Court ruling limits county governments’ ability to recover legal fees in foreclosure cases
A recent Michigan Court of Appeals decision further limits the ability of counties and other foreclosing governmental units (FGUs) to recover costs associated with tax foreclosure proceedings — specifically attorney fees and court costs tied to disputes over surplus proceeds from property sales.
A three-judge panel ruled counties cannot deduct legal expenses from surplus funds generated by tax foreclosure sales before returning those funds to former property owners. The opinion clarifies that only certain costs — such as those that could have been included in a property’s minimum bid price at auction — may be deducted.
The case arose after Montcalm County sold several foreclosed properties and retained surplus funds. When former property owners sought the return of those funds, the county attempted to offset the amounts by claiming reimbursement for its attorney fees and related costs. The trial court ruled in favor of the property owners, and the Court of Appeals upheld that decision.
The opinion noted that while FGUs may recover “specific expenses that are statutorily authorized,” the law does not extend that authority to include attorney fees related to distributing surplus proceeds.
This ruling builds on the Michigan Supreme Court’s landmark 2020 decision in Rafaeli, LLC v. Oakland County, which held that local governments cannot retain profits from tax foreclosure sales beyond what is necessary to cover back taxes, interest, and allowable fees. The Rafaeli decision established that surplus proceeds belong to the former property owner — a principle now reinforced through this new appellate opinion.
This decision underscores the continuing financial and administrative challenges counties face in managing tax foreclosure processes post-Rafaeli. MAC will continue to monitor how this ruling and other rulings regarding excess proceeds affects counties.
For more information on this issue, contact Deena Bosworth at Bosworth@micounties.org.
Senate advances bill to nix work hour cap for re-employed county retirees
The Michigan Senate has passed Senate Bill 314, by Sen. Kevin Hertel (D-Macomb), which addresses critical law enforcement and other staffing shortages faced by counties across Michigan by giving local governments more flexibility to rehire retired sheriff’s deputies without jeopardizing their retirement benefits.
SB 314 amends Public Act 156 of 1851, the law governing county boards of commissioners and their authority to create retirement plans for county employees.
Under current law, a county retiree who returns to work for the same county may not work more than 1,000 hours in a 12-month period if they wish to continue receiving retirement benefits. SB 314 removes that 1,000-hour cap, allowing retirees to return to county employment without losing their pension payments.
The bill also clarifies that employment in a county sheriff’s office is considered “work with the county” under this provision, ensuring that sheriff’s departments can directly benefit from the expanded flexibility.
Counties across Michigan have been struggling to fill open positions in sheriff’s departments, leading to increased overtime costs, burnout, and retention challenges for existing deputies. Many counties have sought to bring back experienced retirees to fill critical gaps, but the 1,000-hour cap has limited how effectively they can use this resource.
By eliminating the cap, SB 314 will allow counties — particularly the 13 Michigan counties with independent retirement boards — to rehire trained, experienced personnel without forcing retirees to choose between working part-time or forfeiting their pensions.
According to the Senate Fiscal Agency, this could have a negative fiscal impact on local governments. Allowing retirees to continue working while collecting benefits could increase counties’ unfunded pension liabilities, depending on how many retirees take advantage of the new rule. The precise impact will vary by county and retirement system. Counties will need to monitor potential effects on long-term pension funding and adjust policies accordingly.
MAC supports SB 314, which now moves to the House. If enacted, counties would have the option — but not the obligation — to rehire retirees under the revised conditions.
For more information on this issue, contact Deena Bosworth at bosworth@micounties.org.
Legislature takes up earmark transparency bills
Legislation to establish increased transparency for budget earmark requests passed the Senate this week, albeit in a form weaker than previously passed legislation in the House. Senate Bill 596 would require legislative earmarks to be submitted 10 days before a vote in both chambers; defines earmarks as “legislatively directed spending items,” now referred to as LDSIs; and includes exemptions for disaster response funds. LDSIs require a bill sponsor, fund recipient information, and the purpose of the funding.
