CEDAR RUN DEVELOPMENT LLC V CITY OF WILLIAMSTON
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STATE OF MICHIGAN
COURT OF APPEALS
CEDAR RUN DEVELOPMENT L.L.C.,
UNPUBLISHED
December 14, 2001
Petitioner-Appellant,
v
No. 223640
Michigan Tax Tribunal
LC No. 00-256105
CITY OF WILLIAMSTON,
Respondent-Appellee.
Before: O’Connell, P.J., and Sawyer and Smolenski, JJ.
PER CURIAM.
Petitioner Cedar Run Development, L.L.C., (Cedar Run) appeals as of right from the
November 8, 1999, judgment of the Michigan Tax Tribunal computing the true cash value of real
property for the purpose of assessing ad valorem taxes for the tax years 1998 and 1999. We
vacate and remand.
In 1996 Cedar Run purchased property in Williamston, and subsequently subdivided it
and recorded a subdivision plat. Cedar Run also made various infrastructure improvements to
the land. Respondent City of Williamston (Williamston) assigned new tax identification
numbers to the property and set taxable values for the newly created parcels effective on the
1997 tax rolls. It appears from the record that Cedar Run did not initially petition the Tax
Tribunal for relief from the 1997 assessments. Instead, it filed a petition with the Tax Tribunal
in 1998 for relief from the 1998 taxable values, claiming that they were unlawful. The Tax
Tribunal subsequently allowed Cedar Run to amend its petition to add a claim for relief from the
1999 assessed values.
After each party submitted valuation disclosure, the Tax Tribunal conducted an
evidentiary hearing on September 21, 1999. For reasons unclear from the record, a
representative for the City of Williamston did not attend this hearing. During the hearing Cedar
Run presented evidence concerning the cost of the subject property in 1996, as well as the cost of
subsequent infrastructure improvements. Cedar Run urged the Tax Tribunal to utilize the cost
approach to discern the true cash value of the property. In its November 8, 1999, opinion and
judgment, the Tax Tribunal rejected Cedar Run’s argument that the cost approach should be used
to assess the property’s true cash value and set the true cash value of the property by accepting
Williamston’s determination of the property’s market value. Cedar Run now appeals. On
appeal, amicus briefs were filed by the Michigan Association of Realtors and the Michigan
Association of Home Builders.
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Cedar Run’s primary argument on appeal is that the Tax Tribunal erred in accepting
Williamston’s valuation of the subject property because Williamston’s assessment impermissibly
took into account the increased retail value of the property attributable to the platting of the
property. Our review of a decision of the Tax Tribunal is deferential as mandated by the
Michigan Constitution. Edward Rose Building Co v Independence Twp, 436 Mich 620, 631; 462
NW2d 325 (1990); Const 1963, art 6, § 28. Absent fraud, our review of the Tax Tribunal’s
decision is limited to determining whether it made an error of law or misapplied a legal principle.
Meijer v Midland, 240 Mich App 1, 5; 610 NW2d 242 (2000); National Center for Mfg Sciences,
Inc v Ann Arbor, 221 Mich App 541, 544; 563 NW2d 65 (1997). The Tax Tribunal’s factual
findings are binding on this Court provided they are supported by competent, material, and
substantial evidence. Meijer, supra at 5.
The taxpayer has the burden of proof to establish the true cash value of the
property. MCL 205.737(3). True cash value is synonymous with fair market
value and is commonly determined by three different approaches: (1) cost less
depreciation, (2) sales comparison, and (3) capitalization of income.
Meadowlands Ltd Dividend Housing Ass’n v City of Holland, 437 Mich 473, 484485; 473 NW2d 636 (1991); Jones & Laughlin Steel Corp v City of Warren, 193
Mich App 348, 352; 483 NW2d 416 (1992). Regardless of the approach, the
value determined must represent the usual price for which the property would sell.
Meadowlands, supra at 485; Jones & Laughlin, supra at 353. [Samonek v Norvell
Twp, 208 Mich App 80, 84; 527 NW2d 24 (1994).]
The taxation of real property in Michigan is governed by the General Property Tax Act
(GPTA), MCL 211.1 et seq. Specifically, the taxable value of real property can be determined
by reference to §27a of the GPTA. See MCL 205.737(1). Section 27a provides in pertinent part:
(1) Except as otherwise provided in this section, property shall be assessed
at 50% of its true cash value under section 3 of article IX of the state constitution
of 1963.
(2) Except as otherwise provided in subsection (3), for taxes levied in
1995 and for each year after 1995, the taxable value of each parcel of property is
the lesser of the following:
(a) The property’s taxable value in the immediately preceding year minus
any losses, multiplied by the lesser of 1.05 or the inflation rate, plus all additions .
...
(b) The property’s current state equalized valuation.
(3) Upon a transfer of ownership of property after 1994, the property’s
taxable value for the calendar year following the year of the transfer is the
property’s state equalized valuation for the calendar year following the transfer.
(4) If the taxable value of property is adjusted under subsection (3), a
subsequent increase in the property’s taxable value is subject to the limitation set
forth in subsection (2) until a subsequent transfer of ownership occurs.
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The “additions” the assessor may take into account when assessing taxable value
pursuant to MCL 211.27a(2)(a) are qualified by the language of MCL 211.34d, which provides
in pertinent part:
(1) As used in this section or [MCL 211.27a], or section 3 or 31 of article
IX of the state constitution of 1963:
***
(c) For taxes levied after 1994, additions do not include increased value
attributable to any of the following:
(i) Platting, splits, or combinations of property.
On appeal, Cedar Run argues that Williamston impermissibly factored into the taxable
value of its lots for 1998 and 1999 the increased value of the lots attributable to the platting of
the property in 1996. In support of its argument Cedar Run relies on the language set forth in
MCL 211.34d(1)(c)(i). A review of the Tax Tribunal’s November 8, 1999, judgment reveals that
although the Tax Tribunal was cognizant of Cedar Run’s argument, for reasons unclear from the
record it chose not to address it specifically. Instead, the Tax Tribunal rejected Cedar Run’s cost
approach for determining true cash value and adopted Williamston’s market value approach.1
We recognize “that the tribunal is not bound to accept either of the parties’ theories of
valuation.” Jones, supra at 356. However, on the present record it is difficult to discern the Tax
Tribunal’s findings and conclusions concerning Cedar Run’s assertion that Williamston’s
assessor impermissibly took into account the increased value of the property attributable to
platting in violation of MCL 211.34d(1)(c)(i) when determining the subject property’s taxable
value for 1998 and 1999.
Therefore, we remand to the Tax Tribunal to allow it to consider and address Cedar
Run’s arguments regarding the applicability of MCL 211.34d(1)(c)(i). On remand the Tax
Tribunal shall make specific findings of fact and render conclusions of law with regard to
whether Williamston’s assessor impermissibly accounted for the increase in value attributable to
platting when determining the true cash value and taxable value of the subject property for 1998
and 1999.
Vacated and remanded. We retain jurisdiction.
/s/ Peter D. O’Connell
/s/ David H. Sawyer
/s/ Michael R. Smolenski
1
Although a representative for Williamston did not appear at the September 21, 1999,
evidentiary hearing, it appears from the record that the Tax Tribunal relied on evidence
submitted by Williamston in its valuation disclosure in May 1999.
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