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A Better Partnership
July 03, 2014

COA holds mere presence of a warehouse does not qualify a property as industrial for tax purposes

In CVS Caremark v Michigan State Tax Commission, No. 312119, the Michigan Court of Appeals held that property is not to be classified as “industrial” under MCL 211.34c(2)(d)(ii) merely because it contains a warehouse. The definition of industrial property in Section 211.34c(2)(d) includes “[p]arcels used for utilities sites for generating plants, pumping stations, switches, substations, compressing stations, warehouses, rights-of-way, flowage land, and storage areas.” CVS argued that this definition was ambiguous and, therefore, ought to be construed in CVS’s favor—that is, all properties containing a warehouse should be classified as industrial. The COA found that the definition is not ambiguous, and that any property classified as industrial under MCL 211.34c(2)(d)(ii) must be used for “utility-related purposes.” Because CVS presented no evidence that it used the relevant property for utility-related purposes, the COA upheld the State Tax Commission’s denial of reclassification from commercial to industrial property.

The Court also held that the Michigan State Tax Commission’s (“Commission”) review procedure under MCL 211.34c(6) is not a “hearing” under the Michigan Constitution. MCL 211.34c(6) states in part, “[t]he state tax commission shall arbitrate the petition based on the written petition and the written recommendations of the assessor and the state tax commission staff . . . .” The COA found that the plain meaning of this statute indicates that no hearing by the Commission is required. Because no hearing is required in the Commission’s review, a circuit court’s review of the Commission’s determination is limited to whether the determination is “authorized by law.” Under that limited scope of review, it is improper for the court to review the evidentiary support for the Commission’s determination. 

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