Case Title: CITY OF MT PLEASANT V STATE TAX COMMISSION

Citation: 

Docket Number: 

State: michigan

Court: Michigan Supreme Court

Date: 2007-03-28T00:00:00Z

Document:
Michigan Supreme Court 
Lansing, Michigan 
Chief Justice:  
Justices: 
Clifford W. Taylor  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Opinion 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
FILED MARCH 28, 2007 
CITY OF MT. PLEASANT, 
Petitioner-Appellant, 
v 
No. 129453 
STATE TAX COMMISSION, 
Respondent-Appellee. 
BEFORE THE ENTIRE BENCH 
CAVANAGH, J. 
We granted leave to appeal in this case to determine whether MCL 211.7m 
exempts property from taxation on the basis that it is “used for public purposes” 
when a city acquires property and implements a plan to use the property for 
economic development purposes. Because the city of Mt. Pleasant used the 
property at issue for public purposes when it acquired and improved the land for 
resale for economic development, we hold that the property was exempt from 
taxation under MCL 211.7m.  The Michigan Tax Tribunal made an error of law 
when it concluded otherwise; therefore, we reverse the judgment of the Court of 
Appeals that affirmed the judgment of the Tax Tribunal.  
 
 
 
 
 
I. STATEMENT OF FACTS AND PROCEEDINGS  
In 1990, petitioner city of Mt. Pleasant purchased over 320 acres of vacant 
land adjacent to its border and annexed the property.  The city’s stated purpose for 
purchasing the land was to allow for the extension of city streets that would 
connect to a “ring road” around the city; widen and extend various streets; provide 
land for needed housing, much of which would be low-income housing; and plat 
and prepare land for sale to developers for residential, commercial, and industrial 
uses to increase the city’s tax base. 
The property was initially treated as tax-exempt on the assessment rolls. 
However, the city assessor asked respondent State Tax Commission for guidance 
in assessing the property, and the city assessor was eventually told to treat the 
property as taxable property.  The city objected to that assessment before the local 
board of review, but the assessment was affirmed.  The city then proceeded with 
petitions before the Michigan Tax Tribunal asking for a ruling that the property 
was exempt under MCL 211.7m. 
On October 31, 2003, the Tax Tribunal issued its decision, concluding that 
the property was not exempt and that the city was required to pay two years of 
back taxes on the property. The Tax Tribunal stated that the city was not entitled 
to the exemption because the city did not make a “present” use of the property. 
The Tax Tribunal did not view acquiring and improving the property for economic 
development as a present use. 
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The city appealed to the Court of Appeals.  The Court of Appeals affirmed 
the judgment of the Tax Tribunal, concluding that the city’s use of the property 
was not an “active, actual” use and, therefore, did not qualify for an exemption 
under MCL 211.7m.  Mt Pleasant v State Tax Comm, 267 Mich App 1, 5; 703 
NW2d 227 (2005).  The Court of Appeals then denied the city’s motion for 
reconsideration, and this Court granted the city’s application for leave to appeal. 
474 Mich 1001 (2006). 
II. STANDARD OF REVIEW 
The proper interpretation of a statutory provision is a question of law that 
this Court reviews de novo. Lincoln v Gen Motors Corp, 461 Mich 483, 489-490; 
607 NW2d 73 (2000). Additionally, appellate review of Michigan Tax Tribunal 
decisions is limited. Meadowlanes Ltd Dividend Housing Ass’n v City of Holland, 
437 Mich 473, 482; 473 NW2d 636 (1991).  “All factual findings are final if 
supported by competent and substantial evidence.”  Id. “In the absence of fraud, 
error of law or the adoption of wrong principles, no appeal may be taken to any 
court from any final agency provided for the administration of property tax laws 
from any decision relating to valuation or allocation.”  Const 1963, art 6, § 28. 
III. ANALYSIS 
This case involves an issue of statutory interpretation.  “The primary goal 
of statutory interpretation is to give effect to the intent of the Legislature.”  In re 
MCI Telecom Complaint, 460 Mich 396, 411; 596 NW2d 164 (1999).  The first 
step is to review the language of the statute. Id. If the statutory language is 
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unambiguous, the Legislature is presumed to have intended the meaning expressed 
in the statute and judicial construction is not permissible.  Id. 
The statutory provision at issue in this case provides, in relevant part, as 
follows: 
Property owned by, or being acquired pursuant to, an 
installment purchase agreement by a county, township, city, village, 
or school district used for public purposes and property owned or 
being acquired by an agency, authority, instrumentality, nonprofit 
corporation, commission, or other separate legal entity comprised 
solely of, or which is wholly owned by, or whose members consist 
solely of a political subdivision, a combination of political 
subdivisions, or a combination of political subdivisions and the state 
and is used to carry out a public purpose itself or on behalf of a 
political subdivision or a combination is exempt from taxation under 
this act. [MCL 211.7m (emphasis added).] 
This Court has previously stated that a “public purpose” promotes “‘public 
health, safety, morals, general welfare, security, prosperity, and contentment of all 
the inhabitants or residents within the municipal corporation . . . .’”  Gregory 
Marina, Inc v Detroit, 378 Mich 364, 396; 144 NW2d 503 (1966), quoting 37 Am 
Jur, Municipal Corporations, § 120, p 734; see also City of Gaylord v Gaylord City 
Clerk, 378 Mich 273, 299-301; 144 NW2d 460 (1966); Hays v City of Kalamazoo, 
316 Mich 443, 454; 25 NW2d 787 (1947).  This Court has also recently stated in 
Wayne Co v Hathcock, 471 Mich 445, 461-462; 684 NW2d 765 (2004), that 
economic development constitutes a “public purpose.”  This Court stated that 
creating jobs for Michigan’s citizens and stimulating private investment and 
