioner challenged the validity of an assessment in connection with a dredging project proposed to be undertaken by a previously formed Governmental Lake Board ("GLB") under Part 309 .  The GLB was established in 1984 for weed control purposes, based upon a petition signed by two-thirds of the landowners on Upper Long Lake.  Upper Long Lake is a private inland lake that is located partially in Bloomfield Township and partially in West Bloomfield Township.

In 2005, both Townships approved expanding the Board's authority to include a dredging project and the assessment role was thereafter confirmed.  Stephen Crane filed a petition with the Michigan Tax Tribunal, challenging the validity of the assessment, arguing that a new petition signed by two-thirds of the Upper Long Lake freeholders was required to undertake the dredging project.  The Michigan Tax Tribunal rejected Mr. Crane's argument and an appeal was filed with the Michigan Court of Appeals.  The appellate court reversed the Tax Tribunal's decision, agreeing with Mr. Crane that a new petition was required.  Because Crane is an unpublished decision, it is not binding precedent, though it can provide guidance to other courts.

Initially, the Court of Appeals focused on section 4 of Part 309, which is expressly applicable only to projects undertaken on private inland lakes.  Under Part 309, a private inland lake is simply an inland lake that is not accessible to the public by publicly owned lands or highways contiguous to publicly owned lands or by the bed of a stream.  One thing is clear from Crane – an existing GLB cannot undertake a new project under Part 309 on a private inland lake absent a new petition signed by two-thirds of the affected freeholders.  Questions remain regarding the applicability of Crane to new projects undertaken by an existing GLB on public inland lakes.

Though the Court in Crane relied on section 4 of Part 309, which is applicable only to private inland lakes, its analysis was based largely on section 2, which is applicable to both private and public inland lakes.  Specifically, the court noted that section 2 provides a mechanism for two-thirds of lake freeholders to petition the local governing unit to initiate a lake improvement project and thereafter provides for the subsequent creation of a lake board to implement that project.  While one can certainly argue that the holding in Crane should be limited to proposed improvements on private inland lakes, anyone undertaking a new project using an existing GLB, even on a public inland lake, would be well advised to carefully review Crane.

Important Notice: This advisory has been prepared by Varnum for informational purposes and does not consititute legal advice. Copyright © 2012 Varnum LLP. All Rights Reserved.