If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
DETROIT DIESEL CORPORATION, UNPUBLISHED
January 21, 2021
Petitioner-Appellee,
v No. 350407
Tax Tribunal
REDFORD TOWNSHIP, LC No. 17-001174
Respondent-Appellant.
Before: SWARTZLE, P.J., and RONAYNE KRAUSE and RICK, JJ.
PER CURIAM.
In this ad valorem property-tax appeal, respondent Redford Township appeals by right the
decision of the Michigan Tax Tribunal valuing at $18,120,000 the three-million square-foot single-
use manufacturing plant owned by petitioner, Detroit Diesel Corporation. At the hearing, the
parties presented vastly different valuations, with the Township valuing the property’s true-cash
value at $50,000,000 based on a highest-and-best use of “single-user manufacturing,” and
petitioner valuing the property’s true-cash value at $9,410,000 based on a highest-and-best use of
general-industrial use.
The tribunal agreed with petitioner that the highest-and-best use of the plant was industrial
use, which encompassed a variety of industrial uses including the present use, single-user
manufacturing. The tribunal then based its valuation on the sales-comparison approach using the
only comparable it found reliable: the sale of the former General Motors Powertrain plant for
multi-tenant conversion. Although the Township raises several purported errors on appeal, we
conclude that there is no basis for reversal, and, accordingly, we affirm.
I. BACKGROUND
This tax appeal involves a valuation dispute for the 2017 tax year of petitioner’s single-
user manufacturing facility located primarily in Redford Township. Approximately 12 percent of
the property is located within the taxing jurisdiction of the City of Detroit. Although the property
tax relative to that portion of the property is not at issue in this appeal, the parties and the tribunal
considered the entire property for purposes of valuation.
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As of December 31, 2016, the date of valuation, petitioner used the property to manufacture
powertrains, diesel engines, and axles for heavy and medium trucks. At valuation, petitioner’s
complex spanned approximately three million square feet; the first million square feet of the plant
was constructed before World War II and the plant was then expanded piecemeal through multiple
additions over time. Overall, as of valuation, the complex included administrative and office
spaces, an engineering laboratory, manufacturing and storage spaces, educational and training
classrooms, a fitness center, a daycare, and a cafeteria.
Despite the plant’s age, petitioner was using it to conduct modern manufacturing activities.
Petitioner had made improvements to the real estate, including raising the ceiling height and adding
additional dock doors, as needed for its manufacturing activities. Notwithstanding these
improvements, large portions of the facility were not up to modern standards, e.g., 40 percent of
the facility had ceilings that were 16-feet or lower, some woodblock flooring remained, and
approximately a million square feet of walls lacked dock doors. Further, the plant needed a
substantial portion of its roof replaced. Taking the plant’s condition together with its additions
and improvements gave it an adjusted age of around 50 years old.
For the 2017 tax year, the Township determined the true-cash value of the property to be
approximately $41 million, resulting in a taxable value of approximately $20 million. After
protesting before the Township’s Board of Review, petitioner filed a petition in the Tax Tribunal
challenging the taxable value for the 2017 tax year. Petitioner alleged that the valuation was
unlawful because it exceeded more than 50 percent of the property’s true-cash value, and also that
the assessment was discriminatory because it was higher than the true-cash value of the average
assessment in the same district.
The matter proceeded through discovery. Eventually, the tribunal conducted a seven-day
hearing.
A. PETITIONER’S PROOFS
Petitioner introduced the testimony of Keith Vaughn, petitioner’s technical-services
manager. He testified about the physical attributes and condition of the building. Petitioner also
introduced the testimony of an appraiser, Laurence Allen, who indicated that, as of the date of
valuation, very few users were in the market for a three-million square-foot complex. Allen noted
that while many automakers had shut down their plants in Michigan, a demand for these types of
buildings from nonautomotive companies existed, especially for warehouses and distribution, but
that a plant like the subject one would most likely be purchased for industrial redevelopment or
conversion into a multi-tenant space. According to Allen, the highest-and-best use of the property,
for purposes of conducting a sales-comparison approach to valuing the property, was “industrial
development.” Allen clarified that such a building could be used for a wide variety of industrial
users and uses, including the current single-use manufacturing.
Ultimately, Allen used the sales-comparison approach to value the true-cash value, or fair-
market value, of the property at $3.15 per square foot, or $9,410,000. To establish this value,
Allen evaluated four comparable adjusted sales and seven additional unadjusted sales. Then, Allen
selected a value that was within the mid-range of all of these sales, as well as within the mid-range
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of the two adjusted sales he found to be most comparable to the subject property (Allen Sale 1 and
Allen Sale 4).