redevelopment to ensure a healthy and growing tax base are examples of goals that 
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advance a public purpose. Drawing commerce to an area promotes prosperity and 
the general welfare. While these goals did not meet the narrow constitutional 
requirements at issue in Hathcock, the definition of what constitutes a “public 
purpose” does not change merely because this Court is reviewing the phrase in the 
context of developing property under MCL 211.7m as opposed to condemning 
property. 
In this case, the city had no vacant industrial land within its limits; thus, the 
city acquired the land at issue and prepared it for development.  The city improved 
and sold various parcels of the land, and these efforts at economic development 
and enhancing the tax base are indeed for a public purpose.  While the land at 
issue was vacant during the time that the city owned it, the city improved the land 
by platting the property and beginning to install an infrastructure in 1991 to ready 
the land for sale.  Among the items installed by the city were water lines, sanitary 
sewer lines, curbs, gutters, and roads. Also in 1991, the city began the completion 
or extension of at least three roads. A study conducted in the 1980s determined 
that a major street grid system was needed.  The street widening and expansions 
resulted in better vehicle flow and provided a quicker response time for emergency 
vehicles. The city also noted in an amended resolution for annexation that efforts 
to develop roads for better traffic flow and safety were hampered by the city’s lack 
of control over lands that were outside the city limits but necessary for the street 
extensions. 
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The land at issue also provided a location for much-needed housing.  A 
housing study conducted on behalf of the city indicated that about 100 new 
residential low- and moderate-income units would be needed for city residents. 
The Mt. Pleasant Housing Commission purchased approximately 6.1 acres in 1991 
for the development of low-income rental housing.  In 1992, the city further 
platted two subdivisions containing about 4.6 acres.  The land was also used for a 
65-unit housing development for the elderly. 
Moreover, the city’s determination that it needed to expand its tax base 
with industrial development resulted in the city rejecting offers for the land that 
were not projected to create jobs or enhance the tax base.  Subsequently, the land 
was used to create various projects, including five subdivisions, one condominium 
development, three apartment developments, soccer fields and a park, a county 
health department and emergency center, a state police post, an industrial park, a 
social security building, an optometrist’s office, and at least one other commercial 
development.   
Because we have determined that the city’s efforts at economic 
development and enhancing the tax base were for “public purposes,” we must next 
determine when the city “used” the land for these public purposes.  The language 
chosen by the Legislature indicates that to be tax-exempt, the property must be 
“used for public purposes.”  MCL 211.7m (emphasis added).  Thus, during each 
tax year in question, the city must have made a present use of the land that 
qualifies as a “public purpose” so that the city will have “used” the land for that 
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purpose. While this inquiry is, of course, fact-intensive, the court must consider 
what steps the city has taken to move from merely holding the land to actually 
using it for a public purpose. 
In this case, the city conducted numerous activities that lead to the 
conclusion that the city “used” the land for a public purpose.  The city engaged in 
a number of activities, such as expanding and installing streets and public utilities, 
to indicate that it purposefully moved toward implementation of its development 
plan for the land and did not delay in engaging in reasonable activities to prepare 
the land to attract economic development that would create jobs, stimulate 
investments, and ensure a sound and growing tax base.  The reality of economic 
development is that acquiring and improving land for resale is not done in a day. 
It takes time to assemble and prepare land.  Consequently, the city’s ongoing 
actions in annexing, assembling, marketing, and preparing the land for resale to 
attract economic development indicate that the land was indeed “used for public 
purposes.” 
Today’s decision that the city actively prepared and marketed the land at 
issue in accordance with its plan to foster economic development is in line with 
prior cases from this Court.  In Traverse City v East Bay Twp, 190 Mich 327, 330; 
157 NW 85 (1916), this Court held that vacant land owned by the plaintiff, 
Traverse City, was not tax-exempt.  The plaintiff had purchased 960 acres of 
vacant land at the same time that it purchased operating power-plant facilities. 
Counsel for the plaintiff admitted at a hearing that the plaintiff had no plans for the 
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vacant land and that the land was not part of any plan with a broader vision. 
Counsel stated that the land was not being used and nothing had been done to 
develop it. 
A city commissioner also testified that the land was undeveloped and that 
the plaintiff had not attempted to improve or change the natural condition of the 
land. The city commissioner stated that while the land could be used in the future 
to provide power, there was no plan to do so, and there was no time line when the 
land might be used. The city commissioner further stated that the current power 
plant was meeting the present needs and could meet a considerable increase in 
need. As this Court stated, “The lands not only are not used for any public 
purpose, but they are not used for any purpose.” Id. at 330 (emphasis added). The 
land in Traverse City was being held for pure speculation—there was not even a 
vague plan regarding when or if the land would be used in the future.   
