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Legal Defense FundBlue Arrows

Taxation
City of Mount Pleasant v State Tax Commission

477 Mich 50 (2007)

Issue: Tax status of city - owned property

Background:
In 1990, the city of Mount Pleasant embarked on a land acquisition project designed to increase its tax base, create jobs, and spur economic development in the city. It purchased and then annexed approximately 320 acres of vacant land adjacent to its boundaries. After it acquired the property and laid out the streets, the city platted, marketed, developed, and sold parcels of the property to various developers, investors, and government agencies. By 2002, the city’s efforts resulted in five subdivisions, one condominium development, three apartment developments, a soccer field and park, a county emergency center, a state police post, an industrial park, and several commercial uses. When the city first acquired the property it was listed as exempt pursuant to MCL 211.7m. Under MCL 211.7m, city-owned land held for a public purpose is tax exempt.

After the city platted two small subdivisions, the subdivisions were placed on the tax rolls on the advice of the Michigan State Tax Commission (STC). Ultimately, the STC decided that all remaining properties acquired and owned by the city should be placed on the rolls. The STC argued that the property was not “presently used for a public purpose” and not entitled to an exemption.

After receiving unfavorable decisions at the Michigan Tax Tribunal and the Court of Appeals, the city appealed to the Michigan Supreme Court. It was argued that the Michigan Supreme Court had specifically held, just three years earlier, in Wayne County v Hathcock (see case no. 2) that the acquisition of land to increase a tax base and create jobs was a public purpose.


 

Why did the LDF get involved?
All municipal-owned properties held for economic development purposes were at risk for being placed on tax rolls throughout the state.

What action did the LDF take?
Filed an amicus brief with the Michigan Tax Tribunal

Filed an amicus brief with the Michigan Court of Appeals

Filed an amicus brief with the Michigan Supreme Court

What was the outcome?
In a unanimous decision, the Michigan Supreme Court held that “economic development constitutes a public purpose.” The Court further found that the numerous activities of the city lead to the conclusion that the city used the land for a public purpose. The Court did not overrule a prior decision, however, that held that merely owning land without making any use of it may not qualify a municipality for an exemption.

Who prepared the amicus brief?
Richard J. Figura
(Simen, Figura & Parker, P.L.C.)
(Tax Tribunal)
William J. Danhof
(Miller, Canfield, Paddock and Stone, P.L.C.)
(Michigan Court of Appeals and Michigan Supreme Court)
Bree Popp Woodruff
(Miller, Canfield, Paddock and Stone, P.L.C.)
(Michigan Supreme Court)

 

 

 

 

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