Wal-Mart Real Estate Bus. Tr. v. Twp. of Madison

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WAL-MART REAL ESTATE BUSINESS TRUST, Petitioner-Appellee, v. TOWNSHIP OF MADISON, Respondent-Appellant.

No. 366222

Court of Appeals of Michigan

September 23, 2024

UNPUBLISHED

Tax Tribunal LC No. 20-002388-TT

Before: RICK, P.J., and MURRAY and MALDONADO, JJ.

PER CURIAM.

In this property-tax matter, respondent, Madison Township, appeals as of right the Tax Tribunal's final opinion and judgment determining the true cash value (TCV) of real property located in Lenawee County. At issue is the tribunal's determination that the property's TCV was $5,035,000 as of December 31, 2019, and $5,000,000 as of December 31, 2020. We affirm.

The primary issue is the proper valuation of the TCV of a "big box" store located in Madison Township.^[1] The property is a Wal-Mart Supercenter and consists of 28.5 acres of land containing a 201,888-square-foot big box store. The property was built owned, and occupied by petitioner, Wal-Mart Real Estate Business Trust (Wal-Mart) for retail business. The building was originally built in 1992 and had a square footage of 121,000, but in 2004, 80,000 square feet were added.

Wal-Mart appealed the ad valorem property tax assessments levied by respondent for the 2020 and 2021 tax years. A trial was held at which only two witnesses testified: Wal-Mart's expert Laurence Allen, and respondent's expert, John Widmer. While Widmer provided valuations as of December 31, 2019, and December 31, 2020, Allen only provided an opinion on the value of the property as of December 31, 2019.

At the close of Wal-Mart's proofs, respondent moved for a directed verdict with respect to the 2021 tax year. Respondent's attorney stated:

[B]efore it begins its case[,] Respondent moves for a directed verdict pursuant to MCR 2.516 as to the 2021 tax year. Pursuant to MCR 2.516 a party may move for a directed verdict at the close of the evidence offered by an opponent.

In the case of [Kroll v Katz, 374 Mich. 364; 132 N.W.2d 27 (1965)], the Michigan Supreme Court held that the test for a directed verdict is whether when reviewing the facts in the light most favorable to the Petitioner reasonable men could honestly reach a different conclusion. If the answer to this question is yes, the question is for the Court to resolve. Conversely, if it were impossible to reach a different conclusion, the Court should grant directed verdict for the moving party.

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Petitioner chose to amend its petition to add the 2021 tax year to this appeal, forced Respondent to incur the cost of having the property appraised, and has offered zero evidence to support its claim that the property was overassessed for the 2021 tax year.

The tribunal declined to allow Wal-Mart to respond to the motion and instead took the motion under advisement and allowed respondent to proceed with its case.

The three traditional approaches to determining TCV are the sales-comparison approach, the income approach, and the cost approach. Both Allen and Widmer used these three approaches for determining TCV as of December 31, 2019. Using the sales-comparison approach, Allen derived a value of $4,850,000, while Widmer derived a value of $8,560,000. Using the income approach, Allen calculated a value of $4,630,000 and Widmer calculated a value of $8,860,000. Finally for the 2020 tax year, under the cost approach, Allen derived a value of $4,670,000, and Widmer derived a value of $10,630,000. Notably, in the sales approach, when calculating the adjusted sales price for those comparables, Widmer added a positive adjustment of 25% if the comparable was vacant and available.^[2]

When reconciling their calculations from the three different approaches, Allen placed most weight on the sales-comparison approach because in his view it is the most accurate and reliable method of calculating TCV. As a result, Allen valuated the property at $4,800,000 as of December 31, 2019. Widmer, on the other hand, gave equal weight to the three valuation approaches and calculated the TCV of the property as of December 31, 2019, as being $9,340,000. For the 2021 tax year, Widmer opined that the TCV of the property had slightly decreased to $9,320,000.

The tribunal addressed respondent's motion for directed verdict in its final opinion and judgment and denied the motion, ruling that "reasonable minds could differ regarding whether the 2021 tax year's assessment was incorrect." Regarding the task of arriving at a TCV valuation, the tribunal noted that it has a duty to apply its own expertise in determining the appropriate method. The tribunal relied on the sales-comparison approach because it found that the cost approach and income approach were not as appropriate.

