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STATE OF MICHIGAN 

COURT OF APPEALS 

KAREN M. MORITA LIVING TRUST, 

 Petitioner-Appellant, 

UNPUBLISHED 

December 16, 2014 

v No. 315212 

Tax Tribunal 

TOWNSHIP OF BIG RAPIDS, LC No. 00-440617 

 Respondent-Appellee. 

Before: RONAYNE KRAUSE, P.J., and WILDER and STEPHENS, JJ. 

PER CURIAM. 

 In this property tax appeal, the taxpayer petitioner challenges the Tax Tribunal’s 

valuation of its residential property in tax year 2012. We affirm in part, reverse in part, and 

remand for further proceedings. 

I 

 The assessed value of petitioner’s property changed because of the construction of a 

residence on the land in 2011. Following petitioner’s initial challenge, the local board of review 

modified the taxable value of the property from $338,200 to $316,300. Petitioner appealed that 

decision to the Tax Tribunal. 

 Both petitioner and respondent submitted their own appraisals of the property’s true cash 

value (TCV), using the sales comparison method.1

 Utilizing this method, petitioner claimed the 

property should be valued at $400,000, while respondent claimed the property should be valued 

at $725,000. 

 

1

 The sales comparison method is calculated by analyzing “recent sales of similar properties, a 

comparison of the sales with the subject property, and adjustments to the sale prices of the 

comparable properties to reflect differences between the properties.” Great Lakes Div of Nat’l 

Steel Corp v Ecorse, 227 Mich App 379, 391; 576 NW2d 667 (1998). 
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 Respondent also submitted its property record card, which calculated the value of the 

property under the cost-less-depreciation method2

 as $632,600. The property record card 

contains detailed figures of the dimensions and attributes of the property, which respondent 

divided into two portions—a residential portion and a “commercial” portion constituting a 

multipurpose room or fitness area. We note that there are no facts in the record regarding 

whether the fitness area had any commercial purposes. Figures in the property record card 

include the replacement cost of the property’s improvements, the depreciated value, and two 

different economic condition factors (ECF) used in the calculation of the value of the residential 

portion of the property and the fitness area. There is no explanation in the record for the use of 

two ECFs. For purposes of this calculation, respondent argued its assessor “looked for a specific 

definition of the neighborhood.” Respondent’s assessor also maintained that he assessed the 

property consistent with the guidelines of the State Tax Commission (STC) and the assessor 

manual. Respondent’s assessor did not visit the home, but requested a visit during petitioner’s 

appeal. 

 The referee in the small claims division found that both petitioner’s and respondent’s 

appraisals using the sales comparison method were unreliable indicators of the property’s TCV 

because: (1) as the premier home for the area, the property was too unique and “over-built” to 

adequately compare it to the sale of other residential property; (2) the recent sales market in Big 

Rapids was slow, providing inadequate comparables to the property; and (3) the comparables 

relied upon were dissimilar to the property because they were sold in different tax years, had too 

many adjustments, or were speculative because they had not yet been sold. 

 The referee found that the cost-less-depreciation method contained in the property record 

card was the most reliable evidence in the record of the property’s TCV, and concluded that the 

property was worth $632,600, as indicated in the property record card.3

 The referee adopted this 

method because of the unique nature of the property, the lack of reliable comparables, and the 

lack of evidence from petitioner regarding the value of the fitness area and respondent’s inability 

to visit the property. The referee’s proposed opinion provides that the cost-less-depreciation 

calculation was in conformity the state assessor’s manual and, “based on an independent review 

of the valuation evidence,” the calculation was reliable. No express findings were made 

regarding functional and economic obsolescence. 

