23-002232 Gibbons v Flint Twp - signed by JMW.pdf
Thomas W Gibbons, Petitioner V Township Of Flint, Respondent · 24-004246-TT
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STATE OF MICHIGAN GRETCHEN WHITMER GOVERNOR DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS LANSING MARLON I. BROWN, DPA DIRECTOR MICHIGAN TAX TRIBUNAL · 611 W. OTTAWA ST., LANSING, MI 48933 · 517-335-9760 PO BOX 30232, LANSING, MI 48909 · Other Carriers: 2407 N. GRAND RIVER AVE., LANSING, MI 48906 Thomas W Gibbons, MICHIGAN TAX TRIBUNAL Petitioner, SMALL CLAIMS DIVISION MTT Docket No. 23-002232 v Case Type: Valuation Flint Township, Presiding Judge Respondent. Joshua M. Wease ORDER SEVERING 2024 TAX YEAR AND ASSIGNING IT DOCKET NUMBER 24-004246 FINAL OPINION AND JUDGMENT Location of Hearing: Saginaw, MI Hearing Held on: June 24, 2024 Appearances on Behalf of Petitioner: Thomas W Gibbons Appearances on Behalf of Respondent: Paula Dotson SUMMARY OF JUDGMENT The subject property’s true cash value (TCV), state equalized value (SEV), and taxable value (TV), for the tax year at issue, shall be as follows: Parcel Number: 07-20-505-028 Year TCV SEV TV 2023 $170,000 $85,000 $68,880 PROCEDURAL HISTORY Petitioner was required to protest the subject property’s assessment to the Board of Review (BOR). Petitioner protested the subject property’s assessment to the 2023 March BOR. Petitioner filed a Petition with the Tribunal on May 30, 2023, and Respondent filed an Answer on July 13, 2023.
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MTT Docket No. 23-002232 Page 2 of 15 The amount of SEV or TV in dispute, as set forth in the pleadings, for all tax years at issue is within the jurisdictional limits of the Small Claims Division.1 Further, the property’s assessment for subsequent tax years is included in this proceeding.2 ISSUES AND APPLICABLE LAW The issues in this matter are: 1. Whether the subject property is assessed in excess of 50% of its TCV. “The petitioner has the burden of proof in establishing the true cash value of the property.”3 The assessment of real property in Michigan shall not exceed 50% of its TCV.4 “True cash value” means “the usual selling price . . . .”5 “True cash value” means “fair market value.”6 The Tribunal is required to make an independent determination of TCV.7 “[T]he tribunal is not bound to accept either of the parties’ theories of valuation. It may accept one theory and reject the other, it may reject both theories, or it may utilize a combination of both in arriving at its determination.”8 The Tribunal is required to select the valuation methodology that is accurate and bears a reasonable relationship to the property’s TCV.9 2. Whether the TV exceeds the amount provided by MCL 211.27a. MCL 211.27a provides that a property’s TV is the lesser of the property’s SEV or capped TV, and a property’s capped TV is, absent a transfer of ownership, determined mathematically by taking into consideration the prior tax year’s TV, statutory losses, the lesser of the rate of inflation or 5%, and statutory additions, including omitted property (i.e., property not previously assessed).10 Pursuant to R 792.10133, after hearing, the Tribunal must issue a final decision in writing. Additionally, “[a] written final decision shall include separate sections entitled “findings of fact” and “conclusions of law.’” Findings of fact “shall include a concise statement of the underlying supporting facts” that are “based exclusively on the 1 See MCL 205.762(1). 2 See MCL 205.737(5)(b). 3 MCL 205.737(3); see also Kern v Pontiac Twp, 93 Mich App 612, 620; 287 NW2d 603 (1979). 4 Michigan Const 1963, art IX, sec 3. 5 MCL 211.27(1). 6 CAF Investment Co v State Tax Comm, 392 Mich 442, 450; 221 NW2d 588 (1974). 7 See Jones & Laughlin Steel Corp v City of Warren, 193 Mich App 348; 483 NW2d 416 (1992). 8 Id. at 356. 9 See Safran Printing Co v Detroit, 88 Mich App 376; 276 NW2d 602 (1979). 10 See MCL 211.34d.