To compute adjusted sales, Allen chose sales of manufacturing plants that had over one
million square feet, were located in the Midwest, and had sold within the previous five years,
adjusting the unit rate (price per square foot) to account for differences between the subject
property and the comparables where applicable. The adjustments recognized differences in market
conditions, size, location, average clear ceiling height, finished office areas, age, and condition.
The first comparable (Allen Sale 1) was the former GM powertrain plant, located in
Livonia, Michigan, three miles from the subject property. It sold for $3,710,000 in November
2015. The plant, which was used to manufacture gas engines, was approximately one million
square feet, was built piecemeal over the years, had some limited ceiling heights, and was
purchased for conversion to multi-tenant use. Adjustments were applied for market conditions,
the plant’s size, the percentage of finished space, functional utility, and the cost of replacing the
roof, resulting in an adjusted price of $6.71 per square foot. Also, Allen gave Allen Sale 1 more
weight in valuing the subject property because of its close proximity to the property.
Allen’s second comparable (Allen Sale 2) was the Delphi plant, a 1.5-million-square-foot
complex located in Flint, Michigan. It sold in May 2013 for $3.8 million or $2.51 per square foot.
It was comparable in age to the subject property, had similar ceiling heights, and was also
purchased for multi-tenant use; after the sale, the purchaser tore down approximately 900,000
square feet of the building before converting the remainder for individual tenants. Allen applied
adjustments for market conditions and the plant’s inferior location, as well as for portions of the
plant that had deteriorated, size, functional utility, and percentage of finished space, resulting in
an adjusted price of $3.29 per square foot.
The third comparable (Allen Sale 3), a 1.2 million square-foot Ford plant located in
Sandusky, Ohio, sold in July 2012. The plant was built in 1956 and had better ceiling heights than
the subject property; the purchaser made no changes to the complex, as it had purchased the
property to continue the manufacture of automotive parts. To entice the sale, the seller had entered
into a contract for the production of the parts with the buyer. Adjustments were applied for market
conditions, the plant’s inferior location, size, the percentage of finished space, and functional
utility, resulting in an adjusted price of $3.84 per square foot.
The fourth comparable (Allen Sale 4), a 3.4 million square-foot GM plant located in
Pontiac, Michigan, sold for $1.28 per square foot in September 2011. Allen testified that the plant
was a newer plant, built in the 1970s. It had more uniform ceiling heights and larger truck bays,
which were used to manufacture trucks, and was sold during GM’s bankruptcy. After purchase,
because more money could be made by developing the land, the purchaser tore down the plant and
built a new 400,000 square foot manufacturing building. Allen applied adjustments for market
conditions, size, functional utility, and percentage of finished space, resulting in an adjusted price
of $1.80 per square foot. Allen testified that he gave Allen Sale 4 more weight in valuing the
subject property because of its similarly in size.
Allen testified that he considered seven supplemental unadjusted sales. All of these
supplemental sales were of single-user manufacturing buildings. They averaged around 3.2
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million square feet, were situated throughout the United States, and were purchased primarily for
multi-tenant use.
B. RESPONDENT’S PROOFS
John Widmer, the Township’s appraiser, provided a conflicting account of the market and
the property itself, as well as the value of the property. According to Widmer, the geographic area
in which the plant was located was strong. He testified that, in the previous several years, high
demand existed for industrial space, driven by the auto industry, as well as ecommerce and tech
companies; rents for industrial spaces were rising, vacancies were low, and construction of
industrial facilities had added 5.8 million square feet of new industrial space in 2017 alone.
Widmer testified that the subject property was a “functioning modern industrial property,” which
had the physical attributes and utility to support modern manufacturing activities. Widmer noted
the presence of modern assembly lines, updated lighting, air conditioning, and average to high-
end finishes in the office spaces; he denied observing any woodblock floors and further indicated
that the interior walls could be easily moved.
Widmer also used the sales-comparison approach to arrive at a value of $50,000,000.
Unlike Allen, however, Widmer concluded, based on renovations that had made the property a
modern and efficient manufacturing facility, that the highest-and-best use of the property was
continuation of single-user manufacturing. Conversion of the property, in Widmer’s view, was
not feasible considering the utility of the present plant. Widmer also used four comparable sales,
adjusting them for differences in certain characteristics as compared to the subject property, as
well as numerous unadjusted supplemental sales, giving most weight to a single sale (Widmer Sale
2) that he considered most like the subject property. Notably, none of Widmer’s sales were the
same as Allen’s sales. This was appropriate, according to Widmer, because the properties that
Allen relied on were converted to multi-tenant use after sale and, thus, were not truly comparable
to the property at issue, the highest-and-best use of which was continued single-user
manufacturing.