 

2

 ‘ “Under the [cost-less-depreciation method], true cash value is derived by adding the estimated 

land value to an estimate of the current cost of reproducing or replacing improvements and then 

deducting the loss in value from depreciation in structures, i.e., physical deterioration and 

functional or economic obsolescence.” ’ Forest Hills Coop v City of Ann Arbor, 305 Mich App 

572, 590-591; 854 NW2d 172 (2014), quoting Meadowlanes Ltd Dividend Housing Ass’n v City 

of Holland, 437 Mich 473, 484 n 18; 473 NW2d 636 (1991). 

3

 Although the proposed opinion and judgment were later modified with respect to the recitation 

of the evidence presented during the hearing, the findings and conclusions in the proposed 

opinion and judgment were affirmed in full. 
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 Petitioner filed exceptions to the proposed opinion, arguing that the referee erred in 

failing to record evidence that was timely filed by petitioner. Petitioner also argued, in relevant 

part, that the referee failed to explain the adoption of the cost-less-depreciation method, failed to 

consider external obsolescence when it valued the property, and erroneously accepted the 

property record card as the most reliable indicator of value. 

 The Tribunal agreed that the referee erred with respect to omitting some of petitioner’s 

evidence in the proposed opinion, and found good cause to modify the proposed opinion with 

respect to those omissions, but nevertheless found that the omitted evidence was clearly 

contemplated by the referee, and therefore, the error was harmless. The Tribunal held that 

referee’s findings were supported by the evidence, as the unique nature of the property and 

sparse market transactions rendered the sales approach unreliable. Although it acknowledged the 

significance of petitioner’s evidence, it held that the property record card “provided sufficient 

analysis of replacement costs, land values and depreciation and Respondent’s valuation 

(including that of the disputed ‘multi-purpose room’). In its final opinion and judgment, the 

Tribunal incorporated the findings of fact and conclusions of law set forth in the proposed 

opinion, except to modify the opinion only “with respect to the evidentiary omissions.” 

II 

 Petitioner argues that the Tax Tribunal committed legal error and made findings in the 

absence of any evidence when it held that petitioner’s appraisal was unreliable, respondent’s 

property record card was reliable, and the TCV of the property was the amount indicated in the 

property record card. We disagree in part, and agree in part. 

A 

 MCL 205.762(2) provides: 

A person or legal entity entitled to proceed under section 31, and whose 

proceeding meets the jurisdictional requirements of subsection (1), may elect to 

proceed before either the residential property and small claims division or the 

entire tribunal. A formal record of residential property and small claims division 

proceedings is not required. Within 20 days after a hearing officer or referee 

issues a proposed order, a party may file exceptions to the proposed order. The 

tribunal shall review the exceptions to determine if the proposed order shall be 

adopted as a final order. Upon a showing of good cause or at the tribunal’s 

discretion, the tribunal may modify the proposed order and issue a final order or 

hold a rehearing by a tribunal member. A rehearing is not limited to the evidence 

presented before the hearing officer or referee. 

 This Court has a very limited capacity to review Tax Tribunal decisions. President Inn 

Props, LLC v Grand Rapids, 291 Mich App 625, 630; 806 NW2d 342 (2011). “ ‘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.’ ” Michigan Props, LLC v Meridian Twp, 491 Mich 518, 527; 

817 NW2d 548 (2012), quoting Const 1963, art 6, § 28. Any factual findings are conclusive, so 
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long as they are supported by “competent, material, and substantial evidence on the whole 

record.” Id. “Substantial evidence must be more than a scintilla of the evidence, although it may 

be substantially less than a preponderance of the evidence.” Great Lakes Div of Nat’l Steel Corp 

v Ecorse, 227 Mich App 379, 388-389; 576 NW2d 667 (1998) (citations omitted). The 

Tribunal’s findings of fact and legal conclusions will stand so long as they are sufficiently 

detailed to “afford meaningful appellate review.” Pheasant Ring v Waterford Twp, 272 Mich 

App 436, 443; 726 NW2d 741 (2006), overruled on other grounds 480 Mich 44 (2008). Even if 

erroneous, the Tribunal’s decision will not be reversed unless the appellant has suffered 

prejudice as a result of the error. President Inn Props, LLC, 291 Mich App at 643. 

