Kyle Shaw Residential Props. v. City of Lansing
| Decision Date | 04 November 2021 |
| Docket Number | 354760 |
| Parties | KYLE SHAW RESIDENTIAL PROPERTIES, LLC, Petitioner-Appellant, v. CITY OF LANSING, Respondent-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Before: Ronayne Krause, P.J., and Cameron and Rick, JJ.
Petitioner Kyle Shaw Residential Properties, LLC, appeals the final judgment of the Michigan Tax Tribunal (MTT), which determined the value of petitioner's property in Lansing, Michigan for the 2020 tax year. We affirm.
In August 2018, the subject property was sold to JP Morgan Mortgage Acquisition Corporation (JP Morgan) in a foreclosure sale for $39, 847. JP Morgan later listed the property for sale, and petitioner purchased it for $42, 500 in September 2019. Respondent City of Lansing valued the true cash value (TCV) of the property at $152, 600, resulting in a taxable value (TV) of $76, 300 for the 2020 tax year. Petitioner disagreed with these values and petitioned the Board of Review (BOR) for relief. The March 2020 BOR found that the property was properly valued and left the TCV and TV unchanged.
Petitioner appealed this decision to the MTT, arguing that the TCV of the property was $50, 000 and that the TV of the property was $25, 000. Respondent filed an answer and requested that the MTT affirm the BOR's decision. However, respondent later changed its position and asserted that the TCV of the property was $112, 500. After holding a hearing and considering the evidence submitted by the parties, the MTT concluded that the TCV of the property was $115, 000 and that the TV was $57, 500 for the 2020 tax year. This appeal followed.
In New Covert Generating Co, LLC v. Twp of Covert, 334 Mich.App. 24, 45;___ N.W.2d___ (2020), this Court observed:
This Court's review of agency decisions involving property tax valuations is quite limited: "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 . . . . This Court reviews de novo whether the Tax Tribunal erred as a matter of law when interpreting and applying statutes. Makowski v. Governor, 317 Mich.App. 434, 441; 894 N.W.2d 753 (2016). Agency interpretations of a statute are entitled to "respectful consideration, but they are not binding on courts and cannot conflict with the plain meaning of the statute." In re Complaint of Rovas Against SBC Mich, 482 Mich. 90, 117-118; 754 N.W.2d 259 (2008).
"When the Tribunal's findings of fact are supported by competent, material, and substantial evidence on the whole record, those findings are conclusive." Estate of Schubert v. Dep't of Treasury, 322 Mich.App. 439, 447; 912 N.W.2d 569 (2017). "Substantial evidence must be more than a scintilla of the evidence, although it may be substantially less than a preponderance of the evidence." Forest Hills Coop v. City of Ann Arbor, 305 Mich.App. 572, 588; 854 N.W.2d 172 (2014) (quotation marks and citation omitted).
Petitioner argues that the TV for the 2020 tax year is inaccurate because the property's TCV was improperly assessed. We disagree. MCL 211.27a provides in relevant part as follows:
"[TCV] is synonymous with fair market value." WPW Acquisition Co v. City of Troy, 250 Mich.App. 287, 298; 646 N.W.2d 487 (2002). "Therefore, the assessment must reflect the probable price that a willing buyer and a willing seller would arrive at through arm's length negotiation." Huron Ridge LP v. Ypsilanti Twp, 275 Mich.App. 23, 28; 737 N.W.2d 187 (2007). An arm's-length negotiation "is characterized by three elements: it is voluntary, i.e., without compulsion or duress; it generally takes place in an open market; and the parties act in their own self-interest." Mackey v. Dep't of Human Servs, 289 Mich.App. 688, 699; 808 N.W.2d 484 (2010) (quotation marks and citations omitted).
[T]o determine [TCV], the property must be assessed at its highest and best use. . . . Highest and best use is defined as the most profitable and advantageous use the owner may make of the property even if the property is presently used for a different purpose or is vacant, so long as there is a market demand for such use. [Menard, Inc v. City of Escanaba, 315 Mich.App. 512, 522; 891 N.W.2d 1 (2016) (alteration in original; emphasis, quotation marks, and citations omitted).]
While "[e]vidence of the selling price of property is relevant in determining the [TV] of property," Prof Plaza, LLC v. City of Detroit, 250 Mich.App. 473, 476; 647 N.W.2d 529 (2002), "the purchase price paid in a transfer of property is not the presumptive [TCV] of the property transferred," MCL 211.27(6).
Indeed, there is no single statutorily required method for determining TCV. Great Lakes Div of Nat'l Steel Corp v. City of Ecorse, 227 Mich.App. 379, 390; 576 N.W.2d 667 (1998). Rather, the MTT must "apply its expertise to the facts of a case in order to determine the appropriate method of arriving at the [TCV] of property, utilizing an approach that provides the most accurate valuation under the circumstances." Id. at 389. The MTT must make its own, independent determination of TCV, and it is free to accept or reject either party's valuations or to combine the approaches. Id. at 389-390. The three most common approaches to valuation are: "the capitalization-of-income approach, the sales-comparison or market approach, and the cost-less-depreciation approach." Id. at 390.
In this case, respondent presented evidence of all three approaches. According to respondent, the capitalization-of-income approach supported valuing the property at $146, 000, the sales-comparison approach supported valuing the property at $112, 500, and the cost-less-depreciation approach supported valuing the property at $198, 100. In contrast, petitioner's assertion of valuation was supported by the purchase price of the property and a sampling of purportedly comparable properties in the area. Petitioner also provided evidence that the property had been "deemed unsafe for occupancy" and required extensive "rehabilitation." Petitioner argued that, based on this evidence, the property's TCV was $50, 000. The MTT conducted an independent review of this evidence, as well as other evidence that was presented by the parties. Based on this review, the MTT concluded that respondent's evidence of the sales-comparison approach was the most reliable evidence of the property's TCV and that it was appropriate to assign minimal weight to respondent's capitalization-of-income approach. The MTT then valued the TCV of the property at $115, 000 for the 2020 tax year, resulting in a TV of $57, 500.
On appeal, petitioner argues that the MTT incorrectly applied the law by failing to consider the purchase price of the property. Specifically, petitioner argues that the MTT improperly concluded that the sale was not an arm's-length transaction and, consequently, refused to consider the purchase price of the property. Even if we agreed with petitioner that the MTT erred that the purchase in question was not an arm's length transaction, we would nevertheless conclude that any such error is harmless. This is because the MTT's final opinion and judgment establishes that the MTT did consider the purchase price evidence offered by petitioner, but correctly recognized that it was not required to accept the purchase price as conclusive evidence of the property's TCV. As already stated, "the purchase price paid in a transfer of property is not the presumptive [TCV] of the property transferred." MCL...
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