PHEASANT RING V WATERFORD TWP
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STATE OF MICHIGAN
COURT OF APPEALS
PHEASANT RING, a/k/a HOMES FOR
AUTISM,
FOR PUBLICATION
October 17, 2006
9:05 a.m.
Petitioner-Appellee,
v
No. 262757
Michigan Tax Tribunal
LC No. 00-300885
WATERFORD TOWNSHIP,
Respondent-Appellant.
Official Reported Version
Before: Fitzgerald, P.J., and Markey and Talbot, JJ.
TALBOT, J.
Respondent, Waterford Township (the Township), appeals as of right an opinion and
judgment in favor of petitioner, Pheasant Ring, also known as Homes for Autism, in this
property tax dispute. We affirm.
This action arises from the petition filed by Pheasant Ring seeking to appeal ad valorem
property tax assessments for tax years 2003 and 2004 levied by the Township. Pheasant Ring
contested the Township's denial of an exemption pursuant to MCL 211.7o for the residential
property identified as parcel number 13-08-226-025, located in the Township. The Township
argues that the opinion and judgment of the Michigan Tax Tribunal (MTT), including its holding
that Pheasant Ring is exempt from property taxation, was not based on competent, material, and
substantial evidence on the record and that the MTT improperly applied the relevant legal
standards and principles. We disagree.
"'This Court's authority to review a decision of the Tax Tribunal is very limited. In the
absence of an allegation of fraud, this Court's review of a Tax Tribunal decision is limited to
determining whether the tribunal committed an error of law or adopted a wrong legal principle.'"
Twentieth Century Fox Home Entertainment, Inc v Dep't of Treasury, 270 Mich App 539, 541;
716 NW2d 598 (2006) (citation omitted). "'The tribunal's factual findings will not be disturbed
as long as they are supported by competent, material, and substantial evidence on the whole
record.'" Id. (citation omitted). "'Substantial evidence must be more than a scintilla, although it
may be substantially less than a preponderance . . . .'" Leahy v Orion Twp, 269 Mich App 527,
529-530; 711 NW2d 438 (2006) (citation omitted).
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Statutory interpretation presents a question of law that is reviewed de novo. Eggleston v
Bio-Medical Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003). But "'[t]his
Court will generally defer to the Tax Tribunal's interpretation of a statute that it is charged with
administering and enforcing.'" Twentieth Century Fox, supra, p 541 (citation omitted).
"MCL 211.7o creates the ad valorem property tax exemption for charitable institutions."
Wexford Med Group v City of Cadillac, 474 Mich 192, 199; 713 NW2d 734 (2006). It provides,
in pertinent part: "Real or personal property owned and occupied by a nonprofit charitable
institution while occupied by that nonprofit charitable institution solely for the purposes for
which it was incorporated is exempt from the collection of taxes under this act." MCL
211.7o(1). To qualify for an exemption from ad valorem property taxation, a claimant must
satisfy three elements:
(1) The real estate must be owned and occupied by the exemption
claimant;
(2) The exemption claimant must be a nonprofit charitable institution; and
(3) The exemption exists only when the buildings and other property
thereon are occupied by the claimant solely for the purposes for which it was
incorporated. [Wexford Med Group, supra, p 203.]
Although there is no dispute that Pheasant Ring owns the property, the Township contests
Pheasant Ring's status as a charitable institution and contends that Pheasant Ring's lease of the
property precludes it from meeting the requirement of having "occupied" the property for
purposes of obtaining the exemption.
The meaning of "charitable institution" is not legislatively defined in MCL 211.7o(1), but
has been developed through case law. The Michigan Supreme Court has ruled that the proper
test for determining whether a charitable institution exemption applies can be found in the
definition of "charity" adopted in Retirement Homes of the Detroit Annual Conference of the
United Methodist Church, Inc v Sylvan Twp, 416 Mich 340, 348-349; 330 NW2d 682 (1982):
"'[C]harity . . . [is] a gift, to be applied consistently with existing laws, for
the benefit of an indefinite number of persons, either by bringing their minds or
hearts under the influence of education or religion, by relieving their bodies from
disease, suffering or constraint, by assisting them to establish themselves for life
or by erecting or maintaining public buildings or works or otherwise lessening the
burdens of government.'" [Michigan United Conservation Clubs v Lansing Twp,
423 Mich 661, 671; 378 NW2d 737 (1985), quoting Retirement Homes, supra, pp
348-349 and the cases it cited (emphasis deleted).]
Accordingly, specific factors have been identified as determinative of whether an institution is a
charitable institution under MCL 211.7o, including:
(1) A "charitable institution" must be a nonprofit institution.
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(2) A "charitable institution" is one that is organized chiefly, if not solely,
for charity.
(3) A "charitable institution" does not offer its charity on a discriminatory
basis by choosing who, among the group it purports to serve, deserves the
services. Rather, a "charitable institution" serves any person who needs the
particular type of charity being offered.
(4) A "charitable institution" brings people's minds or hearts under the
influence of education or religion; relieves people's bodies from disease,
suffering, or constraint; assists people to establish themselves for life; erects or
maintains public buildings or works; or otherwise lessens the burdens of
government.
(5) A "charitable institution" can charge for its services as long as the
charges are not more than what is needed for its successful maintenance.
