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### STATE OF MICHIGAN

COURT OF APPEALS

GREAT LAKES GUARDIANS,

Petitioner/CrossAppellee/Appellant, UNPUBLISHED July 14, 2015

V No. 320856 Tax Tribunal TOWNSHIP OF SIMS, LC No. 00-436941

Respondent/CrossAppellant/Appellee.

Before: R ONAYNE K RAUSE , P.J., and M URPHY and S ERVITTO , JJ.

P ER C URIAM

. Petitioner appeals as of right the Michigan Tax Tribunal’s dec ision, denying petitioner’s request for an exemption from ad valorem taxation under MCL 211 .7o(5) (real or personal property owned by a qualified c onservation organization) for th e 2012 and 2013 tax years, and disallowing costs and a ttorney fees. We affirm.

Petitioner is a nonprofit charita ble corporation organized and designated in accordance with Internal Revenue Code § 501(c)(3). Petitioner’s stated pu rpose is “to support scholarships, educational programs, and grants for water quality awareness, t esting, and research.” It directs its activities to land conservancy, public education, scholarsh ip, research, and testing and has conducted various educational programs, such as water festivals that teach school age children about soil erosion, nonpoint sou rce pollution, and water qualit y awareness. Petitioner works in cooperation with Oakland University, the Cranbrook Institute of Science, and other governmental agencies and i s funded through donations and fundr aising efforts.

Petitioner purchased the subject real property located in resp ondent township in 2011. The subject property is .78 acres, is classified as single fami ly residential, and has 60 feet of lake frontage on Saginaw Bay. The subject property is a vacant, woo ded, and undeveloped residential lot neighbored by resi dential cottages. Petitioner sought a tax exemption for the property pursuant to MCL 211.7o(5), which states in relevant pa rt as follows:

Real property owned by a qualifie d conservation organization t hat is held for conservation purposes and that is open to all residents of this state for educational or recreational us e, including, but not limited to, low-impact, nondestructive activities such as hiking, bird watching, cross- country skiing, or-2- snowshoeing is exempt from the c ollection of taxes under this a ct. As used in this subsection, “qualified conserva tion organization” means a nonpr ofit charitable institution or a charitable trust that meets all of the followi ng conditions:

* * *

(b) Is required under its artic les of incorporation, bylaws, o r trust documents to hold in perpetuity property acquired for the purpo ses described in subdivision (a) unless both of t he following conditions are sat isfied:

( i ) That property is no longer suitable for the purposes describe d in subdivision (a).

( ii ) The sale of the property is appr oved by a majority vote of th e members
or trustees.

The Sims Township assessor and the Sims Township Board of revie w denied petitioner’s request for a tax exemption. Petitioner then appealed the Board of Rev iew’s decision to the Tax Tribunal, which held that petiti oner had failed to prove, by a preponderance of the evidence, that the subject property was entitl ed to an exemption. The Tribuna l found that the property was being held for conservation purpos es pursuant to MCL 211.7o(5). The Tribunal also found that petitioner satisfied the requirement of opening the property to the public for educational or recreational use. The Tribunal fu rther found that petitioner h ad met the requirement under MCL 211.7o(5)(a) because petitioner’s purpose stated under its arti cles of incorporation paralleled the purpose delineated in the statute. As to the MCL 211.7o(5)(b) requirement, however, the Tribunal found that neither peti tioner’s articles nor bylaws sp ecifically stated that its disposition of real property could only occur if “(i) such property is no l onger suitable for Petitioner’s purposes” and “(ii) the sale is a pproved by a majority vote of the members.” The Tribunal concluded that petitioner had failed to satisfy the requirement under subparagraph (b), and was therefore not entitled to an e xemption. The Tribunal also foun d that petitioner had failed to show good cause to grant its request f or costs and attorney fees. T his appeal followed.

Petitioner first argues on appeal that the Tax Tribunal erred when it found that petitioner was not entitled to an exemption because petitioner did not mee t the requirements under MCL 211.7o(5)(b). We disagree.

The Michigan Supreme Court summarized as follows the applicabl e standards governing review of Tax Tribunal decisions:

The standard of review for Tax Tribunal cases is multifaceted. Where fraud is not claimed, this Court reviews the tribunal’s decisio n for misapplication of the law or adoption of a wrong principle. We deem the tribu nal’s factual findings conclusive if they are s upported by competent, materia l, and substantial evidence on the whole record. [ Wexford Med Group v City of Cadillac , 474 Mich 192, 201; 713 NW2d 734 (2006)]-3- The substantial evidence standard signifies a level reaching “m ore than a scintilla of evidence, although it may be substantially less than a preponderance of t he evidence. Failure to base a decision on competent, material, and substantial evidence const itutes an error of law requiring reversal.” Leahy v Orion Twp , 269 Mich App 527, 529-530; 711 NW2d 438 (2006) (internal quotation and citation omitted). W hen statutory interpretation is at issue, appellate review of the tribunal’s decision is de novo. Liberty Hill Housing Corp v Livonia , 480 Mich 44, 49; 746 NW2d 282 (2008).

