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STATE OF MICHIGAN
COURT OF APPEALS


BRANFORD TOWNE HOUSES COOP, Petitioner-Appellant, v CITY OF TAYLOR and COUNTY OF WAYNE, Respondents-Appellees.

UNPUBLISHED April 19, 2007

No. 265398 Tax Tribunal LC No. 00-090502

Before: Zahra P.J., and Bandstra and Owens, JJ. PER CURIAM. In this tax case, petitioner Branford Towne Houses Cooperative (Branford) appeals as of right an order and judgment assessing the true cash value of a housing cooperative for tax years 1984 to 2002. On appeal, Branford primarily challenges the tax tribunal's decision not to employ a certain valuation method (income capitalization) to assess the subject property. We affirm. A Basic Facts and Proceedings In its opinion and judgment, the tribunal summarized the basic facts and proceedings as follows:1 The subject property is located within the City of Taylor and Wayne County, Michigan. The subject property is a multi-family housing complex, built in six phases during 1970 and 1971. The housing structures are one-and twostory townhouses. There are 39 buildings containing 369 townhouses. There are 54 one-bedroom townhouses, 248 two-bedroom townhouses, and 67 threebedroom townhouses. Each townhouse has a basement. There is paved parking for the residents, however, there are no garages or carports. In addition to the housing structures, there is a maintenance garage, a community building/clubhouse and playground equipment.

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Neither party challenges the tribunal's summary.

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All structures are located on two parcels of land: parcel nos. 60-38-990022-005 and 60-38-99-0030-002. Additionally, for tax years 1984-1999, the subject property includes one parcel of vacant land, consisting of 19.71 acres. In 1999, 15.257 acres of the vacant land was sold, and the remaining vacant land was split into two parcels: parcel no. 60-038-99-0030-706, consisting of.28 acres; and parcel no. 60-038-99-0030-705, consisting of 4.18 acres. Thus, for tax years 2000-2002, the subject property includes two parcels of vacant land. While the acreage reported by Petitioner and Respondent varied slightly, the Tribunal finds this variance insignificant. Petitioner is a Michigan nonprofit corporation. Petitioner's purpose is to provide housing according to "a cooperative plan under the provisions of Section 98 through 109 and 117 through 132-A, Act No. 327 of the Public Acts of 1931, as amended." Petitioner provides cooperative housing, "in the manner and for the purposes provided in Section 236 of Title II of the National Housing Act, as amended." In other words, Petitioner provides cooperative housing for low-and moderate-income persons. To that end, Petitioner owns and operates the subject property. Petitioner is owned by the members of the cooperative and only members of the cooperative may occupy the premises. According to the "Introduction-The Cooperative Housing Corporation, Branford Towne Houses Cooperative," "[t]he most important part of the cooperative is the individual member." To become a member, an individual or family must meet the income guidelines HUD.[] Prospective members must sign a subscription agreement. After it is determined that an individual, or family, is eligible for membership, the new member pays the "existing equity" on the unit. Members must enter into an "Occupancy Agreement," which defines a member's rights and obligations. Members in the cooperative are issued "membership certificates" as evidence of ownership. Membership gives the individual or family the right to occupy a townhouse unit. Members may sell their share in the cooperative and the right to occupy their unit. Members are responsible for electing a board of directors to govern Petitioner's affairs. The Board is composed of five people, the majority of whom must be members of the cooperative. In addition to payment of the transfer price, members are required to pay a monthly "carrying charge." The amount of the carrying charge is approved by [The Dep't of Housing and Urban Development] HUD, pursuant to the regulatory agreements. While carrying charges are often referred to as rent, they are not the same. For example, the amount of rent charged typically includes a certain amount of landlord's profit. Because cooperatives are organized on a nonprofit basis, carrying charges do not include profit. According to Petitioner, carrying charges are a member's "fair share of operating costs of the property," including payment on the mortgages. Petitioner obtained mortgage financing for the subject property through a federally subsidized housing program known as "Section 236" of the National

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Housing Act of 1959, as amended. A separate mortgage was secured for each of the six phases of construction. Each mortgage has a 40 year term. * * *

To obtain this financing, Petitioner was required to enter into regulatory agreements with HUD, which it did in 1970 and again in 1971. Petitioner, like other recipients of Section 236 financing, may not sell, dispose of or transfer the subject property without prior approval from HUD. Moreover, Petitioner may not prepay the mortgage obligation without prior approval from HUD. Because the parties were unable to locate a sale of a Section 236 property for which the 40 year mortgage restriction had not expired or find a property for which HUD had lifted its restrictions, the parties were unable to find sales of comparable Section 236 properties. [2005 WL 3360589, at pp 42-44 (Citations Omitted).] In addition, the tribunal's opinion categorized the benefits and restrictions of cooperatives regulated by section 236 of the National Housing Act. See 2005 WL 3360589, at pp 42-44. In 1984, Branford's predecessor in interest filed a petition with the tax tribunal against the City of Taylor challenging its assessment of real property taxes in regard to the subject property. The case was held in abeyance pending the Supreme Court's decision in Meadowlanes Ltd Dividend Housing Assoc v City of Holland, 437 Mich 473; 473 NW2d 636 (1991). Subsequently, the case was again held in abeyance pending this Court's decision in Georgetown Place Co-op v City of Taylor, 226 Mich App 33; 572 NW2d 232 (1997). The case was no longer held in abeyance after December of 2000. The tribunal held ten days of hearings at which the parties presented their respective valuations. At the hearings, the parties submitted evidence in regard to the three "well recognized, traditional, and accepted methods for determining true cash value for purposes of taxation of real property: (1) market value as determined by comparable selling prices [sales comparison]; (2) reproduction cost less depreciation or the adjusted reproduction cost method [reproduction cost]; and (3) capitalization of income [income capitalization]. Michigan Civil Jurisprudence, Taxes,

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