SPECIAL ASSESSMENT DISTRICTS: NEIGHBORHOOD-

DRIVEN IMPROVEMENTS IN DISTRESSED CITIES

BRENDAN J. SAWYER†

I. INTRODUCTION .................................................................................. 705

II. BACKGROUND .................................................................................. 707
III. ANALYSIS ........................................................................................ 716
A. Are Neighborhood-Imposed Special Assessment Districts
Beneficial? ............................................................................... 716
B. Legal Challenges and the Likelihood of Success ....................... 720
C. Special Assessment Districts as Residential Business
Improvement Districts?............................................................ 723
D. Policy Prescriptions to Improve Special Assessment Districts . 726
IV. CONCLUSION ................................................................................... 727

I. INTRODUCTION

Residents and local government co-exist in an interdependent

relationship. Residents, sometimes begrudgingly, pay taxes and
assessments to the municipality, and in return expect certain services and
physical improvements in the locale. In a perfect world, improvements
by the municipality raise property values, thus raising the tax revenues
and allowing the municipality to make further improvements in a
virtuous cycle. Sadly, this is not always the case.
In 2014, the City of Detroit (the City) was under significant financial
stress after emerging from the largest municipal bankruptcy in U.S.
history.1 The City’s inability to provide basic and essential services to its
residents extended to many neighborhoods: broken street lights,2 water
shut-offs,3 poor educational outcomes,4 slow snow removal,5 and crime

† B.A., 2011, Grand Valley State University; J.D., 2018, Wayne State University
Law School. Many thanks to Professor John Mogk, and the many others who provided
invaluable assistance, including the editors on The Wayne Law Review.
1. NATHAN BOMEY, DETROIT RESURRECTED: TO BANKRUPTCY AND BACK, at IX
(2016).
2. JC Reindl, Detroit Rising: And Then There Were Streetlights, DETROIT FREE
PRESS (Nov. 12, 2015), http://www.freep.com/story/news/local/michigan/
detroit/2015/11/12/detroit-street-lighting-project-update/31850609/.
3. Joel Kurth, Detroit Hits Residents on Water Shut-offs as Businesses Slide,
DETROIT NEWS, (Apr. 1, 2016), http://www.detroitnews.com/story/news/local/detroit-
city/2016/03/31/detroit-water-shutoffs/82497496/.

705
706 WAYNE LAW REVIEW [Vol. 63:705

rates significantly above the national average.6 In response to these

challenges, the Michigan legislature amended a 1994 law to allow for
neighborhood-imposed special assessment districts (SADs) to fund and
provide three specific services: mosquito abatement, snow removal, and
private security services.7
In response to this state legislation, the City enacted ordinance § 18-
12-120 to establish SADs in Detroit.8 As of early 2017, three
neighborhoods have adopted assessments to fund and acquire services
beyond what the City is capable and willing to provide.9
This Note will explore the benefits and challenges of SADs in
Detroit, as well as several possible policy prescriptions for improving the
implementation of SADs.10 While SADs present an avenue for residents
of particular neighborhoods to, on their own accord, improve their
neighborhoods, the mandatory nature of the assessments may have
unintended negative consequences for some residents.11 Additionally,
SAD’s success could lead to future changes to the enacting law, allowing
a municipality to abdicate other responsibilities that are traditionally
considered uniform for all residents.12 This Note will also explore the
likelihood of success of any potential legal challenges to the SAD statute
and ordinance by drawing parallels to assessment districts utilized by
townships, cities, and business improvement districts.13 Those seeking to
challenge SADs may look to such analogous challenges to provide
guidance on which arguments a court may consider favorably and which
are meritless.

4. Tawnell D. Hobbs, Lawsuit Targets Detroit Public Schools for Failing Students,
WALL ST. J. (Sept. 13, 2016), http://www.wsj.com/articles/lawsuit-targets-detroit-public-
schools-for-failing-students-1473808179.
5. Marlon A. Walker & Niraj Warikoo, Snow Removal Improved? Residents not
Convinced, DETROIT FREE PRESS (Feb. 2, 2015), http://www.freep.com/story/
news/local/michigan/detroit/2015/02/02/snow-removal-detroit-duggan/22760117/.
6. Nicquel Terry, Christine MacDonald & George Hunter, Violent Crime Down 13%
in Detroit, Still 2nd in U.S., DETROIT NEWS (Sept. 27, 2016),
http://www.detroitnews.com/story/news/local/detroit-city/2016/09/26/violent-crime-
detroit/91113598/.
7. MICH. COMP. LAWS ANN. § 117.5i (West Supp. 2018).
8. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-120 et seq
(2014).
9. Joe Guillen, Detroit Neighborhoods Agree to Pay More for Services, DETROIT
FREE PRESS (June 28, 2016), http://www.freep.com/story/news/local/michigan
/detroit/2016/04/03/detroit-neighborhoods-pay-services/82512984/.
10. See infra Section I.
11. See infra Section II(A)
12. Id.
13. See infra Section II(B)–(C).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 707

II. BACKGROUND

Historically, local government units (LGUs) utilize special

assessments to pay for physical improvements such as sewage hook-ups,
sidewalk repair, and road projects.14 Typically, these physical
improvements benefited a limited property or group of property owners,
such as the residents of the street with newly added sidewalks, and the
assessment was imposed accordingly.15 On the other hand, LGUs’
services provided to the entire community are typically paid out of the
general fund.16 Such general services would include snow plowing in the
winter to provide safe streets, fire and police services, and schools,
among others.17
Today, the fiscal outlook for many cities is challenging.18 In
Michigan, revenue sharing between the State and municipalities has
decreased funding distributed to many LGUs by millions of dollars.19
The collapse of the housing market in the early 2000s and the associated
collapse of property values put tremendous pressure on municipal
finances.20 In many cities, raising taxes is not an option. In Detroit,

14. R. Lisle Baker, Using Special Assessments as a Tool for Smart Growth:
Louisville’s New Metro Government as a Potential Example, 45 BRANDEIS L.J. 1, 2
(2006).
15. Id. at 16 (stating that the benefit assessed “should be specific to the property
assessed and not a benefit that is general to the community”); see also Kadzban v. City of
Grandville, 442 Mich. 495, 500, 502 N.W.2d 299, 302 (1993) (“[A] special assessment
can be seen as remunerative; it is a specific levy designed to recover the costs of
improvements that confer local and peculiar benefits upon property within a defined
area.”) (citations omitted).
16. Baker, supra note 14, at 16.
17. See Lynda E. Thomsen, You Get What You Pay For: Special Assessments Fund
Public Improvements, MICH. TWP. NEWS (Oct. 2005),
https://www.michigantownships.org/members/media/topics/media/mta_you_get_what_y
ou_pay_for_special_assessments_mtn_october_2005.pdf.
18. See e.g., Marc Joffe, Chicago, New York in Worst Financial Shape Among Large
US Cities, FISCAL TIMES (Jan. 9, 2017),
http://www.thefiscaltimes.com/2017/01/09/EXCLUSIVE-Chicago-New-York-Worst-
Financial-Shape-Among-Large-US-Cities (saying cities including Chicago and New
York are experiencing fiscal distress with high debt burdens and insufficient general fund
revenues); Riley Murdock, East Lansing Facing Serious Financial Issues, STATE NEWS
(Feb. 15, 2017), http://statenews.com/article/2017/02/east-lansing-faces-serious-
financial-issues-moving-forward (noting the City of East Lansing experienced a -5.9
percent revenue growth for 2017, which resulted in a $1.2 million deficit to the general
fund).
19. See Mike Martindale, Taxpayers Group Sues Mich., Says it Owes Cities Millions,
DETROIT NEWS (Sept. 8, 2016), http://www.detroitnews.com/story/news/
politics/2016/09/08/cities-sue-michigan-say-owed-millions/90093720/.
20. Adam H. Langley, Local Government Finances During and After the Great
Recession, in LINCOLN INST. OF LAND POLICY, LAND AND THE CITY 171, 171 (George W.
708 WAYNE LAW REVIEW [Vol. 63:705

which had the one of the highest effective tax rates in the country as of
2016, any further attempt to raise property taxes to increase revenue is
simply impractical.21 In light of this, LGUs have resorted to creative
measures to adequately maintain city services; even so, in many
instances they have fallen short.22 The application of special millages to
fund services that may have traditionally been paid for out of the general
fund, such as libraries and police, have resulted in a number of ballot
measures to enact such fees.23 This has been true in distressed cities such
as Detroit as well as more affluent cities.24 As residents viewed their
government as an unreliable partner in their security and well-being,
certain neighborhoods have made their own efforts to stabilize their
communities.25 Prior to the enactment of the SAD statute and the
resulting ordinance, neighborhoods and building owners in Detroit
invested in private security, at a time when police response times were

