23-000482.pdf
Robert Baryo, Petitioner V City Of Davison, Respondent · 24-003752-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 Robert Baryo, MICHIGAN TAX TRIBUNAL Petitioner, SMALL CLAIMS DIVISION v MTT Docket No. 23-000482 & 24-003752 City of Davison, Case Type: Valuation Respondent. Presiding Judge Mark Perry ORDER OF DISMISSAL ORDER SEVERING 2024 TAX YEAR AND ASSIGNING IT DOCKET NUMBER 24-003752 Location of Hearing: Telephonic Hearing Hearing Held on: April 8, 2024 Appearances on Behalf of Petitioner: Robert Baryo Appearances on Behalf of Respondent: David McArthur 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 April 3, 2023, and Respondent filed an Answer on April 27, 2023. Following the September 12, 2023 hearing held in this matter, the Tribunal issued an Order of Rehearing on December 6, 2023, which provided that “the ALJ considered the testimony and evidence submitted and made specific findings of fact but could not make value conclusions for the tax years at issue. The ALJ noted that neither Petitioner nor Respondent provided sufficient testimonial or documentary evidence to allow the Tribunal to make an independent determination of value.” As a result, a rehearing in this matter was scheduled for April 8, 2024. The amount of the State Equalized Value (SEV) or Taxable Value (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 1 See MCL 205.762(1). 2 See MCL 205.737(5)(b).
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MTT Docket No. 23-000482 & 24-003752 Page 2 of 9 ISSUES AND APPLICABLE LAW The issues in this matter are: 1. Whether the subject property is assessed in excess of 50% of its true cash value (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 SUMMARY OF EVIDENCE A. Petitioner’s Evidence Petitioner’s contentions of TCV, SEV and TV: Parcel Number: 25-52-03-553-001 Year TCV SEV TV 2023 $170,000 $85,000 $85,000 2024 $180,000 $90,000 $90,000 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. 23-000482 & 24-003752 Page 3 of 9 Petitioner offered the following exhibits: 1. Evidence, filed on April 5, 2023 a. 2023 BOR decision. 2. Evidence, filed on October 16, 2023 a. Appraisal. No evidence was excluded from evidence. Based on the pleadings, admitted exhibits, and sworn testimony, Petitioner contends that Petitioner built a garage to replace an existing building on the subject property. Petitioner moved a garage that was stick built with a steel roof, and Respondent raised the SEV roughly 25% from $87,807 to $109,200. Petitioner built the new building himself with cost being $12,900, meanwhile, the City is valuing it at $40,000. The courts have ruled that taxing an individual on unrealized gains is illegal. Since Petitioner purchased the subject property in May 2013, the taxes were roughly 3% and manageable, but each year they have risen, and each year no new services or consideration have been given to Petitioner for the increase in taxes. Petitioner’s home was appraised in 2021 at $172,000. It did not go up in actual value more than 25%. This is due to a falsely inflated market not value. At the hearing, Petitioner indicated that his taxes had increased $13,000 based on a new building being moved to align with his driveway. Originally, when the City approved the building for the previous owners, the City did not approve them to build south of the home because it would have resulted in two frontages. In 2022, Petitioner began discussing moving the building to another location to make it usable as a garage. The outbuilding was moved to get it in-line with the property as the subject site is a corner lot. According to Petitioner, this resulted in the property being reassessed. Petitioner argues that he has no realized gains from this; Petitioner spent money to move a building from one portion of the property to another. The property has not been transferred and has remained homesteaded throughout this period. The tax values have increased about $2,000 annually during Petitioner’s ownership of the property and now Petitioner is being charged taxes as though he sold the property to himself. Respondent is forcing Petitioner to demolish the other building and assessing him for an additional building even though Petitioner already had a building at the subject site. There is no tangible asset that Petitioner has received, and these changes should not be taxable. Petitioner should not be taxed until he realizes the gains and he should not be taxed on those gains simply because he moved the building to where it should have located in the first place. Petitioner started construction on the new larger detached garage in 2022 and the garage and was largely finished by the end of the year even though the final inspection did not occur until 2023. The old workshop is still standing although partially torn down
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MTT Docket No. 23-000482 & 24-003752 Page 4 of 9 with plans to remove in 2024. Some of the components of the old building, including some electrical and windows, were used in the construction of the new building. The 2021 appraisal report that was submitted was completed for mortgage financing purposes with an effective date of June 7, 2021, and does not include contributory value of new garage. However, Petitioner argues that the appraisal does include the value of an accessory structure measuring 22 x 22, and with new the addition of the new garage, Petitioner was essentially moving 18 feet and 8 feet of building structure, which does not add up to Respondent’s value of the property. Three of the four comparable sales have sheds, and subject property has a workshop. Petitioner is looking for a fair increase in taxes. The building was on the property and even if it was not assessed properly, that is not the fault of Petitioner. Petitioner has had no realized gain. Petitioner is requesting a fair market assessment and not what it is worth today. Petitioner does not see a $47,000 increase in two years. Even if the building is valued at $19,000, this does not equate to the increase in value determined by the City. Petitioner confirmed that the 18 x 19 workshop, with blue siding and a roof, listed in the appraisal is still at the subject site. The new building is offset but would be located in the right rear south side of the property. B. Respondent’s Evidence The property’s TCV, SEV and TV, as confirmed by the BOR, for the tax year(s) at issue: Parcel Number: 25-52-03-553-001 Year TCV SEV TV 2023 $218,400 $109,200 $87,807 2024 $228,800 $114,400 $92,197 Respondent offered the following exhibits: 1. Evidence, filed on February 21, 2024 a. 2023 Property Record Card and Valuation Report for Subject Property. No evidence was excluded. Based on the pleadings, admitted exhibits, and sworn testimony, Respondent testified that the previous workshop was never listed on the assessment records. When the new structure was built, the TCV of $19,962 was added to the assessment. Although Petitioner indicated that he built the structure, the assessor does not consider this fact in valuing the structure. The increase in AV from 2022 to 2023, from $89,300 to $109,200, was attributable to the addition of the new structure and the sales study that is conducted every year. Approximately half of the TV increase was due to the new construction and the other half being attributed to the state-mandated annual TV increase.
