Lafarge Midwest Inc. v. City of Detroit.

• Decision Date: 12 October 2010
• Docket Number: Docket No. 289292.
• Citation: 801 N.W.2d 629,290 Mich.App. 240
• Parties: LAFARGE MIDWEST INC.v.City of DETROIT.
• Court: Court of Appeal of Michigan — District of US

290 Mich.App. 240

801 N.W.2d 629

LAFARGE MIDWEST INC.

v.City of DETROIT.

Docket No. 289292.

Court of Appeals of Michigan.

Submitted April 7, 2010, at Detroit.Decided Oct. 12, 2010, at 9:00 a.m.

Dickinson Wright PLLC (by Robert F. Rhoades and Adam D. Grant), Detroit, for petitioner.Krystal A. Crittendon, Corporation Counsel, and Joanne D. Stafford and Kevin Richard, Assistant Counsels, for respondent.Before: JANSEN, P.J., and CAVANAGH and K.F. KELLY, JJ.CAVANAGH, J.

Respondent, the city of Detroit, appeals as of right an order of the Michigan Tax Tribunal granting petitioner's motion for summary disposition under MCR 2.116(C)(10). We affirm.

Petitioner, Lafarge Midwest, Inc., was responsible for the payment of ad valorem property taxes on three parcels of land that are the site of its cement plant, which is located within the Delray Renaissance Zone in Detroit. In 2005, 2006, and 2007 petitioner's real property tax bills included a school debt service tax of 13 mills, consistent with the school district electors' approval of $116,156,390 in school building and site bonds. The 13–mill property tax was levied by the Detroit Public School District for retirement of bonded debt. Petitioner filed a petition with the Michigan Tax Tribunal, challenging the tax on the ground that the property was subject to the Michigan Renaissance Zone Act (RZA), MCL 125.2681 et seq. and exempt from this school debt service tax.

Subsequently, petitioner moved for summary disposition, arguing that the property was exempt from the school debt service tax because none of the exceptions to the general exemption set forth in MCL 211.7ff applied to the property. First, petitioner argued, the tax levied was not a special assessment under the exception set forth in MCL 211.7ff(2)(a). Second, because the school debt service tax was not levied by a “local governmental unit,” i.e., a county, city, village, or township, the exception to the general exemption set forth in MCL 211.7ff(2)(b) did not apply. Third, the tax was not levied pursuant to any of the Revised School Code sections listed under the exception set forth in MCL 211.7ff(2)(c). And, fourth, a casino was not being operated on the property, so the exception set forth under MCL 211.7ff(3) did not apply.

More particularly, with regard to the second exception to the exemption, petitioner argued that a “school district” is not considered a “local governmental unit” under the definition provided in the RZA, MCL 125.2683(g).¹ And contrary to respondent's anticipated claim, the definition of “local governmental unit” provided in the General Property Tax Act was inapplicable to this case involving the RZA. In support of its position, petitioner cited the case of Kinder Morgan Mich., LLC v. City of Jackson, 277 Mich.App. 159, 166, 744 N.W.2d 184 (2007), which held that MCL 211.7ff must be liberally construed to effectuate the purposes of the RZA—securing tax relief for properties located in renaissance zones. Accordingly, petitioner argued, because the debt obligations were approved by school district electors and not electors “of the local governmental unit,” this exception to the general exemption did not apply. Thus, petitioner's property was exempt from the tax, and it was entitled to a refund of the overpaid tax as well as an order granting summary disposition in its favor.

In response to petitioner's motion for summary disposition, the city argued that MCL 211.7ff(2)(b) actually contains two separate and independent clauses. The statute provides that property in a renaissance zone is not exempt from the collection of “[a]d valorem property taxes specifically levied for the payment of principal and interest of obligations approved by the electors or obligations pledging the unlimited taxing power of the local governmental unit.” MCL 211.7ff(2)(b). At issue in the Kinder case was the second clause, not the first clause, and because the first clause was at issue in this case, Kinder provides no guidance. The city claimed that the tax was levied “to satisfy the indebtedness of the School District of the City of Detroit.” Thus, the fact that the school district is not a “local governmental unit” as that term is defined in the RZA is irrelevant; the tax was levied for the repayment of principal and interest of obligations approved by the electors. The city argued that if the “Legislature [had] intended for the limiting term ‘local governmental unit’ to apply to both clauses of MCL 211.7ff(2)(b) it could have easily done so by the simple placement of a couple of commas.” Accordingly, the city requested that the tribunal deny petitioner's motion for summary disposition and enter a judgment in the city's favor.

