CITY OF GRAND RAPIDS, Plaintiff/Counterdefendant-Appellee, v BROOKSTONE CAPITAL, LLC, Defendant/Counterplaintiff-Appellant, and 240 IONIA AVENUE LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP, and 345 STATE STREET LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP, Defendants-Appellants.
No. 350746
STATE OF MICHIGAN COURT OF APPEALS
October 29, 2020
FOR PUBLICATION. Kent Circuit Court, LC No. 18-006419-CB.
If this opinion indicates that it is “FOR PUBLICATION,” it is subject to revision until final publication in the Michigan Appeals Reports.
Before: LETICA, P.J., and K. F. KELLY and REDFORD, JJ.
Defendants, Brookstone Capital LLC (Brookstone), 240 Ionia Avenue Limited Dividend Housing Association Limited Partnership (240 Ionia), and 345 State Street Limited Dividend Housing Association Limited Partnership (345 State Street), appeal as of right the trial court‘s order granting plaintiff summary disposition under
Brookstone developed 240 Ionia and 345 State Street as affordable low-income housing projects pursuant to the Michigan State Housing Development Authority Act (the MSHDA Act),
II. STANDARD OF REVIEW
We review de novo a trial court‘s decision on a motion for summary disposition. Sau-Tuk Indus, Inc v Allegan Co, 316 Mich App 122, 135; 892 NW2d 33 (2016). We also review de novo a trial court‘s interpretation and application of a statute. Id. at 136. “Municipal ordinances are interpreted and reviewed in the same manner as statutes.” Id. (citation omitted). Therefore, we review de novo a trial court‘s ordinance interpretation and apply the rules governing statutory interpretation to a municipal ordinance. Id.
III. ANALYSIS
A. OVERVIEW
Defendants argue that the trial court erred by ruling in favor of plaintiff because plaintiff calculated and charged ad valorem taxes for the market-rate units contrary to plaintiff‘s PILOT Ordinance. Defendants contend that the PILOT Ordinance bound plaintiff to charge 4% of the annual shelter rents for all occupied units in the subject housing projects whether the tenants were low-income persons or families paying reduced housing charges or were persons or families paying the full market rate. Defendants assert that the PILOT Ordinance complied with
The issues presented in this appeal concern the interpretation of both a state statute and a municipal ordinance. Therefore, we review de novo the trial court‘s interpretation of both the MSHDA Act and plaintiff‘s PILOT Ordinance. Id. As explained in Sau-Tuk:
When interpreting a statute, our primary goal is to give effect to the intent of the Legislature. If the language of a statute is unambiguous, we presume the Legislature intended the meaning expressed in the statute. A statutory provision is ambiguous only if it conflicts irreconcilably with another provision or it is equally susceptible to more than one meaning.... When
construing a statute, we must assign every word or phrase its plain and ordinary meaning unless the Legislature has provided specific definitions or has used technical terms that have acquired a peculiar and appropriate meaning in the law. Similarly, the goal of construction and interpretation of an ordinance is to discern and give effect to the intent of the legislative body. The most reliable evidence of that intent is the language of the ordinance itself, which must be given its plain and ordinary meaning. When the words used in a statute or an ordinance are clear and unambiguous, they express the intent of the legislative body and must be enforced as written. [Sau-Tuk, 316 Mich App at 136-137 (quotation marks and citations omitted).]
Courts “may not pick and choose what parts of a statute to enforce” but “must give effect to every word of a statute if at all possible so as not to render any part of the statute surplusage or nugatory.” Id. at 144 (citations omitted). Courts “may not speculate regarding legislative intent beyond the words expressed in the statute.” Id. at 145. “This Court reads the provisions of statutes reasonably and in context, and reads subsections of cohesive statutory provisions together.” Detroit Pub Schs v Conn, 308 Mich App 234, 247-248; 863 NW2d 373 (2014) (citation omitted).