Widmer Sale 1 was a 532,489-square-foot industrial building purchased by a long-term
tenant in June 2014 for $11,400,000, or $21.41 per square foot. The building was constructed in
1978, was later expanded in 1989, and had ceilings ranging between 24 and 28 feet. Even though
the sale was between a lessor and the lessee, Widmer considered the sale to be at market because
an appraisal was obtained. After adjustments for, inter alia, market conditions, location, physical
characteristics (including size), age, and industrial utility, Widmer assigned it an adjusted sale
price of $18.00 per square foot.
Widmer Sale 2 was a 1,249,073-square-foot multi-tenant industrial building sold in a lease-
fee transfer in September 2015 for $23,250,000 or $18.61 per square foot. The building was
originally constructed in 1956 for single-user manufacturing and had ceiling heights ranging from
19 to 44 feet. At the time of the sale, the building was partially leased. After adjustments for
market conditions, age, condition, and industrial utility, Widmer arrived at an adjusted sale price
of $17.00 per square foot.
Widmer Sale 3 was a 449,623 square-foot multi-tenant industrial building sold in a leased-
fee transaction in December 2015 for $6,155,000 or $13.69 per square foot. Originally built in
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1968 for single-use manufacturing, the building, which had an average ceiling height of 24 feet,
was partially occupied at the time of sale. After certain adjustments for, inter alia, market
conditions, location, and building characteristics (including size), Widmer assigned it an adjusted
value of $15.89 per square foot.
Widmer’s final adjusted sale (Widmer Sale 4), was a 526,540 square foot multi-use
building. At the time of sale in August 2012 it had been vacant. Consequently, the building,
constructed in 1957 with 20 to 26-foot ceilings, had deferred maintenance and needed a new roof.
Before the 2012 sale, it had been acquired through a foreclosure, but was sold in 2012 for
$9,000,000, or $18.04 per square foot. After certain adjustments, Widmer arrived at an adjusted
sales price of $17.49 per square foot.
Widmer also considered four additional unadjusted sales. Two of the sales were sales to
tenants and another was a sale-lease-back transaction. While the average square footage of these
comparables was closer to the subject property—1.3 million square feet—two of the comparables
were purchased for multi-tenant uses.
C. TRIBUNAL’S RULING
At the close of the evidence, petitioner argued that the Township’s highest-and-best-use
conclusion—that the property would be most highly valued if purchased for single-use
manufacturing—was not supported by Widmer’s comparables, because the vast majority of them
were not sales for single-user manufacturing use. Petitioner further argued that all of Widmer’s
sales were inherently suspect because his comparables were smaller than the subject property. The
Township countered that Allen’s conclusion that the highest-and-best use was generic industrial
lacked credibility because Allen “only present[ed] information regarding the automotive industry”
and failed to address manufacturing, warehousing, distribution, and research and development.
After the hearing, the tribunal issued a thorough, comprehensive opinion and judgment.
The tribunal, after summarizing the appraisers’ testimonies at length, found that the sales-
comparison, or market approach, would be most useful in providing the most accurate valuation.
To this end, the tribunal recognized that the key to assessing a property’s fair-market value is
evaluating a property’s highest and best use, because that use will influence the price a buyer will
pay on the open market.
Turning to the appraisers’ testimonies, the tribunal noted that it was generally “unsatisfied
and unpersuaded” by the appraisers’ sales comparables with regard to valuing the property and
that, while both appraisers were experts and had used the same valuation approach, they had
reached vastly different conclusions—a difference of $40 million—and had not a single
comparable in common. Then, taking a global view of the testimony, the tribunal found that multi-
tenant use is the most frequent use for large manufacturing facilities, given that 9 of 11 of Allen’s
sales were converted to multi-tenant use after the sale and that 5 of 8 of Widmer’s sales were
already multi-tenant at the time of sale. Noting that the subject property is a three-million square-
foot single-user manufacturing building—not a 500,000 square foot building with multiple
tenants—the tribunal found that sales of multi-tenant industrial buildings were not useful given
that they did not represent the subject property and costs to convert the building would be
substantial. Ultimately, the tribunal found that the highest-and-best use of the property, which
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would result in its highest value, was “industrial use,” not solely single-use manufacturing as the
Township had advocated.
Next, the tribunal methodically assessed the utility of each sales comparable, finding as
follows:
Allen Sale 2: The tribunal gave this sale “little reliance,” given conflicting
testimony whether the property was sold for scrap or
renovation.
