Order Michigan Supreme Court 

Lansing, Michigan 

June 1, 2007 Clifford W. Taylor,

 Chief Justice 

129041 Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

MUNICIPAL EMPLOYEES RETIREMENT Maura D. Corrigan 

SYSTEMS OF MICHIGAN, 

Petitioner-Appellee, 

v SC: 129041 

Robert P. Young, Jr. 

Stephen J. Markman,

 Justices 

 COA: 260534 

MTT: 00-306773 

CHARTER TOWNSHIP OF DELTA,

Respondent-Appellant. 

_________________________________________/ 

On order of the Court, leave to appeal having been granted and the briefs and oral 

arguments of the parties having been considered by the Court, we AFFIRM the May 24, 

2005 judgment of the Court of Appeals. The Court of Appeals reasoned that the vacant 

properties were held by Municipal Employees Retirement Systems of Michigan, “not for 

ancillary investment purposes, but as part of a diversified investment portfolio pursuant 

to [its] statutory duty to administer funds” under MCL 38.1139(2) and 38.1536(10). It 

further noted: 

Under [the Municipal Employees Retirement Act, MCL 38.1501 et 

seq.,] “[a]ll money and other assets of the retirement system shall be held 

and invested for the sole purpose of meeting disbursements authorized in 

accordance with the provisions of this act and shall be used for no other 

purpose . . . .” MCL 38.1539(2). By the plain language of this statute, 

petitioner is required to hold and invest other assets, such as the land in 

question, for the purpose of meeting its disbursement requirements. 

Furthermore, the statute specifically states that the assets held or invested 

“shall be used for no other purpose.” Id. (emphasis added). The phrase 

“used for no other purpose” necessarily contemplates that the only proper 

“uses” for assets under the act, is to hold or invest them. Consequently, the 

act of holding real property assets in petitioner’s portfolio, ready for 

liquidation to meet its statutorily mandated disbursement requirements, is a 

present use rather than “an indefinite prospective use.” [Traverse City v 

East Bay Twp, 190 Mich 327, 331; 157 NW 85 (1916).] Therefore, the 

land held by petitioner was properly exempt from taxation under MCL 

211.7m because it was land used for a public purpose. 
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We emphasize that the Municipal Employees Retirement Systems of Michigan 

was statutorily required to hold and invest assets. We further note that if the Municipal 

Employees Retirement Systems of Michigan is unable to meet pension disbursements, 

municipalities themselves must produce these funds. The Municipal Employees 

Retirement Systems of Michigan’s acquisition of land in Delta Township carries out the 

public purpose of the retirement system by diversifying the portfolio and investing in a 

way that is not subject to the vicissitudes of the stock or bond market, but instead 

disseminates the risk. For the reasons stated by the Court of Appeals, and the additional 

reasons stated here, the property at issue is exempt from ad valorem taxation under MCL 

211.7m of the General Property Tax Act. 

MARKMAN, J., dissents and states as follows: 

Petitioner is a public entity that administers a pension system for public 

employees. It owns vacant property for investment purposes and claims that this property 

is exempt from property taxes under MCL 211.7m because such property is being “used 

to carry out a public purpose.” The Tax Tribunal concluded that the property was not 

tax-exempt because the passive ownership of property for investment purposes does not 

constitute a present public use. The Court of Appeals reversed, 266 Mich App 510, 514 

(2005), and this Court granted respondent’s application for leave to appeal. 474 Mich 

1053 (2006). The majority now affirms the Court of Appeals that the property is taxexempt. I respectfully dissent. 

MCL 211.7m provides: 

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. . . [Emphasis added.] 

The issue here is whether petitioner’s property is being “used to carry out a public 

purpose.” 

In Traverse City v East Bay Twp, 190 Mich 327, 331 (1916), this Court held that 

“the use which warrants exemption mentioned in the statute is a present use, and not an 

indefinite prospective use.” (Emphasis added.) In that case, the city was holding vacant 

land for the purpose of possible future development of an additional power plant. It was 
3 

undisputed that an additional power plant was not needed at the time and that nothing at 

all had been done to develop the property. We held that “[t]he lands not only are not 

used for any public purpose, but they are not used for any purpose. They lie in a state of 

nature and no attempt has, to the present time, been made to utilize them for the 

development of power, which is the only use of value that can be made of them.” Id. at 

330-331. 

