Kathawa v. Twp. of W. Bloomfield

• Decision Date: 24 February 2022
• Docket Number: 355907
• Parties: ALEXANDER KATHAWA, Petitioner-Appellant, v. TOWNSHIP OF WEST BLOOMFIELD, Respondent-Appellee.
• Court: Court of Appeal of Michigan — District of US

ALEXANDER KATHAWA, Petitioner-Appellant,
v.
TOWNSHIP OF WEST BLOOMFIELD, Respondent-Appellee.

No. 355907

Court of Appeals of Michigan

February 24, 2022

UNPUBLISHED

Tax Tribunal LC No. 20-002685-TT

Before: Cavanagh, P.J., and Jansen and Riordan, JJ.

Per Curiam.

Petitioner appeals as of right the December 9, 2020 Final Opinion and Judgment of Tax Tribunal (tribunal) ruling in favor of respondent and concluding that the true cash value, state equalized value, and taxable value of the subject property were $1, 749, 160; $874, 580; and $866, 490, respectively. We affirm.

I. FACTUAL BACKGROUND

Petitioner purchased the residential property located at 6300 North Shore Drive, West Bloomfield Township, Michigan, on September 14, 2018, for $1, 150, 000. On October 9, 2018, Armstrong Appraisal & Consulting, LLC assessed the property at $1, 300, 000. Respondent assessed the true cash value, state equalized value, and taxable value of the property for the 2020 tax year as $1, 866, 620; $943, 310; and $866, 490, respectively. Petitioner appealed respondent's assessment by filing a petition in the small claims division of the tribunal on July 15, 2020. Both parties submitted valuation disclosures.

A hearing was conducted by telephone on November 2, 2020. On December 9, 2020, the tribunal issued a final opinion and judgment in favor of respondent, adopting respondent's evidence and concluding that the true cash value, state equalized value, and taxable value of the subject property was $1, 749, 160; $874, 580; and $866, 490, respectively. This appeal followed.

II. STANDARD OF REVIEW

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"Absent fraud, our review of [tribunal] decisions is limited to determining whether the [tribunal] erred in applying the law or adopted a wrong legal principle." VanderWerp v Plainfield Charter Twp, 278 Mich.App. 624, 627; 752 N.W.2d 479 (2008). Questions of statutory interpretation are reviewed de novo. Mich Props, LLC v Meridian Twp, 491 Mich. 518, 528; 817 N.W.2d 548 (2012).

In addition, the tribunal's factual findings must be supported by competent, material, and substantial evidence. Dow Chemical Co v Dep't of Treasury, 185 Mich.App. 458, 462-463; 462 N.W.2d 765 (1990). "Substantial evidence must be more than a scintilla of evidence, although it may be substantially less than a preponderance of the evidence required in most civil cases." Id.

III. LAW AND ANALYSIS

Petitioner argues that the tribunal's final opinion and judgment was not supported by competent, substantial, and material evidence. We disagree.

The Michigan Constitution "provides for the uniform taxation of property assessed at not in excess of 50 percent of its true cash value." President Inn Props LLC v Grand Rapids, 291 Mich.App. 625, 636; 806 N.W.2d 342 (2011), citing Const 1963, art 9, § 3. True cash value is "the usual selling price" or "fair market value." MCL 211.27(1); Detroit Lions, Inc v City of Dearborn, 302 Mich.App. 676, 696; 840 N.W.2d 168 (2013). We have stated that fair market value "is the standard and not merely a guideline" for determining the value of a property. Safran Printing Co v Detroit, 88 Mich.App. 376, 381; 276 N.W.2d 602 (1979). In a valuation dispute, the task of the tribunal is to find the true cash value by making an independent determination of the value of the property. Jones & Laughlin Steel Corp v City of Warren, 193 Mich.App. 348, 354; 483 N.W.2d 416 (1992). "The petitioner has the burden of proof in establishing the true cash value of the property." MCL 205.737(3).

There are different approaches used for determining the value of a property. See Great Lakes Div of Nat'l Steel Corp v City of Ecorse, 227 Mich.App. 379, 390; 576 N.W.2d 667 (1998). One approach is the cost-less-depreciation approach (i.e., the cost approach). Id. Under this approach, "true cash value is derived by adding the estimated land value to an estimate of the current cost of reproducing or replacing improvements and then deducting the loss in value from depreciation in structures, i.e., physical deterioration and functional or economic obsolescence." Meadowlanes Ltd Dividend Housing Ass'n v Holland, 437 Mich. 473, 484 n 18; 473 N.W.2d 636 (1991). A second approach is the sales-comparison approach. Great Lakes, 227 Mich.App. at 390. Under this approach, "true cash value is derived by analyzing recent sales of similar properties, comparing those properties with the subject property, and adjusting the sales price of the comparable properties to reflect differences." Meadowlanes, 437 Mich. at 492.

The tribunal is required to select a valuation methodology that is recognized as accurate and that bears a reasonable relationship to the property's true cash value. Safran, 88 Mich.App. at 380. "[T]he tribunal is not bound to accept either of the parties' theories of valuation. It may accept one theory and reject the other, it may reject both theories, or it may utilize a combination of both in arriving at its determination." Jones & Laughlin, 193 Mich.App. at 356. "The [tribunal] may correlate, reconcile, and weigh valuations derived under various approaches with the ultimate

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goal of considering all factors under the circumstances in determining the fair market value of the subject property." President Inn, 291 Mich.App. at 640.

A. PERCENTAGE-BASED ADJUSTMENT METHOD

While respondent utilized both the cost approach and the sales-comparison approach, petitioner's sales grid-prepared by petitioner's counsel, who is not a valuation expert-used only the sales-comparison approach and chose to use the percentage-based adjustment method in doing so.^[1] The tribunal gave no weight to petitioner's adjustments because petitioner used the percentage-based adjustment method. Petitioner challenges this conclusion, arguing that the percentage-based adjustment method is a valid and commonly-used adjustment method, and the tribunal failed to support its rejection of petitioner's adjustments. We disagree.

Again, "the tribunal is not bound to accept either of the parties' theories of valuation. It may accept one theory and reject the other, it may reject both theories, or it may utilize a combination of both in arriving at its determination." Jones & Laughlin, 193 Mich.App. at 356. Therefore, the tribunal was not required to utilize petitioner's percentage-based adjustment method.

The tribunal noted that percentage-based adjustments are normally used for commercial properties, not residential properties. Applying percentage-based adjustments to a residential property such as the subject property, noted the tribunal, "does not illustrate those features that are truly similar between comparable and subject properties" and is therefore "not meaningful in a residential context." This was particularly the case for the subject property, which was simply a single-family residential property. As the tribunal stated: "Single family residential properties are more typically analyzed and adjusted on the basis of sale price and dollar amounts . . . . Said differently, the subject property is not so complex . . . that may warrant adjustments on a percentage basis."

Petitioner argues that the tribunal failed to provide support for its conclusion, but he appears to have overlooked the clearly delineated reasons provided by the tribunal in its final opinion and judgment. Petitioner also argues that the percentage-based adjustment method has been approved by the Appraisal Institute for all sales comparison analyses. However, the fact that it may have been approved does not necessarily mean that it is the better approach or that the tribunal's conclusion is incorrect. Petitioner further argues that adjustments are commonly made using the percentage-based adjustment method and cites The Appraisal of Real Estate, 15th Edition (2020). However, petitioner provides, in a footnote, language from the 15th edition of The Appraisal of Real...