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MTT Docket No. 23-000482 & 24-003752 Page 5 of 9 As far as an increase from 2023 to 2024, the TCV increase was due to the sales study, with the property TCV increasing by approximately $10,400. Respondent testified that the 2022 economic condition factor (ECF) for the property was 1.056. For 2023 and 2024, Respondent indicated that the ECF was 1.105 and 1.133, respectively. Respondent’s assessor also testified that the land value tables changed slightly each year for 2022, 2023, 2024 but did not provide copies of the land table or documents showing the land valuation. The new building at the subject site is listed on the property record card as the 1,200 square foot building with a lean-to of 240 square foot. The “new” $9,900 on the valuation statement is for the new building with a plus adjustment for the sales ratio study. Respondent confirmed that the subject site is improved with the main home, a larger 1,200 square foot building and lean-to. FINDINGS OF FACT The following facts were proven by a preponderance of the evidence: 1. The subject property is located at 605 W. Chelsea Circle, Davison in Genesee County. 2. The subject property is classified as residential real property. 3. This case was originally heard on September 12, 2023. 4. A Proposed Order for Rehearing (“Proposed Order”) was issued on October 13, 2023. The Proposed Order indicated that the parties’ testimony was the only relevant evidence provided, and it is not sufficient to make a value determination. 5. Although neither party filed exceptions to the Proposed Order, Petitioner submitted an appraisal of the subject property to support its contention of value but failed to include a proof of service of the evidence as required by TTR 287(1) or TTR 289(1). 6. Petitioner submitted an appraisal on October 16, 2023. The appraisal values the subject property at $185,000 as of June 7, 2021. The analysis compared the subject property to four comparable sales. 1. Comparable one (3157 North Irish Road) sold on December 2020, for $164,800, with an adjusted sale price of $174,800. 2. Comparable two (2279 Major Lane) sold on September 2020, for $175,000, with an adjusted sale price of $178,800. 3. Comparable three (8162 Faulkner Drive) sold on May 2021, for $185,000, with an adjusted sale price of $192,680. 4. Comparable four (8110 E Potter Road) sold on August 2020, for $190,000, with an adjusted sale price of $186,312. 7. On December 6, 2023, the Tribunal issued the Order for Rehearing (“Order) which provided that the Administrative Law Judge “considered the testimony and evidence submitted and made specific findings of fact but could not make value conclusions for the tax years at issue.” 8. The Tribunal issued the Notice of Telephone Rehearing on January 29, 2024.
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MTT Docket No. 23-000482 & 24-003752 Page 6 of 9 9. The Notice of Telephone Rehearing advised the parties that they could submit additional evidence “at least 21 days in advance of the hearing” or by March 18, 2024. 10. Respondent submitted the 2023 property record card as additional evidence after the original hearing, but did not submit land value study or ECF study. 11. 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. 12. Neither Petitioner nor Respondent provided reliable evidence of value. CONCLUSIONS OF LAW The following authority and reasoned opinion supports the Tribunal’s determination: Petitioner in this case contends that the subject property is assessed in excess of 50% of its TCV. As indicated above, “the petitioner has the burden of proof in establishing the [TCV] of the property.”11 The Michigan Court of Appeals has held that “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 the evidence, which may shift to the opposing party.”12 Although the Tribunal may not “automatically accept a respondent’s assessment,”13 “involuntary dismissal of an action is appropriate where the trial court, when sitting as the finder of fact, is satisfied at the close of the plaintiff's evidence that ‘on the facts and the law the plaintiff has shown no right to relief.’”14 Thus, the Tribunal may, upon motion or its own initiative, enter an involuntary dismissal if the petitioner fails to meet the burden of going forward.15 “[A] motion for involuntary dismissal calls upon the trial judge to exercise [their] function as trier of fact, weigh the evidence, pass upon the credibility of witnesses and select between conflicting inferences. [Petitioner] is not given the advantage of the most favorable interpretation of the evidence.”16 The Tribunal concludes, based upon the Findings of Fact set forth herein, that this case was originally heard on September 12, 2023. After that hearing, the Tribunal issued a Proposed Order indicating that neither Petitioner nor Respondent presented any relevant testimony or documentary evidence that could assist the Tribunal in making an independent determination of value. Specifically, the Proposed Order stated that “the parties’ testimony was the only relevant evidence provided, and it is not sufficient to make a value determination. As a result, the case was scheduled for a rehearing to give the parties another opportunity to submit evidence of value. The only additional 11 MCL 205.737(3); see also Kern v Pontiac Twp, 93 Mich App 612, 620; 287 NW2d 603 (1979). 12 Jones & Laughlin, 193 Mich App at 354-355. 13 Id. at 355-356. 14 Begola Services Inc v Wild Bros, 210 Mich App 636, 639; 534 NW2d 217 (1995). 15 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 379, 408-410; 576 NW2d 667 (1998). 16 2 Crooked Creek LLC v Cass County Treasurer, 329 Mich App 22, 41; 941 NW2d 88 (2019) (quotation marks omitted).