McCarthy et at eds., 2015); see also Adam J. Levitin & Susan M. Wachter, Explaining
the Housing Bubble, 100 GEO. L.J. 1177, 1179 (2012) (“By mid-2009, . . . housing prices
had fallen by 33% from their peak [in 2008]”).
21. LINCOLN INST. OF LAND POLICY, 50-STATE PROPERTY TAX COMPARISON STUDY:
FOR TAXES PAID IN 2015 2–3 (2016), http://www.lincolninst.edu/sites/default/files/
pubfiles/50-state-property-tax-study-2016-full.pdf.
22. See TERESA TER-MINASSIAN, BROOKINGS INST., FISCAL AND FINANCIAL ISSUES FOR
21ST CENTURY CITIES 1 (2016), https://www.brookings.edu/wp-
content/uploads/2016/07/Fiscal-and-Financial-Issuesweb.pdf
More and more, solutions to urban challenges involve creative approaches that
circumvent the constraints of traditional governmental bureaucracies through
greater collaboration with the private sector and civil society. Yet no amount of
innovation can escape the need to tackle fiscal constraints and set up
mechanisms that allow for a predictable flow of funding from national and
regional governments to cities.
23. See Sean Delaney, Millage Proposal for Utica Library to Appear on August
Ballot, MACOMB DAILY (May 16, 2016),
http://www.macombdaily.com/article/MD/20160516/NEWS/160519692; Cathy Landry,
Local Ballot Features Circuit Judge, County Library Millage, GAYLORD HERALD TIMES
(Nov. 4, 2016), http://www.petoskeynews.com/gaylord/news/local-ballot-features-circuit-
judge-county-library-millage/article_d26a1227-c335-52ca-ae57-ba375fb4ad08.html.
24. Carol Hopkins, Police, Fire Millages Pass in Nearly All Oakland County
Communities, THE OAKLAND PRESS (Aug. 6, 2014), http://www.theoaklandpress.com/
government-and-politics/20140806/police-fire-millages-pass-in-nearly-all-oakland-
county-communities (saying communities in Oakland County almost unanimously pass
police and fire millages).
25. Laura Gottesdiener, How Private Security Guards Divide Detroit Into Two
Separate and Unequal Cities, MOTHER JONES (Nov. 18, 2014),
http://www.motherjones.com/politics/2014/11/how-bad-are-things-detroit-even-police-
protection-getting-privatized.
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 709

nearly twenty minutes for urgent calls.26 These voluntary neighborhood-

driven efforts certainly were beneficial to residents of that area, however
there are obvious free-rider problems inherent to a voluntary payment
scheme.27
In 1994 the State of Michigan enacted MCLA § 117.5i which
allowed cities with a population of at least one million to enact special
assessment districts for the purpose of securing private providers of
mosquito abatement, snow removal services, and private security
services.28 At the time, only one city in Michigan had a population of one
million: Detroit.29 As the population of Detroit declined, the population
threshold was amended downward, to 750,000 in 2001, and 600,000 in
2011.30 It is clear that, while the statute does not explicitly mention
Detroit, it is only targeted at Detroit. The second largest city in
Michigan, Grand Rapids, is a distant second with a population of around
195,000 in 2016.31
Despite the 1994 legislation, the City of Detroit never enacted an
enabling ordinance to establish special assessment districts in Detroit.
However, in response to the 2011 amendment to MCLA section 117.5i,
the City of Detroit enacted City Ordinance 18-12-120, which established
the process by which a special assessment district may be enacted by
residents of a particular neighborhood or neighborhoods.32 Creation of
SADs is a neighborhood-driven process.33 It is important to note that the
ordinance claims that:

Services funded by a SAD are supplemental to city-provided

services. Notwithstanding the establishment of a SAD under this

26. 2014 End of Year Statistics and Projections, CITY OF DETROIT, (Jan. 6, 2015, 9:54
AM), http://www.detroitmi.gov/News/ArticleID/10/2014-End-of-Year-Statistics-and-
Projections.
27. Laura Gottesdiener, supra note 25; ROBERT COOTER & THOMAS ULEN, LAW AND
ECONOMICS 107 (3d ed. 2000) (explaining how it may be in individuals best interest to
receive benefits purchased by others without paying for them).
28. S.B. 936, 87th Leg, Reg. Sess. (Mich. 1994).
29. Detroit Population, GOOGLE, PUBLIC DATA, https://www.google.com/publicdata/
explore?ds=kf7tgg1uo9ude_&met_y=population&hl=en&dl=en#!ctype=l&strail=false&
bcs=d&nselm=h&met_y=population&scale_y=lin&ind_y=false&rdim=country&idim=pl
ace:2622000&ifdim=country&hl=en_US&dl=en&ind=false (last visited Jan. 30, 2018)
(indicating that the population of Detroit was 1,008 million in June 1994).
30. H.B. 4868, 91st Leg., Reg. Sess. (Mich. 2001); H.B. 4874, 96th Leg.,Reg. Sess.
(Mich. 2011).
31. QuickFacts: Grand Rapids City, Michigan, U.S. CENSUS BUREAU,
http://www.census.gov/quickfacts/table/PST045215/2634000 (last visited Jan. 30, 2016).
32. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-120 et seq
(2014).
33. Id.
710 WAYNE LAW REVIEW [Vol. 63:705

division, the City shall continue to provide Services to a SAD at

the same level and frequency that it provides services to other
comparable areas of the City that do not contain a SAD. The
existence of a SAD shall not be a basis for the subsequent
discontinuance or diminution of city-provided services within a
SAD.34

This is important because two of the services that could be enhanced

through a SAD are functions traditionally provided by the city: snow
removal in the streets and sidewalks and maintaining security and
preventing crime.35
To establish a neighborhood SAD, a city-recognized designated
neighborhood improvement organization (DNIO) sponsors a petition to
establish a SAD within its boundaries.36 The boundaries of the proposed
SAD need not be contiguous.37 The petition must contain a description of
the services to be covered as well as a cost estimate for the assessment.38
The petition is considered complete when 51% of the record owners
within the proposed SAD have signed it.39 A petition does not become
invalid if the proposed cost presented on the petition later turns out to be
overly optimistic (the actual assessment is actually higher than
estimated).40 Thus, DNIOs may have incentive to underestimate costs
while circulating the petition, only for record owners to later find out that
they have signed the petition based on incomplete or inaccurate costs.
After 51% of the record owners within the proposed SAD have
signed the petition, it is next submitted to the City Clerk, and the City
Council is obligated to hold a public hearing to consider the DNIO’s
petition to establish an SAD and, if the City Council is not satisfied with
the proposed SAD, a second public hearing within the next sixty days.41
If a record owner wishes to appeal the special assessment to the
Michigan Tax Tribunal, he or she must first protest the assessment at the
public hearing and then file a petition.42 If approved by the City Council,
the SAD’s roll of parcels to be assessed is transmitted to the City
Treasurer, who collects the assessment as part of the winter or summer