When courts interpret statutes, they must first look to the specific statutory language to determine the intent of the Legislature, and if the language is clear and unambiguous, the plain meaning of the statute reflects the legislative intent and judicial construction is not permitted. Universal Underwriters Ins Group v Auto Club Ins Ass‘n, 256 Mich App 541, 544; 666 NW2d 294 (2003). “Judicial construction of a statute is only permitted when statutory language is ambiguous,” and ambiguity exists “only if it creates an irreconcilable conflict with another provision or it is equally susceptible to more than one meaning.” Noll v Ritzer (On Remand), 317 Mich App 506, 511; 895 NW2d 192 (2016). Courts may not infer legislative intent from the absence of action by the Legislature. McCahan v Brennan, 492 Mich 730, 749; 822 NW2d 747 (2012). A “legislature legislates by legislating, not by doing nothing, not by keeping silent.” Id. (quotation marks and citation omitted). This Court defers “to a deliberate act of a legislative body, and does not inquire into the wisdom of its legislation.” Bonner v City of Brighton, 495 Mich 209, 221; 848 NW2d 380 (2014) (citation omitted).
In In re Implementing Section 6w of 2016 PA 341 for Cloverland Electric Coop, 329 Mich App 163, 178; 942 NW2d 38 (2019) (citation omitted), this Court explained the application of the in pari materia doctrine of statutory construction:
Statutes that relate to the same subject matter or share a common purpose are in pari materia and must be read together as one law to effectuate the legislative purpose as found in harmonious statutes. If two statutes lend themselves to a construction that avoids conflict, that construction should control. When two statutes are in pari materia but conflict with one another on a particular issue, the more specific statute must control over the more general statute.
In Summer v Southfield Bd of Ed, 324 Mich App 81, 93; 919 NW2d 641 (2018), this Court explained, however, that the in pari materia doctrine is a rule of statutory construction that is not implicated if the language of the statute is unambiguous
The rule, in pari materia, cannot be invoked here, for the reason that the language of the statute is clear and unambiguous.
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The rule, in pari materia, does not permit the use of a previous statute to control by way of former policy the plain language of a subsequent statute, much less to add a condition or restriction thereto found in the earlier statute and left out of the later one. The contention made, if allowed, would go beyond the construction of the statute, and ingraft upon its provisions a restriction which the Legislature might have added but left out.
Statutes should be construed so as to prevent absurd results, injustice, or prejudice to the public interest. McAuley v General Motors Corp, 457 Mich 513, 518; 578 NW2d 282 (1998). In In re Complaint of Rovas Against SBC Mich, 482 Mich 90, 103; 754 NW2d 259 (2008) (alteration and citation omitted), our Supreme Court directed:
the construction given to a statute by those charged with the duty of executing it is always entitled to the most respectful consideration and ought not to be overruled without cogent reasons. However, these are not binding on the courts, and while not controlling, the practical construction given to doubtful or obscure laws in their administration by public officers and departments with a duty to perform under them is taken note of by the courts as an aiding element to be given weight in construing such laws and is sometimes deferred to when not in conflict with the indicated spirit and purpose of the legislature.
B. MCL 125.1415a
For resolution of the issues raised in this appeal, this Court must first consider and interpret
(1) If a housing project owned by a nonprofit housing corporation, consumer housing cooperative, limited dividend housing corporation, mobile home park corporation, or mobile home park association is financed with a federally-aided or authority-aided mortgage or advance or grant from the authority, then, except as provided in this section, the housing project is exempt from all ad valorem property taxes imposed by this state or by any political subdivision, public body, or taxing district in which the project is located. The owner of a housing project eligible for the exemption shall file with the local assessing officer a notification of the exemption, which shall be in an affidavit form as provided by the authority. The completed affidavit form first shall be submitted to the authority for certification by the authority that the project is eligible for the exemption. The owner then shall file the certified notification of the exemption with the local assessing officer before November 1 of the year preceding the tax year in which the exemption is to begin.
