KARTER LANDON V TWP OF MT MORRIS
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STATE OF MICHIGAN
COURT OF APPEALS
KARTER LANDON,
UNPUBLISHED
October 6, 2009
Plaintiff-Appellant,
v
No. 287289
Michigan Tax Tribunal
LC No. 00-315091
TOWNSHIP OF MT. MORRIS,
Defendant-Appellee.
Before: Murray, P.J., and Markey and Borrello, JJ.
PER CURIAM.
Petitioner appeals as of right from the Michigan Tax Tribunal’s (“the tribunal”)
determination of the true cash value (TCV) of a parcel of real property plaintiff owns located at
1364 W. Tremont, Mt. Morris Township, Michigan, for the years 2005, 2006, and 2007. For the
reasons set forth in this opinion, we vacate the tribunal’s decision and remand for further
proceedings.
Petitioner purchased the subject property on March 12, 2004, for $3,850 in cash. The
property was built in 1940 and has 616 square feet of living space. Petitioner offers the property
to the public as a residential rental.
The tribunal entered a judgment finding the TCV of the subject property for the year
2005 to be $22,102 and its state equalized value (SEV) and taxable value (TV) to be $11,050.
Petitioner moved for reconsideration, and the tribunal granted the motion. At issue on
reconsideration were the subject property’s TCV, SEV, and TV for 2005, as well as 2006 and
2007. Respondent contended that the subject property’s TCV for the year 2005 was $22,200 and
SEV and TV were $11,100. For 2006, respondent contended that the subject property’s TCV
was $22,400 and SEV and TV were $11,200. For 2007, respondent contended the subject
property’s TCV was $22,800 and SEV and TV were $11,400. Petitioner contended that the
subject property’s TCV for the year 2005 was $4,900 and that its SEV and TV for that year were
$2,450. Petitioner did not provide any estimates for the years 2006 or 2007. The tribunal found
that the subject property’s TCV for the years 2005, 2006, and 2007 were $10,000, while its SEV
and TV for the same years were $5,000.
“In the absence of fraud, review of a decision by the Tax Tribunal is limited to
determining whether the tribunal erred in applying the law or adopted a wrong principle; its
factual findings are conclusive if supported by competent, material, and substantial evidence on
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the whole record.” Michigan Bell Tel Co v Dep’t of Treasury, 445 Mich 470, 476; 518 NW2d
808 (1994); Const 1963, art 6, § 28. “Evidence is competent, material, and substantial if a
reasoning mind would accept it as sufficient to support a conclusion.” Galuszka v State
Employees Retirement Sys, 265 Mich App 34, 45; 693 NW2d 403 (2004). Substantial evidence
must be more than a scintilla but may be substantially less than a preponderance of the evidence.
Leahy v Orion Twp, 269 Mich App 527, 529-530; 711 NW2d 438 (2006).
On appeal, petitioner argues that the tribunal’s determination of the subject property’s
TCV was not supported by competent, material, and substantial evidence. While we find that the
tribunal’s overall methodology for determining the subject property’s TCV, SEV, and TV was
sound, we cannot determine that the basis for its calculations are supported by competent,
material, and substantial evidence.
The assessment of real property in Michigan must not exceed fifty percent of its TCV.
Const 1963, art 9, § 3; WPW Acquisition Co v City of Troy, 250 Mich App 287, 298; 646 NW2d
487 (2002). MCL 211.27(1) defines “true cash value” as:
[T]he usual selling price at the place where the property to which the term is
applied is at the time of assessment, being the price that could be obtained for the
property at private sale, and not at auction sale except as otherwise provided in
this section, or at forced sale.
