Great Lakes Div. of Nat. Steel Corp. v. City of Ecorse
| Decision Date | 20 January 1998 |
| Docket Number | Docket Nos. 197338,200474 |
| Citation | 227 Mich.App. 379,576 N.W.2d 667 |
| Parties | GREAT LAKES DIVISION OF NATIONAL STEEL CORPORATION, Petitioner-Appellant/Cross-Appellee, v. CITY OF ECORSE and City of River Rouge, Respondents-Appellees/Cross-Appellants, and County of Wayne, Respondent-Appellee. GREAT LAKES DIVISION OF NATIONAL STEEL CORPORATION, Petitioner-Appellee/Cross-Appellee, v. CITY OF ECORSE and City of River Rouge, Respondents-Appellees/Cross-Appellants, and County of Wayne, Respondent-Appellant/Cross-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Honigman Miller Schwartz and Cohen by Jerome M. Salle and Michael B. Shapiro, Detroit, for Great Lakes Division of National Steel Corporation.
Mason, Steinhardt, Jacobs & Perlman, P.C. by Walter B. Mason, Jr., and Jonathan B. Frank, Southfield, for City of Ecorse.
Miller, Canfield, Paddock and Stone, P.L.C. by Robert F. Rhoades, Gilbert E. Gove, and Leland D. Barringer, Detroit, for City of River Rouge.
Jennifer M. Granholm, Corporation Counsel, and Richard G. Stanley, Assistant Corporation Counsel, for Wayne County.
Before BANDSTRA, P.J., and MARK J. CAVANAGH and MARKMAN, JJ.
Petitioner, Great Lakes Division of National Steel Corporation (GLD), appeals as of right and the respondents-cities, Ecorse and River Rouge, cross appeal in Docket No. 197338 from a judgment of the Michigan Tax Tribunal concerning industrial real and personal property tax assessments for tax years 1991, 1992, 1993, and 1994. During the pendency of this appeal, the case was remanded to the Tax Tribunal for a ruling on motions for rehearing. On remand, the Tax Tribunal entered an order to partially grant reconsideration and modify the judgment. Respondent Wayne County filed an appeal as of right and the respondent-cities filed cross appeals in Docket No. 200474 from the order entered on remand. We partially vacate the judgment, as modified, and remand to the Tax Tribunal for further proceedings.
I. UNDERLYING FACTS AND PROCEEDINGS
Petitioner GLD is a production division of the National Steel Corporation located along the Detroit River in the cities of Ecorse and River Rouge in Wayne County. GLD is an integrated steel mill that produces flat-rolled steel from raw materials. Flat-rolled steel is used for various industries, such as automobile manufacturing and canning, but the product mix at GLD may vary in any particular month to meet customer requirements.
The land used for the principal steel-making operations at GLD is in two noncontiguous tracts, connected by a strip of land. The strip of land is adjacent to a railroad right of way that provides rail access between the tracts. The main plant is partially located in both Ecorse and River Rouge, and the steel-making process utilizes the facilities in both cities. Coke oven facilities are located in River Rouge on Zug Island, which are connected to the main plant by the strip of land and bridges. Coke, a commodity that can be purchased on the market, is used to produce a liquid iron product, which is then put through an oxygen process at the Ecorse facilities in order to convert the iron to steel. After further refinement, the liquid steel is put through a continuous caster process in Ecorse. A continuous caster produces slabs by solidifying the liquid steel.
After the slabs are produced, they are transported to a hot strip mill in River Rouge, which reduces the thickness of the slabs down to a hot-rolled band or coil. At this point, the product may be returned to Ecorse for a cold finishing process, which will return some rigidity to the product so that it can be used in forming operations. The product may also go through an electrogalvanizing line wherein corrosion resistance is added to the product. Rather than subjecting the product to this additional processing, the product may also be shipped to customers or other divisions of the National Steel Corporation as hot bands.
In addition to steel-making facilities, GLD has a number of ancillary facilities, such as a boat club, on the subject property. In July of 1991, GLD filed petitions in the Tax Tribunal to challenge the assessments on the real and personal property of the ancillary and steel-making facilities for tax year 1991. GLD filed separate petitions for each city. Wayne County was named as a respondent on both petitions. The Tax Tribunal subsequently allowed amendments of the petitions to add tax years 1992, 1993, and 1994. All tax years in question preceded significant amendments made by 1994 P.A. 415 to the General Property Tax Act, M.C.L. § 211.1 et seq.; M.S.A. § 7.1 et seq., effective with the 1995 tax year.
