Can a township dispose of surplus office computers, including donating the surplus computers to a non-profit group, giving the surplus computers to Township officials, selling the computers at a “garage sale,” or simply throwing the computers in the dumpster?

MTA Legal Counsel Opinion: First, and foremost, we must take note of what may well be the most fundamental of all legal principles relating to the authority of townships--the declaration in Article VII Section 17 of the Michigan Constitution that each township has the “powers and immunities provided by law”. The Michigan Supreme Court and Michigan Court of Appeals have on innumerable occasions relied on this constitutional provision to conclude that townships have no inherent powers and authority; only such powers as may be provided by legislative enactments or by the state constitution itself. However, Article VII, Section 34 of the Constitution also declares that constitutional and statutory provisions concerning townships shall be “liberally construed in their favor”, and shall include the powers “fairly implied” by the expressly granted powers, to the extent not prohibited by the constitution.

In addition to the “express powers” granted to townships by law, and the “implied powers” derived from the express powers, case law also recognizes what may be viewed as a third category of powers potentially relevant to your inquiry--the powers essential to the accomplishment of the objects and purposes of township government as declared by law. However, these “essential powers” include only powers that are indispensable, rather than powers that are simply convenient. Toebe v City of Munising, 282 Mich 1, 15-16 (1937).

Finally, the underlying legal framework especially includes Article IX, Section 18 of the Michigan Constitution, which provides in relevant part that:

“The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, except as authorized in this constitution.”

Case law establishes that this constitutional limitation also applies to local governments as political subdivisions and instrumentalities of the state. In re Request for Advisory Opinion on Constitutionality of 1986 PA 281, 430 Mich 93, 119 (1988).

Pursuant to the foregoing constitutional framework, our first task is to determine whether the state constitution or state statutory law expressly confers upon townships the power to dispose of property that is no longer needed. We do not find any constitutional provision relevant to this issue; but, the legislature has granted some relevant authority by statute. MCL 41.2(3) provides as follows in this regard:

“By resolution of the township board a majority of the members serving may acquire property for public purposes by purchase, gift, condemnation, lease, construction, or otherwise and may convey or lease that property or part of that property not needed for public purposes.” [italics added for emphasis]

Notably, this statutory provision only confers authority to dispose of township property no longer needed for public purposes by either a conveyance (sale) or by lease. In our opinion this provision assumes that the property at issue has some remaining value.

As to property that no longer has any value because it is broken or for some other reason worthless, we think the implied powers or essential powers of the township are sufficient to authorize the township to throw such property away.

Thus, so far, we have determined that townships have express legal authority to sell or lease property that is no longer needed for public purposes by the township. We have also concluded that the township has implied (or essential) power to throw away property that is no longer needed and that has no value. This brings us to situations involving property that, although no longer needed by the township, has some remaining value and is desired to be donated (given away) to either individual officials of the township, to another township or local unit of government, or to a non-profit organization or other private party.

The legal implications of such gifts or donations have been addressed on various occasions by the appellate courts of Michigan. In one such case the Supreme Court stated point-blank that “municipalities may not give away public property without a consideration”. Kaplan v City of Huntington Woods, 357 Mich 612 (1959). In this case the Court determined that a gift or donation of money or other property by a municipality would constitute a violation of the constitutional prohibition against the credit of the state (or its subdivisions) being granted to or in aid of any person, association or corporation, public or private (currently Article IX, Section 18, quoted above).

This principle of law regarding the lack of legal authority for gifts or donations of public property is reflected in various other court decisions, and in formal written legal opinions issued by the Attorney General and also by this office for the MTA. The principle of law is clear--a gift or donation of public property (that has some remaining value) is unlawful, regardless of the recipient. In order to not run afoul of the constitutional prohibition on gifts or donations of township property, the township must receive a “consideration” for property with value that is no longer needed for public purposes.

This “consideration” must be something of sufficiently “fair value” (to properly characterize the disposition of the property as a conveyance or lease, as authorized by MCL 41.2(3), rather than a constitutionally prohibited gift or donation). See Alan v Wayne County, 388 Mich 210, 330; rehearing denied 388 Mich 626 (1972).

