Banking & Finance and Government

State House bill would limit government from competing with business

Another House bill would make land banks more liable to private-sector complaints.

May 31, 2013
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A bill recently introduced in the state House would prohibit government and its agencies, such as land bank authorities, from competing against the private sector.

State Rep. Greg MacMaster, R-Kewadin, is the main sponsor of HB4549.

MacMaster said he introduced the bill in mid-April because he felt private business owners face enough challenges without having to compete against the government, and he wants to ensure the state allows anyone to bid on providing services or goods to the public.

If passed, the legislation would put protections in place that would keep government from unnecessarily competing against for-profit business in many areas except for “essential services” like police and fire protection, the judicial system and a few others, which the bill calls exclusive government functions.

“Private business owners and entrepreneurs are the lifeblood and future of continuing Michigan’s economic resurgence, so having clear limits on where government can compete with private enterprise will boost that growth, protect the future of our economic opportunities and ensure that government does not act beyond its function,” said MacMaster in a statement.

“This bill creates a fair, competitive playing field where all stakeholders in any type of business, including unions, can bid for the work,” he added.

In addition to labor unions, the legislation defines private enterprise as an individual, firm, partnership, corporation, association, or any other legal entity that engages in the manufacturing, processing, sale, offering for sale, rental, leasing, delivery, dispensing, distributing, or advertising of goods or services for a profit.

“The bottom line is that if a company can be found in the Yellow Pages listings, the government shouldn’t be a monopolizing competitor,” said MacMaster.

MacMaster wrote the legislation after the state Department of Corrections rejected three “competitive” bids from private firms to provide the agency with health care and food services. He said his bill would clarify the request-for-proposals system in the state.

But the legislation’s reach could extend beyond RFPs. The bill was one of two that were briefly discussed at the Kent County Land Bank Authority’s board meeting in May.

KCLBA is a state-empowered entity under Public Act 258 of 2003 and would likely fall under HB4549, if the bill becomes law. The land bank is primarily a property developer and functions like the private real estate sector does when it buys and sells properties.

The land bank and Kent County drew criticism from some private realtors after commissioners agreed last summer to sell 44 tax-foreclosed properties to KCLBA for $422,000 prior to last year’s annual auction. The sale was seen by some in private enterprise as being anti-competitive, and 11 members of the local real estate industry filed a lawsuit last fall against that action. The complaint was dismissed in December as having no standing, but the plaintiffs appealed. It may be another year before the state appellate court takes up the issue.

Following the circuit court decision that temporarily validated last summer’s sale, county commissioners decided in March not to sell tax-foreclosed properties to the land bank. The county commission’s action, though, does allow KCLBA to accept tax-foreclosed properties from cities and townships and to bid at the auction in August.

“I never attempt to predict what will happen with legislation. All land banks and county treasurers are watching the bill,” said Kent County Treasurer Ken Parrish, also KCLBA chairman.

“Hopefully, elected officials are aware there are a lot of projects by land banks out there,” said Grand Rapids City Commissioner Rosalynn Bliss, a KCLBA board member.

“At the end of the day, there’s their opinion and the public’s opinion,” added Kent County Commissioner Stan Ponstein, also a KCLBA board member.

MacMaster’s bill also allows the private sector to file for injunctive relief against a governmental action it deems anti-competitive, and a court can award damages to a plaintiff if the action is seen as inhibiting private enterprise. The bill is in the House Oversight Committee.

Two West Michigan Republican state representatives have signed on as cosponsors to HB4549: Peter MacGregor of Rockford and Caledonia’s Ken Yonker.

A few days after Jonker threw his support to MacMaster’s bill, he introduced HB4646 in the House. The bill would amend Public Act 258 of 2003, the Land Bank Fast Track Act. The legislation would give the state the power to suspend a land bank’s authority to acquire tax-foreclosed properties until it has determined that a land bank has complied with the act.

The bill also would allow any individual or business to file a complaint with the state if they believe a land bank has violated the act. If the complaint goes to a circuit court on appeal and if a land bank loses, it would have to pay the complainant’s legal fees. Then the local unit of government, normally, in this case, a county, would have to remove the land bank director from that post.

HB4646 is in the House Committee on Local Government.

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