34. Id. § 18-12-142 (emphasis added).

35. Id. § 18-12-120 et seq.
36. Id. § 18-12-122.
37. Id. § 18-12-125.
38. Id.
39. Id. § 18-12-127.
40. Id. § 18-12-126(a)(5).
41. Id. § 18-12-131.
42. Id. § 18-12-133(c).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 711

tax bill.43 The Treasurer then works with the DNIO to secure a city-
approved private contractor for the service or services to be funded by
the special assessment.44 The Treasurer makes periodic evaluations to
ensure that the assessment receipts are sufficient to cover the cost of the
services to be provided, and the Treasurer may increase the assessment
by up to 15% without any public hearing or notice to record owners.45
If a record owner fails to pay the assessment, a lien is placed on the
property the same as if the record owner had failed to pay municipal
property taxes, with the associated penalties and interest.46 This brings
the threat of foreclosure along with failure to pay the special assessment.
This is problematic considering that Detroit suffered from an estimated
16,000 tax foreclosures in 2016.47
SADs are established for a term of not less than seven years.48
However, SADs may be terminated prior to seven years by a process
identical to that which led to their creation.49 At the expiration of the
seven-year term, if the neighborhood wishes to renew the SAD, they
must repeat the petition process.50 As SADs are a recent addition to the
arsenal of tools available to the City for off-loading its provision of
services, there have yet to be any renewals or terminations.51
To date, there has been only one legal challenge to the SADs in the
City.52 However, the suit was dismissed for lack of jurisdiction as it was
improperly filed in Wayne County Circuit Court.53 As previously noted,
the ordinance requires that any challenges to the SADs be filed with the
Michigan Tax Tribunal,54 and it is unclear why the attorney in that case
chose to ignore this requirement. However, public meetings by
neighborhood organizations seeking to establish SADs demonstrate that
significant opposition exists.55 Some residents oppose SADs as a form of

43. Id. § 18-12-133(b).

44. Id.
45. Id. § 18-12-134(b).
46. Id. § 18-12-138 (2014).
47. Eric D. Lawrence, Wayne County Foreclosure Numbers See Big Dip, DETROIT
FREE PRESS (June 27, 2016), http://www.freep.com/story/news/local
/michigan/detroit/2016/06/26/wayne-county-foreclosure-numbers-drop/86348712/.
48. DETROIT, MICH., CODE OF ORDINANCES § 18-12-121 (2014).
49. Id. § 18-12-141.
50. Id. § 18-12-140.
51. Detroit enacted City Ordinance 18-12-120 in 2011, so the seven-year term for the
first SADS, enacted in 2018, has not yet expired.
52. Margie McCall, et al. v. Michael Duggan, et al., No. 16-005526-CZ (Mich. Cir.
Ct. May 2, 2016) (on file with author).
53. Id.
54. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-133(c)
(2014), see supra note 42 and accompanying text.
55. Joe Guillen, Detroit Neighborhood, supra note 9.
712 WAYNE LAW REVIEW [Vol. 63:705

double taxation.56 Additionally, as required by the ordinance, the

established SADs have instituted uniform assessments, regardless of
property value or parcel size.57 The special assessment cost is determined
by dividing the cost of the services by the number of non-exempt tax
parcels.58 The threshold, 51% of record owners, for creation of a SAD,
means that only a bare majority is necessary to create an assessment,
often for hundreds of dollars.59 It certainly appears that there will be
other legal challenges to SADs in Detroit, as awareness of them grows.
In March 2016, the Detroit City Council approved the first three
SADs.60 The Palmer Woods, Sherwood Forest, and Detroit Golf Club
neighborhoods established SADs that require annual payments of $495,
$250, and $400 for residents, respectively.61 An ongoing effort by the
Grandmont Rosedale Development Corporation, a DNIO, is under way
to enact their own $250 special assessment to provide security services
and snow removal.62 Currently, it is city policy not to plow snow until at
least six inches have accumulated, 63 but the proposed SAD would secure
snow removal services after only three inches.64 However, the
Grandmont Rosedale SAD has been hindered by the fact that it is
comprised of five separate neighborhood organizations.65 Additionally,
the tax collection rate in the Grandmont Rosedale neighborhood is only
65%.66 While this is higher than the overall Detroit average of 52%, it
pales in comparison to the nearby city of Ann Arbor’s collection rate of
92%.67 The three Detroit neighborhoods that have adopted SADs, Palmer

56. Id.
57. DETROIT, MICH., CODE OF ORDINANCES § 18-12-126(a)(5) (2014).
58. Id. § 18-12-121.
59. Joe Guillen, Will More Neighborhoods Turn to Fees for Better Services?,
DETROIT FREE PRESS (July 10, 2016), http://www.freep.com/story/news/
local/michigan/detroit/2016/07/09/detroit-neighborhoods-fees-services/86866196/.
60. Id.
61. Id.
62. Id.
63. City of Detroit Announces Snow Removal Policy and Service Improvement for
2015, CITY OF DETROIT (Jan. 31), http://www.detroitmi.gov/News/ArticleID/26/City-of-
Detroit-Announces-Snow-Removal-Policy-and-Service-Improvement-for-2015.
64. Guillen, Detroit Neighborhood, supra note 9.
65. Christine Ferretti, Neighbors in Upscale Detroit Areas Feud Over Fees, THE
DETROIT NEWS (May 11, 2016), http://www.detroitnews.com/story/news/local/detroit-
city/2016/05/10/neighbors-upscale-detroit-areas-feud-fees/84208920/.
66. Letter from Grandmont Rosedale Development Corporation to Residents on
Proposed SAD (Feb. 22, 2016), http://mygrandmontrosedale.org/wp-
content/uploads/2016/02/GRDC-Response.pdf (on file with author).
67. James Alm, et al., Detroit Property Tax Delinquency –Social Contract in Crisis 2
(Tulane U, Dep’t of Econ., Working Paper Series, Paper No. 1508, 2015),
http://econ.tulane.edu/RePEc/pdf/tul1508.pdf (“Currently, 48 percent of Detroit
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 713

Woods, Sherwood Forest, and Detroit Golf Course area, all have a far
lower delinquency rates than the city average.68 Due to this, any estimate
of assessed revenue for a proposed SAD in Detroit must be conservative
and take non-payment into account. This is one reason that the City
Treasurer is required to annually evaluate the assessment.69
SADs also expose one of the great challenges facing the City of
Detroit today. There is little doubt that certain areas of the city are
rapidly changing. The word “gentrification” appears in a great many
newspaper articles.70 There are vast divides between areas of the city that
benefit from regular police patrols, working streetlights, and an
abundance of quality school offerings, and those areas of the city
decimated by blight and isolated by poor transit options.71 Opponents of
SADs point to them as a further cause of gentrification and increasing
inequality between neighborhoods.72 Essentially, SADs allow residents
in an area to receive the best security, snow removal, and mosquito
abatement that at least 51% of the residents can afford. Many residents
likely expect that their property taxes already go to services such as those
covered by SADs. This is more troubling considering that Detroit has the

properties are tax delinquent,” while “[i]n Ann Arbor the delinquency rate was about
eight percent during this period, which is high relative to historical standards.”).
68. Id. at 32 fig. 4.
69. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-134
(2014).
70. See e.g., Dana Afana, Final Touches on Detroit’s QLine Project Could Bring $3
Billion in Development, MLIVE.COM (Dec. 2, 2016),
http://www.mlive.com/news/detroit/index.ssf/2016/12/m-1_rail.html; Louis Aguilar,
Detroit Area Rents Squeeze Record Number of Residents, DETROIT NEWS (Dec. 9, 2015),
http://www.detroitnews.com/story/business/real-estate/2015/12/09/rent-detroit-harvard-
study/77020532/; John Gallager, Downtown Detroit Sales Prices Rise to “Insane”
Levels, DETROIT FREE PRESS (Apr. 24, 2016), http://www.freep.com/story/money/real-
estate/home-sales/2016/04/23/detroit-downtown-midtown-condominiums-m1-rail-
arena/83191622/; Bill McGraw, Meet the Downtown Residents Who Say They are Being
Pushed Aside for the “New Detroit”, DEADLINE DETROIT (May 2, 2013),
http://www.deadlinedetroit.com/articles/4721/meet_the_downtown_residents_who_say_t
hey_are_being_pushed_aside_for_the_new_detroit#.WFmgh7YrK8p; Kimberly Hayes
Taylor, Gentrification of Detroit Leaves Black-Owned Businesses Behind, NBC NEWS
(Nov. 1, 2015, 9:55 AM), http://www.nbcnews.com/news/nbcblk/gentrification-detroit-
leaves-black-residents-behind-n412476; Ian Thibodeau, Downtown Detroit Apartment
Rents Rise 7 Percent, DETROIT NEWS (July 22, 2016), http://www.detroitnews.com/
story/business/2016/07/22/downtown-detroit-rent-jump/87460118/.
71. Peter Moskowitz, The Two Detroits: A City Both Collapsing and Gentrifying at
the Same Time, THE GUARDIAN (Feb. 5, 2015), https://www.theguardian.com/cities
/2015/feb/05/detroit-city-collapsing-gentrifying.
72. Ferretti, Neighbors, supra note 65.
714 WAYNE LAW REVIEW [Vol. 63:705