B 

 The petitioner has the burden of establishing the property’s true cash 

value. The burden of proof encompasses both the burden of persuasion, which 

never shifts during the course of the hearing, and the burden of going forward 

with evidence, which may shift to the opposing party. In a property tax dispute, 

the petitioner must prove by the greater weight of the evidence that the disputed 

assessment was too high based on the Tax Tribunal’s findings of true cash value. 

[Forest Hills Coop v City of Ann Arbor, 305 Mich App 572, 588; 854 NW2d 172 

(2014) (citations omitted).] 

“Regardless of the method employed, the Tax Tribunal has the overall duty to determine the 

most accurate valuation under the individual circumstances of the case.” President Inn Props, 

LLC, 291 Mich App at 631. 

 The Tribunal is not required to accept either party’s theory of valuation; it is free to 

accept either theory, or a combination of both theories, or reject both in determining the TCV of 

the property. Great Lakes Div of Nat’l Steel Corp, 227 Mich App at 389-390. Although the 

Tribunal cannot presume that a property record card is accurate, the Tribunal is free to “adopt the 

assessed valuation on the tax rolls as its independent finding of [TCV]” when the evidence 

supports such a finding. President Inn Props, LLC, 291 Mich App at 640. And this Court must 

affirm if the Tribunal’s valuation is “within the range of valuations in evidence.” Id. at 642. 

 Under our state constitution, real property cannot be taxed at more than 50 percent of its 

TCV. Const 1963, art 9, § 3. The TCV of a property is its fair market value. MCL 211.27(1); 

President Inn Props, LLC, 291 Mich App at 637. The three most common methods to calculate 

the TCV of a property are the capitalization-of-income method, the sales comparison method, or 

the cost-less-depreciation method. Id. at 639. The Tax Tribunal must “select the approach 

which provides the most accurate valuation under the circumstances of the individual case.” 

Antisdale v City of Galesburg, 420 Mich 265, 277; 362 NW2d 632 (1984). “Regardless of the 

valuation approach employed, the final value determination must represent the usual price for 

which the subject property would sell.” Meadowlanes Ltd Dividend Housing Ass’n v City of 

Holland, 437 Mich 473, 485; 473 NW2d 636 (1991). 
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C 

 The parties concede that the capitalization-of-interest method does not apply to this case. 

The sales comparison method is generally preferred over the cost-less-depreciation method, but 

the Tribunal is not required to use it in every circumstance. Wayne Co v State Tax Comm, 261 

Mich App 174, 206; 682 NW2d 100 (2004). In rejecting the sales comparison method, the 

Tribunal must consider that approach and justify its decision after faithfully considering the 

evidence. Id. Where the evidence establishes that the sales comparison method would be too 

subjective or contain too many variables or adjustments to be reliable, the Tribunal would have 

competent, material, and substantial evidence to justify the decision to disregard the sales 

comparison method. Id. Further, “if it can be shown that the sale price [on] each of the 

comparable properties has been determined by a flawed method the result of the market approach 

to valuation will also be flawed.” Antisdale, 420 Mich at 279.

 The Tribunal did not err by adopting the referee’s finding that the sales comparison 

method of valuation was unreliable. Petitioner met its burden of production by presenting 

evidence supporting its sales comparison valuation. But respondent presented substantial, 

compelling, and material evidence to establish that the sales comparison approach was 

unreliable, including the facts that the property was the “premier” home in the area, it was unique 

and “over-built,” and it had a large multipurpose room used for fitness, which was so unusual 

that respondent had no means of comparing it to other homes for valuation. The referee found 

that petitioner’s comparables were inadequate and dissimilar due to the property’s unique nature 

and the incredibly slow sales market. Without a meaningful amount of similar comparables to 

the property, the Tribunal had competent, material, and substantial evidence to conclude that the 

sales comparison method was unreliable. Wayne Co, 261 Mich App at 206. 