Allen Sale 3: The tribunal found this sale “less relevant,” given that the
sale occurred in Ohio and no adjustments were made to
account for the out-of-state sale.
Allen Sale 4: The tribunal found this was “not the best comparable,” as it
was sold and demolished.
Allen’s additional unadjusted comparables:
The tribunal found that these additional comparables should
be given “little emphasis,” as they were from out of state or
were sold for demolition.
Widmer Sale 1: The tribunal was “not persuaded” given the “small size
[532,489 square feet] relative” to the subject property and
unknown conditions of the sale.
Widmer Sale 2: The tribunal found that this sale was “not comparable to the
subject” property since it was a multi-tenant building that
was 100 percent leased at the time of sale.
Widmer Sale 3: The tribunal was “not persuaded” by this sale because the
building was only 449,623 square feet and was already
converted to multi-tenant use at the time of sale.
Widmer Sale 4: The tribunal placed “little emphasis” on this sale because the
building was 526,540 square feet and no testimony was
provided regarding the effect of a prior foreclosure on the
property.
Widmer’s additional unadjusted comparables:
The tribunal “place[d] no emphasis” on these sales because
they were all sale-leasebacks with no indication that they
were sold at market rates.
The tribunal then stated:
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After placing little emphasis on Mr. Allen’s sales two, three and four, and additional
comparables, as well as Mr. Widmer’s adjusted and supplemental sales
comparables, the Tribunal is left with Mr. Allen’s sales comparable one. The sale
was of the former General Motors Powertrain plant. It is located just less than two
miles from the subject property and manufacturing engines, such as the subject.
There is a DTE substation at the subject property, as well as at the comparable.
Respondent contends that the sale was from RACER trust and as such, was for a
low price as RACER’s mission is to clean up and sell properties. However, the sale
from RACER was to Schostak, and the sale utilized by Mr. Allen was from
Schostak to Ashley Capital. In fact, he testified that the RACER environmental
monitoring remained with the property after sale, which is an asset. Mr. Vaughn
testified he pays $30,000 per year for environmental monitoring at the subject
property, which was not supplied to the subject by the RACER trust, as General
Motors was relieved of this obligation at the time of its bankruptcy. Mr. Allen
testified comparable one has hydrocarbon plumes, similar to those located at the
subject property. The comparable does have deferred maintenance as half of the
roof required replacement, so Mr. Allen adjusted the purchase price up to $6.04
cents per square foot which was similar to Mr. Widmer’s adjustment for roof
replacement with regard to his comparable four, obtained from Marshall Valuation
Service. The comparable did have a lease in place at the time of sale, but it was a
short-term lease and it was understood that the tenant was leaving, unlike in Mr.
Widmer’s true, leased-fee sales.
As far as the other adjustments to the comparable, the Tribunal is simply
not persuaded by them, especially the size adjustment. As such, it finds the best
method of valuing the property is to use its sale price per square foot with only the
commonly confirmed deferred maintenance adjustment for roof repair. As such,
the Tribunal finds the true cash value of the subject property for the 2017 tax year
to be 3,000,000 square feet (rounded) multiplied by $6.04 per square foot or
$18,120,000. This amount is allocated between the parcels and the true cash value
of the parcel located in Redford Township, which is the subject of this appeal, is
$15,873,120, or $15,900,000, rounded.
The Tribunal finds, based upon the Findings of Fact and the Conclusions of
Law set forth herein, that the subject property is over assessed.
The Township now appeals by right.
II. ANALYSIS
A. STANDARD OF REVIEW
“This Court’s ability to review decisions of the Tax Tribunal is very limited.” President
Inn Props LLC v Grand Rapids, 291 Mich App 625, 630; 806 NW2d 342 (2011). In the absence
of fraud, the Court’s review is limited to determining whether the tribunal made an error of law or
adopted a wrong legal principle. Const 1963, art 6, § 28. “The tribunal’s factual findings are
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upheld unless they are not supported by competent, material, and substantial evidence.” Menard,
Inc v Escanaba, 315 Mich App 512, 520; 891 NW2d 1 (2016) (cleaned up).
B. HIGHEST-AND-BEST USE
Respondent first argues that the tribunal erred in its finding that “industrial use,”
encompassing both single-use and multi-use, was the highest-and-best use of the property.
Respondent argues that no evidence in the record supported the tribunal’s conclusion with regard
to legality, financial feasibility, and maximum productivity. We conclude that the tribunal’s
highest-and-best use determination was not legally erroneous, and was supported by substantial,
competent, and material evidence on the record.
