Court Opinion

ID: 6324495
Source: CourtListenerOpinion
Date Created: 2022-03-18 05:06:35.40943+00
Date Added: 2024-06-11T09:21:52.651610
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                           COURT OF APPEALS

LEONARD COHEN and SARA MIRIAM A.                                   UNPUBLISHED
COHEN,                                                             March 17, 2022

               Petitioners-Appellants,

v                                                                  No. 356993
                                                                   Michigan Tax Tribunal
CITY OF OAK PARK,                                                  LC No. 18-003295-TT

               Respondent-Appellee.

Before: O’BRIEN, P.J., and SHAPIRO and BOONSTRA, JJ.

PER CURIAM.

        Petitioners appeal as of right the Michigan Tax Tribunal’s (MTT’s) judgment valuing
petitioners’ property (the subject property) at $155,800 in true cash value (TCV), and $77,900 in
both state equalized value (SEV) and taxable value (TV). We affirm.

                                         I. BACKGROUND

       The subject property is residential property with a single-family dwelling located in Oak
Park, Michigan. Petitioners purchased the subject property for $160,000 in 2017. For the 2018
tax year, the subject property’s TCV was assessed by respondent at $155,800, and its TV was
assessed at $77,900. Petitioners protested this valuation before the Oak Park Board of Review,
which confirmed respondent’s valuation of the subject property.

        Petitioners appealed to the MTT, arguing that the subject property was overvalued because
of the manner in which respondent created economic-condition-factor (ECF) neighborhoods in
Oak Park. ECFs are used as part of the cost-less-depreciation mass-appraisal technique to adjust
costs as listed in the Michigan Assessor’s Manual to local conditions. Calculation and application
of ECFs requires the grouping of properties into various ECF neighborhoods.1 Petitioners alleged

1
 A basic explanation of ECFs can be found in the Michigan Assessor’s Manual. Michigan State
Tax Commission, Michigan Assessor’s Manual Volume III (February 2018), pp 40-42.

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that respondent unfairly created ECF neighborhoods on the basis of residents’ demographics rather
than differences in the properties themselves. Petitioners noted that the ECF neighborhood
boundary lines were drawn such that the subject property was placed in the “ECF 30 Etkin”
neighborhood, but if the subject property were only one block east, it would be located in the “ECF
30” neighborhood, which, despite containing properties with similar homes built by the same
builder at about the same time, were valued lower on average than the properties in ECF 30 Etkin.
Petitioners argued that respondent’s only reason for separating out the ECF 30 Etkin neighborhood
was to unfairly increase respondent’s tax revenue from the properties in that neighborhood.
Petitioners asked that the ECF neighborhoods be redrawn so that the property values of the subject
property and nearby properties in the affected ECF neighborhoods could be recalculated.

        Respondent moved for summary disposition, arguing that petitioners could not challenge
the creation of ECF 30 Etkin on behalf of all property owners in that ECF neighborhood. The
MTT agreed, allowing petitioners’ ECF challenge to go forward only with regard to “the
calculation of the ECF applied to the assessed and taxable values” assigned to the subject property.
As the MTT later explained, “true cash value is always the issue before us,” and petitioners’
challenge to the ECF neighborhood was allowed to proceed on the theory that an ECF error would
affect respondent’s assessment of the subject property’s true cash value. After a hearing, the MTT
upheld respondent’s valuation of the subject property, ruling that petitioners had failed to
demonstrate any error in relation to the ECF or that the subject property had been otherwise
overvalued. Petitioners filed a motion for reconsideration, which the MTT denied. Petitioners
now appeal.

                                  II. STANDARD OF REVIEW

        “In the absence of fraud, review of a decision by the Tax Tribunal is limited to determining
whether the tribunal erred in applying the law or adopted a wrong principle; its factual findings
are conclusive if supported by competent, material, and substantial evidence on the whole record.”
Klooster v City of Charlevoix, 488 Mich 289, 295; 795 NW2d 578 (2011) (quotation marks and
citation omitted). To the extent petitioners’ arguments constitute a challenge to the MTT’s denial
of their motion for reconsideration, we review that denial for an abuse of discretion. See, e.g.,
Electronic Data Sys Corp v Flint Twp, 253 Mich App 538, 548; 656 NW2d 215 (2002).