highest property tax rate in Michigan and one of the highest in the
nation.73
As previously mentioned, at the time of its creation, SADs are only
allowed in one Michigan city—Detroit—by virtue of the population
restriction.74 However, Detroit is far from the only distressed city in
Michigan. Fiscal restraints in the face of plunging property values and
low tax revenues plague LGUs both big and small across the state.75
There is little doubt that SADs, if residents of a neighborhood wanted,
could provide benefits by improving services above the standard which
the municipality could provide.76 Some consider Flint to be the most
distressed city in the State of Michigan.77 In the face of the Flint water
crisis, the city is under severe resource constraints.78 Surely, SADs may
provide benefits for particular neighborhoods that are on the edge of
decline, or stable neighborhoods seeking to improve. If neighborhoods
on the verge of suffering from lower property values could financially
band together to improve their own services, at no expense to the city,
that certainly is something the Michigan legislature could explore.
Indeed, any city that wishes to empower its citizens to enhance their own
services could arguably do so. For example, when the Traverse City
School District announced plans to shut down an elementary school, an
anonymous resident offered $800,000 to maintain it.79 In a constrained
fiscal environment, policy makers ought to embrace citizen initiatives to

73. GARY SANDS & MIKE SKIDMORE, LINCOLN INST. OF LAND POLICY, DETROIT AND
THE PROPERTY TAX: STRATEGIES TO IMPROVE EQUITY AND ENHANCE REVENUE 5, 26
(2015), https://www.lincolninst.edu/sites/default/files/pubfiles/detroit-and-the-property-
tax-full_0.pdf.
74. See supra notes 26–27 and accompanying text.
75. Paul Egan, Economy Improved, but Michigan Cities Still in Crisis, DETROIT FREE
PRESS (Aug. 29, 2016), http://www.freep.com/story/news/local/michigan/flint-water-
crisis/2016/08/28/economy-improved-but-michigan-cities-still-crisis/89213194/ (stating
cities such as Flint and Wayne are in financial hardships due to the broken state-sharing
system).
76. See e.g., MICH. DEP’T OF ENVTL. QUALITY, GUIDE: USE OF SPECIAL ASSESSMENTS
TO FUND RECYCLING SERVICES & FACILITIES (Nov. 2016),
https://www.michigan.gov/documents/deq/ResidentialRecycling-SpecialAssessments-
web_489180_7.pdf.
77. See ECONOMIC INNOVATION GROUP, THE 2016 DISTRESSED COMMUNITIES INDEX:
AN ANALYSIS OF COMMUNITY WELL-BEING ACROSS THE UNITED STATES 20 (2016),
http://eig.org/wp-content/uploads/2016/02/2016-Distressed-Communities-Index-
Report.pdf (listing Flint as ninth most distressed U.S. cities, and the only other Michigan
city on the list was Detroit at the tenth place).
78. Id.
79. Morgan Springer, Superintendent Doubt’s There is a Solution to Save Old
Mission School, INTERLOCHEN PUB. RADIO (Oct. 12, 2016),
http://interlochenpublicradio.org/post/superintendent-doubts-theres-solution-save-old-
mission-school.
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 715

better their communities. Perhaps all neighborhoods, not just distressed

Michigan cities, and their residents should be allowed to democratically
impose special assessments on their neighbors to improve their
environment.
For all their shortcomings, SADs hold great promise and appeal for
many neighborhoods. Residents, fed up by years of subpar city services,
appear willing to take matters into their own hands.80 While several
neighborhood organizations previously solicited and received voluntary
dues or fees for certain services, such as local park maintenance or
private security, SADs make such fees mandatory and eliminate the free-
rider problem.81 For residents in new SADs that have previously paid for
services enjoyed by all, a formal SAD may mean no financial
detriment.82 In fact, with greater mandatory participation, some residents
may see their costs decrease.83
The Detroit SAD model does not apply to renters or properties
owned by the city or state.84 From the City Council’s viewpoint, if
property owners in a neighborhood are willing to pay for private security,
it may allow the City to more effectively use limited resources
elsewhere.85 Interestingly, the proposed Grandmont Rosedale SAD has
made clear their intention to use off-duty Detroit police officers as part of
their private security services.86 While performing this work off-duty,
Detroit Police officers may dress in uniform, drive their squad car, and
carry their firearm.87 This leads to a very reasonable question: if an off-
duty Detroit Police Department (DPD) car is making rounds in a
neighborhood that can afford to pay for it themselves, why would DPD
have its own duplicative patrols? The ordinance establishing SADs
requires that there be no reduction in services, however the reality will

80. See id.; see also Guillen, Detroit Neighborhood, supra note 9 (“For some
residents in Palmer Woods and Sherwood Forest [the Detroit neighborhood that have
established SADs], the fees won’t be altogether new. Some already have been paying
dues to neighborhood organizations for extra security and snow removal.”).
81. See Guillen, Detroit Neighborhood, supra note 9 (“[A]ll residents—regardless of
membership in a neighborhood association—must pay for better services in the special
assessment districts. Those who don’t pay the annual fee could be subject to foreclosure”)
(emphasis in original).
82. See id.
83. See id.
84. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-136
(2014).
85. Ferretti, Neighbors, supra note 65.
86. Lucy Perkins, Detroit Program Employs Off-Duty Cops to Maintain Safe
Neighborhood, MICHIGAN RADIO (July 30, 2013), http://michiganradio.org/post/detroit-
program-employs-duty-cops-maintain-safe-neighborhood.
87. DETROIT, MICH., CODE OF ORDINANCES ch. 43, art. II, div. 2, § 43-2-11 et seq.
(2010).
716 WAYNE LAW REVIEW [Vol. 63:705

likely be more complicated. Why would a city snowplow spend time

plowing a street which a private contractor cleaned hours ago?
Undoubtedly some reallocation of resources will occur, and perhaps it
would be beneficial to residents in non-SADs, who may see more
frequent and timely police patrols and responses, or better snow removal.
It is also important to consider limitations that exist within the
Michigan Constitution that may encourage future SADs both outside and
within Detroit. The Michigan Constitution and several statutes limit
property tax rates at “15 mills on each dollar.”88 Detroit property taxes
are already the highest in Michigan, as a result of low property values.89
As the City seeks to improve services, increasing property tax rates is not
an option. Thus, the City will have to be creative in finding ways to
improve services in the face of limited resources. SADs would seem to
be an attractive means for any city to shift the burden of providing a high
level of services onto the neighborhoods willing to pay for them.

