Const 1963, art 10, § 5 states the following:
The legislature shall have general supervisory jurisdiction over all state owned lands useful for forest preserves, game areas and recreational purposes; shall require annual reports as to such lands from all departments having supervision or control thereof; and shall by general law provide for the sale, lease or other disposition of such lands.
Thus, the sale of land is a legislative power.
In the instant case, it is instructive to set forth the pertinent portion of 2004 PA 326 and to note its differences from the pertinent portion of 2002 PA 671. The pertinent portion of 2004 PA 326, § 2 states:
(1) The state administrative board, on behalf of the state, and subject to the terms stated in this section, may convey for consideration the board considers a fair exchange of value for value . . . all or portions of certain state owned property now under the jurisdiction of the department of community health, known as the Ypsilanti regional psychiatric hospital, located in the township of York, Washtenaw county, Michigan. ...
(2) In determining whether consideration for the property described in this section represents a fair exchange of value for value, the board may consider the highest return and best value to the state based on either or both of the following:
(a) The fair market value of the property described in this section as determined by an appraisal prepared for the department of management and budget by an independent appraiser.
(b) The total value to the state of the sale of the property and the best interests of the state, including, but not limited to, any positive economic impact to the state likely to be generated by the proposed use of the property, especially economic impact resulting in the creation of high-technology or highly skilled jobs or increased capital investment for research and development.
Id. (emphasis added). Therefore, the SAB could sell the property based on “total value” and “the best interests of the state,” factors that would be determined by any methods chosen by the SAB itself.
In contrast, under 2002 PA 671 the SAB was required to obtain fair market value for the property, Id. at § 13(1), which would be determined after an appraisal. Id. at § 13(2). The sale was also required to “realize the highest price for the sale and the highest return to the state.” Id. at § 13(3).
The telling differences between 2004 PA 326 and 2002 PA 671 do not end there. Under 2004 PA 326, the sale of the property can occur through a competitive sealed bid process, a public auction, the use of a real estate brokerage system, or a negotiated sale process — i.e., discussions between the DMB and a single entity, such as the entity in the instant case, Toyota. Id. at § 2(3)(d). Under 2004 PA 326, the DMB, like the SAB, was permitted by the Legislature to consider amorphous criteria:
(d) A negotiated sale process conducted by the department of management and budget in a manner to provide the state with consideration for the property representing at least a fair exchange of value for value. In determining whether consideration for the property described in subsection (1) represents a fair exchange of value for value, the department may consider the highest return and best value to the state based on either or both of the following:
(i) The fair market value of the property described in subsection (1) as determined by an appraisal prepared for the department of management and budget by an independent appraiser.
(ii) The total value to the state of the sale of the property described in subsection (1) and the best interests of the state, including, but not limited to, any positive economic impact to the state likely to be generated by the proposed use of the property, especially economic impact resulting in the creation or retention of high-technology or highly skilled jobs or increased capital investment for research and development, as determined by the department.
Id. (emphasis added). But under 2002 PA 671, there was no “negotiated sale process” and again, the standard to be applied involved a concrete legislative guideline (the highest price for the land), not the vague and open-ended criteria listed above.
Yet another instructive difference between the two acts was that 2002 PA 671 required the state to retain mineral rights for the property. When Toyota made its unsuccessful $9,000,000 bid under the 2002 act, it did not agree to the state’s reservation of these mineral rights. Interestingly, 2004 PA 326 stated that the state “shall not reserve oil, gas, or mineral rights to property conveyed under this section,” Id. at § 2(8), although the state would be provided with one half of the revenue generated from any subsequent extraction of minerals from the property. Id.
This provision was not the only change that appears tailor-made for Toyota. The Legislature allowed the DMB to negotiate solely with a single party (in this case Toyota), and the Legislature likewise eliminated the requirement that the DMB obtain the best price for the land. This had the effect of removing DPG York, a demonstrably higher bidder, and other companies that were potentially higher bidders, from the process. The Legislature also agreed in 2004 PA 326 to pay any costs of preparing the property for sale, environmental remediation of the property, or litigation related to conveyance of the property. Id. at § 2(11). While any of these concessions would have been available to any buyer of the land, Toyota in particular faced the likelihood of litigation over conveyance of the property, given that DPG York had already filed suit against the state at the time this legislation was approved.
