A legal opinion from an outside attorney has determined that a 1947 agreement between the City of Traverse City and the state of Michigan gives the city approval power over the reconstruction design of Grandview Parkway. City commissioners voted Monday to release the legal opinion after discussing it in closed session, though did not publicly discuss what it could mean for negotiations with the Michigan Department of Transportation (MDOT) over design elements for next year’s planned Grandview Parkway reconstruction project.

City commissioners voted in February to seek an independent legal opinion on a decades-old agreement between the city and MDOT (then called the Michigan State Highway Department), which states that neither entity can undertake construction projects on the shared US-31/M-22/M-37 trunkline running through the city “without full approval and consent by the other interested party.” MDOT is preparing to undertake a $19 million complete reconstruction of Grandview Parkway and East Front Street between Division Street and Garfield Avenue starting in March 2023. Recent public input sessions on the reconstruction plans have indicated the city and state don’t always see eye-to-eye on proposed design elements, however, such as a new intersection layout at East Front Street and Peninsula Drive.

Those disagreements prompted city commissioners to revisit the 1947 agreement between the city and the state about who has final approval over Grandview Parkway design elements, including crosswalks, sidewalks, bike lanes, and landscaping. It’s not the first time both entities have circled the discussion. In 2008, then-City Attorney Karrie Zeits stated in a memo that it was her legal opinion that for MDOT to make Grandview Parkway improvements, “it must receive the approval and consent of the city.” She added that she had “not found a document or agreement that supersedes this provision.” However, in a 2017 memo to City Engineer Tim Lodge, then-MDOT Traverse City Transportation Service Center Manager Richard Liptak said that Act 51 – state legislation that was passed in 1951 – supersedes the agreement and gives MDOT “exclusive power to construct, maintain, and improve state trunk line highways.” Liptak said that opinion was backed by the attorney general’s office.

But on Monday, an opinion released from Debra Walling of Rosati Schultz Joppich & Amtsbuechler PC – an outside attorney hired to evaluate the agreement – upheld the city’s interpretation. She said it was her firm’s opinion that the “1947 agreement is a valid contract which does not have a termination date” and was “intended by the parties to be perpetual.” She disagreed with Liptak’s opinion that Act 51 overrode the agreement, saying the legislation did not have a retroactive effect when it was passed. She added that the city and state continued to enter into other agreements after Act 51 passed that gave the city similar authority over road design elements, and that because the city and state never agreed to modify or rescind the 1947 agreement, it remained intact. Act 51 allows the state and city to renegotiate the agreement, Walling said, but until that happens, “mutual consent” is required for any construction to be undertaken on Grandview Parkway. She added that the 1947 agreement is also consistent with Act 51 terms, which “encourage mutual cooperation and allow contracts between MDOT and local units of government.”

City commissioners did not publicly discuss the implications of Walling’s opinion Monday, voting only to go into closed session to discuss it at length with staff and then coming back into public session to vote to release the opinion. However, several commissioners previously said they weren’t trying to jeopardize the state’s timeline or funding for the Grandview Parkway reconstruction, but believed it was important to understand what the city’s rights are for this and any future corridor work. Assistant City Manager Penny Hill previously noted that MDOT is aiming to have Grandview Parkway’s new design 98 percent complete by late April or early May and to put the project out to bid in November, cautioning commissioners she didn’t know how MDOT would react to the city’s pursuit of investigating and possibly enforcing the 1947 agreement.

Also at Monday’s commission meeting…
> City commissioners approved City Manager Marty Colburn's recommendation to make interim city treasurer James Henderson the new city treasurer. Henderson served as deputy treasurer since 2015 before taking the helm as interim treasurer after Colburn fired former City Treasurer Kelli Martin last fall. That move set off a controversy for Colburn, since city commission approval is required before a treasurer can be hired or fired. In the wake of Martin's departure and Henderson's appointment to the interim role, Colburn said he's “taken the opportunity to observe Mr. Henderson in this role, and found that he has the qualifications, skills, and characteristics that this position requires.” Colburn also noted that Henderson was the runner-up candidate when the city originally undertook the hiring process that led to Martin being offered the position. Commissioners agreed to promote Henderson full-time to the role.

> Commissioners adopted letters of intent indicating the city plans to borrow up to $30 million in sanitary sewer system bond funds and up to $16 million in drinking water system bonds to make improvements to the city's infrastructure. A majority of those funds could be reimbursed through low-interest loans and or grants from the state to cover a range of water system upgrades throughout Traverse City. The city doesn't have to actually spend those full amounts if project budgets come in lower than those estimates, staff noted, but the bonding resolutions provide flexibility for spending up to those limits. The actual bonds could be issued later this summer, assuming no referendum petitions are submitted before then.