“ ‘[T]rue cash value’ is the starting point for determining the taxable value of real and
tangible personal property in Michigan.” Detroit Lions, Inc v Dearborn, 302 Mich App 676, 696;
840 NW2d 168 (2013). Generally, real property is taxed at 50 percent of its true cash value. MCL
211.27a. “True cash value is synonymous with fair market value.” Great Lakes Div of Nat’l Steel
Corp v Ecorse, 227 Mich App 379, 389; 576 NW2d 667 (1998). The term “means the usual selling
price at the place where the property to which the term is applied is at the time of assessment,
being the price that could be obtained for the property at private sale, and not at auction sale . . .
or at forced sale.” MCL 211.27(1).
While the petitioner has the burden of establishing the true cash value of the property, “the
Tax Tribunal has a duty to make an independent determination of true cash value.” President Inn
Props LLC, 291 Mich App at 631. In particular, the “Tax Tribunal is under a duty to apply its
expertise to the facts of a case in order to determine the appropriate method of arriving at the true
cash value of property, utilizing an approach that provides the most accurate valuation under the
circumstances.” Menard, Inc, 315 Mich App at 521-522 (cleaned up). “The three most common
approaches for determining true cash value are the capitalization-of-income approach, the sales-
comparison or market approach, and the cost-less-depreciation approach.” Great Lakes Div of
Nat’l Steel Corp, 227 Mich App at 390. The “final value determination must represent the usual
price for which the subject property would sell irrespective of the specific method employed.”
Menard, Inc, 315 Mich App at 523 (cleaned up).
Regardless of the methodology used, the property must be assessed at its highest-and-best
use, which is a concept fundamental to determining true-cash value. Id. at 522. “Highest and best
use means the most profitable and advantageous use the owner may make of the property even if
the property is presently used for a different purpose or is vacant, so long as there is a market
demand for such use.” Detroit Lions, Inc, 302 Mich App at 697 (cleaned up). The concept is
significant to determining true-cash value because it “recognizes that the use to which a
prospective buyer would put the property will influence the price that the buyer would be willing
to pay for it.” Menard, Inc, 315 Mich App at 522. “A highest-and-best-use determination requires
simply that the use be legally permissible, financially feasible, maximally productive, and
physically possible.” Detroit Lions, Inc, 302 Mich App at 697 (cleaned up).
Here, the tribunal found that the property’s highest-and-best use was “industrial use.” The
tribunal reasoned:
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Mr. Allen’s determination of the highest and best use of the property is for industrial
use, which encompasses single-user manufacturing, as well as
warehouse/distribution. He testified, “I found that most of the larger plants over a
million square feet are sold for redevelopment as multi-tenant industrial plants, so
they end up getting used by multiple users.” Mr. Widmer’s determination of the
highest and best use of the subject property is continued, single-user,
manufacturing. This conclusion is made because “the subject is in very good
condition. Likewise, with the renovations completed over the past several years, it
is considered to represent a modern and efficient manufacturing facility, that does
not need to be converted or renovated.”
Based on its analysis below for the 2017 tax year, the Tribunal finds Mr.
Allen is correct, the highest and best use of the subject property, or the use that
results in the highest value, is for industrial use, not for single-user manufacturing.
1. LEGAL PRINCIPLE
On appeal, aside from claiming that the tribunal’s finding was not supported by substantial
evidence, the Township also argues that the tribunal’s understanding of the highest-and-best-use
concept was legally erroneous and contrary to Michigan law. Thus, the Township argues that the
tribunal applied an incorrect legal principle.
In this regard, the Township first argues that the tribunal’s highest-and-best-use finding is
“suspect” because general-industrial use encompasses single-user manufacturing, but the tribunal
rejected continued single-user manufacturing as the highest-and-best use. In other words, the
Township posits that an inherent inconsistency exists in the adoption of “industrial use” as the
highest-and-best use because the tribunal rejected single-user manufacturing as the highest-and-
best use. The Township’s interpretation of the tribunal’s opinion is misplaced. When the
tribunal’s finding is read in context, it is clear that while single-user manufacturing was rejected
as the one and only highest-and-best use, the tribunal, by agreeing with Allen’s testimony, found
that general-industrial use was the highest-and-best use, which by definition encompasses single-
user manufacturing.
