The Law

Who’s the “Party of Interest” by Ron Davis A tenant of a Michigan shopping center has won the right to challenge a local tax assessment of its leased property. For the tenant’s corporate owner, however, that’s not the case at all. The shopping center is located in Grand Rapids, and the tenant is Family Fare, LLC, which operates a grocery store there. Family Fare, in turn, is owned by Spartan Stores, Inc. Problems arose when the city of Grand Rapids levied a property tax on the Family Fare store. Spartan Stores reacted to the levy by protesting the tax. Spartan Stores argued that, as owner of the grocery store, it should be allowed a chance to present its argument before the Tax Tribunal. Under Michigan state law, however, only a “party of interest” to a tax-assessment dispute can protest the assessment directly before the Tax Tribunal. But both Family Fare and Spartan Stores claimed to be the party of interest. In response to those claims, the city of Grand Rapids argued that only property owners or their agents, not leaseholders, may be considered parties of interest. If that’s the case, lessees wanting to challenge the assessment cannot do so before the Tax Tribunal. And that of course included Family Fare. Family Fare, however, is responsible for paying 78.71 percent of the shopping center’s taxes. So at first the Tax Tribunal allowed Family Fare to present its case. But then the Tribunal reversed its position, finding that Family Fare failed to prove that it is in fact a party of interest. Again, Michigan state law defines that quandary: the parties who may bring a protest before the Tax Tribunal are “persons whose property is assessed on the assessment roll as property owners.” Otherwise, they may not protest tax assessments at the board of review. But Michigan’s courts have consistently held that lessees are “part of a legal…claim to or right in property.” Therefore, persons or entities whose property is being assessed may directly appeal to the Tax Tribunal. A Michigan appellate court therefore ruled that Family Fare is a “party of interest” according to law. The court explained that Family Fare has a lease hold—a property interest that allows the tax dispute to be settled by the Tax Tribunal. The court added, however, that whereas Spartan Stores, Family Fare’s corporate owner, “certainly has a ‘financial interest’ in the tax assessment of the shopping center, it does not have a property interest in the assessment of the shopping center.” And, the court added, Spartan Stores did not sign the lease—Family Fare did. That means, the court decided, Spartan Stores cannot protest the assessment of the shopping center directly before the Tax Tribunal. “Accordingly,” the court concluded, “we hold that Family Fare, as a party with a property interest in the property being assessed, is a ‘party in interest’ and the Tax Tribunal has jurisdiction over its appeal” (Spartan Stores, Inc. v. City of Grand Rapids,--N.W.2d—2014, W.L. 5485842 [Mich.App.] Decision: November 2014 Published: November 2014