III. ANALYSIS

A. Are Neighborhood-Imposed Special Assessment Districts Beneficial?

In an ideal world, property taxes would provide LGUs with the

resources necessary to properly care for its citizens. Unfortunately, this is
not the case in Detroit. Detroit is not alone; many American cities face
serious financial headwinds today.90 These challenges range from
underfunded public pension liabilities,91 to crumbling transportation
infrastructure, 92 to misguided investments.93 Reliance on tax revenue is

88. MICH. CONST. art. IX, § 6; Property Tax Limitation Act of 1933, MICH. COMP.
LAWS. ANN. § 211.201 et seq. (West 1998).
89. Adam H. Langley, Local Government Finances During and After the Great
Recession, in LINCOLN INST. OF LAND POLICY, LAND AND THE CITY 171, 171 (George W.
McCarthy et at eds., 2015).
90. See Tristan Hallman, S&P Once Again Downgrades Dallas’ Bond Rating Over
Pension Fears, DALLAS NEWS (Jan. 11, 2017), http://www.dallasnews.com/news/dallas-
city-hall/2017/01/11/sp-downgrades-dallas-bond-rating-pension-fears; Dave McKinney,
Chicago Schools Order Unpaid Days Off After Governor’s Funding Veto, REUTERS (Jan.
13, 2017), http://www.reuters.com/article/us-chicago-education-idUSKBN14X2K8.
91. See Laurie Meisler, Pension Fund Problems Worsen in 43 States, BLOOMBERG
(Aug. 29, 2017), https://www.bloomberg.com/graphics/2017-state-pension-funding-
ratios/.
92. See Faiz Siddiqui & Martine Powers, Is It Metro’s Responsibility to Save
Passengers from a Smoke-Filled Train? Leaders Send Mixed Signals, WASH. POST (Jan.
12, 2017), https://www.washingtonpost.com/local/trafficandcommuting/is-it-metros-
responsibility-to-save-passengers-from-a-smoke-filled-train-leaders-send-mixed-
signals/2017/01/12/a492a8ae-d8fb-11e6-9f9f-
5cdb4b7f8dd7_story.html?utm_term=.1ad1b9a574df.
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 717

proving to be insufficient to address these challenges. To stabilize at-risk

neighborhoods and improve established neighborhoods, creative
solutions are necessary. To its advocates, SADs are one such creative
solution.
Residents in three Detroit neighborhoods recently adopted SADs, 94
and as such it would be premature to weigh their efficacy. However, an
examination of other assessment districts both within and outside of
Michigan may prove illuminative.
Special assessments are not uncommon in Michigan. For over 100
years, they have been a frequently-used tool by governments to improve
public services and structures ranging from modest townships to
populous counties.95 Several factors differentiate special assessments
from general taxes. Taxes are a financial burden on property owners for
governmental purposes “without regard to any special benefit which will
inure to the taxpayer.”96 By contrast, property owners pay special
assessments on the premise that the improvements in that specific area
will enhance the value of the assessed property.97 Special assessments are
remunerative and bring some increase in value to the property owner,
while taxes may flow toward more amorphous improvements or more
general investments in the community.98 The Michigan Constitution
contains several provisions regarding limitations on ad valoreum
property taxes, which purportedly limit the tax burden on property.99 On
the other hand, special assessments are not considered tax assessments
for purposes of these limitations.100 This exception allows special
assessments based on some valuation of property which may otherwise

93. Rory Carroll & Edward Krudy, Low Investment Returns Taking a Toll on U.S.
Pension Funds, REUTER (Aug. 4, 2016) https://www.reuters.com/article/markets-
pensions-returns/low-investment-returns-taking-a-toll-on-u-s-pension-funds-
idUSL1N1AK1X7.
94. Ingrid Kelley, Three Detroit Neighborhoods to Pay More Taxes for Better City
Services, FOX2 NEWS, (Apr. 4, 2016), http://www.fox2detroit.com/news/local-
news/116960595-story.
95. See Frank L. Sage, Some Legal Aspects of Special Assessments, 2 MICH. L. REV.
453, 454–55 (1904).
96. Kadzban v. City of Grandville, 442 Mich. 495, 500, 502 N.W.2d 299, 302 (1993)
(citation omitted).
97. Id.
98. Id.
99. ELIZABETH PRATT, MICH. SENATE FISCAL AGENCY, PROPERTY TAX MILLAGE
LIMITATIONS IN MICHIGAN (Spring 2016), http://www.senate.michigan.gov/
sfa/publications/notes/2016notes/notesspr16lp.pdf.
100. MICH. CONST. art IX, § 6. (“The [real property tax limitation] shall not apply to . .
. payment of assessment or contract obligation . . . [which] may be imposed without
limitation as to rate or amount.”).
718 WAYNE LAW REVIEW [Vol. 63:705

exceed the statutory limitations.101 For this reason, they are very
attractive tools for LGUs to finance road improvements, sewer upgrades,
and expansions, or even for dredging of rivers or streams.102 It is
important to note that, with one exception (rubbish collection), each of
the twenty improvements statutorily authorized by a special assessment
are long-lasting physical improvements.103 The SADs as implemented in
Detroit are for short-term improvements, such as removal of a heavy
snowfall, or a mosquito abatement treatment.104 Instead of long-term
investments in some property, these SADs and the associated revenues
are utilized to acquire services from city-approved contractors.105
There is no doubt that the City of Detroit recognizes the advantages
of allowing the establishment of such SADs.106 They allow motivated
property owners in stable neighborhoods to increase their property
values, stave off blight, and increases tax receipts. However, these
neighbor-imposed taxes may have negative consequences for certain
property owners within a SAD. These assessments are uniformly
imposed on each parcel regardless of the value of the structure, if any, on
the real property.107 This means a well-off childless double-income
couple pays the same special assessment as the widow living on monthly
Social Security checks. Or, perhaps more starkly, the owner of a vacant
lot would be compelled to pay for security services, which would likely
be of little benefit to him. In addition, in a city where the median annual
income is $26,249, 108 requiring a $500 special assessment for services
may be a significant burden. Also, the city should already have provided
essential services such as ensuring a safe and secure environment and
removing snow. In adopting SADs, residents are allowing the City to
abdicate its general responsibilities to its citizens. It would be duplicative
for a City-owned plow to come down a street after a SAD-acquired
private plow company had cleared the street. Likewise, if, pursuant to a
SAD, a private security guard were posted in a marked car, would the
Detroit Police Department continue to operate regularly scheduled

101. Id.
102. MICH. COMP. LAWS ANN. § 41.721 (West 2017).
103. Id. at § 41.722.
104. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-120
(2014).
105. Id. § 18-12-145.
106. Jonathan Oosting, Plan Would Let Detroit Neighborhoods Collect Fee for Private
Security, Other Services, MLIVE (May 15, 2012), http://www.mlive.com/news/detroit/
index.ssf/2012/05/plan_would_let_detroit_neighbo.html.
107. DETROIT, MICH., CODE OF ORDINANCES § 18-12-121 (2014).
108. 2012–2016 American Community Survey 5-Year Estimates, Detroit City,
Michigan, U.S. CENSUS BUREAU, https://factfinder.census.gov/faces/tableservices/
jsf/pages/productview.xhtml?src=CF (last visited Feb. 2, 2017).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 719

patrols? The short-term improvements realized may only encourage the

City to further push services toward a SAD model.
However, if the City wished to allow SADs to provide other services
beyond the three authorized by law (private security, snow removal,
mosquito abatement), there must be a change in the State authorizing
statute.109 As private security is analogous to police patrols, it would be a
natural extension to allow special districts to impose a tax for additional
fire protection and response services or park maintenance. Indeed, one
active group of residents has been mowing and maintaining the City’s
parks since 2010.110 Perhaps such a program could be formalized, and
city parks in certain neighborhoods spun off to DNIOs. Detroit does not
have a city-wide recycling program; certainly some neighborhoods
would be interested in securing such services.111 Special assessments
could be used to create mandatory funding regimes for quality-of-life
improvements such as street festivals hosted by a DNIO.112 Considering
the financial stress the City remains under, undoubtedly such alternative
financial arrangements would be very appealing to the City.113 Special
assessment districts are directly accountable to the property owners who
pay the annual assessment, making the managing DNIO more likely to
respond positively to feedback and complaints from residents. In this
way, SADs may be more responsive to resident needs than the city-wide
government, which would be particularly advantageous.
If SADs are beneficial for residents both within and outside the
SAD, who may benefit from increased resources which were previously
utilized in the SAD, it also follows that the SAD statute should be
expanded to include other distressed cities in Michigan as well. Even
residents of neighborhoods in non-distressed cities may be interested in
formalizing a funding stream for neighborhood organizations to improve
their surroundings.

