In an appeal involving a real property tax dispute, the Michigan Court of Appeals held that the Michigan Tax Tribunal did not err in determining the true cash value of the taxpayer's property. [Lin v. Southfield Township, Michigan Court of Appeals, No. 289276, June 1, 2010]
The taxpayer argued that the Tax Tribunal's determination was wrong because upgrades to comparable properties affected those properties' true cash value when the cost approach was used for valuation. However, the Tax Tribunal rejected the cost approach and used the market approach, and deference must be given to the tribunal regarding the appropriate method of valuation and the interpretation of statutes pertaining to valuation because these were matters within the Tax Tribunal's area of expertise.
In this case, the Tax Tribunal found that the market approach was the only reliable evidence of true cash value. Under the market approach, as outlined in the assessor's manual, the presence of upgrades in comparables and the cost of those upgrades did not necessarily mean that the comparables were more valuable than the subject property that lacked the same upgrades. Moreover, the taxpayer could not cite any provision in the assessor's manual indicating that, when using the market approach, the cost of improvements to comparables had to be considered.
The taxpayer also argued that the Tax Tribunal erred in determining the true cash value of his property because it held that market trend did not affect the property's true cash value. However, the taxpayer did not cite any authority from the law or the appraisal literature to suggest that the tribunal's determination that market trend was not evidence of a particular property's true cash value was a wrong principle.
This case is noteworthy because of the Tax Tribunal's rejection of the cost approach to determination of the true cash value. Many assessors use the cost approach.