Relatedly, the Township posits that by not specifying the highest-and-best use, the tribunal
effectively found that every industrial use would produce the same sales price—a “nonsensical”
conclusion not supported in the record. The Township, however, cites no legal authority in support
of its assertion that the highest-and-best-use analysis must arrive at a singular specific use to be
valid. In fact, this Court’s jurisprudence indicates otherwise; on at least one occasion, this Court
has upheld general-industrial use as the highest and best use, as opposed to a current limited single-
manufacturing use. In Teledyne Continental Motors v Muskegon Twp, 163 Mich App 188; 413
NW2d 700 (1987), which also involved a property-tax assessment of an industrial plant, the Court
upheld general-industrial use as the highest-and-best use, as opposed to the current single use,
single-user manufacturing. This Court addressed the claim that a single use was more appropriate,
stating,
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Respondent first claims that the Tax Tribunal erred in concluding that the highest
and best use of the property was for general industrial uses, rather than its current
limited use.
* * *
In the instant case, the Tax Tribunal considered the existing use of the
industrial plant and believed that manufacturing operations would continue for a
considerable length of time. However, the Tax Tribunal also noted that the
industrial plant was old and obsolete, and recited the following examples of
functional deficiencies from the record:
1. Inadequate roof loads.
2. Overtaxed water and sewer services.
3. Unreliable electrical power distribution.
4. Inadequate wooden flooring.
5. Heating and sprinkling systems needing replacement.
6. Inadequate building ventilation.
7. Limited floor loads.
Petitioner submitted evidence showing that comparable plants throughout the
midwest had been sold for general industrial purposes. Respondent failed to present
any evidence on how the existing use of the industrial plant would affect its usual
selling price under a market approach to valuation. The Tax Tribunal did not adopt
a wrong principle or commit legal error in valuing the property as if a potential
buyer would purchase it for general industrial purposes. [Id. at 192-193.]
Moreover, the focus of the highest-and-best-use concept is the identification of the most
profitable use of the property going forward so long as there is a market demand for that use.
Detroit Lions, Inc, 302 Mich App at 697. This does not necessarily mean that the identified use
will always produce the same sales price in every circumstance. Indeed, the Township, by
maintaining that the highest-and-best use must meet both of these qualifications, makes claims
contrary to Michigan law and cites no authority in support.
Accordingly, the Township has failed to establish that the tribunal adopted an incorrect
legal principle in conducting its best-and-highest-use analysis.
2. SUBSTANTIAL EVIDENCE
This conclusion does not end the analysis, however, because the Township also argues that
the tribunal’s highest-and-best-use determination is not supported by substantial evidence. The
Township first argues that no evidence supported the conclusion that multi-tenant use was legally
permissible. The Township points out that the relevant zoning ordinances were not admitted into
evidence and that Allen merely testified that nothing in his appraisal showed that multi-tenant use
was not legally permissible. We find the Township’s argument unpersuasive.
Even assuming that Allen did not affirmatively state that multi-tenant use was legally
permissible, this point is immaterial because other evidence sufficiently supports the conclusion
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that multi-tenant use would be legally permissible. Specifically, Widmer testified that the property
was zoned industrial, “the most intensive industrial zoning, so there really are limited restrictions
in terms of what type of use can be applied within that site.” He further indicated that in its current
use, the complex represented all phases of industrial uses, including research and development,
light and heavy manufacturing, warehousing, and distribution. Moreover, it is undisputed that
portions of the complex had been leased—one lease being for a surface lot for vehicle storage and
the other lease being to a subsidiary for both office space and research-and-development space.
The record, therefore, sufficiently supports the conclusion that multiple industrial uses and tenants
would be legally permissible on the property.
Next, the Township maintains that no evidence existed to support the conclusion that multi-
tenant use was financially feasible. The Township explains that Allen merely testified that
conversion costs would be “substantial,” that he did not account for these costs in his appraisal,
and that without discussion of specific conversion costs for the “infinite combinations” of potential
conversions, there is no substantial evidence on the record to support a conclusion that conversion
is financially feasible. The Township’s assertions are misplaced.
Mainly, the Township wrongly assumes that a robust discussion of conversion costs and a
cost analysis of the infinite conversion possibilities was necessary to show that conversion was
financially feasible. While conversion costs could be relevant to evaluating financial feasibility,
such analysis was not imperative for petitioner to meet its burden of proof in this case. This is
because petitioner showed that conversion was financially feasible through Allen’s comparable
sales analysis. Indeed, the Township ignores the fact that petitioner adduced evidence that multiple
similar properties, meaning older, partially updated 1,000,000 square-feet-plus mostly single-user
manufacturing facilities, had sold for purposes of conversion to multi-tenant industrial use. These
sales reflect that such a use was not only desirable but financially feasible from a buyer’s
perspective. Indeed, the tribunal’s best-use analysis recognized that most of the purchases were
for conversion to multi-tenant after sale. Petitioner’s comparable sales alone, then, provide
sufficient, competent, and material evidence supporting the conclusion that conversion was
financially feasible. Because petitioner met its burden, the burden shifted to the Township to rebut
petitioner’s evidence that conversion was not financially feasible, but it failed to put forth any
evidence that conversion would be cost-prohibitive or otherwise unfeasible.
