Frequently Asked Questions (FAQ)
The city wants to purchase property, but has limited funds. The seller
wants $180,000. If the city and seller agree, can the city pay $140,000
and acknowledge receipt of a gift in the amount of $40,000?
Yes, if the value of the property is $180,000. The city should have an
agreement from the seller that the seller will pay for an appraisal
and hold the city harmless if the IRS challenges the gift.
Can a city or village make a donation to the local Little League team?
It is quite difficult to meet the standard of “public purpose” for
these expenditures. The Michigan Supreme Court has also held that an
improper “lending of credit” occurs when a municipality gives
something of value without getting something of specific value in return.
In some instances there may be the possibility of contracting with the
organization for services, e.g. contracting with an organization to provide
recreational opportunities for youth. You will need to talk with your
municipal attorney about this.
The League has a One-Pager
Plus on municipal expenditures which you
may find helpful. There is also a Bulletin prepared by the Michigan Department
of Treasury on the determining lawful expenditures and a handout prepared
for MML on municipal finance.
Top of page