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MTT Docket No. 23-002232 Page 3 of 15 evidence.”11 Consequently, the Tribunal has not addressed every piece of evidence or every inference that might lead to a conflicting conclusion and has rejected evidence contrary to its findings. Furthermore, “[e]ach conclusion of law shall be supported by authority or reasoned opinion.”12 Accordingly, the Tribunal will outline the summary of evidence, findings of facts, and conclusions of law, before ultimately rendering judgment. SUMMARY OF EVIDENCE A. Petitioner’s Evidence Petitioner’s contentions of TCV, SEV, and TV: Parcel Number: 07-20-505-028 Year TCV SEV TV 2023 $131,200 $65,600 $65,600 The exhibits offered by Petitioner may be viewed on lines 1, and 16-37 of the docket maintained in this case.13 No exhibits were excluded from evidence. Based on the pleadings, admitted exhibits, and sworn testimony, Petitioner contends that a sales comparison approach supports their contention that the assessments on this property are too high. Petitioner objects to some of Respondent’s sales. First, the sale at 5081 Caulkins is the highest price sale, and it looks like it has had a remodel. There is a triple driveway to the garage in back with gazebo and a huge deck. It has a pool, fantastic shed, new roof, double sidewalk, and updated kitchen. The garage is heated and hooked up to 220 amps. Further, the lot size makes a significant difference in value, say, between a half-acre and a quarter-acre lot. Lot size is not considered in the various sales approaches. Petitioner’s report spells out the different steps, trend, sales, and sales approach and pictures. There were some corrections to the Property Record Card (PRC) when the Township inspected the property. The subject home has no basement, and it is a tri- level not a quad level. The PRC has been changed and is up to date. The subject is a 60-year-old house that should have a depreciation of 45% instead of the 64% depreciation that the assessor has for the property. Petitioner questions Respondent’s rates for the living area at $22/square foot (SF) rather than $7/SF and $50/SF instead of $18/SF. Petitioner used interior measurements for basement square footage rather than exterior. In 2021, Petitioner paid $140,000 for the subject, which was in line with the trend of fourteen sales. Later in 2022, that trend continues in the first half of the year., but in 11 See also MCR 2.517(a). 12 Id. 13 The docket is located on the Tribunal’s website at Tax Docket Lookup Search Page and may be accessed by entering the docket number assigned to this case.
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MTT Docket No. 23-002232 Page 4 of 15 the second half of 2022 mortgage rates were increasing and fighting limited supply, which stabilizes in the middle. In 2023, the value of the subject would still be around $140,000 if you average the low prices of a couple houses and the high prices on a couple houses because there was limited availability of houses. For 2024, the value of the subject would still be about $144,500. Petitioner’s sales are just from the subject’s subdivision. Petitioner objected to looking for sales throughout the Township. It is better to look at one subdivision because the lots are smaller and more relevant to the subject. Looking at the three of the highest sale prices, this data results in far less value than Petitioner paid for the subject. Another three of the sales average $125,000. Petitioner admitted that he did not submit evidence for 2024 and would like to sever the cases. B. Respondent’s Evidence The property’s TCV, SEV and TV, as confirmed by the BOR, for the tax year at issue: Parcel Number: 07-20-505-028 Year TCV SEV TV 2023 $155,800 $77,900 $68,880 Respondent’s revised contentions of TCV, SEV and TV: Parcel Number: 07-20-505-028 Year TCV SEV TV 2023 $170,000 $85,000 $68,880 The exhibits offered by Respondent may be viewed on lines 4, 15, and 38 (duplicate copy) of the docket maintained in this case.14 No exhibits were excluded from evidence. Based on the pleadings, admitted exhibits, and sworn testimony, Respondent contends that the subject has been appropriately assessed given the market conditions for tax year 2023. Respondent’s assessor testified that their valuation disclosures contained the updated cost approach, which includes changes based on the property inspection. Further, the home does not contain a basement. However, the cost approach is not driving this valuation. Respondent’s assessor considered sales in that neighborhood. All sales are meant to compare “apples to apples,” meaning that all they are all tri-levels. Further, Respondent adjusted for time based on market conditions. Only one sale has a significant lot size difference. However, Respondent found that sales were not primarily driven by lot size. Respondent made adjustments for amenities that are different from the subject, including size of garage, fireplaces, and decks. Respondent did not find that fireplaces impacted sales prices, however they did adjust for deck size. 14 The docket is located on the Tribunal’s website at Tax Docket Lookup Search Page and may be accessed by entering the docket number assigned to this case.