        “We review de novo the MTT’s interpretation and application of statutes.” Stirling v
Leelanau Co, ___ Mich App ___, ___; ___ NW2d ___ (2021) (Docket No. 353117); slip op at 1
(citations omitted). When interpreting statutes:

       the primary goal . . . is to ascertain and give effect to the intent of the Legislature.
       The words used by the Legislature in writing a statute provide us with the most
       reliable evidence of the Legislature’s intent. If the statutory language is clear and
       unambiguous, this Court must apply the statute as written, and no further judicial
       construction is necessary or permitted. [Id. at 2 (quotation marks and citations
       omitted).]

                                                 -2-
                                          III. STANDING

        On appeal, petitioners raise an issue with respect to standing, but the argument is difficult
to parse. In their “Questions Presented,” petitioners frame their standing issue as whether they are
“required to have standing to act on behalf of all the property owners . . . [in] the contested ECF
for the Tribunal to rule on the ECF issue?” With this framing and a review of the briefing as a
whole, it appears that petitioners are trying to ensure that a lack of standing is not used as a reason
to withhold a decision on the validity of the ECF neighborhood at issue.

        This, however, is not an issue on which this Court can provide relief—this Court cannot
assign error to the MTT for holding that petitioners lacked standing to raise ECF issues with regard
to the subject property because the MTT never held that. What the MTT held is that “Petitioners
have failed to establish that they are parties in interest to any other properties in the ECF
neighborhood as required to invoke the Tribunal’s jurisdiction” with regard to other properties,
but allowed the case to continue “with respect to the ECF neighborhood utilized to determine the
economic condition [sic] affecting the subject property.” Then, in its final judgment, the MTT
held petitioners failed to provide “any proof that the subject property’s ECF neighborhood was
improperly established.” Later, in its order denying reconsideration, the MTT clarified that it could
consider the effect of the ECF analysis on the reliability of the mass appraisal performed “in this
case” but lacked authority to “alter the boundaries of an ECF neighborhood.” In short, the MTT
never ruled that petitioners lacked standing to challenge the ECF analysis as applied to the subject
property, so petitioner’s argument in this regard is misplaced.2

                        IV. JURISDICTION TO ADDRESS ECF ISSUES

        Next, petitioners argue the MTT erred by holding it had no “authority over issues related
to the establishment review [sic] of ECF neighborhoods.” With this issue too, the MTT made no
such holding. The MTT allowed petitioners to present their case that the ECF neighborhood for
the subject property was invalid and resulted in an inflated valuation of the subject property. After
hearing the evidence, the MTT held that petitioners “totally missed the mark in providing any
proof that the subject property’s ECF neighborhood was improperly established or that the subject
property’s TCV is less than that assessed by Respondent.”

2
   In their briefing on appeal, petitioners suggest that other property owners might also have
standing, and suggest any relief granted should also apply to other property owners. To the extent
petitioners are attempting to argue for relief which would apply beyond the subject property, they
have provided no authority for doing so, and the argument is abandoned. See Mitcham v Detroit,
355 Mich 182, 203; 94 NW2d 388 (1959). Petitioners have simply failed to explain how they
would be entitled to seek relief with regard to properties they do not own and did not identify
below. Among other issues, petitioners protested only the assessment of the subject property, and
not the assessments of any other properties, to the Board of Review. See MCL 205.735a (“Except
as otherwise provided in this section or by law, for an assessment dispute as to the valuation or
exemption of property, the assessment must be protested before the board of review before the
tribunal acquires jurisdiction of the dispute . . . .”).