109. MICH. COMP. LAWS ANN. § 117.5i (West Supp. 2017).

110. Tom Henderson, Detroit Mower Gang Makes Cut on Video, CRAIN’S DETROIT
BUS. (Apr. 1, 2017), http://www.crainsdetroit.com/article/20160717/NEWS/160719847.
111. Christine Ferretti, Detroit Plans Outreach to Boost Recycling Participation,
DETROIT NEWS (Feb. 11, 2016), http://www.detroitnews.com/story/news/local/detroit-
city/2016/02/11/detroit-recycling-outreach-campaign/80254664/.
112. See About Us: Our Programs, GRANDMONT ROSEDALE DEV. CORP.,
http://grandmontrosedale.com/about/ (last visited Feb. 3, 2018).
113. See Joe Guillen, Detroit Braces for Hefty Pension, Debt Payments, DETROIT FREE
PRESS (Dec. 12, 2016), http://www.freep.com/story/news/local/michigan
/detroit/2016/12/12/detroit-braces-hefty-pension-debt-payments/95209736/.
720 WAYNE LAW REVIEW [Vol. 63:705

B. Legal Challenges and the Likelihood of Success

Special assessments levied by municipal governments are frequently

challenged in court.114 Interestingly, while the Michigan Supreme Court
has stated that special assessments are not taxes, 115 legal challenges to
special assessments are directed toward the Michigan Tax Tribunal
(MTT). 116 The MTT recognizes the general principal that municipal
assessment decisions are presumed to be valid.117 To overcome this
presumption, the challenger must show that there is an unreasonable
disproportionality between the special assessment and the benefits to the
property subject to the special assessment.118 Absent proportionality
between the benefit and burden, the special assessment is “akin to the
taking of property without due process of law.”119
Courts, hesitant to apply a dollar-for-dollar balance or some other
formula between the special assessment and its benefits, also favor the
presumption of validity granted to the government.120 The challenger
must present evidence that demonstrates a substantial or unreasonable
disproportional relationship.121 Due to the difficulty of quantifying
improvements, the evidentiary requirements may be met without
attributing specific dollar amounts to the improvements.122 Thus, the
local government is afforded a presumption in its favor, and even if the
challenger demonstrates a disparity in value between the benefit and the
assessment, the court need not conclude that the disparity is
unreasonably disproportional.

114. See Kane v. Williamston Twp., 301 Mich. App. 582, 836 N.W.2d 868 (2013);
Dalton Enter. v. Dalton Twp., No. 291789, 2010 WL 2867944 (Mich. Ct. App. July 22,
2010); Mich.’s Adventure, Inc. v. Dalton Twp., 290 Mich. App. 328, 802 N.W.2d 353
(2010).
115. Kadzban v. City of Grandville, 442 Mich. 495, 500, 502 N.W.2d 299, 301 (1993)
(“Although it resembles a tax, a special assessment is not a tax.”) (citing Knott v. City of
Flint, 363 Mich. 483, 497, 109 N.W.2d 908, 916 (1961)).
116. MICH. COMP. LAWS ANN. § 205.731 (West 2017).
117. Dixon Rd. Grp. v. City of Novi, 426 Mich. 390, 408, 395 N.W.2d 211, 219
(1986) (citing Auditor Gen. v. Maier, 95 Mich. 127, 131, 54 N.W. 640, 641 (1893)).
118. Dixon Rd. Grp., 426 Mich. at 393, 395 N.W.2d at 212.
119. Id. at 403, 395 N.W.2d at 217.
120. Id. at 402, 395 N.W.2d at 216.
121. Id. at 403, 395 N.W.2d at 217.
122. Fluckey v. City of Plymouth, 358 Mich. 447, 451–53, 100 N.W.2d 486, 487–89
(1960) (holding that a special assessment for significant road expansion was invalid
because the danger to young children and the increased tonnage and volume of traffic
substantially outweighed the benefit to some commercial businesses).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 721

To date there has been one lawsuit challenging SADs in Detroit.123

As this suit was improperly filed in Wayne County Circuit Court, rather
than with the Michigan Tax Tribunal, it was dismissed in the summer of
2016.124 Through the lens of other challenges to special assessments,
suits brought by other property owners who want to challenge the
validity of these special assessment districts for snow removal, private
security, and mosquito abatement125 would likely face strong headwinds.
To overcome the general presumption that the action by the City in
establishing SAD at the request of the DNIO is valid, a challenger must
demonstrate several elements. First, he or she must be a property owner
within the SAD, who is subject to the special assessment.126 Second, he
or she must protest the SAD at the City Council’s hearing.127 However,
mere refusal to sign the petition to establish the SAD does not amount to
“protest.”128 Finally, the challenger must present sufficient evidence to
demonstrate that the burden of the assessment is unreasonably
disproportionate to the benefit received.129 In doing so, the challenger
must demonstrate that the assessment results in no increase in property
value, no relief of some burden, or no “creation of special adaptability in
the land” which enhances its value.130 While this may appear to be three
different methods, all point toward a calculation of the change in market
value.131
For each property owner, the tax parcel share is their portion of the
assessed cost of the service or services as being divided equally among
the non-exempt tax parcels within the SAD.132 To date, the cost of
implemented SADs has been between $250 and $500 annually per
parcel.133 After implementation, the tax parcel share can be adjusted by
up to 15% automatically and without any notice.134 A uniform fee

123. Margie McCall, et al. v. Michael Duggan, et al., No. 16-005526-CZ (Mich. Cir.
Ct. May 2, 2016) (on file with author).
124. Id.
125. See supra notes 114–124
126. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-121 et seq
(2014).
127. Id. § 18-12-133(c) (2014).
128. See id.
129. Dixon Rd. Grp. v. City of Novi, 426 Mich. 390, 401–03, 395 N.W.2d 211, 216–
17 (1986).
130. Soncoff v. City of Inkster, 22 Mich. App. 358, 361, 177 N.W.2d 243, 245 (1970).
131. Dixon Rd. Grp., 426 Mich. at 401, 395 N.W.2d at 216 (believing that “a
determination of the increased market value of a piece of property after the improvement
is necessary in order to determine whether or not the benefits derived from the special
assessment are proportional to the cost incurred.”).
132. DETROIT, MICH., CODE OF ORDINANCES § 18-12-121 (2014).
133. See Guillen, Detroit Neighborhood, supra note 9.
134. DETROIT, MICH., CODE OF ORDINANCES §18-12-134 (2014).
722 WAYNE LAW REVIEW [Vol. 63:705

assessment, as opposed to an assessment based on property value, does

not in itself invalidate a special assessment.135 A property owner can
overcome the presumption of validity if he or she is able to establish that
the value of his or her property value did not in fact increase
proportionally to the creation of the SAD.136 However, unrelated
increases in property value, which would be difficult to distinguish, may
hamper this fact-intensive inquiry.
In one successful challenge to a special assessment, the challenger
demonstrated that the special assessment was 2.6 times greater than the
value of the benefit realized from streetscape and sewer improvements.137
However, in this case, the increase in the value of the land was dwarfed
by the special assessment, with a difference of over $8,000 per acre in
one section and $23,000 in another, which was clearly unreasonably
disproportionate. 138 A SAD challenger in Detroit is unlikely to be able to
allege such an obvious instance of an unreasonably disproportional
relationship between the SAD’s cost and benefit that would amount to a
taking without due process. A court would likely consider the special
assessments, which to date have been around several hundred dollars,
and the interest of the City in allowing provision of special services great
enough to uphold the presumption of validity.139
There have been some challenges to special assessments as
violations of the Michigan Constitution.140 In one case, the city of
Jackson imposed a storm water management charge on all property
owners within the city to pay for “street sweeping, catch basin cleaning,
and leaf pickup and mulching.”141 The Michigan Court of Appeals
concluded that what the city called a “special assessment” was actually a
tax, violating Section 31 of the Headlee Amendment of the Michigan
Constitution.142 The Headlee Amendment, adopted by Michigan voters in

