CAPCO 1998-D7 PIPESTONE LLC V BENTON CHARTER TWP
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STATE OF MICHIGAN
COURT OF APPEALS
CAPCO 1998-D7 PIPESTONE, L.L.C.,
UNPUBLISHED
December 28, 2006
Petitioner-Appellant,
v
No. 260823
Tax Tribunal
LC No. 00-290990
BENTON CHARTER TOWNSHIP,
Respondent-Appellee.
Before: O’Connell, P.J., and White and Markey, JJ.
PER CURIAM.
Petitioner appeals as of right from a Tax Tribunal judgment establishing a true cash value
of $7,250,000, and assessed and state equalized values of $3,625,000 for petitioner’s 15.15-acre
parcel, the Pipestone Plaza shopping center in Benton Township, for the 2003 tax year. We
affirm.
Until July 2002, most of Pipestone Plaza was occupied by a Kmart store, which
subsequently vacated the premises due to bankruptcy. Other tenants also left, resulting in a 77
percent vacancy rate on December 31, 2002. An assessor determined that the true cash value of
the property on that date was $10,674,800, and that its assessed value was $5,337,400. Petitioner
appealed to the Tax Tribunal, asserting that the assessed value exceeded 50 percent of the true
cash value. Following a hearing, the tribunal issued a 25-page opinion establishing the various
values for the property. Although the tribunal judge expressed agreement with respondent’s
appraiser’s determination that the true cash value of the property was $7,250,000, a chart on p 22
of the judgment listed the following values:
Taxable Value: 2,484,892
Assessed Value: $5,337,400
State Equalized Value: $5,337,400
“TVC”: 2,400,000
Respondent subsequently notified the tribunal that these figures were not correct and asked that
the tribunal issue an errata correcting the figures to conform with the value determination
reflected in the tribunal judge’s opinion. After petitioner filed its claim of appeal, the tribunal
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issued an “erratum to correct order” modifying the values in the chart on p 22 to reflect a true
cash value of $7,250,000, and assessed and state equalized values of $3,625,000 each.
On appeal, petitioner first argues that the Tax Tribunal did not have jurisdiction to issue
the “erratum to correct order” after a claim of appeal was filed. We disagree. Under MCR
7.208(C)(2), the tribunal could correct any part of the record upon notice to the parties and an
opportunity for a hearing. As petitioner concedes, the figures reflected in the chart on page 22 of
the tribunal’s opinion were inconsistent with the value determination actually made in the
opinion and were in conflict with each other. It was apparent that there was a clerical error in
preparing the chart on page 22, and the erratum that was issued corrected the figures in that chart
consistent with the actual value determination made in the opinion. Further, petitioner received
notice of the proposed corrections approximately six weeks before the erratum was issued and
never requested a hearing on the corrections. Under these circumstances, we conclude that the
tribunal had jurisdiction to issue the erratum to correct the clerical error in the record.
Relying on MCR 2.613(B), petitioner also asserts that the erratum was invalid because it
was not issued by the same tribunal judge who issued the original opinion and judgment.
Petitioner’s reliance on MCR 2.613(B) is misplaced because that rule only applies to a judgment
or order that is set aside or vacated. In this case, the erratum merely corrected a clerical error in
the judgment. The judgment itself was neither set aside nor vacated.
Petitioner next argues that the Tax Tribunal erred in accepting respondent’s valuation,
because that valuation employed faulty methodology, i.e., the use of the direct capitalization
method and failure to consider the actual vacancy rate of the property. We disagree. In the
absence of fraud, this Court’s review of a Tax Tribunal decision is limited to determining
whether the tribunal erred in applying the law or adopted a wrong legal principle. Georgetown
Place Co-op v City of Taylor, 226 Mich App 33, 43; 572 NW2d 232 (1997). The Tax Tribunal’s
factual findings are upheld unless they are not supported by competent, material, and substantial
evidence on the whole record. Id.
The Legislature did not direct that specific methods be used in valuing property.
Meadowlanes Ltd Dividend Housing Ass’n v City of Holland, 437 Mich 473, 484; 473 NW2d
636 (1991). The statutory provisions on which petitioner relies neither mandate the use of a
discounted cash flow method (DCF), nor indicate that direct capitalization is improper in
situations involving a significant vacancy. Direct capitalization, while a simpler process than
DCF, is an acceptable method of performing the income analysis. The Tax Tribunal decisions
cited by petitioner are factually distinguishable because, apart from the high vacancies, they each
involve additional factors, not present here, justifying use of the discounted cash flow
methodology. The gist of petitioner’s argument is that the true cash value of the property could
not be determined without taking the actual vacancy rate into account. We are not persuaded
that the methodology used here was improper. There was testimony that the Pipestone area was
surveyed and that the occupancy rate was 10%, and, more specifically, that the expert made an
investigation of potential tenants for the vacant space. There was no evidence that the actual
vacancy rate was due to some feature of the property, rather than K-Mart’s departure. Under
these circumstances, we find no error in the use of the market rate.
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Petitioner also complains that the tribunal made unwarranted criticisms of its appraisal,
but there has been no showing that an error of law was committed or that the tribunal’s factual
findings were unsupported by competent, material, and substantial evidence.
Affirmed.
/s/ Peter D. O’Connell
/s/ Helene N. White
/s/ Jane E. Markey
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