(2) The owner of a housing project exempt from taxation under this section shall pay to the municipality in which
the project is located an annual service charge for public services in lieu of all taxes. Subject to subsection (6), the amount to be paid as a service charge in lieu of taxes shall be for new construction projects the greater of, and for rehabilitation projects the lesser of, the tax on the property on which the project is located for the tax year before the date when construction or rehabilitation of the project was commenced or 10% of the annual shelter rents obtained from the project. A municipality, by ordinance, may establish or change, by any amount it chooses, the service charge to be paid in lieu of taxes by all or any class of housing projects exempt from taxation under this act. However, the service charge shall not exceed the taxes that would be paid but for this act. *
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(6) Notwithstanding subsection (2), the service charge to be paid each year in lieu of taxes for that part of a housing project that is tax exempt under subsection (1) and that is occupied by other than low income persons or families shall be equal to the full amount of the taxes that would be paid on that portion of the project if the project were not tax exempt. The benefits of any tax exemption granted under this section shall be allocated by the owner of the housing project exclusively to low income persons or families in the form of reduced housing charges.
(7) For purposes of this section only, “low income persons and families” means, with respect to any housing project that is tax exempt, persons and families eligible to move into that project. For purposes of this subsection, the authority may promulgate rules to redefine low income persons or families for each municipality on the basis of conditions existing in that municipality.
The provisions of
Subpart (2) orders tax-exempt housing project owners to pay an annual service charge for public services in lieu of all taxes, i.e., PILOT. Subject to the provisions of Subpart (6), Subpart (2) establishes a default service charge in the amount of the greater of either the property tax amount for the preceding year or 10% of the annual shelter rents obtained from the project.1 Subpart (2) provides further that a municipality may set the amount of PILOT applicable to all or any class of housing project by enacting an ordinance that sets the amount, so long as the service charge it imposes does not exceed the ad valorem tax amount that would otherwise apply but for the exemption granted under the MSHDA Act.
Despite the general provisions of
Subpart (7) defines the meaning of the terms “low income persons and families” for purposes of
Merriam-Webster‘s Collegiate Dictionary (11th ed) defines the term “eligible” in relevant part as “qualified to participate or be chosen” or “worthy of being chosen.” Black‘s Law Dictionary (11th ed) similarly defines the term as, “Fit and proper to be selected or to receive a benefit; legally qualified for an office, privilege, or status.” To be eligible, therefore, means to be qualified, worthy, or fit to participate or receive a benefit. In the context of low-income housing, such housing is available to persons who are eligible, i.e., qualified, worthy, and fit to receive a benefit by virtue of their income level. The benefit conferred in the context of low-income housing is paying reduced rent to occupy a unit because of one‘s low-income status. Persons of financial means do not qualify for rent restricted housing because they lack eligibility to receive the benefit conferred by virtue of their income level. This interpretation of the term “eligible” comports with the overall public purpose of the MSHDA Act as set forth in
The second sentence of Subpart (7) grants MSHDA discretion to promulgate rules to redefine who “low income persons or families” are for a given municipality depending on the conditions existing in that municipality. This sentence makes clear that the definition of “low income persons or families” specifically pertains to eligible persons’ financial means as compared with the financial wherewithal of the general community.
Defendants argue that the Legislature meant that the terms “low income persons and families” for purposes of
Occupants of market rate units fall within the portions of a low-income housing project occupied by persons “other than low income persons or families.” Under Subpart (6), the PILOT charges for all portions of defendants’ low-income housing projects occupied by persons “other than
We conclude, as did the trial court, that the Legislature intended the meaning clearly expressed when it enacted a statute. People v Williams, 475 Mich 245, 250; 716 NW2d 208 (2006). And because statutes must be interpreted to prevent absurd results, injustice, or prejudice to the public interest, McAuley, 457 Mich at 518, we decline to adopt defendants’ interpretation. Rather, we interpret
In this case, the record reflects that the trial court considered the plain language of
C. THE GRAND RAPIDS PILOT ORDINANCE
Defendants argue that plaintiff‘s PILOT Ordinance bound plaintiff to impose a uniform PILOT charge based on the total number of units in the project irrespective of the financial status of the persons who occupied the unit and the unit‘s designation as low-income or market-rate. Defendants contend that the PILOT Ordinance required plaintiff to charge 4% of the annual shelter rents collected for all occupied units. Plaintiff counters that the provision of
Under
In Ter Beek v City of Wyoming, 495 Mich 1, 19-20; 846 NW2d 531 (2014), our Supreme Court recently reiterated the fundamental hierarchy of law in Michigan as follows:
Under the Michigan Constitution, the City‘s “power to adopt resolutions and ordinances relating to its municipal concerns” is “subject to the constitution and the law.”