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MTT Docket No. 23-002232 Page 5 of 15 The four sales are within same school district and are less than three miles away from the subject. After adjustments, all four sales needed less than 20% adjustment. Sales 2, 3, and 4, needed the least adjustment, so they were given most weight. Respondent’s assessor determined that the 2023 TCV was $170,000 under the sales approach. For 2024, that neighborhood had an increase of about 8.4%. Therefore, Respondent would increase the subject’s 2024 TCV to $184,000. The state sets the assessors’ sales parameters for the cost approach. Respondent disagrees with Petitioner’s assertion that there were not many sales. The Economic Condition Factor (ECF) studies for each year contained over 20 sales in those neighborhoods. As for depreciation, Respondent’s assessor responded to Petitioner’s challenge of the 64% depreciation rate. The assessor uses the CAMA system, and their depreciation tables are continually updated. A property’s depreciation is based on an effective age, which is based on observations at the inspection. As for Petitioner’s sales, Respondent’s assessor was not certain if Petitioner was using all twelve sales. Petitioner’s Sale 1 should not be considered because it was a destroyed house that sold for a discounted price of $57,000 based on condition. Sales 2,3,4,5,6, and 7 are one-story houses. Sale 8 is a tri-level house. Sales 9 through 12 are all one stories and not comparable. While Respondent’s adjustments are market based, several of Petitioner’s sales sold for higher prices and contradict his own trend analysis. The overall trend for prices in this neighborhood has been increasing. FINDINGS OF FACT The following facts were proven by a preponderance of the evidence: 1. The subject property is located at 5511 Westchester Dr in Genesee County. 2. The subject property is classified as Residential Improved. 3. Petitioner purchased the subject property in 2021 for $140,000. 4. The subject is a 1,680 SF tri-level home that was built in 1964. The exterior is brick and siding. It has one garage attached. There is no fireplace. The lot size is .25 acres. 5. Petitioner submitted a valuation disclosure based on the sales comparison approach that considered 7 sales. a. 5507 Litchfield, sold on March 1, 2023, for $57,000. Petitioner adjusted the sale price to $62,500 based on evidence submitted with the petition.15 Petitioner adjusted the sale price to $57,000 in the exhibit submitted on June 3, 2024.16 b. 2104 Cambrian, sold on November 23, 2022, for $108,000. Petitioner adjusted the sale price to $114,000 based on evidence submitted with the 15 Tax Docket Lookup, line 1. 16 Tax Docket Lookup, line 16.
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MTT Docket No. 23-002232 Page 6 of 15 petition.17 Petitioner adjusted the sale price to $103,000 in the exhibit submitted on June 3, 2024.18 c. 5503 Westchester, sold on August 26, 2022, for $135,000. Petitioner adjusted the sale price to $133,000 based on evidence submitted with the petition.19 Petitioner adjusted the sale price to $127,000 in the exhibit submitted on June 3, 2024.20 d. 5476 Westchester, sold on January 5, 2023, for $135,000. Petitioner adjusted the sale price to $148,000 based on evidence submitted with the petition.21 Petitioner adjusted the sale price to $131,000 in the exhibit submitted on June 3, 2024.22 e. 5482 Meadowcrest, sold on October 15, 2021, for $160,000. Petitioner adjusted the sale price to $140,000 based on evidence submitted with the petition.23 Petitioner adjusted the sale price to $143,000 in the exhibit submitted on June 3, 2024.24 f. 5411 Litchfield, sold on November 11, 2021, for $159,000. Petitioner adjusted the sale price to $152,900 based on evidence submitted with the petition.25 Petitioner adjusted the sale price to $145,900 in the exhibit submitted on June 3, 2024.26 g. 5449 Meadowcrest, sold on April 13, 2022, for $155,000. Petitioner adjusted the sale price to $147,000 based on evidence submitted with the petition.27 Petitioner adjusted the sale price to $$134,000 in the exhibit submitted on June 3, 2024.28 h. 5394 Westchester, sold on December 8, 2023, for $127,000. Petitioner adjusted the sale price to $119,500.29 i. 5465 Meadowcrest, sold on July 26, 2023, for $124,000. Petitioner adjusted the sale price to $119,400.30 j. 5383 Westchester, sold on February 5, 2024, for $185,000. Petitioner adjusted the sale price to $138,000.31 k. 5450 Litchfield, sold on April 10, 2024, for $185,000. Petitioner adjusted the sale price to $144,500.32 17 Tax Docket Lookup, line 1. 18 Tax Docket Lookup, line 16. 19 Tax Docket Lookup, line 1. 20 Tax Docket Lookup, Line 17. 21 Tax Docket Lookup, line 1. 22 Tax Docket Lookup, line 17. 23 Tax Docket Lookup, line 1. 24 Tax Docket Lookup, Line 18. 25 Tax Docket Lookup, line 1. 26 Tax Docket Lookup, Line 18. 27 Tax Docket Lookup, line 1. 28 Tax Docket Lookup, Line 18. 29 Tax Docket Lookup, line 16. 30 Tax Docket Lookup, line 17. 31 Tax Docket Lookup, line 19. 32 Tax Docket Lookup, line 19.