The Tax Tribunal agreed with petitioner, holding that the definition of “local governmental unit” does not include school districts and that the city's “stance of the Legislature's intent [is] unconvincing.” The tribunal concluded that, in light of the clear definition of “local governmental unit,” as well as the mandate to read the property tax act in conjunction with the RZA, a clerical error or mutual mistake of fact existed and resulted in an error on petitioner's tax bills. Accordingly, petitioner's motion for summary disposition was granted, and the city was ordered to remove the school debt tax from the taxes charged to the property and refund any overpaid taxes. This appeal followed.

On appeal, the city argues that the general exemption set forth in MCL 211.7ff(1) did not apply to petitioner's property; rather, the exception to that exemption set forth in MCL 211.7ff(2)(b) applied because the tax at issue was approved by the school district electors for payment of school debt principal and interest. We disagree.

In the absence of fraud, our review of the Tax Tribunal's decision is limited to determining whether the tribunal misapplied the law or adopted a wrong principle. Wexford Med. Group v. City of Cadillac, 474 Mich. 192, 201, 713 N.W.2d 734 (2006). The tribunal's interpretation of a statute, however, presents a question of law that is reviewed de novo on appeal. Pittsfield Charter Twp. v. Washtenaw Co., 468 Mich. 702, 707, 664 N.W.2d 193 (2003).

MCL 125.2682 of the RZA provides:

The legislature of this state finds and declares that there exists in this state continuing need for programs to assist certain local governmental units in encouraging economic development, the consequent job creation and retention, and ancillary economic growth in this state. To achieve these purposes, it is necessary to assist and encourage the creation of renaissance zones and provide temporary relief from certain taxes within the renaissance zones.

In accord, MCL 125.2689(2)(a) of the RZA states that, except as provided in MCL 125.2690, property in a renaissance zone is exempt from the collection of taxes under MCL 211.7ff of the General Property Tax Act. And MCL 211.7ff provides in part as follows:

(1) For taxes levied after 1996, except as otherwise provided in subsections (2) and (3) and except as limited in subsections (4), (5), and (6), real property in a renaissance zone and personal property located in a renaissance zone is exempt from taxes collected under this act to the extent and for the duration provided pursuant to the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696.

(2) Real and personal property in a renaissance zone is not exempt from collection of the following:

(a) A special assessment levied by the local tax collecting unit in which the property is located.

(b) Ad valorem property taxes specifically levied for the payment of principal and interest of obligations approved by the electors or obligations pledging the unlimited taxing power of the local governmental unit.

(c) A tax levied under section 705, 1211c, or 1212 of the revised school code, 1976 PA 451, MCL 380.705, 380.1211c, and 380.1212.

The dispute between the parties came to be centered on the interpretation of MCL 211.7ff(2)(b). The city argues that this exception to the general exemption applied to petitioner's property because the taxes were “levied for the payment of principal and interest of obligations approved by the electors.” The taxes were not levied for “obligations pledging the unlimited taxing power of the local governmental unit.” The city argues that the statute details two separate debt obligations that are excepted from the exemption and that the modifying phrase “of the local governmental unit” only applies—consistently with the rule of the last antecedent—to the second type of debt obligation for which taxes may be levied, not the first type of debt obligation, which is the one at issue here. In contrast, petitioner argues that the phrase “of the local governmental unit” applies and modifies both types of debt obligations, consistently with the plain language and purpose of the RZA. Thus, petitioner argues, because the statute itself requires a different interpretation than would be accorded by the application of the rule of the last antecedent, that rule does not apply. See Sun Valley Foods Co. v. Ward, 460 Mich. 230, 237, 596 N.W.2d 119 (1999).

The primary goal in construing a statute is to discern and give effect to the intent of the Legislature. Murphy v. Mich. Bell Tel. Co., 447 Mich. 93, 98, 523 N.W.2d 310 (1994). The first criterion in determining intent is the specific language of the statute. United States Fidelity & Guaranty Co. v. Mich. Catastrophic Claims Ass'n (On Rehearing), 484 Mich. 1, 13, 795 N.W.2d 101 (2009). The fair and natural import of the terms employed, in view of the subject matter of the law, governs. People v. McGraw, 484 Mich. 120, 124, 771 N.W.2d 655 (2009). If the plain and ordinary meaning of the statutory language is clear, i.e., unambiguous, the Legislative intent is clear. Nastal v. Henderson & Assoc. Investigations, Inc., 471 Mich. 712, 720, 691 N.W.2d 1 (2005); Lansing Mayor v. Pub. Serv. Comm., 470 Mich. 154, 157...