Lyle Schmidt Farms, LLC v. Mendon Twp., Docket Nos. 326609

315 Mich.App. 824

891 N.W.2d 43

LYLE SCHMIDT FARMS, LLC

v.MENDON TOWNSHIP.

Equity Trust Company

v.Sherwood Township.

Docket Nos. 326609

327909

327916

326611.

Court of Appeals of Michigan.

Submitted June 9, 2016, at Lansing.

Decided June 14, 2016, at 9:25 a.m.

Miller Johnson, Kalamazoo (by Daniel P. Perk ) for petitioners.

Before: MARKEY, P.J., and OWENS and BOONSTRA, JJ.

BOONSTRA, J.

In Docket Nos. 326609 and 326611, petitioner Lyle Schmidt Farms, LLC (Schmidt Farm), appeals by right the Final Opinion and Judgment[s] in Lower Court Nos. 14–005344–TT and 14–005347–TT, entered March 11, 2015, in favor of respondent Mendon Township. In Docket Nos. 327909 and 327916, petitioners Equity Trust Company (Equity Trust) and Schmidt Farm appeal by right the Final Opinion and Judgment[s] in Lower Court Nos. 14–007565–TT and 14–005340–TT, entered June 12, 2015, in favor of respondent Sherwood Township. This Court granted Equity Trust's motion to consolidate the appeals.¹ We affirm.

I. PERTINENT FACTS AND PROCEDURAL HISTORY

This case concerns the ad valorem tax valuation of five parcels of real property located in Michigan. Parcels 75–010–034–008–00 and 75–010–033–012–00 are located on Prairie Corners Road in Mendon Township, which is in St. Joseph County. They consist of 34.3 and 76.3 acres, respectively, of vacant agricultural land. Parcel 75–010–032–007–00 is located on Wakeman Road in Mendon Township. It consists of 40.65 acres of vacant agricultural land. Parcels 12–010–027–200–001–00 and 12–010–027–200–010–00 are located on Milligan Road in Sherwood Township. They consist of 37.3 and 33.6 acres, respectively, of vacant agricultural land.

In 2003, the First National Bank of Three Rivers (National Bank) purchased all five of the parcels from Rex and Ann Croster through a foreclosure sale. On July 23, 2004, Tony and Amy Wiegel purchased the five parcels from National Bank. There is no dispute that when the Wiegels purchased the five parcels, all of the parcels were qualified agricultural property under MCL 211.7dd(d). However, during the time the Wiegels owned the parcels, they did not submit an affidavit in accordance with MCL 211.27a(7)(o ) and, therefore, the July 23, 2004 transfer of the parcels to the Wiegels was considered a transfer of ownership under MCL 211.27a(6). Because of this transfer of ownership, the parcels were "uncapped," and respondents therefore assessed the taxable values of the parcels for the year 2005 according to the state equalized values of those parcels as authorized by MCL 211.27a(3). As a result, the taxable values of the parcels increased in the tax year 2005 by substantially more than five percent or the rate of inflation. On June 29, 2006, Equity Trust purchased parcels 12–010–027–200–010–00 and 12–010–027–200–010–00 from the Wiegels, and Schmidt Farm purchased the other three parcels from the Wiegels.

In 2006, Schmidt Farm and Equity Trust executed affidavits and filed them with the appropriate registers of deeds, attesting that the parcels remained qualified agricultural property under MCL 211.27a(7)(o ). The taxable values of the parcels were, therefore, not uncapped in 2006 as a result of petitioners having purchased the property from the Wiegels. In 2007, the Wiegels executed and filed affidavits indicating that the parcels had remained qualified agricultural property after the Wiegels purchased them in 2004. The Wiegels possessed no ownership interest in the parcels at the time they executed and filed these affidavits.

In 2008, Schmidt Farm protested the then-current assessments of its three parcels before the Mendon Township Board of Review and, according to Equity Trust,² Equity Trust protested the assessments of its two parcels before the Sherwood Township Board of Review, requesting that the taxable values of those parcels be reassessed, i.e., "recapped," according to their 2004 values. The boards of review denied these protests. Petitioners did not appeal the denials in the Michigan Tax Tribunal (MTT).

In 2014, petitioners again petitioned their respective township's board of review for reassessment of their parcels for the tax year 2014. Petitioners argued that the taxable values of the five parcels should be recapped according to their 2004 taxable values because the Wiegels had submitted affidavits in accordance with MCL 211.27a(7)(o ) and (8) with regard to the parcels. Respondents again denied the petitions.

Petitioners appealed in the MTT, again arguing that the taxable values of the five parcels should be assessed using their 2004 values because the Wiegels had submitted affidavits in accordance with MCL 211.27a(7)(o ) and (8). Respondents argued that the Wiegels' purchase of the parcels and failure to file the relevant affidavits concerning qualified agricultural property uncapped the parcels, and that the Wiegel's 2007 affidavits did not require the parcels to be recapped at their 2004 values because the Wiegels lacked an interest in the parcels at the time they filed the affidavits.

