Lessons from the Proposed Merger of Onekama Village with Onekama Township
January 2013
Report 381

In 2012, the Onekama community in Manistee County became the first village and township to use the provisions for a disincorporation commission provided in the General Law Village Act. While the efforts of the commission did not lead to voter approval in August, the state can learn from Onekama’s experience to improve the process for future efforts to consolidate local governments.

In 1998, the General Law Village Act was amended to provide for an orderly process for villages contemplating disincorporation. As an alternative to taking the question of disincorporation directly to the electorate, a village board of trustees could elect to create a disincorporation commission. That entity would be comprised of equal representation from the village and the township(s) in which the village is located. The law establishes 14 subjects that the commission must address to plan for changes in operations in the event the village is disincorporated. These subjects include: the repayment of indebtedness; the disposition of the village’s real and personal property; the transfer or termination of village employees; and the fiscal impact that disincorporation would have on the township and the village residents. The commission may opt to address additional subjects.

In August 2011, petitions were submitted calling for a vote on the disincorporation of the Village of Onekama, a village of 411 people in 2010 that resides on the northern shore of Portage Lake. The Village Board of Trustees opted to convene a disincorporation commission, which met from January to March of 2012. The following are some of the highlights from the commission’s plan:

• The commission plan expected that the five mills currently levied by the village would be eliminated without the immediate need for replacement revenues.
• Village streets would transfer into the jurisdiction of the Manistee County Road Commission with special provisions for snow removal in the village.
• Stewardship of the sewer system would transfer to Onekama Township without expansion to new properties. The existing indebtedness related to the sewer system would continue to be paid only by those connected to the sewer system.
• Other Village real and personal assets would be transferred to the Township, either for the continued provision of services or to be sold with the revenues funding future service provision.
• The plan provided that the fund balances transferred from the Village to the Township and revenues from assets sales should be used only for the maintenance of assets and the provision of services in the geographic area that constituted the Village.
• Finally, the Village worked with the commission to identify ordinances that pertained directly to protecting the welfare of village residents and provided that the township should adopt those ordinances if the village was disincorporated.

Recommendations to Improve Process of Local Government Consolidation

As the first village and township to consider the costs and benefits of village disincorporation under the 1998 provisions added to the General Law Village Act, the lessons of Onekama’s experience provide for a number of recommendations that would improve the process for the next community to travel down this path. Based on the experience working with the Onekama disincorporation commission, CRC makes several recommendations to state law…