980 N.W.2d 727
Mich. Ct. App.2021Background
- The subject property is a 33,000-sq-ft office building in Delta Township; 2019 SEV and taxable value were $1,208,700. Petitioner (West St. Joseph Property LLC) held legal title.
- Petitioner and the State executed a 2018 lease/instalment agreement: 20-year lease with payments from 2018–2038 and a $1 option to purchase in 2038; lease omitted/marked "tax" provisions and the State was the sole occupant.
- Petitioner applied for a property-tax exemption under MCL 211.7l ("public property belonging to the state"); the assessor denied the application.
- Petitioner petitioned the Michigan Tax Tribunal seeking a zero taxable value, arguing the lease either (a) made the property exempt because it "belongs to" the State, or (b) constituted a "transfer of ownership" under MCL 211.27a(6)(g).
- The Tribunal granted respondent’s summary-disposition motion, concluding "belonging to" meant legal ownership/title, MCL 18.1222 did not apply (lease did not require the State to pay taxes or reimburse the lessor), and the statutory recording/notice requirements of MCL 211.7l were not met.
- Petitioner’s motions for leave to file a reply brief and for reconsideration were denied; the Court of Appeals affirmed the Tribunal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether property is exempt under MCL 211.7l as "public property belonging to the state" | Lease made State the equitable owner; State occupied and used the property for public purposes, so it "belongs to" the State | "Belonging to" requires legal title/ownership; petitioner retained legal title and did not provide required recording/notice | Held: "Belonging to" requires ownership by legal title; exemption denied because no conveyance/notice recorded or sent |
| Whether the lease constituted a "transfer of ownership" under MCL 211.27a(6)(g) | Lease with purchase option/equitable interest constitutes a "transfer of ownership" so exemption follows | MCL 211.27a(6)(g) is a definitional provision that applies only where the GPTA uses the phrase "transfer of ownership"; that phrase does not appear in MCL 211.7l | Held: MCL 211.27a(6)(g) is inapplicable to MCL 211.7l; petitioner failed to show a completed transfer |
| Whether MCL 18.1222 (installment lease exemption) made property exempt | MCL 18.1222 creates an alternate path to exemption for installment leases | MCL 18.1222 only applies if the State as lessee is required to pay taxes or reimburse the lessor; lease here imposes no such obligation | Held: MCL 18.1222 inapplicable because lease does not require State to pay taxes or reimburse lessor; even if it applied, petitioner still needed to satisfy MCL 211.7l |
| Whether Tribunal abused discretion by denying leave to file a reply brief and reconsideration | Respondent raised new arguments in its response, so petitioner should have been allowed a reply | Respondent’s response addressed petitioner’s cited cases and distinguished them by lease terms; not new argument | Held: Denials were not an abuse of discretion; Tribunal properly refused untimely/redundant filings |
Key Cases Cited
- SBC Health Midwest, Inc v City of Kentwood, 500 Mich 65 (agency interpretations are entitled to respect but cannot control if inconsistent with statute)
- US Fidelity & Guaranty Co v Mich Catastrophic Claims Ass’n, 484 Mich 1 (statutory language must be enforced as written; consult plain meaning)
- Driver v Naini, 490 Mich 239 (statutory provisions read in context; give words ordinary meaning)
- Mich United Conservation Clubs v Lansing Twp, 423 Mich 661 (tax exemptions strictly construed in favor of taxing authority)
- Washington v Sinai Hosp of Greater Detroit, 478 Mich 412 (de novo review of summary disposition)
- Oakland County Bd of Co Rd Comm’rs v Mich Prop & Cas Guaranty Ass’n, 456 Mich 590 (courts may consult dictionaries for undefined statutory terms)
- Apsey v Mem Hosp, 477 Mich 120 (avoid statutory constructions that render provisions surplusage)
- Kemerko Clawson, LLC v RxIV Inc, 269 Mich App 347 (trial court has discretion to enforce scheduling orders)
- Sherry v E Suburban Football League, 292 Mich App 23 (abuse-of-discretion standard for reconsideration denials)