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MTT Docket No. 23-000482 & 24-003752 Page 7 of 9 evidence that was not considered at the original September 12, 2023 hearing was the June 7, 2021 appraisal of the subject property and the 2023 property record card. The testimony and documentary evidence offered by the parties at the rehearing was again insufficient to allow the Tribunal to make a value determination for the tax year at issue. Petitioner’s testimony at the rehearing largely mirrors the testimony provided at the first hearing, especially as it related to the change in AV following the modifications to the garage. Similarly, Respondent’s testimony at both the original hearing and the rehearing simply indicated that the improvements were based on the assessor manual, with the change in AV and TV due to the new construction and sales studies. Petitioner’s appraisal and the comparables relied upon by the appraiser all sold in 2020 and 2021 and are too far removed from the December 31, 2022 valuation date to be considered reliable indicators of value, especially in the absence of adjustments for changes in market conditions or evidence establishing that no adjustments are needed. Further, Petitioner’s testimony indicated that the subject property had been reconfigured or modified in such a way that the comparables selected by the appraiser may not have been suitable for comparison as of the valuation date. Finally, although Respondent submitted the 2023 property record card for the subject property, Respondent failed to submit the land and ECF sales studies or provide testimony for either of these two components of the cost approach. Absent support for the various factors affecting the value determination, the Tribunal cannot find its valuation credible or reliable. As a result, the Tribunal finds that Petitioner has not met the burden of going forward with the evidence in this case. As indicated above, Petitioner has the burden of establishing the value and here, Petitioner’s sales comparables cannot be considered a reliable indicator of value given their sale dates and the reconfiguration of the subject property. Petitioner has failed to show any right to relief even after being afforded a second opportunity to submit additional evidence and testimony at a continued hearing. Neither party provided any relevant evidence of value for the 2024 tax year. “The Tribunal may not automatically accept a respondent's assessment, but must make its own findings of fact and arrive at a legally supportable true cash value.”17 As such, the Tribunal shall sever the 2024 tax year, assign it a new docket number, and parties will be ordered to file pleadings specific to the 2024 tax year. JUDGMENT IT IS ORDERED that this case is DISMISSED. IT IS ORDERED that the 2024 tax year shall be SEVERED and assigned Docket No. 24-003752. 17 Jones & Laughlin Steel Corp v City of Warren, 193 Mich App 348, 355; 483 NW2d 416 (1992) (Citing Pinelake Housing Cooperative v Ann Arbor, 159 Mich App 208, 220; 406 NW2d 832 (1987)); Consolidated Aluminum Corp v Richmond Twp, 88 Mich App 229, 232-233; 276 NW2d 566 (1979)).
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MTT Docket No. 23-000482 & 24-003752 Page 8 of 9 IT IS FURTHER ORDERED that Petitioner shall file a petition pertaining to the 2024 tax year within 21 days of the entry of this Order.18 The petition shall note the docket number assigned by the Tribunal for the 2024 tax year and if filed utilizing the Tribunal’s e-filing system, must be filed on the assigned 2024 docket number as a “Severed Petition.” IT IS FURTHER ORDERED that the Tribunal shall issue a Notice of Docket after receipt of Petitioner’s petition. 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 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: October 11, 2024 18 Alternatively, the petition may be downloaded from the Tribunal’s website and mailed to the Tribunal via United States Postal Service at: Michigan Tax Tribunal, PO BOX 30232, Lansing, MI 48909. The petition may also be delivered to the Tribunal via overnight carrier (UPS, FedEx, or DHL) at: Michigan Tax Tribunal, 2nd Floor MTT, 2407 N. Grand River Avenue, Lansing, MI 48933.
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MTT Docket No. 23-000482 & 24-003752 Page 9 of 9 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 provide by those parties, attorneys, or authorized representatives. By: Tribunal Clerk