Tax exemptions are disfavored, and the burden of proving the r ight to an exemption is on the party claiming the exemption. Elias Bros Restaurants, Inc v Treasury Dep’t , 452 Mich 144, 150; 549 NW2d 837 (1996). The Legislature must expressly grant an exemption from the state taxing power; it will not be implied. VanderWerp v Plainfield Twp , 278 Mich App 624, 627- 628; 752 NW2d 479 (2008) (Citations omitted). Tax exemptions m ust be strictly construed in favor of the taxing body because tax exemptions upset the desir able balance achieved by equal taxation. Michigan Baptist Homes & Dev Co v Ann Arbor , 396 Mich 660, 669-670; 242 NW2d 749 (1976). In an appeal from an order of the Tax Tribunal, th e appellant bears the burden of proof. ANR Pipeline Co v Dep’t of Treasury , 266 Mich App 190, 198; 699 NW2d 707 (2005).

Petitioner’s articles of incor poration and bylaws provide that the purposes for which petitioner is organized are:

To acquire, preserve, maintai n, improve, protect and hold in p erpetuity nature sanctuaries, nature prese rves, and significant natural, agricultural, and scenic land areas that predominantly contain natural habitat fo r fish, wildlife and plants, and for conservation, outdoor recreation by the general public, scientific study, preservation of biodiversit y and historical sites, the e ducation of the general public, and to advance land stewardship in Michigan now and for future generations. Acquisition of such land shall be made by gift, d onation, or otherwise of real and personal property, both tangible and inta ngible of every sort and description, and such property shall be used in such a mann er as the directors of the Corporation shall deem appropriate to carry out the abov e purposes, and which is not inconsistent with t hose purposes established herei n.
The articles of incorporation and bylaws further state that pet itioner is organized to “acquire, own, disperse of, and deal with r eal and personal property and interests therein and to apply gifts, grants, bequests, and devises and the proceeds thereof in furth erance of the purposes of the Corporation.”

Based on these provisions in its articles of incorporation and bylaws, petitioner argues that the requirement s under MCL 211.7o(5)(b)( i ) are satisfied. However, while petitioner’s articles of incorporation and bylaws provide that its purpose i s to hold property in perpetuity, the same articles and bylaws provide that petitioner can “disperse of” real and personal property if it is “in furtherance of the purposes of the Corporat ion;” it does not specify that th e property can be “dispersed of” only if it “is no longer suitable” for purposes of “acquiring, main taining, and protecting nature sanctuaries, nature preserves, and natural ar eas in this state, that predominantly contain natural habitat for fish, wildlife, and plants” which i s what is required by subsection (b)( i ). Conceivably, a decision could be made that it would further the purposes of plaintiff to-4- sell one property to buy another that is more suitable to its purposes. Such a sale would be permitted by the articles of incorporation and bylaws, but sinc e the property subject to taxation would still be “suitable” for the designated purposes, albeit l ess desirable, the property would not qualify for the exemption under subsection (b)( i ).

It is well established that a statute granting a tax exemption must be strictly construed against the taxpayer and in favor of the taxing authority. Michigan Baptist Home & Development Co , 396 Mich at 670. Accordingly, based on a strict constructionof the statute, the Tribunal did not make an error of law or apply a wrong principl e when finding that petitioner had failed to satisfy the requi rements set forth under MCL 211. 7o(5).

Petitioner next claims that it was an abuse of discretion for t he Tribunal to deny its request for costs and atto rney fees. We disagree.

“This Court reviews for an abuse of discretion a court’s ruling on a motion for costs to the prevailing party.” Pontiac Country Club v Waterford Twp , 299 Mich App 427, 437; 830 NW2d 785 (2013). We conclude that the same standard of review would apply to a determination by the Tax Tribunal.

MCL 205.752(1) states that “[c]osts may be awarded in the disc retion of the tribunal.” The Tribunal adopted this statu te in its procedural rule, Mich Admin Code, R 792.10209 (Rule 209). This rule provides that “ [t]he tribunal may, upon motion or its own initiative, award costs in a contested case, as provided by section 52 of the tax tribu nal act, MCL 205.752.” Rule 209(1). This rule does not limit the award of costs to a preva iling party, and does not provide criteria by which the Tribunal is t o determine whether costs sh ould be awarded.

Petitioner argues that it is entitled to costs and attorney fe es for having to file this appeal and a motion for default when respondent did not submit its ans wer within a 28-day deadline. Respondent filed a motion to set aside default arguing that it timely filed and served its answer, and it did not have knowledge as to why the answer was not rece ived and recorded by the Tribunal. The Tribunal found that respondent had shown good ca use and granted its motion to set aside the default. Although not statutorily required, the Tribunal determined that petitioner had not shown good cause to grant its request for costs and att orney fees, and found that such an award was not justified in this case. Given the lack of criter ia based in statute or rule for awarding costs in a Tribunal proc eeding, the Tribunal’s explana tion for its order, and the fact that petitioner is the non-preva iling party, it cannot be said that the Tribunal abused its discretion by denying petitioner’s motion.

On cross-appeal, respondent contends that the Tribunal erred i n finding that petitioner met the requirements of MCL 211.7o(5) and (5)(a). Specifically , respondent maintains that the Tribunal should not h ave found that petiti oner’s property was o pen to all residents of the state for educational or recreational use as required by MCL 211.7o(5), a nd should not have found that petitioner was holding the real property for conservation purpo ses under MCL 211.7o(5)(a). Since we conclude that the Tribunal correctly determined that p etitioner was not entitled to the exemption based on MCL 211.7o(5)(b), we need not address whethe r petitioner would also have failed to qualify for an exemp tion under MCL 211.7o(5) or (5)(a ).-5- Affirmed.

/s/ Amy Ronayne Krause /s/ William B. Murphy /s/ Deborah A. Servitto