                                                 -3-
       Petitioners’ confusion seems to stem from the MTT’s denial of petitioners’ motion for
reconsideration, in which the MTT reasoned the ECF was

          relevant to a determination as to the reliability of [respondent’s] mass appraisal
          cost-less-depreciation approach in this case, [but] the Tribunal’s review of that
          analysis is limited to determining its reliability and relevancy to this appeal. The
          tribunal has no authority to alter the boundaries of an ECF neighborhood, and to
          that end, it erred in stating in the Order Partially Granting Respondent’s Motion for
          Summary Disposition that “there are facts in dispute about what constitutes the
          appropriate ECF neighborhood . . . .”

Though the language in the reconsideration decision emphasizes the limitations of the MTT’s
power, the MTT never held that it lacked jurisdiction to address petitioners’ argument that the ECF
used was invalid and resulted in overvaluation of the subject property. Instead, as explained in the
MTT’s final judgment, the MTT did assess petitioners’ argument about the ECF neighborhoods
and found that petitioners failed to show any errors in the creation or application of the ECF or
any overvaluation of the subject property.

        In sum, the MTT addressed and decided the issues raised by petitioners as related to the
valuation of the subject property, including petitioners’ challenge to the ECF neighborhood. The
precise contours of the MTT’s power with regard to ECF errors that affect a taxpayer’s property
valuation need not be addressed further because petitioners failed to demonstrate any error in the
creation of the ECF neighborhood at issue,3 in calculation of the ECF applied to the subject
property, or in the valuation of the subject property. That is, even if it were shown that the MTT’s
statement about its powers in the denial of reconsideration contained a legal error—a question we
do not address—such error would be harmless, and this Court need not correct harmless errors by
the MTT. See Kok v Cascade Charter Twp, 265 Mich App 413, 418; 695 NW2d 545 (2005);
Syntex Labs v Dep’t of Treasury, 233 Mich App 286, 293; 590 NW2d 612 (1998).

3
    In its final judgment, the MTT explained in relevant part:
          [Petitioners’] report does not provide anything that would constitute evidence that
          Respondent made an error in creating its ECF 30 Etkin neighborhood, and
          Petitioners’ valuation expert admitted that he knows next to nothing about mass
          appraisal and how ECF neighborhoods are created. For these reasons, the Tribunal
          finds that Petitioners have totally missed the mark in providing any proof that the
          subject property’s ECF neighborhood was improperly established . . . .
While petitioners do not explicitly contend that the MTT erred by reaching this conclusion, to the
extent that petitioners’ argument could be interpreted as making such a claim, the MTT adequately
supported its finding that petitioners failed to establish that respondent erred in its creation of the
ECF neighborhood at issue. Further, as explained in the next section, the MTT properly placed
this burden on petitioners. Given our limited review of the MTT’s decisions, there is no basis to
disturb this ruling.

                                                  -4-
              V. BURDEN OF PROOF REGARDING ECF NEIGHBORHOODS

        Petitioners argue that respondent had the burden of proof with regard to justifying the basis
for the ECF applied to the subject property, and failed to meet that burden. In support of their
argument, petitioners rely on MCL 205.737(3), which states in relevant part:

               (1) The tribunal shall determine a property’s taxable value pursuant to
       section 27a of the general property tax act, 1893 PA 206, MCL 211.27a.

              (2) The tribunal shall determine a property’s state equalized valuation by
       multiplying its finding of true cash value by a percentage equal to the ratio of the
       average level of assessment in relation to true cash values in the assessment district,
       and equalizing that product by application of the equalization factor that is
       uniformly applicable in the assessment district for the year in question. The
       property’s state equalized valuation shall not exceed 50% of the true cash value of
       the property on the assessment date.

               (3) The petitioner has the burden of proof in establishing the true cash value
       of the property. The assessing agency has the burden of proof in establishing the
       ratio of the average level of assessments in relation to true cash values in the
       assessment district and the equalization factor that was uniformly applied in the
       assessment district for the year in question.