The TCV is synonymous with fair market value. Great Lakes Div of Nat’l Steel Corp v City of
Ecorse, 227 Mich App 379, 389; 576 NW2d 667 (1998). The petitioner has the burden of proof
in establishing the TCV of the property. MCL 205.737(3). “The Tax Tribunal is under a duty to
apply its expertise to the facts of a case to determine the appropriate method of arriving at the
true cash value of property, utilizing an approach that provides the most accurate valuation under
the circumstances.” Jones & Laughlin Steel Corp v City of Warren, 193 Mich App 348, 353;
483 NW2d 416 (1992). The three most common approaches for determining TCV are “the
capitalization-of-income approach, the sales-comparison or market approach, and the cost-lessdepreciation approach.” Great Lakes, supra at 390. In this case, the tribunal arrived at its
determination of the subject property’s TCV relying primarily on the sales-comparison method
of valuation. The tribunal stated that it gave “some consideration” to the capitalization-ofincome approach offered by respondent, but that respondent had offered “very little
documentation to support the numbers used in the calculation.” The tribunal did not discuss to
what extent, if at all, its consideration of the capitalization-of-income approach affected its
determination of the subject property’s TCV. Thus, we focus on the tribunal’s use of the salescomparison approach.
Under the sales-comparison approach, TCV is determined by analyzing recent sales of
properties similar to the subject property, i.e., “comparables,” while making adjustments to the
comparable’s sale price to reflect differences between the properties. Id. at 391. In the instant
case, both petitioner and respondent presented the tribunal with the details of various sales of
comparables. The tribunal selected five comparables, two from petitioner and three from
respondent, “that seem[ed] to reflect the characteristics of the subject property.” The tribunal
then adjusted the sale price of each comparable to reflect differences between the comparables
and the subject property with respect to lot size, square footage, number of bedrooms, age, the
presence or absence of a garage, and other attributes. The tribunal adjusted each sale price using
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dollar amounts offered by respondent that corresponded with each characteristic, ultimately
singling out a comparable located at 1167 Temple as the most relevant because “it is used as a
rental and the cash purchase was not open to any financial schemes.” 1167 Temple was sold on
November 5, 2003 for $5,500. The tribunal adjusted 1167 Temple’s sale price as follows: (1)
added $432 because it had 24 square feet less of living space than the subject property; (2) added
$2,000 because it was built ten years earlier than the subject property; and (3) added $500
because, unlike the subject property, it did not have a garage. 1167 Temple’s adjusted sale price
was $8,432.
Petitioner argues that the tribunal erred when it based its adjustments of each
comparable’s sale price, including 1167 Temple, on dollar amounts offered by respondent
because those amounts were arbitrary and not based on competent, material, and substantial
evidence. Petitioner is correct in his assertion that the tribunal’s decision merely notes its
decision to adopt respondent’s offered values, but fails to explain its reasoning for adopting those
values. We also note the tribunal’s failure to explain the $1,568 difference between the adjusted
sale price of 1167 Temple, $8,432, and the subject’s property’s final TCV, $10,000. The
decision does not explain the reasoning process the tribunal used to reach its decision regarding
the TCV of the subject property. As a result, we cannot determine if the tribunal’s findings of
fact are supported by the requisite evidence.
Petitioner also argues the tribunal’s criteria for adjusting the sale prices of comparables
was flawed or underinclusive in that the tribunal gave undue weight to some criteria, and failed
to ascribe any importance to other criteria. Further, petitioner stresses that the tribunal did not
adequately consider the price at which petitioner purchased the property in 2004 ($3,850) or is
currently attempting to sell it at ($6,000).
MCL 211.27(5) provides, “[T]he purchase price paid in a transfer of property is not the
presumptive true cash value of the property transferred.” Second, the tribunal did not err when it
emphasized some characteristics of the properties over others in its application of the salescomparison approach because “[t]he weight to be accorded to the evidence is within the Tax
Tribunal’s discretion.” Great Lakes, supra at 404.
While the tribunal did not err in relying on the sales-comparison approach as the method
to determine the subject property’s TCV, SEV, and TV, it failed to state its reasoning for relying
on respondent’s proposed adjustments of comparable properties, and failed to state its reasoning
for making adjustments as it did. Under the circumstances, we cannot determine if the tribunal’s
factual findings are supported by the requisite evidence. Thus, we vacate the tribunal’s decision
and remand this matter to the tribunal for reconsideration.
Vacated and remanded for the reasons stated above. We do not retain jurisdiction.
/s/ Christopher M. Murray
/s/ Jane E. Markey
/s/ Stephen L. Borrello
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