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United Methodist Retirement Communities, Inc. v. City of Chelsea

Supreme Court of Michigan

May 10, 2019

UNITED METHODIST RETIREMENT COMMUNITIES, INC., Petitioner-Appellant,
v.
CITY OF CHELSEA, Respondent-Appellee.

          MTT: 15-003171-R

          Bridget M. McCormack, Chief Justice David F. Viviano, Chief Justice Pro Tem Stephen J. Markman Brian K. Zahra Richard H. Bernstein Elizabeth T. Clement Megan K. Cavanagh, Justices

          ORDER

         On order of the Court, the application for leave to appeal the May 22, 2018 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the question presented should be reviewed by this Court.

          Markman, J. (dissenting).

         I respectfully dissent from this Court's order denying leave to appeal. Instead, I would grant leave to appeal to reconsider this Court's holdings in Mich Baptist Homes & Dev Co v Ann Arbor, 396 Mich. 660 (1976), and Retirement Homes of the United Methodist Church v Sylvan Twp, 416 Mich. 340 (1982), in light of our more recent holding in Baruch SLS, Inc v Tittabawassee Twp, 500 Mich. 345 (2017). More specifically, I would grant to consider whether this Court's holding in Baruch logically compels an alternative analysis for determining whether a charitable institution is precluded from receiving a property tax exemption under MCL 211.7o because its property is not "occupied by [it] solely for the purposes for which [it] was incorporated . . . ." MCL 211.7o(1).

         Petitioner United Methodist Retirement Communities seeks a tax exemption under MCL 211.7o for property it owns and operates as a residential retirement facility for senior citizens. MCL 211.7o(1) provides:

Real or personal property owned and occupied by a nonprofit charitable institution while occupied by that nonprofit charitable institution solely for the purposes for which that nonprofit charitable institution was incorporated is exempt from the collection of taxes under this act.

The Tax Tribunal denied petitioner an exemption on the grounds that its property was not "occupied by [it] solely for the purposes for which [it] was incorporated," MCL 211.7o(1), and the Court of Appeals affirmed, relying on this Court's decisions in Mich Baptist and Retirement Homes. In those cases, this Court denied tax exemptions under MCL 211.7o to retirement homes on the basis that their properties were not occupied solely for the purposes for which they were incorporated. We reasoned that this requirement was only satisfied if the homes "benefit[ed] the general public without restriction," Mich Baptist, 396 Mich. at 671; see also Retirement Homes, 416 Mich. at 349, and that the homes in dispute did not do so because they did not help the elderly population generally, but rather only a subset of relatively less infirm and relatively less financially needy individuals, Mich Baptist, 396 Mich. at 671-672; Retirement Homes, 416 Mich. at 349-353.

         Petitioner here argues that the Court of Appeals erred by relying on these two cases because their reasoning was effectively rejected in Baruch, 500 Mich. 345 (2017). In Baruch, we addressed one of the six factors that this Court had previously laid out in Wexford Med Group v City of Cadillac, 474 Mich. 192 (2006), for determining whether an institution is "charitable." As relevant to the instant case, Wexford held that the third of these factors is:

A "charitable institution" does not offer its charity on a discriminatory basis by choosing who, among the group it purports to serve, deserves the services. Rather, a "charitable institution" serves any person who needs the particular type of charity being offered. [Id. at 215.]

Baruch, however, clarified that this factor only "ban[s] restrictions or conditions on charity that bear no reasonable relationship to an organization's legitimate charitable goals" and further explained that "the 'reasonable relationship' test should be construed quite broadly to prevent unnecessarily limiting the restrictions a charity may choose to place on its services." Baruch, 500 Mich. at 357-358.

         Petitioner contends that Baruch overruled Mich Baptist and Retirement Homes, which denied charitable tax exemptions on the basis of limitations that those institutions placed on those who could receive their services absent consideration of whether there was a reasonable relationship between those limitations and the organizations' legitimate charitable goals. The Court of Appeals rejected this argument, asserting that Baruch had exclusively addressed whether an institution was "charitable," whereas Mich Baptist and Retirement Homes addressed whether a charitable institution "occupied the premises solely for the purposes for which it was incorporated." United Methodist Retirement Communities, Inc v City of Chelsea, unpublished per curiam opinion of the Court of Appeals, issued May 22, 2018 (Docket No. 337998), pp 5-6.

         I would grant leave to reconsider Mich Baptist and Retirement Homes in light of Baruch for three related reasons.

         First, Wexford factor three, which this Court interpreted in Baruch, was arguably derived from the same two cases (Mich Baptist and Retirement Homes) that also supply the standard for determining whether a property is "occupied by that nonprofit charitable institution solely for the purposes for which [it] was incorporated . . . ." MCL 211.7o(1). In Wexford, before laying out the factors relevant to determining whether an institution is "charitable," this Court analyzed Mich Baptist and Retirement Homes. Wexford, 474 Mich. at 209-212. Indeed, Wexford factor three substantially reflects the analysis that we employed in Mich Baptist and Retirement Homes. If Wexford factor three was indeed derived from the same cases that defined the standard for whether a property is "occupied by that nonprofit ...


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