Const 1963, art 7, § 22 . As this Court has previously noted, “[w]hile prescribing broad powers, this provision specifically provides that ordinances are subject to the laws of this state, i.e., statutes.” AFSCME v Detroit, 468 Mich 388, 410; 662 NW2d 695 (2003). The City, therefore, “is precluded from enacting an ordinance if ... the ordinance is in direct conflict with the state statutory scheme, or ... if the state statutory scheme preempts the ordinance by occupying the field of regulation which the municipality seeks to enter, to the exclusion of the ordinance, even where there is no direct conflict between the two schemes of regulation.” People v Llewellyn, 401 Mich 314, 322; 257 NW2d 902 (1977) (footnotes omitted). A direct conflict exists when “the ordinance permits what the statute prohibits or the ordinance prohibits what the statute permits.” Id. at 322 n. 4.
Plaintiff‘s PILOT Ordinance at times relevant to this matter provided in pertinent part as follows:
§ 1.410. The tax exemption established in [
MCL 125.1415(a)(1) ] shall apply to housing projects within the boundaries of the City of Grand Rapids which meet all of the following criteria, upon approval of the City Commission:(1) Projects which are financed with a Federally-aided or State Housing Development Authority-aided mortgage or with an advance or grant from such Authority.
(2) Projects which serve lower-income families, elderly, and/or handicapped, and
(3) Projects which are owned by “consumer housing cooperatives,” “qualified nonprofit housing corporations,” and “limited dividend housing associations” as defined in Act No. 346 of the Public Acts of 1966, as amended.
§ 1.411. Housing projects which qualify under Section 1.410 above shall have the tax exemption provided in [
MCL 125.1415a(1) ], provided the owner of a housing project has complied with the [MHSDA] Act, is current with all taxes and assessments on the subject property, and has annually filed before August 1st an audited financial statement for each previous calendar year, as requested, with the City Assessor.§ 1.412. The service charge in lieu of property taxes shall be paid by the housing project owner as follows:
(1) ... Annual shelter rent is defined as the total collections from all occupants of a housing
project exclusive of any charges for gas, electricity, heat, or other utilities furnished to the occupants. (2) Housing projects approved for tax exemption under this ordinance on or after January 1, 1991 shall pay a service charge in the amount equal to four (4) percent of annual shelter rent or may choose to pay a service charge in the amount equal to one (1) percent of annual shelter rent in addition to making an annual contribution to the City of Grand Rapids’ Affordable Housing Fund in an amount equal to two (2) percent of annual shelter rent. If the annual contribution to the Housing Fund is not made, the service charge shall revert to four (4) percent of annual shelter rent.
Plaintiff‘s PILOT Ordinance lacks ambiguity. Plaintiff enacted the ordinance as permitted under
Defendants seek enforcement of the PILOT Ordinance to evade plaintiff‘s charges of the equivalent of ad valorem tax for the portions of the subject housing projects occupied by other than low-income persons or families. An ordinance that conflicts with a superior authorizing statute, however, cannot be enforced to the extent that the inferior legislative body enacted an ordinance that fails to do what the superior legislative body required. Enforcement of the plain language of the PILOT Ordinance in this case in the manner desired by defendants, therefore, would violate state law.
