965 N.W.2d 232
Mich. Ct. App.2020Background:
- Brookstone, 240 Ionia, and 345 State Street developed low-income housing projects in Grand Rapids and obtained tax-exempt status under MCL 125.1415a.
- Grand Rapids’ PILOT Ordinance (§1.412) set the service charge at 4% of "annual shelter rent" (with a 1% option plus a 2% affordable-housing contribution) for qualifying projects.
- MCL 125.1415a(6) requires owners to pay the full ad valorem taxes for portions of a project occupied by persons "other than low income persons or families," while shelter-rent–based PILOT applies to low‑income units.
- City billed defendants for 2015–2017 using a split calculation: 4% for low‑income units and ad valorem-equivalent for market‑rate units; defendants paid only on a uniform 4% basis and refused the remainder.
- Grand Rapids moved for summary disposition enforcing MCL 125.1415a(6) and the parties’ PILOT/resolution agreements; the trial court granted the city’s motion and found defendants breached their agreements. Defendants appealed; the Court of Appeals affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 125.1415a requires distinguishing low‑income vs. market‑rate units for PILOT | MCL 125.1415a(6) mandates full ad valorem charges for portions occupied by persons other than low‑income families and allows shelter‑rent PILOT for low‑income units | The statute should allow a uniform shelter‑rent calculation (4%) for all occupied units; eligibility language covers all occupants | Court: Statute unambiguously requires differentiation; market‑rate units must be charged ad valorem equivalent, low‑income units may be charged per ordinance (4%) |
| Whether Grand Rapids’ PILOT Ordinance (uniform 4%) controls | City: ordinance sets 4% and should govern PILOTs, and the ordinance can be harmonized with statute | Defendants: ordinance binds the city to charge 4% for all units (no split) | Court: Ordinance conflicts with MCL 125.1415a(6) to the extent it imposes a uniform 4% and that portion is preempted and unenforceable |
| Whether the in pari materia doctrine permits reading MCL 125.1415a(6) into the ordinance | City/trial court: read statute and ordinance in pari materia to harmonize and effectively apply MCL 125.1415a(6) to calculating PILOTs | Defendants: ordinance plain; city cannot add statutory requirements by interpretation | Court: In pari materia not applicable where statute and ordinance are unambiguous; trial court erred to rely on it but outcome stands because ordinance conflicts with statute |
| Whether defendants breached the PILOT agreements/resolutions | City: parties’ resolutions/PILOT agreements incorporated statutory compliance and required split calculation; defendants breached by paying only 4% | Defendants: they complied with the city ordinance and owe no additional amounts | Court: Resolutions and contracts valid; defendants breached and owe the difference between their payments and amounts due under statute/agreements |
Key Cases Cited
- Sau-Tuk Indus., Inc. v. Allegan County, 316 Mich. App. 122 (2016) (standards for de novo review and that ordinances are interpreted like statutes)
- Ter Beek v. City of Wyoming, 495 Mich. 1 (2014) (municipal ordinances are subject to state law and may be preempted by statute)
- Bonner v. City of Brighton, 495 Mich. 209 (2014) (ordinance interpretation follows statutory rules; words given plain meaning)
- Voorhies v. Faust, 220 Mich. 155 (1922) (limits on using in pari materia when statute is clear)
- Hughes v. Almena Township, 284 Mich. App. 50 (2009) (reading statutory duties into an ordinance—distinguished by this opinion)
- In re Complaint of Rovas Against SBC Michigan, 482 Mich. 90 (2008) (agency interpretations entitled to respect but not controlling if inconsistent with statute)
- Sun Valley Foods Co. v. Ward, 460 Mich. 230 (1999) (unambiguous statute must be enforced as written)
- Tyler v. Livonia Pub. Sch., 459 Mich. 382 (1999) (in pari materia applies only where statute is ambiguous)
- Summer v. Southfield Bd. of Ed., 324 Mich. App. 81 (2018) (in pari materia is a rule of construction not invoked if statute unambiguous)
- Rollingwood Homeowners Corp. v. City of Flint, 386 Mich. 258 (1971) (city may not legislate by resolution)