Again on the agenda of the Washtenaw County board commissioners for Sept. 5 will be the articles of incorporation for a new countywide transit authority. The intended outcome is not for the board to rescind or amend in a significant way the articles it approved on Aug. 1, 2012 – on a 6-4 vote.
Instead, the point of re-introducing the agenda item is to provide an opportunity for the board to affirm the administrative changes to the articles of incorporation that took place after the board’s Aug. 1 vote.
The administrative changes were already included in the documents by the other three parties to the four-party agreement when they subsequently ratified the document. Those parties are the cities of Ann Arbor and Ypsilanti, and the Ann Arbor Transportation Authority, which is leading this effort. The Ann Arbor city council voted (for a third time) to approve the articles of incorporation at its Aug. 9, 2012 meeting; the Ypsilanti city council voted at its Aug. 14 meeting (also for a third time); and the AATA board voted (for a second time) at its meeting on Aug. 16.
News of the agenda item came from an email sent by Washtenaw County board chair Conan Smith to other commissioners on the evening of Aug. 22. It’s not entirely clear whether the board will: (1) take a vote that affirms the administrative (non-substantive) nature of the changes that were made after the board approved the document on Aug. 1; or (2) take a vote that amends the document to match the version approved by the other three parties.
Previous re-votes have been driven by substantive amendments made by one of the parties to the agreement. For example, the Ypsilanti city council amended the four-party accord after the Ann Arbor city council first voted, on March 5, 2012. That amendment involved service charges applied to the respective cities’ existing millages. When the agreement went back to the Ann Arbor city council, that body amended the document further – which meant that it returned to the Ypsilanti city council for its approval again. The AATA board then ratified the agreement.
It was expected to be approved by the Washtenaw County board of commissioners without further substantive amendment. But on Aug. 1 the board made a change to the size of the majority needed, in order for the new transit authority’s board to change the articles of incorporation – from 2/3 to 4/5 of the 15 board members. That triggered the most recent round of approvals by the various bodies.
But those approvals incorporated some changes that were driven by a desire to harmonize the county board’s amendment with the rest of the document, as well as with Act 196 of 1986 – the act under which the new transit authority will be incorporated. For example, the 4/5 majority requirement for changes to the articles of incorporation is at apparent odds with one kind of change to the articles specifically mentioned in Act 196 – a change in jurisdictions that are part of the authority. Act 196 explicitly indicates that a 2/3 vote is required. So an administrative change undertaken after the board’s Aug. 1 meeting was to add the clause: “… unless another vote of Board is required under the terms of these Articles or provided for in Act 196.”
The view of legal counsel for the four parties was apparently that it’s not actually necessary for those changes to be explicitly re-voted and affirmed by the county board of commissioners. However, there is at least some sentiment on the county board that the changes might be construed as substantive and contrary to the intent of the county board, which could become an unnecessary point of contention down the road.
The AATA is current finalizing the details of a five-year service plan that will need to be published as one of several conditions that must be met before the AATA could transition into the newly incorporated authority, to be called The Washtenaw Ride. This week, the AATA board called a special meeting for Sept. 5 to unveil that service plan.
Earlier in the year, the AATA had hoped to be in a position to possibly place a transit millage proposal on the ballot this November. But at this point, that won’t be possible. Any transit millage proposal will come at a later election.
After the jump, this report describes the administrative changes in question and possible misinterpretations.
Text of the Changes
The Washtenaw County board of commissioners made the following change to the articles of incorporation on Aug. 1:
SECTION 10.01: AMENDMENTS
These Articles of Incorporation may be amended only upon a two-thirds (2/3) four-fifths (4/5) vote of the directors appointed and serving on the Authority. [Amendment by Washtenaw County board]
That drove additional changes made by city of Ann Arbor legal staff before the Ann Arbor city council voted on the amended document. The staff memo from the council’s Aug. 9, 2012 meeting characterized the nature of the additional changes as following logically from the amendment that the county board had made on Aug. 1: ” … however, the implementation of 4/5th requirement necessitated changes to Section 5.01 to recognize no change was being made to the 2/3 vote of the Board related to budgets and since amendments are referenced in Section 5.01 the inclusion of the change to 4/5 vote for amendments.”
Text of Changes: Ordinary Votes
The first administrative change involves the basic rule that decisions of the board of the new transit authority require a simple majority – with two exceptions: (1) votes on the budget, and (2) votes to change the articles of incorporation. Because the Washtenaw County board changed the threshold from 2/3 to 4/5 on amendments to the articles in a subsequent section, the following section was changed to be consistent with that intent. Added text is in bold italics. Deleted text is in strike-through.
