Liberty Hill Housing Corp. v. City of Livonia

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:

Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

FILED APRIL 2, 2008

LIBERTY HILL HOUSING
CORPORATION,

Petitioner-Appellant,

v No. 131531

CITY OF LIVONIA,

Respondent-Appellee.

BEFORE THE ENTIRE BENCH

CORRIGAN, J.

Petitioner, a nonprofit organization, leased housing to disabled and low-

income individuals during the tax years at issue. In question is whether petitioner

was entitled to a property-tax exemption for charitable institutions under MCL

211.7o(1), which requires that the charitable institution has “occupied” the

property. We affirm the Court of Appeals holding that because petitioner did not

occupy the property under the unambiguous language of MCL 211.7o, it was not

entitled to the property-tax exemption. Petitioner did not maintain a regular

physical presence on the property, but instead leased the housing on the property

for tenants to use for their own personal purposes. Because the Court of Appeals
reached the opposite result in Pheasant Ring v Waterford Twp, 272 Mich App 436;

726 NW2d 741 (2006), which involved similar facts, we overrule that decision.

I. FACTS AND PROCEDURAL HISTORY

Petitioner is a nonprofit corporation whose stated purpose is to “creat[e]

integrated housing alternatives for low income individuals and families, and

persons with disabilities, to interact with the general public, and to promote the

establishment of safe, affordable and accessible as necessary housing for low-

income individuals and families and persons with disabilities.”1 Petitioner owns

51 single-family homes in the Detroit area. It leases or rents these homes to

qualified individuals who are referred by its parent corporation, Community

Living Services.2 Petitioner’s clients are individuals whose low-income or

disability status qualify them to receive federal Supplemental Security Income

benefits. All of petitioner’s tenants pay rent under traditional written leases.

These lease agreements include provisions for security deposits, late-payment

fees, and hold-over fees. Petitioner has no ongoing day-to-day presence in the

homes.

1
Although petitioner’s goal is to break even while providing necessary
housing and services to its clients, petitioner had operated at a deficit for the three
years preceding this suit.
2
Community Living Services provides the clients with additional services,
such as transportation, meals, monitoring, medical assistance, repairs,
maintenance, and social activities.

2

 At issue in this case are five houses that petitioner owned and leased to

persons who qualified under petitioner’s statement of purpose. Petitioner

requested from respondent city of Livonia an exemption from property taxes under

MCL 211.7o(1) for tax years 2003 and 2004, arguing that the five houses were

exempt because petitioner “owned and occupied” the houses in furtherance of its

charitable purpose. After respondent denied petitioner’s request, petitioner

appealed in the Michigan Tax Tribunal (MTT).

The MTT affirmed, concluding that petitioner was not entitled to the

property-tax exemption because petitioner did not occupy the houses within the

meaning of MCL 211.7o(1). The MTT observed that the caselaw interpreting the

occupancy requirement of MCL 211.7o(1) had held that a charitable institution

“occupied” the housing when its provision of housing was incidental to the overall

corporate purpose. The MTT pointed out that, in this case, petitioner’s tenants

were not using the homes for charitable purposes. The MTT concluded that

petitioner did not occupy the properties under MCL 211.7o for the following

reasons:

To say that Liberty Hill occupies the properties in these
instances where Liberty Hill lessees reside at the subject properties
does not comport with the plain meaning of the statute. In a
landlord-tenant relationship, the lessee is generally considered the
occupant and the lessor does not generally have occupancy rights
during the term of the lease. See Frenchtown Villa v Meadors, 117
Mich App 683[324 NW2d 133] (1982).

In this case, involving single family homes, it is a significant
stretch to say that the non-profit [sic] corporate owner/lessor

3

 occupies the properties by virtue of leasing them to tenant occupants
consistent with the non-profit’s [sic] corporate purposes.

In these consolidated cases, while Liberty Hill, a nonprofit
charitable institution, owns the properties, it does not occupy any of
them. The exemption is apparently meant for instances where the
offices and operations of the non-profit [sic] charitable institution
exist.

The Court of Appeals affirmed in an unpublished opinion per curiam. The

panel explained that it agreed with the MTT’s reasoning and conclusion:

The tribunal’s opinion points out that in a landlord-tenant
relationship, the lessee is the occupant while the lessor, here
petitioner, does not have occupancy rights during the terms of the
lease. Further, to find that the non-profit [sic] corporate
owner/lessor occupies the properties by virtue of leasing them to
tenant-occupants, even though the tenancy is consistent with the
non-profit’s [sic] corporate purposes, requires a “significant stretch”.
We agree. [Liberty Hill Housing Corp v City of Livonia,
unpublished opinion per curiam of the Court of Appeals, issued May
16, 2006 (Docket No. 258752), p 2 (emphasis in original).]

The panel concluded that petitioner did not occupy the properties that it leased to

tenants for the tenants’ personal housing needs.

While petitioner’s application for leave to appeal the Court of Appeals

decision was pending, the Court of Appeals decided Pheasant Ring, in which it

held that the petitioner charitable institution “occupied” property under MCL

211.7o(1) when it leased housing to tenants in furtherance of its charitable purpose

of providing housing to individuals with autism. No appeal was taken from the

Court of Appeals decision in Pheasant Ring.