Accordingly, defendants’ arguments in this regard lack merit because they incorrectly interpret
MSHDA argues in its amicus curiae brief that it has always interpreted
Courts generally give respectful consideration of the interpretation of a statute by those charged with executing it and courts ought not overrule the agency without cogent reasons. In re Rovas Against SBC Mich, 482 Mich at 103. “However, the agency‘s interpretation is not binding on the courts, and
D. THE INAPPLICABILITY OF IN PARI MATERIA TO THE MATTER AT BAR
Plaintiff argues that the trial court and this Court should look beyond the unambiguous language of the PILOT Ordinance and interpret it as having the absent provision of
Where, as here, the legislative intent of the Legislature in enacting
In this case, the trial court invoked the in pari materia doctrine to reconcile the statute and the ordinance. Under Voorhies, Tyler, and Summer, however, the in pari materia doctrine lacked applicability in this case because both legislative enactments, the statute and the ordinance, lacked ambiguity. Accordingly, the trial court erred in this regard.
Plaintiff invoked the in pari materia doctrine based on Hughes v Almena Twp, 284 Mich App 50; 771 NW2d 453 (2009). Plaintiff contends that Hughes requires that a statute and an ordinance should be read in pari materia. Plaintiff also relied on Hughes for the proposition that the provisions of a statute may be read into an
In Hughes, this Court considered whether the trial court correctly held that the township‘s zoning board‘s decision upholding the township board‘s denial of a preliminary site plan lacked authorization by law or proper procedure because the zoning ordinance‘s provisions regarding review and approval of a planned unit development conflicted with the Township Zoning Act‘s review and approval process, in part because the township‘s ordinance did not specify that the township board had to conduct a public hearing. Id. at 62-66. This Court ruled that the ordinance remained valid despite failing to mention the township board‘s statutory duty to hold a public hearing. This Court explained:
Additionally, the ordinance is not invalid for failing to mention the township board‘s statutory duty to hold a public hearing. The Legislature is presumed to be aware of all existing statutes when enacting a new statute, particularly laws on the same subject. Statutes that are in pari materia must be read together as one law and should be reconciled if possible even if they appear to conflict. Here, the ordinance requires the planning commission, but not the township board, to hold a public hearing. The township board was required to hold a public hearing pursuant to
MCL 125.286c(5) , which it did in this case. Thus, we read this requirement into the ordinance. [Id. at 66 (citations omitted).]
The Hughes Court invoked the in pari materia doctrine without finding an ambiguity in the controlling statute or the township‘s ordinance and relied on the doctrine for the general principle that laws on the same subject should be read together and reconciled if possible even if they appear to conflict. The Hughes Court, however, applied the doctrine of statutory construction to engraft into the ordinance provisions of the controlling statute absent from the ordinance. Both the application of the doctrine and the engrafting of an absent statutory provision into the ordinance contradict our Supreme Court‘s explanations in Voorhies and Tyler regarding when and to what extent the in pari materia doctrine may be used to construe statutory language. Hughes stands alone in its use of the doctrine to engraft statutory requirements into an ordinance that failed to incorporate the statute‘s requirement. We question the validity of the trial court‘s reliance on Hughes because the principles articulated in Voorhies and Tyler by our Supreme Court prevent the invocation of the in pari materia doctrine in this case and do not permit the doctrine‘s use to engraft into the defective PILOT Ordinance the absent statutory requirement set forth in
The trial court did not have to reconcile the statute with the defective ordinance. Because
E. THE UNDERLYING BREACH OF AGREEMENT BY DEFENDANTS
Moreover, lost in all of the arguments made by defendants regarding justification for interpreting
The record also reflects that, when billed pursuant to the parties’ contracts, defendants refused to pay the contractually defined amounts required by plaintiff and defendants thereby breached the agreements. The trial court correctly concluded that, based upon the admissible evidence before it, defendants breached the agreements and owed plaintiff the difference between what defendants paid under their incorrect PILOT calculation method based on the defective ordinance and the amount plaintiff billed that accorded with the contracts’ terms and
IV. CONCLUSION
We hold that the trial court correctly determined that
Affirmed. No taxable costs pursuant to
/s/ James Robert Redford
/s/ Anica Letica
/s/ Kirsten Frank Kelly