D 

 Petitioner also argues that the Tribunal erred in its application of the cost-lessdepreciation method. As we previously noted, under the cost-less-depreciation method, the TCV 

is calculated by adding the value of the land (as if unimproved) to the replacement cost of all 

improvements, then subtracting all depreciated value from three sources: (1) physical 

deterioration; (2) functional obsolescence; and (3) economic obsolescence. Forest Hills Coop, 

305 Mich App at 590-591. “Functional obsolescence refers to ‘a loss of value brought about by 

failure or inability of the assessed property to provide full utility.’ ” Id. at 591, quoting Meijer, 

Inc v City of Midland, 240 Mich App 1, 4 n 4; 610 NW2d 242 (2000). “Economic obsolescence 

refers to a ‘loss of value occasioned by outside forces.’ ” Id., quoting Fisher-New Ctr Co v Mich 

State Tax Comm, 380 Mich 340, 362; 157 NW2d 271 (1968), vacated on other grounds on reh 

381 Mich 713 (1969). 

 Although the Tribunal is not required “to quantify every possible factor affecting value,” 

Great Lakes Div of Nat’l Steep Corp, 227 Mich App at 398-399, the Tribunal may not accord 

presumptive validity to the respondent’s property record card where, although the valuation 

decision at issue was within the range of valuations in evidence, the referee’s decision on the 

property’s true cash value is reached without an explicit finding on obsolescence. Forest Hills 

Coop, 305 Mich App at 591-593. In Forest Hills Coop, this Court remanded to the “Tribunal 

for the purpose of making an independent determination of the amount of functional and 
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economic obsolescence, if any, to be used to determine the true cash value.” Id. at 593. The 

Court held that the Tribunal could reopen proofs, if necessary, to make legally supportable 

determinations regarding functional and economic obsolescence. Id. 

 Here, although respondent’s assessor followed the assessor’s manual, evaluated the 

“specific definition of the neighborhood,” and included depreciation values in its TCV 

calculation, it is unclear how the assessor calculated the ECFs or the depreciation and 

obsolescence on the property. Moreover, given the limited record before us,4 we have no 

evidence that either the referee or the Tribunal expressly addressed obsolescence in the 

independent determination of the TCV. President Inn Props, LLC, 291 Mich App at 631. 

Because the referee made no express findings on obsolescence, and when it adopted the referee’s 

findings of fact and conclusions of law the Tribunal accorded presumptive validity to the 

property record card, remand is necessary for the Tribunal to reopen proofs, if needed, and make 

an independent determination on obsolescence used to determine the true cash value.5

III 

 Affirmed, in part, reversed, in part, and remanded for proceedings consistent with this 

opinion. We do not retain jurisdiction. No costs under MCR 7.219 because an issue of public 

interest is involved. 

/s/ Amy Ronayne Krause 

/s/ Kurtis T. Wilder 

/s/ Cynthia Diane Stephens 

 

4

 There are no transcripts available in this case. 

5

 Petitioner challenges the Tribunal’s reliance on commercial figures to calculate the value of a 

room petitioner claims is only for personal use, citing authority establishing that land containing 

restrictions (i.e., commercial zoning) on its use cannot be comparatively valued to residential 

property. See Lochmoor Club v City of Grosse Pointe Woods, 10 Mich App 394, 398; 159 

NW2d 756 (1968); see also Deerfield Village Community Ass’n v West Bloomfield Twp, 25 Mich 

App 138, 140; 181 NW2d 62 (1970). Because we remand for further clarification on 

obsolescence, which may reveal additional facts regarding the calculation of the TCV of the 

fitness area, we decline to address petitioner’s argument that respondent committed a “fraud” by 

separately assessing the multipurpose room as a commercial fitness area.