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MTT Docket No. 23-002232 Page 7 of 15 l. 5342 Elmsford, sold on October 23, 2023, for $179,000. Petitioner adjusted the sale price to $144,500. 33 6. Respondent submitted a valuation disclosure based on the sales comparison approach of four sales that concluded with a TCV for the subject of $170,000 for 2023. a. Sale 1, located at 5081 Calkins sold on July 14, 2023, for $213,500. Respondent adjusted the sales price to $168,491. b. Sale 2, located at 5282 Mapletree, sold on February 7, 2024, for $200,000. Respondent adjusted the sales price to $163,119. c. Sale 3, located at 6220 Lancaster, sold on April 8, 2022, for $180,000. Respondent adjusted the sales price to $200,820. d. Sale 4, located at 5411 Litchfield, sold on November 30, 2021, for $159,900. Respondent adjusted the sales price to $177,368. CONCLUSIONS OF LAW A proceeding before the Tax Tribunal is original, independent, and de novo.34 The Tribunal's factual findings are to be supported by competent, material, and substantial evidence.35 Further, “[i]t is the duty of the [T]ax [T]ribunal to select the approach which provides the most accurate valuation under the circumstances of the individual case.”36 In doing so, the Tribunal shall consider the three most common approaches to valuation - the capitalization of income approach, the sales comparison or market approach, and the cost-less-depreciation approach.37 Neither party raised any issue with respect to the highest and best use of the property by way of the testimony and evidence provided, and the Tribunal finds that there is no dispute that its highest and best use is continued use as residential property. All evidence submitted by both parties was considered in reaching a decision in this case. However, if specific evidence is not discussed in this section of the Opinion and Judgment, the presiding judge has determined that this evidence shall be given no weight or credibility. Only evidence determined to have relevance in reaching a decision in this case is discussed below. Petitioner “has the burden of proof in establishing the [TCV] of the property.”38 “This burden encompasses two separate concepts: (1) the burden of persuasion, which does not shift during the course of the hearing, and (2) the burden of going forward with 33 Tax Docket Lookup, line 19. 34 MCL 205.735a(2). 35 See Antisdale v City of Galesburg, 420 Mich 265, 277; 362 NW2d 632 (1984); Dow Chemical Co v Dep’t of Treasury, 185 Mich App 458, 462-463; 462 NW2d 765 (1990). 36 Antisdale at 277; citing Pantlind Hotel Co v State Tax Comm, 3 Mich App 170; 141 NW2d 699 (1966). 37 See Meadowlanes Ltd Dividend Housing Ass’n v City of Holland, 437 Mich 473, 484-485; 473 NW2d 636 (1991); Pantlind Hotel Co, 3 Mich App 170. 38 MCL 205.737(3).
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MTT Docket No. 23-002232 Page 8 of 15 the evidence, which may shift to the opposing party.”39 Although the Tribunal has a duty to make an independent determination of value,40 the Michigan Court of Appeals has held that this duty “arises only when the petitioner has met its burden of going forward with evidence.”41 Therefore, “if a petitioner fails to come forward with competent evidence to challenge the assessed values of the property, then the tribunal's duty to make an independent determination of true cash value is not triggered.”42 Indeed, the Tribunal’s factual findings must be supported by competent, material, and substantial evidence.43 Thus, while the Tribunal may not “automatically accept a respondent’s assessment,”44 it may, upon motion or its own initiative, enter an involuntary dismissal if the petitioner fails to meet the burden of going forward.45 “The ‘substantial evidence test’ has been defined as evidence which a reasoning mind would accept as sufficient to support a conclusion. While it consists of more than a mere scintilla of evidence it may be substantially less than a preponderance of the evidence.”46 “Competent evidence” has been defined as “that which the very nature of the thing to be proven requires . . . . ”47 The “thing to be proven” in this case is the TCV of the property at issue. TCV is defined as “the usual selling price at the place where the property to which the term is applied is at the time of assessment, being the price that could be obtained for the property at private sale, and not at auction sale except as otherwise provided in this section, or at forced sale.”48 TCV is traditionally determined using one of three widely accepted appraisal methods: cost, income, and market.49 39 Jones & Laughlin, 193 Mich App at 354–55; 483 NW2d 416, 420 (1992). 40 See Alhi Dev Co v Orion Twp, 110 Mich App 764, 767; 314 NW2d 479, 481 (1981). 41 Dicastal N Am, Inc v City of Greenville, unpublished per curiam opinion of the Court of Appeals, issued August 22, 2024 (Docket No. 365333) citing Great Lakes Div of Nat'l Steel Corp, 227 Mich App 379, 408- 410; 576 NW2d 667, 680-681 (1998). 