Does the property tax exemption for educational institutions apply only to non-profits, or can for-profit educational institutions take advantage of the tax break as well? The Michigan Supreme Court will address that issue in SBC Health Midwest, Inc. v. City of Kentwood, No. 151524.
SBC Health Midwest, Inc., which operates Sanford-Brown College Grand Rapids, protested an assessment of property taxes and the assessments were affirmed by the local Board of Review. SBC petitioned the Tax Tribunal, claiming entitlement to a tax exemption for the property under MCL 211.9(1)(a), a statute that provides a tax exemption for personal property and real property of charitable, educational, and scientific institutions. The Tax Tribunal denied SBC’s motion for summary judgment, finding that MCL 211.9(1)(a) must be read in pari matertia with MCL 211.7n, a statute that provides a tax exemption for real estate or personal property owned and occupied by nonprofit institutions. The Tax Tribunal’s interpretation of those two statutes disqualified Sanford-Brown College from the tax exemption because it is for-profit. SBC appealed, arguing that it qualifies for the tax exemption under MCL 211.9(1)(a) without regard to the institution’s for-profit status.
The Court of Appeals agreed with SBC, holding that the language of MCL 211.9(1)(a) is unambiguous and clearly exempts institutions like Sanford-Brown College from property taxes. The court concluded that reading statutes in pari matertia should only be utilized when the statute is ambiguous, a condition not present with MCL 211.9(1)(a). Furthermore, the court reasoned that even if MCL 211.7n was applicable and required an educational institution to be nonprofit to qualify for the tax exemption, that would not preclude SBC from qualifying for a tax exemption under MCL 211.9(1)(a). Therefore, the court reversed the decision and remanded the case for the Tax Tribunal to determine whether SBC met the requirements of MCL 211.9(1)(a), not MCL 211.7n, to qualify for the tax exemption.
Having granted the City of Kentwood's application for leave to appeal, the Michigan Supreme Court apparently sees this as a close question. Given the public importance of this issue and the timing of the leave-grant, the court can be expected to decide the issue this term.