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143085-7 - Michigan Properties v Meridian Township

Michigan Properties, L.L.C.,
Michael B. Shapiro
John D. Pirich
(Appeal from Ct of Appeals
(Michigan Tax Tribunal)
Meridian Township,
Peter A. Teholiz
Michael G. Woodworth


​In December 2004, Michigan Properties L.L.C. purchased three apartment complexes in Meridian Township. In January 2005, Michigan Properties filed the required property transfer affidavits, advising the township that there had been a transfer of ownership of the property. Such a transfer allows the township to base the taxable value of the property on the property’s state equalized value for the following year without regard to the limitations imposed by Proposal A (Const 1963, art 9, § 3) and the enabling statute MCL 211.27a. Proposal A caps the amount that a property’s taxable value can increase each year, even if the property’s true cash value or actual market value rose at a greater rate. The taxable value is “uncapped” upon a transfer of ownership: MCL 211.27a(3) states that “the property’s taxable value for the calendar year following the year of the transfer is the property’s state equalized value for the calendar year following the transfer.” Without a transfer of ownership, the taxable value of the property cannot be increased from one tax year to the next by more than the lesser amount of 5 percent of the assessed value of the property for the previous year or the increase in the rate of inflation from the previous year. MCL 211.27a(2).

The township failed to make assessments for calendar year 2005 based on the properties’ taxable value as defined by § 27a(3). Rather, it increased the taxable value by the amounts allowed by MCL § 27a(2). The township discovered its mistake in October 2006, and notified Michigan Properties that it had corrected the SEV.
Michigan Properties filed separate appeals for each apartment complex with the Michigan Tax Tribunal. The Board of Review granted the appeal and ruled in favor of the township, correcting the assessment for each parcel to reflect uncapping of the property with the 2005 SEV as the base figure for the taxable value.

Michigan Properties appealed each reassessment to the Tax Tribunal, claiming that, because the township failed to uncap the SEV in the year following the transfer, the township was precluded from doing so for any subsequent tax year. But the Tax Tribunal rejected that argument and ruled in the township’s favor. The tribunal found that the property had been transferred in 2004 and that Michigan Properties had filed a timely affidavit of transfer, but that the township had failed to adjust the taxable value for 2005 in accordance with the actual sufficient evidence as required by MCL 211.27a(3). Relying on the Board of Review’s powers under MCL 211.29 and .30 to correct errors in property assessments, the Tax Tribunal concluded that the township’s increase in taxable value for tax year 2007 was proper.

Michigan Properties appealed all three cases to the Court of Appeals, which consolidated the appeals. Michigan Properties argued that MCL 211.27a(3) permits the taxable value of property to be “uncapped” based on a transfer of the property only in the calendar year following the transfer, where a timely affidavit of transfer has been filed, and that the Board of Review may not correct taxable value that is inconsistent with § 27a(3). But in a unanimous published per curiam opinion, the Court of Appeals reversed the Tax Tribunal. The Court of Appeals agreed with Michigan Properties’ argument that MCL 211.27a(3) is unambiguous and only permits the taxable value of transferred property to be “uncapped” in the calendar year following the transfer. The broad authority of the Board of Review to correct erroneous assessments is restricted by the limitation in § 27a(3), the appeals court held. The township appeals.