Battani v. Almont Twp.

1

RICHARD M. BATTANI, JR., Petitioner-Appellant, v. ALMONT TOWNSHIP, Respondent-Appellee

No. 364723

Court of Appeals of Michigan

December 21, 2023

UNPUBLISHED

Tax Tribunal LC No. 21-000518-TT.

Before: BORRELLO, P.J., and SWARTZLE and PATEL, JJ.

PER CURIAM.

Petitioner appeals as of right the Tax Tribunal's final opinion and judgment determining the true cash value (TCV), the state equalized value (SEV) and the taxable value (TV) of petitioner's real property in Almont, Michigan for the 2021 and 2022 tax years. We affirm.

I. FACTUAL BACKGROUND

The issue in this case is whether a 16-foot wide by 64.5-foot long area in the middle of the second level of a house should be classified as a "story" and living space, or as an "attic" and not living space.^[1] The property consists of 21.91 acres of land containing a 31-foot wide by 64.5-foot long frame house over a full basement with walk out, an attached garage, and a pole barn. The property is classified as agricultural.

Petitioner purchased the property in 2018 for $120,000. At that time there were no buildings on the land. A permit was pulled for a pole barn in 2018. Several permits were pulled in 2018-2019 for a house with an attached garage. Respondent's representatives visited the subject property in August 2019 to measure the home for assessment purposes during the construction phase. The 2020 TV was $153,009. At that time, the pole barn was complete and the house was 30% complete.

In April 2020, petitioner requested an occupancy permit. The final inspection was completed in August 2020, and the certificate of occupancy was issued on October 21, 2020. On October 27, 2020, Tom Valentine, the Almont Township Assessor, sent petitioner a letter requesting an opportunity to inspect the interior of the home to assist with the assessment of petitioner's "new home."^[2] Valentine stated that he was "particularly interested in the upper level of the home." Valentine noted "there may be some difference of opinion as to the use, intention and value of the space above the first floor and under the roof." On November 10, 2020, Valentine sent petitioner a letter informing him that he would be visiting the subject property on November 24, 2020 for an interior and exterior inspection. Once again, Valentine stated that he was "particularly interested in the upper level of the home" and wanted "to come to a clear understanding of the assessment status of this space." Petitioner declined to grant Valentine access to the interior of the house. Petitioner maintained that the disputed area on the second level was an attic, stating that it was "unfinished, truss only with no insulation, or drywall." However, petitioner told Valentine to "[l]et [him] know if [he] had any specific questions regarding the interior space."

Valentine informed petitioner that he would rely on the information he gathered during his December 2019 visit to the property, at which time petitioner was installing insulation throughout the home, including the second level. Valentine further stated:

The second level subfloor had been installed because we walked on it. The second level is heated because of the large open stairway (8 ft. wide) at the end of the room allowing heat to rise from the first floor.... It is my opinion the upper level is a recreation room and possible bedroom in the bonus room over the garage.

Petitioner protested Valentine's characterization of the second level:

Per my response during the March board of review: The upper level did NOT have insulation during your visit other than the stairway which would be open to lower level and are therefore treated as exterior walls. The "open doorway" for heat was also an assumption made as there were not yet ANY doors installed on the interior of the home at that time. There is an exterior fire door installed as the top of that stairway upon completion. Again, the upper level is not insulated and is closed off from the first floor. It is utilized as storage space only.

Valentine conducted an exterior inspection of the home on November 24, 2020.

Following his exterior inspection, Valentine utilized a cost less depreciation method to determine the market value of the subject parcel. This method included economic condition factor (ECF) calculations,^[3] with a consumer price index (CPI) factor of 1.014, to determine the value of the residence as $355,796 and the pole barn as $50,111.^[4] He used a land value of $123,916, which was derived from a sales study and reflected on the property record card. Based on these calculations, the 2021 TCV was determined to be $529,823, and the 2021 SEV and TV were set at $264,900.

Petitioner, proceeding in propria persona, challenged the assessment values to the township's board of review. Petitioner maintained that the TCV should be $333,357 and the TV should be $166,678. The board of review denied the petition, finding that the assessment was accurate. Petitioner appealed to the Tax Tribunal, once again asserting that the TCV should be $333,357 and the TV should be $166,678. In response, respondent asserted that "the market value, assessed value and taxable value are accurate, fair and equitable with surrounding similar parcels." Both parties filed evidence in support of their positions, and a hearing was held.