(6) A "charitable institution" need not meet any monetary threshold of
charity to merit the charitable institution exemption; rather, if the overall nature of
the institution is charitable, it is a "charitable institution" regardless of how much
money it devotes to charitable activities in a particular year. [Wexford Med
Group, supra, p 215.]
Evaluating Pheasant Ring in accordance with these factors demonstrates that it is a
charitable institution. Pheasant Ring's articles of incorporation denote that it is organized as a
nonprofit corporation
to carry on exclusively educational and other charitable activities . . . , including,
but not limited to establishing and supporting a transitional community for
persons with autism which provides an environment, preferably in a rural setting,
in which such persons will be able to fulfill their individual potential with respect
to socialization, education, recreation and vocation and, within that setting, to
provide each such person with quality care at the level of his or her individual
needs on a consistent basis.
The Township has not produced any evidence that Pheasant Ring has failed to actively pursue its
stated mission or has any other reason or basis for its existence. In addition, although the
Township asserts that Pheasant Ring only offers services to select individuals within its target
population, it fails to substantiate this claim. The record is devoid of any evidence to suggest
that Pheasant Ring offers its services "on a discriminatory basis." With regard to factor 4, the
stated purpose of Pheasant Ring's facility is to assist individuals with autism "to establish
themselves for life." In addition, the services provided by Pheasant Ring serve to "lessen[] the
burdens of government" by assisting the state in addressing the needs of this specific population
of disabled individuals.
The primary dispute centers on the Township's assertion that Pheasant Ring does not
qualify as a charitable institution because it accepts rents from residents at its Waterford home.
The acceptance of rental payments or the imposition of fees by Pheasant Ring does not preclude
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its status as a charitable institution "as long as the charges are not more than what is needed for
its successful maintenance." Wexford Med Group, supra, p 215. Further, to be deemed a
charitable institution, Pheasant Ring "need not meet any monetary threshold of charity to merit
the . . . exemption[.]" Id. "[A] nonprofit corporation will not be disqualified for a charitable
exemption because it charges those who can afford to pay for its services as long as the charges
approximate the cost of the services." Retirement Homes, supra, p 350 n 15. A review of
Pheasant Ring's financial statements verifies that revenues obtained from rent neither meet nor
exceed the expenses incurred in maintaining and running their homes.
The Township next contends that Pheasant Ring does not qualify as a charitable
institution because it does not personally occupy the home on the property, but, instead, rents the
property to its clientele. The MTT found that "the property is occupied by the Petitioner . . . ."
The General Property Tax Act does not define "occupied." MCL 211.1 et seq. In the absence of
a statutory definition, this Court refers to dictionary definitions. Willett v Waterford Charter
Twp, 271 Mich App 38, 51; 718 NW2d 386 (2006). Random House Webster's College
Dictionary (1997) defines "occupy" to mean "to have, hold, or take as a separate space; possess,
reside in or on, or claim[.]" Similarly, Black's Law Dictionary (8th ed) defines "occupancy" as
"[t]he act, state, or condition of holding, possessing, or residing in or on something; actual
possession, residence or tenancy . . . . The period or term during which one owns, rents, or
otherwise occupies property."
The Township asserts that Pheasant Ring does not occupy the property because the
location of its offices is not physically on the property at issue and it rents the property to
tenants. This interpretation of the requirements for tax exemption is too narrow and restrictive.
There is no dispute that Pheasant Ring owns the property. Although Pheasant Ring does not use
the property for its own offices, the property is occupied by tenants of Pheasant Ring in
furtherance of its charitable purposes. This Court, in determining whether a charitable
organization "occupied" a property for purposes of qualifying for a tax exemption, has
determined that "[t]he proper test is whether the entire property was used in a manner consistent
with the purposes of the owning institution." Holland Home v Grand Rapids, 219 Mich App
384, 398; 557 NW2d 118 (1996). Under this criterion, Pheasant Ring occupied the residence.
The Township's final argument is that the opinion and judgment fails to comply with
MCL 205.751(1), because it does not (1) state exactly under which subsection Pheasant Ring is
claiming an exemption or (2) contain an adequate statement of facts. Specifically, MCL
205.751(1) provides:
A decision and opinion of the tribunal shall be made within a reasonable
period, shall be in writing or stated in the record, and shall include a concise
statement of facts and conclusions of law, stated separately and, upon order of the
tribunal, shall be officially reported and published.
"The purpose of the Tax Tribunal's opinion is to facilitate appellate review, but the Tax Tribunal
Act and the [Administrative Procedures Act] requires only a concise statement of facts and
conclusions." Great Lakes Div of Nat'l Steel Corp v Ecorse, 227 Mich App 379, 402; 576 NW2d
667 (1998).
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Although the hearing referee's findings of fact and conclusions of law are not
exceptionally detailed, they are sufficient to afford meaningful appellate review. The referee
summarized the arguments and evidence presented by both parties and made preliminary
findings of fact pertaining to the property. In addition, the referee provided conclusions of law,
with supporting legal citations, in determining Pheasant Ring's tax-exempt status. While our
review would have been facilitated by the provision of a more detailed opinion, it was sufficient
for the referee to provide her findings of fact and conclusions of law in a concise manner, with
supporting authority, and an explanation of her reasoning.
Affirmed.
/s/ Michael J. Talbot
/s/ E. Thomas Fitzgerald
/s/ Jane E. Markey
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