This requires the value of the consideration received by the township to be reasonably related to the remaining value of the property at issue; in other words, a “value-for-value” transaction. See Alan v Wayne County, supra at 388 Mich 330. However, we believe the township has some latitude in determining what constitutes sufficient value based on the circumstances of each situation. In our opinion the township also has discretion to select the method of determining the fair value of its surplus property, through such devices as advertising, appraisals, and perhaps even educated guesses as to the value of property, especially property that may have relatively little residual value (much like a homeowner makes an educated guess in placing a value on certain items at a yard sale).

Determining the permissible method of disposing of surplus township property thus depends on an initial determination as to whether the property has any value, or is simply worthless.

The Township Board, as the legislative or executive body of the township government, is the judge of what constitutes “fair value”. See Alan v Wayne County, 388 Mich at 330. In our opinion, the Township Board may choose to exercise this authority and responsibility itself or may delegate this function to a specified township official (such as, for example, Supervisor, Superintendent, or Manager). In exercising this authority the decision-maker has considerable discretion; provided that such discretion must be exercised reasonably, in good faith, and in a manner that is neither arbitrary nor capricious, and otherwise consistent with the fiduciary duty of public officials.

1. What type of policy should be written to allow a township to give away computers (or other township property)?

Since a township may not lawfully make a gift or donation of township property with any remaining value to any individual or entity, public or private, there should be no township policy with respect to such gifts or donations, except perhaps to indicate that such dispositions are not lawful.

In our opinion a township may establish written policies concerning the lawful disposal of township property with no remaining value, as well as policies concerning the disposition of property with value; but, in each instance, the adoption of such written policies (by the township board) is not mandatory. In our view it is permissible for a township board to address these decisions on a case-by-case basis, when the township actually has some property that is no longer needed for public purposes. In either event, such general policies and case-by-case decisions would logically address such matters as whether the township board or a designee of the board will decide whether the surplus property has any value, whether to establish such value by advertising or other means, etc.

2. Are there types of township property that townships can give away and types they cannot?

Our research does not suggest any basis for making any distinctions as to the legality of gifts or donations of township property based on the types of property involved. Indeed, in interpreting Article IX, Section 18 of the Michigan Constitution our appellate courts have stated the following:

“It is clear the state or its subdivision the county cannot give anything away without consideration.” Alan v Wayne Co., 388 Mich 210, 325; rehearing denied 388 Mich 626 (1972) [italics added for emphasis]

(Note: This pronouncement, which is in the specific context of a county, has equal applicability to all political subdivisions and instrumentalities of the state, including townships.)

3. When other items (other than computers), such as vehicles or desks or unused equipment are concerned, do townships draw the line on a dollar amount or “needs or not needs” test?

As concluded above, we see no justification for distinguishing between types of property in analyzing the legal implications of disposing of such property; other than the obvious distinction of property with some value and property that is worthless. Whether the property in question consists of vehicles, desks or other office equipment, land, or otherwise, if the property has any remaining value the township has no legal authority to make a gift or donation of the property to any individual or entity, public or private. This legal conclusion is not altered by applying a “needs” test or any other test to determine whether a potential recipient is worthy of such a gift or donation. The apparent worthiness of a potential donee is completely irrelevant, because the issue is the absence of legal authority to give away or donate township property having some value, regardless of the potential recipient of such property.

4. Along with giving property to other townships, are there other agencies (public or private), that we (townships) can give township property to?

This question is moot. Any gift or donation of township property to other townships or any other agencies, public or private, is unlawful.

5. Is there any limit on which townships can participate in such an exchange? For example, can a township on the state line donate to a neighboring township in Wisconsin or Ohio or Indiana?

This question is also moot, at least with respect to any gift or donation of any township property with any value, which is unlawful. We are not aware of any geographic limitation on the permissible sale (or lease) of township property that is no longer needed for public purposes, as authorized by MCL 41.2(3).

6. Can townships give property to individual residents based on some level of need?

This question is moot, as townships do not have legal authority give property to anyone.