42 Id. The Court further stated that it “will not assess the credibility of witnesses, and the determination of the weight to be given the evidence is within the Tax Tribunal’s discretion.” Id. (citations omitted). See also Country Meadows, GP v Macomb Twp, unpublished per curiam opinion of the Court of Appeals, issued April 1, 1997 (Docket No. 182305), wherein the Court held: “Plaintiffs cite Jones & Laughlin . . . . for the proposition that even when the plaintiff fails to meet his burden of proof, the tribunal must still make an independent determination of the true cash value of the property in question. However, unlike the plaintiff in Jones & Laughlin, in the present case plaintiffs did not meet their burden of going forward with evidence. Under the circumstances, the tribunal could not make an independent determination of the true cash value of the property because it had no evidence on which to base such a determination except that provided by defendant. A contrary holding would be tantamount to requiring the tribunal to hire its own appraiser.” Id. (citations omitted). 43 See Antisdale v City of Galesburg, 420 Mich 265, 277; 362 NW2d 632 (1984). 44 Jones & Laughlin, 193 Mich App at 355-356. 45 See MCR 2.504(B)(2). See also Jones & Laughlin, 193 Mich App at 354-355 and Great Lakes v City of Ecorse, 227 Mich App at 408-410. 46 Russo v Dep't of Licensing & Regul, 119 Mich App 624, 631; 326 NW2d 583, 587 (1982). See also Dow Chem Co v Dep't of Treasury, 185 Mich App 458; 462 NW2d 765 (1990). 47 Goff v Bil–Mar Foods, Inc (After Remand), 454 Mich 507, 514 n 5; 563 NW2d 214 (1997), overruled on other grounds in Mudel v Great Atl & Pac Tea Co, 462 Mich 691; 614 NW2d 607 (2000), quoting Black's Law Dictionary (6th ed). See also Moore v Prestige Painting, 277 Mich App 437; 745 NW2d 816 (2007). 48 MCL 211.27(1). 49 Meadowlanes Ltd Dividend Housing Ass'n v City of Holland, 437 Mich 473, 485; 473 NW2d 636 (1991).
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MTT Docket No. 23-002232 Page 9 of 15 “Variations of these approaches and entirely new methods may be useful if found to be accurate and reasonably related to the fair-market value of the subject property.”50 In this case, there is no evidence that this property is used for income generation, therefore it is not an appropriate approach for this property for the years at issue. Cost Approach TCV is generally determined using one of three widely accepted appraisal methods: cost, income, and market.51 Respondent calculated the subject property’s assessment using the mass appraisal, cost-less-depreciation approach to value, which includes market adjustments through the use of a county multiplier and an ECF. Although this approach is lawful and generally mandated for assessment purposes,52 it is most applicable to newly constructed properties.53 It “can sometimes be applied to older properties given adequate data to measure depreciation,” but “investors or purchasers of older buildings . . . may be more concerned about expenditures that they will need to make after the purchase to make the property suitable to their needs than they are by the calculation of replacement or reproduction cost and depreciation.”54 Further, “when improvements are considerably older or do not represent the highest and best use of the land as though vacant, the physical deterioration, functional obsolescence, and external obsolescence may be more difficult to estimate.” 55 The cost approach also requires that land value be well supported and Respondent did not provide the land sale studies used in its valuation of the subject property in this case.56 The Supreme Court has also recognized that “while actual and reproduction cost are some evidence of value, the constitutional and statutory standard is market-based,”57 and “the market approach is the only valuation method that directly reflects the balance of supply and demand for property in marketplace trading.”58 Respondent’s valuation disclosure does not rely on the cost approach. Given the subject’s age, there is good reason to not apply this approach for the year at issue. While Petitioner did not develop a valuation disclosure based on the cost approach either, Petitioner makes several arguments about the accuracy of the PRC.59 First, Petitioner argues that the Township depreciation for a home built in 1964 (55 years old) should be 45% rather than the 64% set by the assessor. Petitioner provides copies of an outdated version of the Assessor’s Manual that provides for an explanation of depreciation and a depreciation schedule for residences that was copyrighted in 50 Id. 51 Meadowlanes Ltd Dividend Housing Ass'n v City of Holland, 437 Mich 473, 485; 473 NW2d 636 (1991). 52 See MCL 211.10e and State Tax Commission, Michigan Assessors Manual, Vol. I-III. 53 “Because cost and market value are usually more closely related when improvements are new, the cost approach is more important in estimating the market value of new or relatively new construction.” Appraisal Institute, The Appraisal of Real Estate (Chicago: Appraisal Institute, 15th ed. 2020) p. 530. 54 Id. 55 Appraisal Institute, The Appraisal of Real Estate (Chicago: Appraisal Institute, 15th ed. 2020) p. 531. 56 Id. 57 First Fed Sav & Loan Ass'n of Flint v City of Flint, 415 Mich 702, 705; 329 NW2d 755, 757 (1982). 58 Jones & Laughlin, 193 Mich App at 353-354. 59 Tax Docket Lookup, line 20.