135. Kane v. Williamston Twp., 301 Mich. App. 582, 589, 836 N.W.2d 868, 872
(2013) (permitting uniform special assessment as opposed to property value-based
assessment).
136. Dixon Rd. Grp., 426 Mich. at 403, 395 N.W.2d at 217.
137. Id.
138. Id. at 393, 395 N.W.2d at 212.
139. Christine Ferretti, Neighbors in Upscale Detroit Areas Feud Over Fees, THE
DETROIT NEWS (May 11, 2016), http://www.detroitnews.com/story/news/local/detroit-
city/2016/05/10/neighbors-upscale-detroit-areas-feud-fees/84208920/.
140. See Bolt v. City of Lansing, 459 Mich. 152, 587 N.W.2d 264 (1998); Kowalski v.
City of Livonia, 267 Mich. App. 517, 705 N.W.2d 161 (2005); Wolf v. City of Detroit,
287 Mich. App. 184, 786 N.W.2d 620 (2010).
141. Jackson Cnty. v. City of Jackson, 302 Mich. App. 90, 93, 836 N.W.2d 903, 905
(2013).
142. Id.
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 723

1978, prohibits increases of certain state or local taxes.143 However, in

this case the court noted that the benefit was to the general public, not to
a particular person upon whom the fee was imposed.144 In contrast, with
valid SADs, which only benefit the assessed properties rather than the
general public, a court would likely conclude that such assessments are
not a tax.145 Additionally, Headlee Amendment violations can be avoided
by voter approval of the fee.146 Thus, even if a court found that such
SADs were a tax, the voluntary nature and democratic adoption of the
special assessment might also defeat any Headlee Amendment
challenge.147 Accordingly, challenges to SADs as unconstitutional
impositions of a tax are likely to be unsuccessful.

C. Special Assessment Districts as Residential Business Improvement

Districts?

Special assessment districts may be somewhat analogous to business

improvement districts. Michigan has two forms of business improvement
districts: business improvement districts (BIDs), and business
improvement zones (BIZs).148 While they are created by different
processes, they operate under similar constraints, and so will be
considered jointly. Under both regimes, a compulsory assessment
program is imposed on defined geographic area, with the funds collected
for physical improvements and services within the district.149 However,
several crucial differences exist between business improvement districts
and special assessment districts. First, under Michigan law residential
real property cannot be assessed in a BID.150 Second, the array of
authorized uses for the assessments collected under a BID are far more
expansive than for a SAD.151 BIDs may raise and use funds for cultural
or recreational events, horticulture, and acquire or demolish structures,
along with a litany of other uses.152 Because of these expansive powers,

143. MICH. CONST. art. IX, §§ 25–34.

144. Jackson Cnty., 302 Mich. App. 90, 108, 836 N.W.2d 903, 913 (2013).
145. Id. at 99, 836 N.W.2d at 908.
146. Id.
147. Id.
148. Jeff Stefan, Comment, Business Improvement Districts and Michigan: An
Analysis, 49 WAYNE L. REV. 791, 795 (2003).
149. Id. at 793.
150. MICH. COMP. LAWS. § 125.990 (West 2017).
151. Id.
152. See Winnie Hu, Property Owners Spend on Quality of Life (But is That Fair?),
N.Y. TIMES (Mar. 13, 2017), https://www.nytimes.com/2017/03/13/nyregion/nyc-
business-improvement-districts.html.
724 WAYNE LAW REVIEW [Vol. 63:705

oversight and operation of BIDs is vested in boards which include

members appointed by city and state government.153
However, the criticisms frequently lodged against BIDs are very
similar to the criticisms of SADs. Interlocal inequality is a frequent
refrain regarding BIDs, leading to “Balkanization” of cities, and a similar
criticism could be leveled against SADs.154 “[W]hile it is true that the
[BID’s] activities are “dwarfed” by the services provided by the City, its
functions are far from limited or unique. Rather, the [BID] performs
services nearly identical to core municipal functions.”155 Thus, duplicity
of services by BID is a similar result that could arise from SADs, despite
the ordinance’s statement that no such diminution of services may take
place.156 To paraphrase the attorney who brought a (ultimately
unsuccessful) challenge to a BID, if the revenue of a city is 100 pennies,
and one neighborhood imposes a self-tax increasing the city revenue to
110 pennies, that neighborhood would “get to keep all the additional
pennies and will pressure the city against [a] tax increase.”157 Similarly,
residents of a SAD may strongly oppose increased taxes if all the city
can offer in return is better police and snow removal services, which they
should already have received without the special assessment.158
Similar to SADs, BIDs do not allow for participation of non-
property-owning residents. Here, a distinction between BIDs and SADs
becomes crucial. In most BIDs, the owner of a residential rental property
is assessed based on the property value, and the fractional cost of the
assessment is passed on to the renters in the units, who have no vote in
BID management.159 Like BIDs, non-owner residents of an SAD do not
have a vote in the decision-making process of the special assessment
district.160 On the other hand, a SAD assessment, like those in Detroit, is

153. MICH. COMP. LAWS ANN. § 125.981(6) (West 2017); Stefan, supra note 148, at
797.
154. Stefan, supra note 148, at 807.
155. Daniel R. Garodnick, Comment, What’s the BID Deal? Can the Grand Central
Business Improvement District Serve a Special Limited Purpose?, 148 U. PA. L. REV.
1733, 1756 (2000).
156. DETROIT, MICH., ORDINANCES § 18-12-142 (2014).
157. Heather Mac Donald, BIDs Really Work, CITY J. (Spring 1996), https://www.city-
journal.org/html/bids-really-work-11853.html.
158. This result contradicts the ordinance’s statement that no such diminution of
municipal services may take place because of SADs. DETROIT, MICH., CODE OF
ORDINANCES ch. 18, art. XII, div. 7, § 18-12-142 (2014).
159. Garodnick, supra note 155, at 1736.
160. DETROIT, MICH., CODE OF ORDINANCES § 18-12-122 (2014) (defining who may
sign petition to create SAD).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 725

uniform across all non-exempt parcels.161 So, the fractional cost to each
renter in an SAD is considerably smaller than it would have been in a
BID, assuming that there is more than one unit per residential rental
property. This discrepancy may prove crucial in a challenge based on the
voting structure.
BIDs themselves have been the subject of much litigation,
particularly over the unequal voting structure that many BIDs operate
under. The United States Supreme Court has upheld the sanctity of the
“one-person, one-vote principle;” however, at the same time, the Court
has recognized that there exists a special limited purpose exemption to
this principle.162 BIDs, as well as other special purpose entities such as
SADs may fall into this exemption if they operate in a manner distinct
from a general government function, or have some limited purpose.163 In
considering voting challenges, the court will consider the
disproportionate impact on property owners, as well as the special
limited purpose of the entity.164 Under the current SAD model, a court
would likely determine that the limitation of voting rights to record
owners does not result in a disproportionate harm to non-owners.
Additionally, the extremely limited nature of the services provided by
SADs would disfavor any challenge to the voting structure.
If legislation were enacted to increase the scope of services provided
by a SAD, a SAD would become more analogous to BIDs, which can
procure a greater array of services. Had that been the case, a stronger
governance and oversight structure would be necessary to ensure
responsible use of funds. BIDs operate under very stringent governance
regimes, while SADs, after formation, can operate almost without
supervision for the life of their term, assuming that the assessment does
not increase more than 15% above the initial amount.165 Additionally,
had SADs covered a broader scope of services, they may come closer to
violating the “one-person, one-vote” principle. However, presently there
is likely no violation of this principle considering the SADs’ limited
burden and unclear or positive benefit to both affected property owners
and renters.