The MTT denied all of petitioners' appeals. See Equity Trust Co. v. Sherwood Twp., unpublished opinion of the MTT (Docket No. 14–005340), issued June 12, 2015; Equity Trust Co. v. Sherwood Twp., unpublished opinion of the MTT (Docket No. 14–007565–R), issued June 12, 2015; Lyle Schmidt Farm, LLC v. Mendon Twp., unpublished opinion of the MTT (Docket No. 14–005347), issued March 11, 2015; Lyle Schmidt Farm, LLC v. Mendon Twp., unpublished opinion of the MTT (Docket No. 14–005344), March 11, 2015. The MTT held that the Wiegels did not meet the requirements of MCL 211.27a(8) because they were not owners of the parcels at the time they filed the affidavits.

Following the MTT's denials, the MTT also denied Equity Trust's postjudgment motion to add the tax year 2015 to its appeal concerning its two parcels. These appeals followed and were consolidated as described earlier.

II. STANDARD OF REVIEW

The Michigan Constitution provides for judicial review of administrative agency decisions. Const. 1963, art. 6, § 28. However, this Court's review of MTT decisions "is limited." Mt. Pleasant v. State Tax Comm., 477 Mich. 50, 53, 729 N.W.2d 833 (2007). The MTT's "factual findings are final if they are supported by competent, material, and substantial evidence on the whole record. If facts are not disputed and fraud is not alleged, our review is limited to whether the Tax Tribunal made an error of law or adopted a wrong principle." Mich. Props., LLC v. Meridian Twp., 491 Mich. 518, 527–528, 817 N.W.2d 548 (2012) (citations omitted). " ‘Evidence is competent, material, and substantial if a reasoning mind would accept it as sufficient to support a conclusion.’ " Galuszka v. State Employees Retirement Sys., 265 Mich.App. 34, 45, 693 N.W.2d 403 (2005), quoting Romulus v. Mich. Dep't of Environmental Quality, 260 Mich.App. 54, 63, 678 N.W.2d 444 (2003). With regard to determining whether the MTT's factual findings are supported by competent, material, and substantial evidence, "[m]ore than a scintilla of evidence is required, although a preponderance of the evidence is not necessary." Canterbury Health Care, Inc. v. Dep't of Treasury, 220 Mich.App. 23, 28, 558 N.W.2d 444 (1996). However, to the extent that an appeal from a decision of the MTT requires this Court to construe a statutory provision or question of law, this Court's review is de novo. Moshier v. Whitewater Twp., 277 Mich.App. 403, 407, 745 N.W.2d 523 (2007) ; Schwass v. Riverton Twp., 290 Mich.App. 220, 222, 800 N.W.2d 758 (2010).

III. ANALYSIS

Petitioners argue that the MTT erred by determining that MCL 211.27a(8)(b) allows only a current, not a former, owner of qualified agricultural property to file an affidavit pursuant to MCL 211.27a(7)(o ) and that because the Wiegels were former owners of the five parcels when they filed their 2007 affidavits, the parcels should have been recapped at 2004 values. We disagree.

All real property in Michigan is subject to ad valorem tax under the General Property Tax Act (GPTA), MCL 211.1 et seq. One classification under MCL 211.34c of assessable real property is "[a]gricultural real property[, which] includes parcels used partially or wholly for agricultural operations, with or without buildings." MCL 211.34c(2)(a). "On or before the first Monday in March in each year, the assessor shall make and complete an assessment roll," which contains information such as "a full description of all the real property liable to be taxed," the assessor's estimate of "the true cash value and assessed value of every parcel of real property," and the assessor's calculation of "the tentative taxable value of every parcel of real property." MCL 211.24(a) through (c). A property's "true cash value" is "the price that could be obtained for the property at private sale...." MCL 211.27(1). This Court has explained the process by which real property's taxable value is assessed as follows:

Pursuant to the Michigan Constitution and the GPTA, property may not be assessed at more than 50 percent of its "true cash value," or fair market value. Additionally, [Article 9, § 3 of Michigan's 1963 Constitution] ^{[3 ]} limits annual increases in property valuation for taxation purposes until ownership of the property is transferred. An assessment, or "taxable value," may not be annually increased at more than the rate of inflation or five percent, whichever is less. Because this limitation undervalues property in relation to market factors, a "state equalized valuation" is calculated and maintained to more accurately reflect property value increases. The Michigan Constitution permits the property's taxable value to be reassessed according to the following year's state equalized value upon the sale or transfer of the property. [Signature Villas, LLC v. Ann Arbor, 269 Mich.App. 694, 696–697, 714 N.W.2d 392 (2006) (citations omitted).]

In other words, before ownership of property is transferred, its taxable value may increase no more than the lesser of the rate of...