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MTT Docket No. 23-002232 Page 10 of 15 2003.60 The current Assessors Manual was copyrighted in 2014. Petitioner’s data and source material are out of date and are given no weight. However, as stated in the current Assessors Manual, depreciation and percentage good are based on more than just a building’s age. Appraisal depreciation is defined as a loss in value resulting from physical deterioration, functional obsolescence and economic obsolescence. These three categories of depreciation are defined in the appraisal theory section of Volume III of the manual. However, there are many times when the appraiser will estimate total depreciation directly, instead of, or as a check against, the results found by estimating each category separately.61 A 64% value was used instead of a 45% value recommended by the State of Michigan. The Assessors Manual also instructs that: The appraiser is to recognize exceptional maintenance, remodeling, replacements and additions in adjusting the % condition from that listed in this table to the actual observed condition. Exceptionally poor maintenance is also to be recognized.62 Beyond age, Petitioner has not provided persuasive evidence on the maintenance and observed conditions of the home to justify lowering the depreciation from 64% to 45%. Further, Petitioner provides a number of challenges on the square foot rates used by the assessor. However, Petitioner proffers an outdated cost manual that was copyrighted in 2003, rather than referring to the current cost manual – which account for the perceived errors.63 Petitioner’s arguments are not persuasive and the evidence on square foot rates is given no weight. Sales Comparison Approach The parties presented sales to support their valuations assertions. “The sales comparison approach is most useful when a number of similar properties have recently been sold or are currently for sale in the subject property’s market.”64 Tax Year 2023 Petitioner proffered twelve sales from November 2021 to April 2024. Petitioner adjusted each of the sales. However, the adjustments to some of the sales changed between their submission with the Petition and the submission of evidence for the hearing. Petitioner did not provide any support for their adjustments to the sales prices. 60 Tax Docket Lookup, line 31. 61 State of Michigan, Assessors Manual: Volume I Residential, p 22. 62 Id. at 23. 63 https://www.michigan.gov/treasury/-/media/Project/Websites/treasury/STC/Assessors-Manual/Vol- 1/5_2014_Michigan_Assessors_Manual_Volume_I_Class_C_575750_7.pdf 64 The Appraisal of Real Estate at 36.
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MTT Docket No. 23-002232 Page 11 of 15 Further, while each of the sales have features that are either superior or inferior to the subject property, Petitioner appears to only adjust when the properties are superior (to lower the adjusted sale price) and ignores those features where the subject is inferior and would require an increased adjustment. Further, many of the adjustments are internally inconsistent. For instance, the subject has a total finish square footage of 1,632 SF, but the adjustments do not bare any discernable relationship with the difference in size with the subject or compared to the other sales. Sale Date of Sale Square Footage Sale Price Adjustment 2104 Cambrian November 23, 2022 2,400 SF $108,000 $0 5324 Elmsford October 23, 2023 1,937 SF $179,000 ($13,500) 5449 Meadowcrest April 13, 2022 1,842 SF $155,000 ($5,000) 5482 Meadowcrest October 15, 2021 1,550 SF $160,000 ($3,000) 5450 Litchfield April 10, 2024 1,754 SF $185,000 ($18,500) 5411 Litchfield November 30, 2021 1,755 SF $159,900 ($2,000) 5383 Westchester February 5, 2024 2,144 SF $185,000 ($18,500) 5503 Westchester August 26, 2022 1,534 SF $135,000 ($3,000) 5507 Litchfield March 1, 2023 1,731 SF $57,000 ($0) Most striking is the comparison of the two properties located at 5450 Litchfield and 5411 Litchfield differ by one square foot, yet one is adjusted by $18,500 and the other is adjusted by $2,000. Two other properties, that are inferior to the subject and require an upward adjustment, were also inconsistent. 5476 Westchester January 5, 2023 1,002 SF $135,000 $0 5465 Meadowcrest July 26, 2023 1,114 SF $124,900 $1,500 5394 Westchester December 8, 2023 1,030 SF $127,000 $2,000 Petitioner also made inappropriate adjustments for personal property like a pool table (5383 Westchester) and hot tub (5324 Elmsford). Petitioner’s adjustments are not credible or persuasive. Therefore, Petitioner’s adjustments to the sale prices are not given any weight. Next, Petitioner presents trend analysis for the periods 2021-2024 based on the sale prices of a few selected sales.65 This data is insufficient to establish a market trend for the area, township, or any other geographic area. Each individual sale has sale prices that reflect their individual characteristics. Petitioner has not provided adequate data or a persuasive analysis that supports their contention that property values are decreasing. Even if Petitioner’s trend data was accurate, Petitioner made no time adjustments to their comparable sale prices. To make no time adjustment to the sales is the same as arguing that the residential housing market did not change during this period of time. Respondent rebutted Petitioner’s trend analysis by finding that the residential property market was increasing at a rate of approximately 8%. Respondent’s 65 Tax Docket Lookup, line 22-25.