The tribunal noted that for the 10 comparable sales Allen used, it was going to disregard Sales 1, 2, and 9, as those were not suitable comparisons. Consequently, the adjusted sale price per square foot for Allen's remaining seven comparables ranged from $18.90 to $31.56.^[3] Regarding the sales comparables Widmer used, the tribunal found that the positive 25% adjustment Widmer made for properties that were vacant was contrary to law and those adjustments were removed. This made the range of the adjusted price per square foot of Widmer's five sales $30.12 to $39.87. With no further explanation, the tribunal concluded that the fee simple TCV of the property was $5,035,000 as of December 31, 2019, and $5,000,000 as of December 31, 2020.

I. STANDARD OF REVIEW

This Court's review of a decision of the Tax Tribunal 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, "this Court's review of a Tax Tribunal decision is limited to determining whether the tribunal committed an error of law or adopted a wrong legal principle." Id. "The tribunal's factual findings will not be disturbed as long as they are supported by competent, material, and substantial evidence on the whole record." Id. at 490-491. This Court reviews questions of law de novo. Avery v Michigan, 345 Mich.App. 705, 715; 9 N.W.3d 115 (2023).

II. ADEQUACY OF FINDINGS

Respondent argues that the tribunal erred when it did not provide sufficient detail on how it arrived at its TCV determinations.

The tribunal found that the Wal-Mart building occupied 201,888 square feet. Regarding the TCV determination, the tribunal found, in pertinent part:

The Tribunal finds that Petitioner's sales comparison approach's rate per sq ft ranges from $16.19 [sic-$18.09, see note 4 of this opinion] to $39.30 [sic- $31.56, see note 4 of this opinion] and Respondent's sales comparison approach ranges from $30.12 to $39.87, based on size, location, and age. The Tribunal finds that the sales comparison approach is the best method to determine the TCV of the subject property.

The Tribunal finds the fee simple TCV of the 20-year-old big-box store located in Madison Township is $5,035,000, as of December 31, 2019, for tax year 2020.

Dividing the $5,035,000 TCV by the building's 201,888 square footage results in a TCV of $24.94 per square foot. While the TCV appears to be reasonable in light of the data presented, especially by Allen, respondent is correct that it is difficult to ascertain how the tribunal arrived at this value. Although respondent claims that this lack of detail violates MCL 205.751(1) and requires a remand, MCL 205.751(1) only requires that a decision and opinion of the tribunal "shall include a concise statement of facts and conclusions of law." Here, there is no question that the tribunal provided a statement of facts and conclusions of law. The pertinent question is whether the tribunal was required to do more in order to "show its work" as respondent asserts.

Respondent cites Granader v Southfield Twp, 145 Mich.App. 585; 377 N.W.2d 893 (1985), where the tribunal rendered a decision that provided "no underlying reasons or findings for the final determination of true cash value." Id. at 588-589. This Court, while citing the principle that "[m]erely stating that the tribunal has reviewed the evidence and finds it to be insufficient as a basis for relief is not adequate," remanded for the tribunal to make more explicit findings. Id.; see also Plymouth Twp v Wayne Co Bd of Comm'rs, 137 Mich.App. 738, 756; 359 N.W.2d 547 (1984). "Only if the decisions of the tribunal contain the factual and legal basis of the determination will appellate review be meaningful." Granader, 145 Mich.App. at 588.

However, when the tribunal's valuation is within the range of valuations in evidence, that valuation necessarily is supported by competent and material evidence. President Inn Props, LLC v City of Grand Rapids, 291 Mich.App. 625, 642; 806 N.W.2d 342 (2011). Thus, although it would have been more desirable for the tribunal to have expounded on how it arrived at its ultimate valuation, that preference does not control. Notably, respondent does not address President Inn Props in its reply brief, and unlike Granader, President Inn Props is binding. See MCR 7.215(J)(1); Secura Ins Co v Stamp, 341 Mich.App. 574, 581 n 5; 991 N.W.2d 244 (2022). In this instance, the price per square foot from the experts' considered sales comparables ranged from $18.09 to $39.78. Clearly, the tribunal's final determination of a price per square foot of $24.94 falls squarely within the range of evidence. We therefore reject respondent's argument.

We stress that this ruling does not mean that this Court must always affirm a valuation as long as it falls within the range the evidence supports. For instance, if the tribunal commits an error of law, such as respondent suggests in its second issue, then that could be adequate to reverse despite any ultimate conclusion falling within the range of evidence. See President Inn Props, 291...