The Tax Tribunal did not consolidate the Ecorse and River Rouge cases, but did order a simultaneous hearing. Proposed valuations for the integrated steel mill and ancillary property were disclosed by GLD, Ecorse, and River Rouge before the hearing by exchanging appraisals. Ecorse and River Rouge did not rely upon the valuations reflected by the property tax rolls for the tax years in question and instead proposed new valuations for the property located in their respective cities based on appraisals. Wayne County adopted the valuation disclosure of the cities in their respective cases. Some corrections or modifications were made to the valuation disclosures during the course of the hearing, as experts provided testimony concerning the various approaches considered in the appraisals in reaching their opinions regarding how the integrated steel mill and ancillary facilities should be valued for property tax purposes.
None of the parties ultimately relied on an income approach in arriving at an indicated value for the integrated steel mill. GLD's valuation gave weight to a comparable-sales or market approach. GLD valued the integrated steel mill as a whole, and then allocated that value between the cities for each tax year. The valuations of Ecorse and River Rouge gave weight to cost-less-depreciation approaches for each tax year. Ecorse and River Rouge did not value the entire integrated steel mill, but instead arrived at valuations based on the appraisal of facilities located within their respective cities.
The Tax Tribunal issued a written opinion following the hearing, wherein it was determined that the ancillary facilities, such as the boat club, should be valued as stand-alone properties for each tax year. The Tax Tribunal's decision regarding the ancillary facilities is not challenged on appeal, with the exception of an issue concerning the level of assessment discussed in part VI of this opinion.
With regard to the integrated steel mill, the Tax Tribunal determined that a rationale existed for rejecting all proposed valuation methods, but that it could use GLD's proofs regarding comparable sales to develop a formula for measuring the value of the integrated steel mill as a whole. As modified in its order partially granting reconsideration, the Tax Tribunal's formula resulted in a true cash value of $483,078,750 for each tax year. The Tax Tribunal then allocated this value between the cities and to specific tax parcels within each city. The Tax Tribunal's allocation of the true cash value between the cities, excluding the ancillary properties, was as follows:
Tax Year Ecorse River Rouge Total
1991 $259,220,050 $223,858,700 $483,078,750
1992 $225,742,700 $257,336,050 $483,078,750
1993 $142,025,160 $341,053,590 $483,078,750
1994 $156,179,360 $326,899,390 $483,078,750
II. STANDARD OF REVIEW
On appeal, the parties raise a number of issues regarding the Tax Tribunal's overall valuation for the integrated steel mill, the allocation of that valuation between cities and specific tax parcels, the levels of assessment, and procedural matters. Our review of the Tax Tribunal's decision is limited by the Michigan Constitution, which provides:
In the absence of fraud, error of law or the adoption of wrong principles, no appeal may be taken to any court from any final agency provided for the administration of property tax laws from any decision relating to valuation or allocation. [Const. 1963, art. 6, § 28.]
While this Court is bound by the Tax Tribunal's factual determinations and may properly consider only questions of law under this section, a Tax Tribunal decision that is not supported by competent, material, and substantial evidence on the whole record is an "error of law" within the meaning of Const. 1963, art. 6, § 28. Oldenburg v. Dryden Twp., 198 Mich.App. 696, 698, 499 N.W.2d 416 (1993); Kern v. Pontiac Twp., 93 Mich.App. 612, 620, 287 N.W.2d 603 (1979). Substantial evidence must be more than a scintilla of the evidence, although it may be substantially less than a preponderance of the evidence. Jones & Laughlin Steel Corp. v. City of Warren, 193 Mich.App. 348, 352-353, 483 N.W.2d 416 (1992). "Substantial" means evidence that a reasonable mind would accept as sufficient to support the conclusion. Kotmar, Ltd. v. Liquor Control Comm., 207 Mich.App. 687, 689, 525 N.W.2d 921 (1994).
III. THE TAX TRIBUNAL'S OVERALL DETERMINATION OF TRUE CASH VALUE
We shall first address the issues raised by the cities and Wayne County concerning whether the Tax Tribunal's formula for determining the true cash value for the integrated steel mill constituted the adoption of a wrong principle or an error of law because this is the most significant issue raised on appeal.
The Tax Tribunal is under a duty to apply its expertise to the facts of a case in order 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. Antisdale v. City of Galesburg, 420 Mich. 265, 277, 362 N.W.2d 632 (1984); Jones & Laughlin Steel Corp, supra at 353, 483 N.W.2d 416. True cash...
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