Much more recently, in City of Mt Pleasant v State Tax Comm, 477 Mich 50, 51 

(2007), this Court held that “[b]ecause 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, . . . the property was exempt from taxation under MCL 211.7m.” In that 

case, the city purchased property with the intention of reselling it to developers. During 

the time the city owned the property, it prepared the property for development by 

installing such things as water lines, sewer lines, curbs, gutters, and roads. In 

determining whether the property was used for a public purpose, the court “consider[ed] 

what steps the city ha[d] taken to move from merely holding the land to actually using it 

for a public purpose.” Id. at 56. 

In the instant case, petitioner acquired the property with the hope of selling it at a 

profit at some future time. Assuming that earning such a profit for its members serves a 

“public” purpose, the property is still not being “used” for a public purpose at the present 

time. Indeed, it is not being used for any purpose at this time. It is simply vacant and 

unused property. As Justice Cooley noted, “Land not needed for municipal uses but held 

for speculative increase in value is, of course, not used for a public purpose.” 2 Cooley, 

Taxation (4th ed), § 638, p 1338. “[P]roperty of a municipal corporation which is not 

devoted to any public or municipal use but is merely held for its value as property or for 

the income to be derived therefrom is taxable by any other body politic having 

jurisdiction thereof.” 71 Am Jur 2d, State and Local Taxation, § 281, p 562. It is the 

property that must be “used” for a public purpose, not the proceeds from the property. 

As with the property in Traverse City, and, unlike the property in Mt Pleasant, 

nothing at all has been done to develop the property at issue here. That is, the city has 

not taken any steps “to move from merely holding the land to actually using it for a 

public purpose.” Mt Pleasant, supra at 56. 

The Court of Appeals held: 

This case presents circumstances distinct from those involved in the 

cases relied on by the Tax Tribunal, where a governmental entity holds real 

property for investment purposes. Here, the vacant properties are held by 

petitioner not for ancillary investment purposes, but as part of a diversified 

investment portfolio pursuant to petitioner’s statutory duty to administer 

funds. . . . [P]etitioner is [statutorily] required to hold and invest . . . assets, 
 _________________________________________ 

 

 

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such as the land in question, for the purpose of meeting its disbursement 

requirements. . . . Consequently, the act of holding real property assets in 

petitioner’s portfolio, ready for liquidation to meet its statutorily mandated 

disbursement requirements, is a present use rather than “an indefinite 

prospective use.” [266 Mich App at 513-514 (emphasis in original).] 

The majority adopts this reasoning, and I respectfully disagree. “Had the 

Legislature intended to provide a blanket exemption for all land owned by entities such as 

plaintiff, it clearly would have done so. However, it chose to exempt only that land ‘used 

to carry out a public purpose.’” Rochester Hills Pub Library v Rochester Hills, 

unpublished opinion per curiam of the Court of Appeals, issued October 3, 1997 (Docket 

No. 196077), slip op at 2. Merely because petitioner is required to hold onto assets for 

investment purposes does not mean that petitioner is entitled to a tax exemption when it 

does so. By adopting the Court of Appeals reasoning, the majority has created a tax 

exemption for a category of public entities that simply has no basis in the text of the 

statute. The statute exempts property from taxation that is “used to carry out a public 

purpose.” MCL 211.7m. It does not exempt all property owned by a public entity that 

has a statutory duty to hold onto assets for investment purposes. Under the clear 

language of the statute, such property would only be exempt from taxation if it were 

“used to carry out a public purpose.” The proper question under MCL 211.7m is not 

whether the property is owned by a public entity, or whether a public entity has the 

authority to hold such property for investment purposes, or even whether the ownership 

of the property is “useful” to, or serves, some public purpose. Rather, the proper question 

is simply whether the property is currently being “used” to carry out a public purpose. 

Because the property here is not currently being used at all, it is not being used to carry 

out a public purpose, and, thus, is not tax-exempt under MCL 211.7m. 

 Under the majority’s analysis, it is difficult to comprehend what property owned 

by a public entity would ever be subject to taxation by virtue of not being “used” to carry 

out a public purpose. Even accepting the novel categorization of public entities 

formulated by the majority, how could it not be said that any public entity investing in 

land — whether or not that was its exclusive mission — was “using” the land by virtue of 

its investment value. By nullifying the concept of non-“use,” the majority consumes the 

rule — that public lands are equally taxable as private lands — with the exception — that 

public lands are tax-exempt only when being “used to carry out a public purpose.” As a 

result of this order, there is no rule left, only the exception. 

t0523 

I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the 

foregoing is a true and complete copy of the order entered at the direction of the Court. 

June 1, 2007 

Clerk