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MTT Docket No. 23-002232 Page 12 of 15 trend analysis is stronger, based on more competent data, and more convincing. The Tribunal gives Petitioner’s trend data no weight. Further, the Tribunal finds that several of the sales have issues that bar their consideration. First, the sale at 5507 Litchfield, which Petitioner described as a “strange sale” appears to be an outlier with all other sales by as much as $100,000 or more. Respondent’s assessor testified that this sale involved a house that was in very poor condition. The Tribunal give this sale no weight because it suffers from condition defects. Next, several sales are well outside the valuation period for tax years 2023 and 2024. The sales that took place in 2021 are too far removed to be relevant for this case. Therefore, the Tribunal gives the 2021 sales no weight. Further, the sale for 5383 Westchester and 5450 Litchfield, which both sold in 2024, are too far removed from the tax day of December 31, 2022. Last, the subject is 1,600 SF, which is significantly larger than the three of the sales that ranged between 1,002 SF and 1,114 SF, so those sales are given no weight. This leaves the following sales. Sale Date of Sale Square Footage Sale Price 5324 Elmsford October 23, 2023 1,937 SF $179,000 5449 Meadowcrest April 13, 2022 1,842 SF $155,000 5503 Westchester August 26, 2022 1,534 SF $135,000 The best these comparables can suggest is that the subject’s TCV is between $135,000 and $179,000. While the sale on Elmsford is larger than the subject, it may be inferior in other respects. The Elmsford sale represents the top of the market for the subject. While Petitioner has provided some credible sales that could compare to the subject, these do not support Petitioner’s contention that the subject is worth $131,000. Respondent presented four sales that took place between November 30, 2021, and February 7, 2024. Respondent made significant adjustments for time of sale, as well as for size of living area, air conditioning, garage size, and deck/balconies. However, just as with Petitioner’s evidence, Respondent selected sales that are too old to be considered for this appeal. The Tribunal places no weight in the Sale 4, which took place in 2021. Further, Sale 2 took place in February 2024, which is too far removed for consideration, so that sale is also given no weight. This leaves Sales 1 and 3. Sale 1, located at 5081 Calkins sold on July 14, 2023, for $213,500. It has an adjusted sale price of $168,491. While Petitioner object to the use of this sale, Respondent has made appropriate adjustments for the differences with the subject. Sale 3, located at 6220 Lancaster, sold on April 8, 2022, for $180,000. It has an adjusted sale price of $200,820.
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MTT Docket No. 23-002232 Page 13 of 15 Tax Year 2024 Petitioner requested that the 2024 tax year to be severed from this case because they did not have evidence for that year. Respondent objected, stating that they were presenting evidence that could be used to support the assessment for that tax year. Respondent’s valuation disclosure only provides an explicit declaration of TCV for tax year 2023. Petitioner has provided sales with relevant dates that could be used to value the subject as of December 31, 2023. The unadjusted sale prices for the three relevant sales that Petitioner proffered range between $135,000 and $179,000. Respondent’s sales for 2023 and 2024 range between $168,491 and $200,820 (adjusted sale prices). Petitioner’s sales represent the bottom end of values for comparable properties in this neighborhood whereas Respondent’s represent the top end of values for the same. The parties have an overlap with sales that range between $168,491 to $179,000. With that said, neither party has provided the original assessment values for 2024, nor has either party provided valuation disclosures that specifically address their assertions of TCV for 2024. The Tribunal lacks the appropriate information from either party to make an independent determination of TCV for 2024. Therefore, 2024 will be severed for further proceedings at a later date. Reconciliation of Value Petitioner has failed to meet their burden of proof that the TCV of the subject property is $131,200 for 2023. Respondent has provided credible and persuasive evidence under the sales comparison approach that the TCV is $170,000. Though it reflects a significant increase over the value indicated by the original assessment, the mass appraisal cost methodology used to calculate the original assessment is not as persuasive as the market approach presented here.66 “The market approach is the only valuation method that directly reflects the balance of supply and demand for property in marketplace trading.”67 JUDGMENT IT IS ORDERED that the 2024 tax year shall be SEVERED and assigned Docket No. 24-004246. IT IS FURTHER ORDERED that the property’s SEV and TV for the 2023 tax year at issue shall be as set forth in the Summary of Judgment section of this Final Opinion and Judgment. 66 “Because cost and market value are usually more closely related when improvements are new, the cost approach is more important in estimating the market value of new or relatively new construction . . . . [It] can sometimes be applied to older properties given adequate data to measure depreciation.” Appraisal Institute, The Appraisal of Real Estate (Chicago: Appraisal Institute, 15th ed. 2020) p. 530.. 67 Jones & Laughlin, 193 Mich App at 353-354.
