Harmony Montessori Center v. City of Oak Park
326870
| Mich. Ct. App. | Oct 13, 2016Background
- Harmony Montessori Center is a nonprofit school that charges tuition and fees but also offers reduced tuition to some students and raises funds/donations.
- The dispute concerns whether Harmony’s property is tax-exempt under the charitable institution exemption, MCL 211.7o(1).
- The Tax Tribunal and the majority concluded Harmony is not a charitable institution because it charges tuition and fees.
- Judge O’Connell dissented, arguing the Tribunal and majority improperly focused on the existence of tuition rather than the institution’s overall charitable nature.
- The dissent relies on the Michigan Supreme Court’s guidance in Wexford Med Group v. City of Cadillac that an organization need not meet a monetary threshold of free services to be charitable and may charge for services so long as charges are not excessive.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Harmony qualifies as a "charitable institution" under MCL 211.7o despite charging tuition | Harmony: nonprofit providing nondiscriminatory education, offers reduced rates for needy students, supplements tuition with fundraising; charges are necessary for maintenance | City of Oak Park: charging tuition and fees precludes charitable status | Dissent (O’Connell, J.): Would reverse and remand — Harmony is charitable under Wexford; majority/Tribunal held otherwise based primarily on tuition charges |
Key Cases Cited
- Wexford Med. Grp v. City of Cadillac, 474 Mich. 192 (2006) (an institution’s overall charitable nature controls; may charge for services and need not meet a monetary threshold of free services)