SECTION 5.01: PUBLIC MEETINGS
… Each director shall have one vote. Decisions of the Board require a majority vote of the directors appointed and serving at a Board meeting having a quorum present, except approval of the budget which requires approval of 2/3rds of all directors and amendment of the articles each which requires approval of 2/3rds 4/5th of all directors. [Administrative change.]
Text of Changes: Conflicts with Act 196
The second administrative change is related to the clause in Act 196 that describes how a local governmental unit not originally a part of the authority can join it. Here’s the section from Act 196:
124.457 Membership after formation of public authority; resolution; approval, execution, filing, and publication of amendment to articles. Sec. 7.
A political subdivision or a portion of a city, village, or township bounded by lines described in section 4 may become a member of a public authority after the public authority’s formation under this act upon resolution adopted by a majority vote of the members elected to and serving on the legislative body of the political subdivision requesting membership for all or a portion of the political subdivision and upon resolution adopted by a 2/3 vote of the members serving on the board of the public authority approving an amendment to the articles of incorporation of the public authority adding all or a portion of the political subdivision. The amendment to the articles of incorporation shall be executed by the clerk of the political subdivision, all or a part of which is being added and shall be filed and published in the same manner as the original articles of incorporation.
So that section of Act 196 explicitly calls for a 2/3 vote for changes to the articles that involve the addition of another political subdivision. The amendment made by the Washtenaw County board of commissioners raises that threshold for all votes on the articles. The administrative change interprets the board’s intent as not to raise the threshold to 4/5 for that specific type of change to the articles of incorporation, by adding a kind of savings clause:
SECTION 10.01: AMENDMENTS
These Articles of Incorporation may be amended only upon a four-fifths (4/5) vote of the directors appointed and serving on the Authority unless another vote of Board is required under the terms of these Articles or provided for in Act 196.
Potential for Misunderstanding
The second administrative change depends on one interpretation of the county board’s intent – that it did not mean to lump the membership decisions into the kind of votes that would require a 4/5 majority. But the legislative record of that body might support the contention that the county board’s intent was, in fact, to apply the 4/5 majority requirement to all decisions involving the articles of incorporation – even those involving admission of an additional political subdivision into the transit authority.
That legislative record includes the following amendment, which was considered by the county board but rejected on July 11, 2012:
Unless otherwise specifically allowed by law, these Articles of Incorporation may be amended only upon a two-thirds (2/3) vote of the directors appointed and serving on the Authority. All amendments must comply with applicable state and federal laws. All amendments to the Articles of Incorporation become effective only after they are executed jointly by the Chairperson and by the Secretary of the Board of the Authority, ratified by each member political subdivision and the Washtenaw County Board of Commissioners, filed with the recording officer of the Washtenaw County Clerk, and filed and published in the same manner as the original Articles of Incorporation.
Based on that rejected amendment – which was supported by only 4 of the 11 county commissioners – it’s possible to imagine an argument that the board’s failure to include the savings clause in a later amendment, which it actually passed, was in fact a conscious and deliberate choice by the board.
Had the board made that conscious choice, and had the other three parties ratified the articles without that savings clause, it’s possible to imagine a dispute arising out of the following scenario:
Township A opts out of the new Act 196 transit authority when it’s initially formed. Later, the township board of Township A decides that it would like to be admitted into the new authority – and takes a unanimous vote. Then the board of the new transit authority votes 10-5 to admit Township A into the authority.
Does Township A get in?
The board of Township A might well argue that under 124.457 Sec. 7 of Act 196, the conditions have been met for admission into the transit authority, and that it’s therefore entitled to be admitted. But a resident of Township A, who is opposed to paying the associated property tax, might well argue that the requirement in the articles of incorporation that a 4/5 majority be achieved has not been met for changing the articles of incorporation – a change made necessary by the admission of Township A.
That kind of legal dispute would be settled through interpretation of Act 196. Does Act 196 set forth conditions under which a political subdivision is entitled to be admitted into the transit authority? Or does Act 196 set forth minimum conditions that must be met before a political subdivision can be admitted into the transit authority?
The administrative change made by city of Ann Arbor legal staff eliminates the possibility of that kind of dispute.
And by taking some kind of vote on Sept. 5, the Washtenaw County board of commissioners has an opportunity to make its intent absolutely clear.
The text of the document attached to the Ann Arbor city council’s agenda on Aug. 9, which the council voted to approve, was the following, including the trailing extra period:
These Articles of Incorporation may be amended only upon a four-fifths (4/5) vote of the directors appointed and serving on the Authority unless another vote of Board is required under the terms of these Articles or provided for in Act 196..
It’s not clear if on Sept. 5 the county board will undertake an administrative change to eliminate the extra punctuation, and if so, which one of the two periods will be struck from the text.
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