The Township further asserts that petitioner should have produced the very evidence—
conversion costs—that the Township could have used to rebut petitioner’s evidence. That
petitioner did not produce detailed evidence of conversion costs is not surprising, given that it was
unnecessary for it to prove its case, but also because it was not a relevant adjustment to calculating
the property’s fair market value. The comparable the tribunal placed most emphasis on was Allen
Sale 1, which reflected a market price before conversion to multi-tenant use. The subject property
also has not been converted to multi-tenant use. Under appraisal theory, it makes the most sense
to use sales of large, mostly single-user manufacturing plants that are purchased for the purpose of
converting to multi-tenant use, i.e., before conversion.
Finally, the Township argues that the tribunal erred by rejecting single-user manufacturing
as the highest-and-best use because its alleged reasons for doing so—lack of sufficient ceiling
height and insufficient number of dock doors—were not supported by the record. The tribunal did
not, however, rely primarily on the lack of the subject property’s modern amenities to reject single-
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user manufacturing as the sole highest-and-best use. Rather, its discussion of the property’s lack
of modern attributes was referenced to support the tribunal’s conclusion that “it was not
appropriate to utilize sales comparables that were already multi-tenant at the time of sale,” given
that those facilities had more dock doors and greater ceiling heights. Moreover, evidence existed
on the record that the property was not sufficiently up to modern standards: Vaughn testified that
40 percent of the property had ceiling heights of 16 feet or lower, not the 28 feet considered modern
for manufacturing standards, and the property only had 47 dock doors, as opposed to the 200 dock
doors that would be in accord with modern standards. Finally, the tribunal also relied on the lack
of evidence that any entity was actually in the market for a three-million square-foot facility for
the purpose of single-user manufacturing.
In sum, material, competent, and substantial evidence supported the tribunal’s finding that
the highest-and-best use of the property was general industrial use. In particular, the experts’
adjusted and unadjusted comparable sales supported the conclusion that the most profitable and
advantageous use of an almost 3,000,000 square foot single-user industrial plant, if put up for sale
on the open market on December 30, 2016, was general industrial use, the most frequent use being
conversion to multi-tenant use given market demands for smaller industrial space. While the
Township contends that such a conclusion is without adequate support on the record, it fails to
address the fact that most of the experts’ comparable sales were for conversion to multi-tenant use
or were already multi-tenant at the time of sale. Of the few sales of single-user-manufacturing
facilities for single-use after sale, the transactions involved incentives (a contract for manufacture
of parts) or a tenant entering into a lease buy back. In fact, the Township failed to adduce the most
relevant evidence to support a conclusion that single-user manufacturing was the highest-and-best
use: actual sales of million-square-foot-plus, single-use manufacturing properties that were used
for single-user manufacturing after the sale. The fact that the Township’s appraiser failed to
uncover such sales in his research strongly suggests that single-user manufacturing is not the
highest-and-best use of a plant like the one at issue. Accordingly, the tribunal’s highest-and-best-
use conclusion did not apply an incorrect principle and it was supported by substantial evidence
on the whole record.
C. VALUATION
The Township next argues that the tribunal’s valuation was erroneous because it was not
supported by competent, substantial, and material evidence on the record. We find respondent’s
argument unconvincing.
First, the Township argues that the tribunal should have disregarded Allen Sale 1 because
it was a leased-fee transaction and the tribunal had disregarded other leased-fee transactions as
indicative of fair-market value. The Township maintains that there was no evidence to support a
conclusion that the lease was short-term, claiming that the evidence simply established that a lease
was in place at the time of sale and the buyer would have an active income stream from the tenant.
The Township is incorrect that no evidence supported a conclusion that the lease was short-term.
Allen testified that the tenant left the property shortly after the sale and that the purchaser
bought the property for purposes of redeveloping the plant into a multi-tenant facility, not for
purposes of collecting existing rents as an income stream. The fact that the lease was not admitted
into evidence or that Allen did not testify as to the terms of the lease affects the weight and
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credibility of his testimony. That the tribunal chose to believe Allen’s testimony that Allen Sale 1
was not in fact a leased-sale transaction, that the plant was purchased for redevelopment, and that
the tenant left shortly after the sale, are all determinations that this Court cannot weigh anew on
appeal. Great Lakes Div of Nat’l Steel Corp, 227 Mich App at 404 (“The weight to be accorded
to the evidence is within the Tax Tribunal’s discretion.”).