The House version of this transparency effort, titled the (Speaker) Hall Ethics, Accountability and Transparency plan, or HEAT plan, requires 90 days prior to a vote for LDSI submission. During a press conference this week, Speaker Hall stated the House will not vote on any Senate bills until the Senate passes the HEAT plan.
MAC has not taken a position on this legislation but does expect that some legislative changes to this process will be enacted.
For more information on this issue, contact Samantha Gibson at gibson@micounties.org.
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Drones and their regulation are focus of Podcast 83 episode
The expanding role and regulatory future of drones is the focus of a new special episode of MAC’s Podcast 83.
Matt Rybar of the Michigan Drone Association was interviewed by MAC’s Stephan Currie and Samantha Gibson about his organization’s work and the growing use of drones, aerial and otherwise, in county functions.
“So, we’ve been around as the Michigan Public Safety Drone Association since 2022,” said Rybar. “We recently have gone through a bit of a rebrand to become the Michigan Drone Association.
“Really, there’s a bunch of different reasons that drove that change, but the last legislative cycle opened some eyes to us about many parts of the industry could really use a trade organization to help support them …”
“Who are your members?” Currie asked. “Primarily those people who fly the drones, own the drones? Are they businesses? Are they hobbyists?”
“We have about 700 members, with 120 different organizations represented in that membership,” Rybar replied. “To this point, because we’re just so new into this change over to be the Michigan Drone Association, most of those are going to be governmental organizations, governmental operators, county sheriff’s offices, local police and fire departments and other organizations like that.”
“What are some ways that county governments can utilize drones beyond the public safety aspects of it,” asked Gibson, “and are there opportunities for county governments to work with industry in this space as well?”
“The public safety agencies have been the trailblazers for the use of the technology,” Rybar replied, “but they’re helping support many other aspects of the county government, whether it be inspection of parks, roof inspection, road inspections, a lot of different use cases go into that. So, while that technology has traditionally started in public safety, just because of the regulatory environment and really that life-saving use case, we see those departments are then being tapped in for so many different aspects of county government to be used for other aspects …”
“Can you speak to who regulates the use of these?” Currie asked.
“It’s a hot question,” Rybar said. “At the end of the day, the FAA (Federal Aviation Administration) regulates, on the federal side, anything that leaves the ground, whether it’s one inch off the ground or 30,000 feet in the air. The FAA is the regulatory body of that airspace, and what we’ve seen is, over time, some different carve-outs and abilities for the states to do different things. But, for the most part, the actual application of those drones flying in the airspace is regulated by the FAA.”
To learn about “big changes coming down on the regulatory side” and more, watch the full episode by clicking here or on the image above.
Kent County offers 2,000 free green lights as part of NACo’s Operation Green Light
Chippewa County Courthouse shown during the 2024 Operation Green Light commemorations.
Kent County leaders announced this week its Operation Green Light effort, including the distribution of 2,000 green light bulbs to light the county green in support of veterans.
“Operation Green Light is a powerful, visible moment of unity, and its importance for our veterans cannot be overstated,” said Ryan Grams, director of Kent County Veterans Services, in a release from the county.
This Veterans Day, the National Association of Counties (NACo) will celebrate the fifth anniversary of Operation Green Light. NACo and the National Association of County Veterans Service Officers invite the nation’s 3,069 counties, parishes, and boroughs to join us in showing support for veterans by lighting our buildings green from Nov. 4-11, 2025. By shining a green light, county governments and our residents will let veterans know that they are seen, appreciated and supported.
To participate, counties are encouraged to use this template to pass a resolution declaring your county’s participation in Operation Green Light and utilize NACo’s participation resources to spread the word.
In 2024, Michigan counties participating in the event included Chippewa, St. Joseph, Genesee, Oakland, Wexford, Midland, Lenawee and Kent.
Staff picks
- The case for manufactured housing (Pew Research)
- Addiction treatment program to continue at Berrien County jail (Herald-Palladium)
- Federal shutdown hits Michigan telehealth, Head Start, environment, more (Bridge Michigan)
- Massive legal costs weigh on local budgets (Governing)