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MTT Docket No. 23-002232 Page 14 of 15 IT IS FURTHER ORDERED that the officer charged with maintaining the assessment rolls for the tax year(s) at issue shall correct or cause the assessment rolls to be corrected to reflect the property’s TCV and TV within 20 days of entry of this Final Opinion and Judgment, subject to the processes of equalization.68 To the extent that the final level of assessment for a given year has not yet been determined and published, the assessment rolls shall be corrected once the final level is published or becomes known. IT IS FURTHER ORDERED that the officer charged with collecting or refunding the affected taxes shall collect taxes and any applicable interest or issue a refund within 28 days of entry of this Final Opinion and Judgment. If a refund is warranted, it shall include a proportionate share of any property tax administration fees paid and penalty and interest paid on delinquent taxes. The refund shall also separately indicate the amount of the taxes, fees, penalties, and interest being refunded. A sum determined by the Tribunal to have been unlawfully paid shall bear interest from the date of payment to the date of judgment, and the judgment shall bear interest to the date of its payment. A sum determined by the Tribunal to have been underpaid shall not bear interest for any time period prior to 28 days after the issuance of this Final Opinion and Judgment. Pursuant to MCL 205.737, interest shall accrue (i) after December 31, 2013, through June 30, 2016, at the rate of 4.25%, (ii) after June 30, 2016, through December 31, 2016, at the rate of 4.40%, (iii) after December 31, 2016, through June 30, 2017, at the rate of 4.50%, (iv) after June 30, 2017, through December 31, 2017, at the rate of 4.70%, (v) after December 31, 2017, through June 30, 2018, at the rate of 5.15%, (vi) after June 30, 2018, through December 31, 2018, at the rate of 5.41%, (vii) after December 31, 2018, through June 30, 2019, at the rate of 5.9%, (viii) after June 30, 2019, through December 31, 2019, at the rate of 6.39%, (ix) after December 31, 2019, through June 30, 2020, at the rate of 6.40%, (x) after June 30 2020, through December 31, 2020, at the rate of 5.63%, (xi) after December 31, 2020, through June 30, 2022, at the rate of 4.25%, (xii) after June 30, 2022, through December 31, 2022, at the rate of 4.27%, (xiii) after December 31, 2022, through June 30, 2023, at the rate of 5.65%, (xiv) after June 30, 2023, through December 31, 2023, at the rate of 8.25%, (xv) after December 31, 2023, through June 30, 2024, at the rate of 9.30%, (xvi) after June 30, 2024, through December 31, 2024, at the rate of 9.50%, and (xvii) after December 31, 2024, through June 30, 2025, at the rate of 9.47%. This Final Opinion and Judgment resolves all pending claims in this matter and closes this case. APPEAL RIGHTS If you disagree with the final decision in this case, you may file a motion for reconsideration with the Tribunal or a claim of appeal with the Michigan Court of Appeals. A motion for reconsideration must be filed with the Tribunal with the required filing fee within 21 days from the date of entry of the final decision. Because the final decision 68 See MCL 205.755.
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MTT Docket No. 23-002232 Page 15 of 15 closes the case, the motion cannot be filed through the Tribunal’s web-based e-filing system; it must be filed by mail or personal service. The fee for the filing of such motions is $50.00 in the Entire Tribunal and $25.00 in the Small Claims Division, unless the Small Claims decision relates to the valuation of property and the property had a principal residence exemption of at least 50% at the time the petition was filed or the decision relates to the grant or denial of a poverty or disabled veterans exemption and, if so, there is no filing fee. You are required to serve a copy of the motion on the opposing party by mail or personal service or by email if the opposing party agrees to electronic service, and proof demonstrating that service must be submitted with the motion. Responses to motions for reconsideration are prohibited and there are no oral arguments unless otherwise ordered by the Tribunal. Alternatively, you may file a claim of appeal with the Michigan Court of Appeals. If the claim is filed within 21 days of the entry of the final decision, it is an “appeal of right.” If the claim is filed more than 21 days after the entry of the final decision, it is an “appeal by leave.” A copy of the claim of appeal must be filed with the Tribunal to certify the record on appeal. There is no certification fee. By _______________________________________ Date Entered by Tribunal: February 26, 2025 PROOF OF SERVICE I certify that a copy of the foregoing was sent on the entry date indicated above to the parties or their attorneys or authorized representatives, if any, utilizing either the mailing or email addresses on file, as provided by those parties, attorneys, or authorized representatives. By: Tribunal Clerk