Petitioners argue that “the ratio of the average level of assessments in relation to true cash values
in the assessment district and the equalization factor that was uniformly applied in the assessment
district for the year in question,” which respondent had the burden of proof to establish, MCL
205.737(3), include the ECF applied to the subject property.

        Petitioners’ reading of the statute is untenable. ECFs are calculated and applied by local
assessors as part of a cost-less-depreciation mass-appraisal process to create an initial assessment
of the TCV of property. See Michigan State Tax Commission, Michigan Assessor’s Manual
Volume III (February 2018), p 40, available at  (accessed January 5, 2022).4 The ECF in this case was thus used
by the local assessor to calculate the TCV of the subject property. The burden of proof with regard
to TCV is given to petitioners. MCL 250.737(3). It follows that, because TCV is calculated using
the ECF, the petitioner has the burden of proof when contesting issues related to ECFs.5

4
  The State Tax Commission publication quoted by petitioners on appeal makes the same point,
though using slightly different language.
5
  A panel of this Court previously arrived at this same conclusion, see Schoening v Township of
Orion, unpublished per curiam opinion of the Court of Appeals, issued September 15, 2005
(Docket No. 253887), p 3, and other panels have routinely rejected challenges to ECFs on the basis
that the petitioner failed to establish that the ECFs were improper, see Javor v Township of
Plymouth, unpublished per curiam opinion of the Court of Appeals, issued January 27, 2022

                                                -5-
        Moreover, per the statute, “the ratio of the average level of assessments in relation to true
cash values in the assessment district and the equalization factor that was uniformly applied in the
assessment district for the year in question” are used by the MTT to “determine a property’s state
equalized valuation,” MCL 205.737(2) and (3), and, again, the ECF here was used when
calculating the TCV. That is, the language relied upon by petitioners clearly does not contemplate
the ECF here.

       Overall, it is clear that MCL 205.737(3) does not place a burden of proof on the assessing
agency with regard to justifying the ECF applied to a property as part of the initial assessment
process. There was thus no error in the MTT’s allocation of the burden of proof.6

                                        VI. CONCLUSION

       Affirmed.

                                                               /s/ Colleen A. O’Brien
                                                               /s/ Douglas B. Shapiro
                                                               /s/ Mark T. Boonstra

(Docket No. 356238), p 7; Muskegon River Youth Home, Inc v Township of Sylvan, unpublished
per curiam opinion of the Court of Appeals, issued January 26, 2012 (Docket No. 301329), pp 3-
4; MI Montana, LLC v Township of Custer, unpublished per curiam opinion of the Court of
Appeals, issued September 27, 2007 (Docket No. 269447), p 5.
6
  In their reply brief on appeal, petitioners claim that the purpose of their appearance before the
MTT “was litigating the [ECF] while the Tribunal was discussing true cash value.” They further
assert that respondent makes the same mistake such that “the parties are litigating about what they
are litigating about.” It is unclear, however, the distinction petitioners are trying to make between
litigating the ECF and the TCV. The ECF is used to calculate the TCV when using certain
methods. Both respondent and the MTT recognized that petitioners are challenging the ECF
because they believe that it is improperly high, which in turn increases petitioners’ TCV and the
ultimate amount that petitioners owe in taxes. This is the injury that petitioners in their reply brief
claim they have suffered—“having to pay higher taxes.” It therefore seems that petitioners believe
that their argument is only that the ECF is improperly high which unfairly increases their tax
burden, such that they are “litigating the [ECF].” This, however, ignores that an improperly high
ECF only increases petitioners’ tax burden because it is used in assessing the property’s value.
That is, petitioner’s challenge to the ECF is an argument to lower the subject property’s TCV, in
turn lowering petitioners’ tax burden. The MTT permitted petitioners to contest the ECF—and
argue for a lower TCV—of the subject property on the basis that the subject property’s ECF
neighborhood was improperly created. The MTT rejected this argument, however, finding the
petitioners failed to present evidence sufficient to establish that the subject property’s ECF
neighborhood was improperly created, and consequently affirmed the property’s TCV.

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