On Jan. 12, 2006, the Mackinac Center for Public Policy filed a brief of amicus curiae[*] with the Michigan Court of Appeals in the case DPG York v. Michigan. The legal dispute concerns Public Act 326 of 2004, a law that authorized the sale of a 690-acre state property that was once the site of the Ypsilanti State Hospital. In the Mackinac Center’s brief, Patrick J. Wright, the Center’s senior legal analyst, argues that the legislation violates the separation-of-powers and due-process clauses of the Michigan Constitution.

The terms of Public Act 326 are unusually broad, especially compared to the procedures originally established for selling the land under a state law passed in 2002. The 2002 legislation required competitive bidding for the property, and pursuant to that provision, DPG York LLC, a group of Michigan developers, offered $25 million for the land, outbidding their only competitor, Toyota Technical Center USA, which offered $9 million. A state appraisal at the time suggested the property’s market value was $11.9 million.

The state accepted neither bid, however, and when the governor and the Legislature passed Public Act 326, they permitted the sale of the land through an open-ended grant of power to the State Administrative Board and the Department of Management and Budget. The new legislation did not require competitive bidding and provided no restrictions on the criteria to be applied by executive branch officials in determining to whom the property would be sold. The state subsequently entered into negotiation with Toyota Technical Center USA and ultimately awarded the property to the firm for $11 million, according to a state Web site.

Mackinac Center policy analysts recognized the state’s approach to this sale to be unsound public policy (see "Additional Research" on Page 25). The state’s actions not only deprived taxpayers of at least $14 million to $16 million in revenue at a time of state budget shortfalls,[†] but sent entrepreneurs the message that high-profile competitors would receive preferential treatment in the conduct of state business. Such a disincentive to general business investment is counterproductive, especially given Michigan’s ailing economy.

But Public Act 326 was also dubious on legal grounds, and when it was being passed by the Legislature, DPG York filed suit. The Mackinac Center submitted its amicus curiae brief after the Michigan Supreme Court, specifically citing the case Westervelt v. Natural Resources Commission, remanded the case to the Michigan Court of Appeals for further consideration.

The Center’s brief[‡] focuses particularly on the lead opinion in Westervelt and argues that Public Act 326 violates core clauses of the Michigan Constitution (see "Executive Summary" below). Wright requests that the court declare the act unconstitutional, noting that under such a ruling, the land would remain with the state until the Legislature and the governor passed new legislation for administering the sale.


[*] "Amicus curiae" means "friend of the court." Thus, the Mackinac Center is not a litigant in DPG York v. Michigan, but rather an interested observer supplying additional legal reasoning for the Michigan Court of Appeals to consider.

[†] Toyota Technical Center USA also received mineral rights to the land, something DPG York did not request. Moreover, Public Act 326 stipulated that the Legislature would cover the costs of environmental cleanup and any litigation involved in conveying the land, such as the cost to the state of the current lawsuit. Neither of these costs would likely have been borne by the Legislature if the state had accepted DPG York’s original bid.

[‡] Small typographical errors in the original brief have been corrected in the pages that follow. The edited text is inserted in braces ("{" and "}").