The core dispute was the valuation of the property and whether the subject area on the second level constituted an attic or a story. Respondent argued that the cost less depreciation method was the most accurate method to determine the value of the subject property as of December 31, 2020. Most of petitioner's argument focused on characterizing the second level as an uninhabitable attic. Petitioner maintained that the home value should be $119,275 less $1,747 for the assessment of a wood stove, which was not present in the home. His valuation method used a square foot value that he obtained from the assessor's manual, which was multiplied by 1,086 square feet.^[5] Petitioner further asserted that the land value was $121,680, which was the $120,000 land purchase price multiplied by a CPI factor of 1.014. And he used the depreciated cost multiplied by a CPI factor of 1.014 for his asserted value of $43,578 for the pole barn. Based on these calculations, petitioner maintained that the TCV^[6] should be $282,786 and the TV $141,393, which were lower than the amounts he asserted in his petition to the board of review and his petition to the Tax Tribunal. Petitioner did not present an appraisal, expert testimony, or estimates regarding valuation.

After considering the evidence and testimony, the Tax Tribunal concluded that the house was correctly assessed as 1.5 story based on the following pertinent facts that it determined were proven by a preponderance of the evidence:

11. The Michigan Residential Building Code defines "story" as "that portion of a building included between the upper surface of a floor and the upper surface of the floor or roof next above."

12. The Michigan Residential Building Code defines "attic" as the "unfinished space between the ceiling assembly and the roof assembly."

13. The portion which Petitioner contends is attic space has insulation, electric wiring, windows, and a subfloor. Permanent stairs lead to this area.

14. The portion which Petitioner contends is attic space has trusses and no drywall.

15. The second story of the subject property house which has a floor, electric wiring, windows, and insulation with full access to a permanent stairway does not qualify as an attic by the building code.

The Tax Tribunal noted that it had a duty to apply its own expertise in determining the appropriate method of arriving at a TCV valuation. The Tax Tribunal afforded lesser weight to petitioner's valuation data because "it did not conform to generally accepted methods for determining valuation." The Tax Tribunal found respondent's valuation method more persuasive and thus afforded more weight to respondent's valuation evidence, which was based on the costless-depreciation approach. However, the Tax Tribunal held that respondent had no proof that the property had a wood-burning stove and ordered that the value be adjusted accordingly. The Tax Tribunal ordered that the property's TCV, SEV, and TV for 2021 and 2022 be:

Year

TCV

SEV

TV

2021

$527,800

$263,900

$264,900

2022

$630,000

$315,000

$273,641

Petitioner moved for reconsideration, which was denied.^[7] This appeal followed.

II. STANDARD OF REVIEW

Our review of a Tax Tribunal decision is limited. Mich Milk Producers Ass'n v Dep't of Treasury, 242 Mich.App. 486, 490; 618 N.W.2d 917 (2000). In the absence of fraud, we review the Tax Tribunal's decision for "misapplication of the law or adoption of a wrong principle." EldenBrady v City of Albion, 294 Mich.App. 251, 254; 816 N.W.2d 449 (2011) (cleaned up). "[F]actual findings are conclusive if supported by competent, material, and substantial evidence on the whole record." Benedict v Dep't of Treasury, 236 Mich.App. 559, 563; 601 N.W.2d 151 (1999) (cleaned up). "Substantial evidence must be more than a scintilla of evidence, although it may be substantially less than a preponderance of the evidence." Meijer, Inc v Midland, 240 Mich.App. 1, 5; 610 N.W.2d 242 (2000).

III. TRUE CASH VALUE

Petitioner argues that the second level of the home is an unfinished, uninhabitable attic and thus it was improperly assessed as a habitable recreation room. We disagree.

Under the General Property Tax Act, MCL 211.1 et seq., assessments are "based on the property's true cash value." Meijer, 240 Mich.App. at 3; see also Const 1963, art 9, § 3; MCL 211.27a(1). Property is assessed at 50% of its TCV. MCL 211.27a(1). TCV is defined in MCL 211.27(1), in pertinent part, as "the usual...