161. DETROIT, MICH., CODE OF ORDINANCES 18-12-122 (2014) (defining tax parcel
share as the assessment cost divided by the number of parcels in the district).
162. Salyer Land Co.v. Tulare Lake Basin Water Storage Dist., 410 U.S. 719, 728
(1973).
163. Garodnick, supra note 155, at 1751–52.
164. Ball v. James, 451 U.S. 355, 361 (1981) (citing Salyer Land Co., 410 U.S. at
728).
165. DETROIT, MICH., CODE OF ORDINANCES 18-12-134(b) (2014).
726 WAYNE LAW REVIEW [Vol. 63:705

D. Policy Prescriptions to Improve Special Assessment Districts

The existing SADs in Detroit are in their infancy.166 Thus, whether

they prove beneficial remains to be seen. However, encouragement of
SADs adoption by other neighborhoods and distressed cities may
improve several aspects of SADs. The current statute, which restricts the
adoption of SADs to cities with over 600,000 residents,167 limits its
application to Detroit.168 If the state legislature considered SADs
beneficial for Detroit, undoubtedly other cities could benefit from them
as well. Rather, the state legislature seemed to think that Detroit could
not reasonably provide certain services for its residents, and that the
residents should be allowed to fend for themselves. Surely other cities
suffer from financial distress, unless the state legislature viewed the City
of Detroit as uniquely unqualified to provide essential services such as
security for its residents. Additionally, while the residents of the Detroit
district adopt the special assessment and pay for the services, they must
acquire the services from a list of city-approved private contractors.169
This creates an opportunity for cronyism by the Detroit City Council, a
body which is no stranger to impropriety and criminal contracting.170
Beyond the possible benefits to residents of SADs, it is also
important to consider the burden imposed on properties within the
assessment district. As previously mentioned, the median annual income
in Detroit is $26,249.171 In Flint it is even less, at $25,650.172 The special
assessment may be overly onerous on some residents within an SAD, and
failure to pay the special assessment can result in a lien on the property.
For this reason, a poverty exemption may be necessary to allow poorer,
long-term residents to remain in their house. This poverty exemption

166. See Guillen, Will More Neighborhoods turn to Fees, supra note 59.
167. MICH. COMP. LAWS ANN. § 117.5i (West Supp. 2018).
168. See Population of Cities in Michigan (2018), WORLD POPULATION REV.,
http://worldpopulationreview.com/states/michigan-population/cities/ (last visited Feb. 3,
2018) (indicating that the second largest city in Michigan is Grand Rapids, with a
population of 199,147).
169. DETROIT, MICH., CODE OF ORDINANCES 18-12-145 (2014).
170. Tresa Baldas & Robert Allen, Sex Charges Finally Catch Up with Ex-councilman
Charles Pugh, DETROIT FREE PRESS (June 23, 2016),
http://www.freep.com/story/news/local/michigan/detroit/2016/06/23/charles-pugh-
arrested-molestation-charges-detroit/86279342/; Alex P. Kellogg, Conyers’s Wife Admits
to Bribery in Detroit Investigation, WALL ST. J. (June 27, 2009),
http://www.wsj.com/articles/SB124604274223662285.
171. 2012–2016 American Community Survey 5-Year Estimates, Detroit City,
Michigan supra note 108.
172. 2012–2016 American Community Survey 5-Year Estimates, Flint City, Michigan,
U.S. CENSUS BUREAU, https://factfinder.census.gov/faces/tableservices/jsf/
pages/productview.xhtml?src=CF (last visited Feb. 3, 2016).
2018] NEIGHBORHOOD-DRIVEN IMPROVEMENT 727

would also ameliorate the unintended consequence of SADs resulting in

more foreclosures in Detroit or Wayne County.
The possibility that the City of Detroit may decrease services to
neighborhoods with SADs is also something that needs to be guarded
against and monitored. In SADs, attention should be paid to changes in
the level of services provided by the City. On the other hand, not
adjusting to SADs could lead to times when duplicative, and
unnecessary, services are being provided. This could lead to waste,
which the City, remaining subject to state-imposed financial oversight,
cannot afford.173 A balanced approach is necessary to balance the
interests of certain residents against the standards to which the City
should be held in providing services to all residents.

IV. CONCLUSION

To their proponents, special assessment districts allow motivated

neighborhoods to take control of their own future.174 It allows
neighborhood residents, if they democratically agree, to pay for
improved services that the financially-strapped municipality cannot
afford.175 To opponents, SADs represent the City’s abdication of a
responsibility to residents to maintain public safety and a sound
environment.176 They allow a bare majority of residents to impose a fee,
often hundreds of dollars, on all residents for services that most would
consider essential services such as plowing the streets after a snowfall.177
The reality is likely somewhere in the middle.
The mechanism to create SADs empowers residents to improve their
neighborhoods. In the context of Detroit, this is particularly
advantageous for those residents and for the City itself. However,
improvements can be made to ensure that these SADs are not abused or
overly coercive. Presently, all SADs expire at the end of a term of seven
years.178 The experience of the neighborhoods that have adopted these
fees as well as the experience of the City in collecting and remitting
these fees should shape future policy outcomes. Additionally, the Detroit
experience may prove illustrative for other cities in Michigan, should the
state legislature amend the governing statute to allow for cities with
smaller populations to adopt citizen-initiated SADs.

173. MICH. COMP. LAWS ANN. §§ 141.1631–141.1643 (West Supp. 2018).

174. Ferretti, Neighbors, supra note 65; Guillen, Detroit Neighborhood, supra note 9.
175. Ferretti, Neighbors, supra note 65; Guillen, Detroit Neighborhood, supra note 9.
176. Ferretti, Neighbors, supra note 65.
177. DETROIT, MICH., CODE OF ORDINANCES ch. 18, art. XII, div. 7, § 18-12-120 et seq
(2014).
178. Id. § 18-12-121.
728 WAYNE LAW REVIEW [Vol. 63:705

Legal challenges to special assessment districts are confronted with

several hurdles. The general presumption of validity afforded to local
government action, coupled with courts reluctance to impose any
quantitative balancing test between the purported benefit and the
assessment makes successful challenges to the assessments, which to
date have been less than $500 annually, unlikely.179 Successful
challenges to special assessments typically have involved far larger sums
of money, and the unreasonableness was readily apparent.180 However,
there could be a sum that a court would consider unreasonable, but the
fact that the services that SADs can provide is limited to three (private
security, mosquito abatement, and snow removal), may have some
impact as well. On the other hand, because the SADs are established in a
geographic area as delineated by the neighborhood improvement
organization, some SAD could be so small that the assessment would be
large enough to offend notions of equality between benefit and burden.
Lastly, special assessment districts evidence a trend in municipal
governance.181 At one time, the strong central government, supported by
a booming tax base, could satisfy the needs of its residents.182 National
economic challenges have dampened that aspiration several times, from
the Great Depression in the 1920s and 30s to the Great Recession in
2007.183 Today, cities are seeking new ways to acquire and provide
services. Public-private partnerships, charter schools, and regional water
authorities, all evidence a shift away from the past.184 Creative solutions
to improve the physical surroundings in both urban and rural areas are
likely to become the norm rather than an exception.185 Special
assessment districts are one such solution to weak municipal finances
and are a way that residents can seize the initiative to make positive
improvements in their neighborhood.

179. Guillen, Detroit Neighborhood, supra note 9; Oosting, supra note 106.
180. Dixon Rd. Gp. v. City of Novi, 426 Mich. 390, 400, 395 N.W.2d 211, 215 (1986)
(noting that the assessment dwarfed the minor increase in property value by over $8,000
per acre).
181. Ellen Dannin, Red Tape or Accountability: Privatization, Publicization, and
Public Values, 15 CORNELL J.L. & PUB. POL’Y 111, 114 (2005).
182. Dominque Custos & John Reitz, Public-Private Partnerships, 58 AM. J. COMP. L.
555, 564 (2010).
183. Patrick F. McGow, Municipal Finance After the Detroit Bankruptcy, 94 MICH.
B.J. 28, 30 (2015).
184. Custos & Reitz, supra note 182.
185. Id.