SEPARATE LEGAL ENTITIES CREATED

THROUGH INTERLOCAL AGREEMENT

Senate Bill 437                                                                       (Enacted as Public Act 36 of 2014)

Sponsor:  Sen. Mike Nofs

House Committee:  Local Government

Senate Committee:  Local Government and Elections

Complete to 2-26-14

A SUMMARY OF SENATE BILL 437 AS PASSED BY COMMITTEE

The bill would amend the Urban Cooperation Act (MCL 124.505 et al.) to allow the parties to an interlocal agreement to create a separate legal entity to exercise designated powers only if the agreement expressly provided for the creation of a separate legal entity.

The Urban Cooperation Act allows a public agency of Michigan to exercise jointly with any other public agency of Michigan, any other state, Canada, or the U.S. government, any power, privilege, or authority that the agencies share in common and that each might exercise separately.  The law requires that a joint exercise of power be made by contract, in the form of an interlocal agreement.  In addition, the law now specifies that an interlocal agreement may provide for a separate legal or administrative entity to administer or execute the agreement. 

Senate Bill 437 retains these provisions, but clarifies that if an interlocal agreement did not expressly provide for a separate legal entity, then a separate legal entity could not be created.  The term "administrative" in reference to such an entity would be eliminated throughout the section being amended.

  

An interlocal agreement must include, among other things, the precise organization, composition, and nature of any separate legal or administrative entity created in the agreement with the powers designated to that entity. The bill would refer instead to a separate legal entity expressly created in the agreement.

FISCAL IMPACT:

As written, the bill would have no impact on state and local revenues or costs. 

CHANGES IN COMMITTEE:

The members of the House Local Government Committee reported out the Senate-passed version of Senate Bill 437 without any amendments.

POSITIONS:

The Michigan State Police support the bill.  (2-13-14)

                                                                                        Legislative Analyst:   J. Hunault

                                                                                                Fiscal Analyst:   Adam Desrosiers

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.