Next, the Township argues that the tribunal erred by relying on Allen Sale 1 when it found
that none of the comparables were truly comparable to the subject property because of substantial
size differences. The Township asserts that using a dissimilar comparable is not a valid valuation
method. We conclude that the Township misconstrues the tribunal’s opinion.
As the Township points out, the tribunal did state, “Mr. Allen adjusts three of his
comparables by (50%) to (60%) for size, which suggests the comparables are not truly comparable
to the subject.” When read in isolation and in a perfunctory manner, this statement could be
construed to mean that Allen’s comparables (including Allen Sale 1) were not comparable due to
substantial size differences. Read more closely, however, the tribunal did not expressly find that
Allen Sale 1 lacked similarity due to its size; it merely found a suggestion of dissimilarity as to
Allen Sale 1 based on the magnitude of the size adjustment. Moreover, the statement followed the
tribunal’s criticisms of Allen’s substantial size adjustments; mainly, the tribunal found the size
adjustments unreliable because the adjustment data relied on plants all below 1,000,000 square
feet. Ultimately, the tribunal, in relying on Allen Sale 1, did not apply the size adjustment because
it found the adjustment itself unpersuasive. The statement, when read in context of the entire
opinion, then, does not reflect a finding that Allen Sale 1 lacked similarity to the subject property
due to size; rather, it reflects the tribunal’s criticism of the adjustment as unreliable, the application
of which would actually make the comparables less similar to the subject. Contrary to the
Townships’ claim, then, the tribunal did not use a comparable that it had previously found to be
unlike the subject property.
Finally, the Township asserts that the tribunal erred by failing to adjust Allen Sale 1 for
additional deferred maintenance. The Township explains that the evidence showed that the buyer
had additional expenditures for deferred maintenance beyond the roof and, absent consideration
of these expenditures, the tribunal’s decision was not supported by substantial evidence. The
Township’s argument is unpersuasive.
In its decision, the tribunal relied on Allen Sale 1 as the most comparable property with
respect to a sale for purposes of valuation, but only accepted the adjustment for the roof, which it
deemed deferred maintenance. The tribunal did not reference any other items of deferred
maintenance, implicitly rejecting the additional expenditures that the Township now claims should
have been accounted for. In particular, during Allen’s cross-examination, the Township
introduced marketing material from the buyer’s website, which stated, “Upon acquisition, [the
buyer] began a renovation program to address the deferred maintenance. The scope of work
included roof replacement, additional dock doors and upgraded the lighting to T5 fluorescent,
structural and paving repairs, and a new ESF fire suppression system for most of the building.”
Allen acknowledged these expenditures in his testimony and appraisal, but did not consider them
deferred maintenance; rather, he viewed them as improvements related to conversion to multi-
tenant use.
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While the tribunal’s duty is to determine the most accurate valuation under the
circumstances, this Court has long recognized that “the determination of true cash value is not an
exact science” and that the “process of weighing evidence involves a considerable amount of
judgment and reasonable approximation.” Id. at 398. This examination contemplates analysis and
weighing of values provided by both parties with the goal of reaching a “well-supported conclusion
that reflects the study of all factors that influence the market value of the subject property.”
Meadowlanes Ltd Dividend Housing Ass’n v Holland, 437 Mich 473, 486; 473 NW2d 636 (1991).
There is no rule of law, however, “that requires the Tax Tribunal to quantify every possible factor
affecting value.” Great Lakes Div. of Nat’l Steel Corp, 227 Mich App at 399.
Here, the tribunal clearly found none of the parties’ proposed comparable sales to be
completely on point, and it found valuation of the property challenging. Nonetheless, the tribunal’s
opinion reflects that it extensively considered the parties’ evidence, analyses, comparable sales,
adjustments, and conclusions, and determined whether they were reasonable. While the tribunal
did not include additional adjustments for “deferred maintenance” with respect to Allen Sale 1, its
decision not to do so reasonably reflects that it agreed with Allen that these items were not truly
deferred maintenance. This Court will not weigh the evidence anew or disturb such credibility
determinations on appeal. Id. at 404. In any case, it was not incumbent on the tribunal to quantify
every possible factor affecting the property’s value. Id. at 399. Overall, the tribunal’s decision is
supported by substantial, competent, and material evidence on the whole record.
Affirmed.
/s/ Brock A. Swartzle
/s/ Amy Ronayne Krause
/s/ Michelle M. Rick
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