In marked contrast, the city’s plan for the property at issue in this case was 
not merely aspirational. In the resolution passed by the city to approve the 
property acquisition, the city stated that it wanted to acquire the land to handle the 
increased traffic demand caused by growth within the city and to use the land for 
the development of new industry that “is badly needed in the future to expand the 
City’s tax base” because of the lack of other available land in the city.  The city 
also had a conceptual site plan that divided the property into various zones to 
accommodate future uses under the master plan.  The site plan provided a guide 
for areas of future development, such as roads, utilities, population densities, 
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residential neighborhoods, and commercial areas.  The city solicited requests for 
proposals related to the land that were based on the conceptual site plan and land- 
use plan. The city did not delay in requesting these proposals, issuing a deadline 
of March 7, 1991. The city followed its plan for the land at issue and purposefully 
moved toward implementation of its plan by actively improving the land for 
resale. The city platted, developed, marketed, and eventually sold the land to 
encourage economic growth; thus, the city used the land for public purposes. 
The city’s use of the land for public purposes began when it started to 
prepare the land for economic development after the city purchased land adjacent 
to its borders and annexed this property to the city.  In December 1990, the city 
reviewed the responses to its request for proposals for the recently purchased and 
annexed land, and the city also began developing a request for proposals for local 
real estate companies to market the property. Throughout 1991, the city actively 
engaged in planning for the land.  For example, in January 1991, the city reviewed 
requests for proposals and discussed options for the sale of the land.  Interviews 
that had taken place with two agencies that had submitted proposals for the land 
were discussed, as was a recommendation to list land with a cobroker to market 
the land. 
The city’s land-marketing committee was also given specific 
authorization by the city to work with a development corporation to market and 
sell the land. In February 1991, the mayor discussed recommendations from the 
land-marketing committee with the city commission.  Additionally, evaluations of 
the city’s options were discussed, and members of the public spoke at a city 
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commission meeting about their concerns and opinions.  In March 1991, proposals 
for the land were discussed and a resolution was passed regarding road expansion. 
In May 1991, a master plan for the residential portion of the land was discussed 
and a master plan for the newly acquired property was approved.  In June 1991, 
the city continued to work on marketing and selling the land. 
In July 1991, the city hired a management company to market 
approximately 220 acres of land.  The city also hired a local nonprofit organization 
dedicated to attracting new industries to the area.  The agreement between the city 
and the nonprofit organization provided that the organization was to develop a 
comprehensive master plan for the development of the proposed 138-acre 
industrial park and also develop, within 30 days of the signing of the agreement, a 
detailed marketing plan to be presented to the city.  In 1991, the city also platted 
some of the land, and streets and public utilities were expanded and installed.  The 
city also considered the master plan for the industrial part of the land. 
Throughout 1992, the city continued platting and actively developing the 
property. The city considered and accepted offers for the land, as well as extended 
an agreement for surveying services to continue platting the land.  The city also 
submitted a grant to the Economic Development Administration to assist with the 
cost of constructing necessary infrastructure improvements.  When the grant was 
approved, roads and utilities were constructed in the industrial park area. 
Throughout 1993, 1994, and 1995, and subsequently when applicable, the city 
continued to market and sell the land. 
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The city’s efforts with regard to the land indicate its active and purposeful 
engagement in using the land for the public purpose of economic development. 
The city’s efforts to actively prepare the land for resale distinguish its actions from 
those of the plaintiff school district in Rural Agricultural School Dist v Blondell, 
251 Mich 525, 526-527; 232 NW 377 (1930).  In Blondell, the plaintiff acquired 
land with the intent to use the land for school purposes at some point in the future, 
but the plaintiff was renting dwellings on the land for private purposes.  This 
Court held that the land was not tax-exempt because a future intended use of the 
property could not control the determination regarding its use for a public purpose 
when the present use of the land—renting it to private citizens just as any other 
landlord would do—was not for a public purpose.  In contrast, in this case the 
city’s present use was for a public purpose because the city actively and 
purposefully prepared the land for resale for the public purpose of economic 
development. 
IV. CONCLUSION 
The city of Mt. Pleasant acquired and actively prepared property for sale for 
economic development purposes and purposefully moved toward implementation 
of its plan for the land. As such, the property was being “used for public 
purposes” and is exempt from taxation under MCL 211.7m.  Because the 
Michigan Tax Tribunal made an  error of law  when it concluded otherwise, we 
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reverse the judgment of the Court of Appeals and remand this case to the Tax 
Tribunal for entry of a judgment for the city. 
Michael F. Cavanagh 
Clifford W. Taylor 
 
Elizabeth A. Weaver 
 
Marilyn Kelly 
 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
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