On January 18, 2024, the Michigan Court of Appeals issued an important decision upholding a Michigan Tax Tribunal ruling that dedicated greenspace can be subject to ad valorem property taxes. In Parkview Hills Community Association v City of Kalamazoo, Court of Appeals Case No. 365331, the Parkview Hills Community Association (“the Association”) argued that a parcel of greenspace it owned had no commercial value. The City of Kalamazoo had assessed the property value at $43,747, and the Association argued it should be assessed at a $0 valuation. Underlying this matter was the Association’s Declaration of General Covenants (“Declaration”), which restricted the subject parcel to be maintained “as a common-area and greenspace for the neighborhood’s residents.” However, the Declaration could be amended by a unanimous vote of all the Association’s owners and 75% of the votes for owner-occupied dwelling units. The Michigan Tax Tribunal upheld the City’s valuation of the subject property.
In affirming the Tax Tribunal’s decision, the Court of Appeals held that the Association’s Declaration was a self-imposed restriction on the marketability of the subject property because the Declaration could be amended by the Association. The Court of Appeals then acknowledged that self-imposed restrictions on marketability are not to be considered in assessing the value of property. Finally, the Court of Appeals determined that it was appropriate to tax the subject property because it was classified as vacant commercial property, distinguishing it from the Association’s other untaxed improved-commercial or vacant residential lots. If you have question about the taxability of real estate, our attorneys are here to help.