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Foster Swift Municipal Law News: MTA Edition
January 2010
In a case of significance handled by this firm on behalf of Leelanau Township, the Court of Appeals recently affirmed an opinion of the Tax Tribunal regarding the valuation of real property encumbered by a conservation easement.
This was a Small Claims appeal before an Administrative Law Judge for the Tribunal. Petitioner owns approximately 23 acres of vacant property, with 1,400 feet of frontage on Lake Michigan. The property is also encumbered with three conservation easements which restrict subdivision of the property, and prohibit the installation of utilities on the property, among other things.
The ALJ held that Petitioner’s appraisal, which was prepared for income tax purposes with an "as of" date of December 9, 2003, was the better evidence of the value of the subject property for the 2005 - 2007 tax years. The appraisal concluded that the property was worth $960,000 before it was encumbered by the three easements, but only $85,000 after the easements were in place. The ALJ agreed with Petitioner’s appraiser that only the first 100 feet of the lake shore property should be valued under a theory that no purchaser would pay for all 1,400 feet of frontage and that there is only one access point to the property.
The Township filed exceptions to the ALJ’s proposed opinion based on, among other things, the appraisal techniques used by Petitioner’s appraiser and the impact of the easements on the property’s value.
The Tribunal then overturned the Proposed Opinion issued by the ALJ and agreed with the Township that the value of the property should be the approximately $600,000 true cash value determined by its assessor.
The property owner then appealed this rejection of the ALJ’s opinion by the Tribunal judge to the Court of Appeals, arguing that:
- The Tribunal erred because it did not consider oral testimony presented at the small claims hearing and therefore could not fully and fairly evaluate the referee’s opinion without a formal record of the proceedings. [Note that small claims hearings do not have a formal record, and that is just one of the decisions a property owner must make in deciding whether to appeal to the Full Tribunal or file a Small Claims appeal];
- The Tribunal erred because it did not make an independent determination of the true cash value of the property and because the Tax Tribunal adopted the Township’s valuation of the property without an explanation why it believed the Township’s valuation more accurately reflected the true cash value of the property. [Here, the Court of Appeals noted that the Tax Tribunal must make its own independent determination of value; in doing so, it may accept one theory and reject the other, it may reject both theories, or it may utilize a combination of both in arriving at its determination of value. Further, a decision of the Tax Tribunal must include a concise statement of the facts and conclusions of law that support its decision. Here, the Court of Appeals held that the Tribunal satisfied its burden by adopting the hearing referee’s findings of fact and conclusions of law, but modified them to reflect its specific findings.]
- The Tribunal erred in basing its decision on evidence not raised in the exceptions filed by the township. [The Court of Appeals concluded that the Tribunal responded properly to the evidence in the case and the exceptions filed by Respondent.]
The important point of this case is that if an assessor does not agree with a hearing referee’s conclusion in a small claims case and that referee’s decision is not supported by the findings of fact and conclusions of law stated in the opinion, it is not a worthless effort to file exceptions to the decision. Here, the township believed that the decision of the ALJ was not supported by the facts, filed exemptions with the Tribunal and convinced the Tribunal judge to reverse the decision of the ALJ. The Court of Appeals has confirmed that a Tribunal judge may do so, so long as the facts and law support its decision.