Circuit Court. LC No. 2017-161231-AA.
Before: SAWYER, P.J., and O'BRIEN and LETICA, JJ.
Mich.App. 686] Per Curiam.
Delta Business Center, LLC (Delta), appeals as of right the
trial court's opinion and order affirming a decision of
the State Tax Commission (STC) denying Delta's
application for a tax exemption under the Plant
Rehabilitation and Industrial Development Districts Act (the
PRIDDA), MCL 207.551 et seq. On appeal, we are asked to
decide under what circumstances leased property can qualify
as " industrial property" [328 Mich.App. 687] under
the PRIDDA. We conclude that for leased property to qualify
as " industrial property" under the PRIDDA, a
lessee must be liable for property taxes and must furnish
proof of that liability. We further conclude that this means
that a lessor cannot receive a tax exemption under the PRIDDA
when the leased property must qualify as " industrial
property." Because Delta is strictly a lessor of the
property at issue and because that property must qualify as
" industrial property" for Delta to receive its
requested tax exemption, the STC correctly denied Delta's
application. We affirm.
the PRIDDA, local governmental units may establish "
plant rehabilitation districts" and " industrial
development districts." MCL 207.554(1). After such a
district is established, " the owner or lessee of a
facility may file an application for an industrial facilities
exemption certificate [IFEC] with the clerk of the local
governmental unit that established the plant rehabilitation
district or industrial development district." MCL
207.555(1). If the application is approved by the local
governmental unit, the application is sent to the STC for
review. MCL 207.557(1). If the STC grants the IFEC
application, the applicant receives a tax advantage: in place
of ad valorem taxes, an industrial facility tax is levied on
the exempt property. MCL 207.561. If the STC had granted
Delta's IFEC application, Delta's industrial facility
tax for up to the next 12 years would have been calculated
using the taxable value of the at-issue property in the year
before the effective date of the IFEC, essentially freezing
the taxable value of the property. MCL 207.564(1); MCL
is the owner of a 93,000-square-foot industrial park that it
leases to tenants. The building on Delta's[328 Mich.App.
688] property was originally intended for printing
newspapers, but, by 2017, that use was no longer economically
feasible. So in an agreement between respondent, Delta
Charter Township (the Township), and Delta, the Township
agreed to grant Delta a 10-year IFEC; in return, Delta agreed
to invest $3,900,000 in the property.
being approved by the Township, Delta's IFEC application
was sent to the STC for review. For Delta to receive the IFEC
that it requested, it had to establish, among other things,
that its property would constitute " industrial
property" under MCL 207.552(7) after it was renovated;
the statutory provision provides a detailed explanation of
all the activities that can be performed on a property for it
to qualify as " industrial property." The STC
interpreted MCL 207.552(7) as requiring that the IFEC
applicant engage in one of the activities listed in that
statute for the applicant
to qualify for the exemption. Though Delta's tenants were
allegedly engaging in listed activities, Delta itself was
using the property for an unlisted activity— real
estate development. The STC thus denied Delta's IFEC
application, concluding that Delta " does not qualify
for the exemption because it does not engage in any of the
activities listed within the definition of industrial
property as outlined in MCL 207.552."
appealed in the circuit court. The circuit court
affirmed the STC's decision but on other
grounds. The[328 Mich.App. 689] trial court
reasoned that for leased property to be considered "
industrial property" under MCL 207.552(7), " the
lessee must be liable for the payment of property taxes and
must furnish proof of that liability."  The court
concluded that because Delta " offered no proof of [its]
lessees' liability for payment of property taxes,"
the STC was authorized by law to deny Delta's
now appeals by right.
STANDARDS OF REVIEW
appealed the STC's decision in accordance with the
Administrative Procedures Act, MCL 24.201 et seq.
Under that act, the circuit court was required to set aside
the STC's decision if, among other reasons, it was in
violation of a statute or was affected by a substantial and
material error of law. MCL 24.306.
Court reviews a circuit court's decision " to
determine whether the circuit court applied correct legal
principles and whether it misapprehended or grossly
misapplied the substantial evidence test to the agency's
findings." Sterling Heights v Chrysler Grp,
LLC, 309 Mich.App. 676, 681; 873 N.W.2d 342 (2015)
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