Tribunal LC No. 16-000408-TT
Before: O'Brien, P.J., and Cavanagh and Stephens, JJ.
City of Lansing, appeals by right an order of the Michigan
Tax Tribunal granting summary disposition in favor of
petitioner, TRJ & E Properties, LLC, and concluding that
respondent had erroneously uncapped the taxable value of
property that had been transferred to petitioner by a
commonly controlled entity, TRJ Properties, Inc. (TRJ
Properties). We affirm.
2015, TRJ Properties owned an apartment building and
transferred its interest in that property to petitioner. The
ownership interests in petitioner are as follows: 25% by Tony
Farida, 25% by Ricky Farida, 25% by Jeffrey Farida, and 25%
by Eric Farida. TRJ Properties was owned as follows: 40% by
Hamid Farida, 20% by Tony Farida, 20% by Ricky Farida, and
20% by Jeffrey Farida. Hamid is the father of Tony, Ricky,
Jeffrey, and Eric. Petitioner's operating agreement
provides that, subject to specific exceptions, "the
affirmative vote of a majority of the Shares of all Members
entitled to vote on such a matter is required."
determined that the property transfer was an uncapping event
under MCL 211.27a(3), and increased the property's
taxable value from $468, 746 to $535, 200. Petitioner
petitioned the Tax Tribunal to reverse respondent's
decision uncapping the property's taxable value,
asserting that the transfer was between commonly controlled
entities and thus exempt from uncapping under MCL
moved for summary disposition, asserting that the facts were
not in dispute and respondent was entitled to judgment as a
matter of law. Respondent argued that the State Tax
Commission (STC) had issued Revenue Administrative Bulletin
(RAB) 1989-48, which provides that common control only exists
when ownership is identical, or when the same five or fewer
people have an 80% interest in both properties. Respondent
argued that an uncapping event occurred in this case because
the same five or fewer people only had a 60% shared interest
in the properties.
Petitioner also moved for summary disposition. Petitioner
argued that TRJ Properties and petitioner were commonly
controlled because the same siblings owned a controlling
interest in each entity, where a controlling interest was 50%
or more of the combined voting power in each entity.
Petitioner alternatively argued that common control existed
under RAB 2010-1 because a parent indirectly controlled,
through his or her children, both entities. Because Hamid was
the father of all the siblings who had an ownership interest
in each entity, Hamid constructively controlled 100% of both
entities. Accordingly, no uncapping event occurred.
Tribunal determined that the parties had effectively moved
for summary disposition under MCR 2.116(C)(10). The Tax
Tribunal noted that respondent was arguing that the common
control rules of RAB 1989-48 applied, but not the
constructive ownership rules in RAB 2010-1. It rejected
respondent's argument that RAB 1989-48 applied and
declined to adopt RAB 1989-48's requirements because
"[t]o apply such a rule would be to add requirements not
present in the statute, and thus exercising legislative power
without authority, by creating or changing the laws enacted
by the Legislature." Instead, the Tax Tribunal applied
the plain language of MCL 211.27a which provides that a
transfer of ownership uncaps a property's taxable value
for the following tax year, but a transfer of ownership does
not include "[a] transfer of real property . . . among .
. . other legal entities if the entities involved are
commonly controlled." MCL 211.27a(3), 211.27a(7)(m).
case, the Tax Tribunal noted, Tony, Ricky, and Jeffrey's
60% interest in TRJ Properties controlled that entity, and
Tony, Ricky, and Jeffrey's 75% interest in petitioner
also controlled that entity. Petitioner's Articles of
Organization showed that "a mere majority of shares of
all members is required to act." Accordingly, both
entities were controlled by three of the four Farida
brothers, and thus the entities were commonly controlled.
Therefore, MCL 211.27a(7)(m) applied and "the
property's taxable value remains capped." This
argues that the Tax Tribunal erred when it determined that
these two entities were commonly controlled for the purposes
of MCL 211.27a(7)(m) because RAB 1989-48 provides that common
control requires 80% of the combined voting power be shared
between two entities and, in this case, the combined voting
power of the people who controlled the two entities was 60%
and 75%, respectively. We disagree.
Court reviews de novo a lower tribunal's decision on a
motion for summary disposition. Maiden v Rozwood,
461 Mich. 109, 118; 597 N.W.2d 817 (1999). A party is
entitled to summary disposition under MCR
2.116(C)(10) if there is no genuine issue as to any
material fact, and the moving party is entitled to judgment
as a matter of law. Id. at 120.
Court's review of a decision by the Tax Tribunal is
limited. Mich Props, LLC v Meridian Twp, 491 Mich.
518, 527; 817 N.W.2d 548 (2012). When a party does not
dispute the facts or allege fraud, this Court reviews whether
the tribunal "made an error of law or adopted a wrong
principle." Id. at 527-528. This Court reviews
de novo the interpretation and application of tax statutes.
Id. at 528. If the plain and ordinary meaning of a
statute's language is clear, this Court will not engage
in judicial construction. Paris Meadows, LLC v City of
Kentwood, 287 Mich.App. 136, 141; 783 N.W.2d 133 (2010).
When interpreting a statute, this Court's goal is to give
effect to the intent of the Legislature. Sun Valley Foods
Co v Ward, 460 Mich. 230, 236; 596 N.W.2d 119 (1999).
The language of the statute itself is the primary indicator
of the Legislature's intent. Id.
General Property Tax Act (GPTA) provides for the taxation of
real and personal property. MCL 211.1 et seq.
Generally, a property's taxable value is determined by
the lesser of (1) the property's current state equalized
value, or (2) the property's taxable value in the
previous year, minus losses, multiplied by 1.05 or the
inflation rate, plus all additions. MCL 211.27a(2). This
limitation, which is based on Const 1963, art 9, § 3,
effectively caps increases on a property's taxable value
so that "any yearly increase in taxable value is limited
to either the rate of inflation or 5 percent, whichever is
less." Mic ...