Background
Knier, Powers, Martin, & Smith, LLC replaced the roof on its commercial property in Bay City. The city treated the replacement roof as “new construction” and therefore an “addition” under Michigan’s General Property Tax Act, allowing the property’s taxable value to increase beyond the statutory cap. The Michigan Tax Tribunal granted summary disposition in favor of Bay City.
The Court of Appeals initially affirmed in an August 2024 opinion. The Michigan Supreme Court remanded for reconsideration of whether the Tax Tribunal had jurisdiction to address KPMS’s arguments that the roof was not an “addition” under the Michigan Constitution and that the statutory definition of “additions” impermissibly conflicted with the Constitution.
The Court’s Holding
The Court of Appeals held that the Tax Tribunal had jurisdiction to determine whether the replacement roof was an “addition” under both MCL 211.34d and article 9, § 3 of the Michigan Constitution. Because MCL 211.34d expressly defines “additions” for purposes of that constitutional provision, applying the statute to the roof required no independent constitutional analysis. The roof was “new construction” because it did not exist on the preceding tax day and was not statutory “replacement construction,” which is limited to property replaced after damage or destruction by accident or an act of God.
The Tribunal lacked jurisdiction, however, to decide whether the statutory definition itself impermissibly conflicted with the Michigan Constitution. That constitutional challenge had to be brought in a separate circuit-court action, and the Court of Appeals lacked jurisdiction to decide it in an appeal from the Tribunal. The court accordingly readopted most of its prior opinion, vacated the inconsistent portion of its earlier constitutional analysis, and affirmed the Tribunal’s April 24, 2023 order.
Key Takeaways
- A replacement roof may qualify as “new construction” and an “addition” under Michigan property-tax law when it was not replaced because of damage or destruction by accident or an act of God.
- The Tax Tribunal may determine whether property fits the statutory definition of an “addition,” which also governs that term under article 9, § 3 of the Michigan Constitution.
- A claim that the statutory definition itself conflicts with the Constitution must be filed in circuit court, not litigated before the Tax Tribunal.
Why It Matters
The decision clarifies the boundary between the Michigan Tax Tribunal’s authority to apply property-tax statutes and a circuit court’s authority to decide challenges to those statutes’ constitutionality. Taxpayers contesting how an assessment statute applies may proceed before the Tribunal, but those seeking to invalidate the governing statute on constitutional grounds must pursue a separate circuit-court action.