Whether a drainage charge assessed by a city against property owners is a “tax” or a “user fee”; Bolt v. City of Lansing; Wheeler v. Shelby Charter Twp.; The Headlee Amendment’s prohibition on the levying of a new tax without voter approval; Const. 1963, art. 9, § 31; Principle that a charge that constitutes a user fee is not subject to the Headlee Amendment; Jackson Cnty. v. City of Jackson; Whether the treatment of storm runoff water is a “service”; Detroit v. Michigan (6th Cir.); Whether the charge is reasonable; Trahey v. City of Inskter; Novi v. Detroit; Association of Businesses Advocating Tariff Equity v. Public Serv. Comm’n; Gradualism in setting rates; Citizens Action Coal. of IN, Inc. v. Northern IN Pub. Serv. Comm’n (IN App.); Watergate E., Inc. v. Public Serv. Comm’n of Dist. of Columbia (DC)

Holding that a drainage charge assessed by defendants-city and its agencies against plaintiffs-property owners is a permissible user fee that is not subject to the Headlee Amendment, the court denied plaintiffs’ requests for relief. Plaintiffs alleged that the drainage charge violates the Headlee Amendment because it assesses a “tax” for which voter approval was not obtained. But the court agreed with defendants that the drainage charge constitutes a valid “user fee” that is not subject to the Headlee Amendment. “The application of the Bolt criteria to the facts of the present case leads to the conclusion that the . . . drainage charge is a user fee rather than a tax and that the charge is therefore not subject to the Headlee Amendment.” First, the charge served “a regulatory purpose rather than a revenue-raising purpose.” The “federally mandated treatment of combined sewage that includes storm water runoff constitutes the provision of a service.” Further, “the lack of evidence of a significant revenue-generating purpose that outweighs the regulatory purpose leads to the conclusion that the drainage charge at issue primarily serves a regulatory purpose.” Moreover, the fact that the charge was “used in part to service debt incurred to pay for federally required capital investments does not by itself require the conclusion that the drainage charge constitutes a tax.” Second, the charge was “reasonably proportionate to the necessary costs of service.” Third, the charge was “effectively compulsory rather than voluntary.” Property owners “must either pay the drainage charge or pay at least some of the costs for making the green infrastructure improvements required to obtain a credit, thus making it impossible for property owners to escape the financial demands of the drainage charge.” Although “the third Bolt factor indicates that the drainage charge is effectively compulsory rather than voluntary, ‘the lack of volition does not render a charge a tax, particularly where the other criteria indicate the challenged charge is a user fee and not a tax.’” Because applying “the first two Bolt criteria clearly demonstrates that the drainage charge is a proper user fee rather than a tax, the effectively compulsory nature of the drainage charge does not render the drainage charge a tax for the purpose of the Headlee Amendment.”