To clarify whether a charitable institution that leases property to others in

furtherance of its charitable purpose occupies the property for purposes of the

4

property-tax exemption under MCL 211.7o(1), we ordered oral argument on the

application in the instant case and directed the parties to address whether Pheasant

Ring was correctly decided. 477 Mich 1018 (2007).

II. STANDARD OF REVIEW

In Wexford Med Group v City of Cadillac, 474 Mich 192, 201; 713 NW2d

734 (2006), this Court described the standard of review for MTT decisions as

follows:

The standard of review for Tax Tribunal cases is
multifaceted. Where fraud is not claimed, this Court reviews the
tribunal’s decision for misapplication of the law or adoption of a
wrong principle. Michigan Bell Tel Co v Dep’t of Treasury, 445
Mich 470, 476; 518 NW2d 808 (1994). We deem the tribunal’s
factual findings conclusive if they are supported by “competent,
material, and substantial evidence on the whole record.” Id., citing
Const 1963, art 6, § 28 and Continental Cablevision v Roseville, 430
Mich 727, 735; 425 NW2d 53 (1988). But when statutory
interpretation is involved, this Court reviews the tribunal’s decision
de novo. Danse Corp v Madison Hts, 466 Mich 175; 644 NW2d
721 (2002).

This Court has held that statutes exempting persons or property from taxation must

be narrowly construed in favor of the taxing authority. See, e.g., Wexford, supra

at 204.

III. LEGAL BACKGROUND

A. MCL 211.7o

The statute at issue, MCL 211.7o, creates an ad valorem property-tax

exemption for charitable institutions. Wexford Med Group, supra at 199. At the

relevant times, MCL 211.7o(1) provided: “Real or personal property owned and

5

occupied by a nonprofit charitable institution while occupied by that nonprofit

charitable institution solely for the purposes for which it was incorporated is

exempt from the collection of taxes under this act.” (Emphasis added.)3 As a

consequence of the statutory requirements, courts should consider three factors

when determining whether the tax exemption under MCL 211.7o(1) applies:

(1) The real estate must be owned and occupied by the
exemption claimant;

(2) the exemption claimant must be a nonprofit charitable
institution; and

(3) the exemption exists only when the buildings and other
property thereon are occupied by the claimant solely for the
purposes for which it was incorporated. [Wexford Med Group,
supra at 203 (emphasis added).]

Here, it is undisputed that petitioner owned the properties at issue. The main point

of contention is whether petitioner “occupied” the properties.

B. CASELAW INTERPRETATIONS

Petitioner argues that this Court, in analyzing the exemption under MCL

211.7o(1) and its predecessors, has construed “occupation” to mean “charitable

use” and has not required physical possession by the exemption claimant. In

making this argument, petitioner relies on cases that interpreted the third element

of MCL 211.7o(1), that the property be occupied solely for a charitable purpose,

3
MCL 211.7o(1) was last amended by 2006 PA 681. It now provides:
“Real or personal property owned and occupied by a nonprofit charitable
institution while occupied by that nonprofit charitable institution solely for the
(continued…)

6

and not the first element, that the real estate must be owned and occupied by the

claimant. A review of this Court’s caselaw yields no support for petitioner’s

argument.

Our first case addressing the occupation requirement of Michigan’s

statutory tax exemption for nonprofit institutions was Detroit Young Men’s Society

v Detroit, 3 Mich 172 (1854).4 In that case, the plaintiff was incorporated “for the

purpose of moral and intellectual improvement” and owned a building in the city

of Detroit that included a library. Id. at 180. The plaintiff offered for rent by third

parties two stores on the first floor and two small offices on the second floor, but

the “remainder of the building . . . was used entirely for the purposes of the society

. . . . ” Id. at 173 (opinion syllabus). Because the 1853 statute required “actual[]”

occupation by the institution,5 this Court held that the occupation must be

(…continued)

purposes for which that nonprofit charitable institution was incorporated is exempt

from the collection of taxes under this act.”

4
1853 PA 86, § 5(8) exempted from taxation the “personal property of all
library, benevolent, charitable and scientific institutions, incorporated within this
State, and such real estate belonging to such institutions as shall actually be
occupied by them, for the purposes for which they were incorporated[.]”
5
The Legislature later amended the statute to remove the word “actually.”
See 1885 PA 153, § 3, providing a tax exemption for the personal property of
“library, benevolent, charitable, and scientific institutions, incorporated under the
laws of this State, and such real estate as shall be occupied by them for the
purposes for which they were incorporated[.]” This statute was amended a few
years later by 1893 PA 206 to provide a tax exemption for “[s]uch real estate as
shall be owned and occupied by library, benevolent, charitable, educational and
scientific institutions incorporated under the laws of this State, with the buildings
and other property thereon, while occupied by them solely for the purposes for
(continued…)

7

exclusive and ruled that the property was subject to taxation, “subject to a

deduction of the value of the tenements actually used and occupied by them for the

purposes for which they were incorporated, from the entire value of the lot and

building.” Id. at 184.

In Webb Academy v Grand Rapids, 209 Mich 523, 525; 177 NW 290

(1920), the plaintiff, an incorporated educational institution, sought a property-tax

exemption for educational institutions.6 The plaintiff conducted school business

on the property, but the founder of the school and his wife, a teacher at the school,

lived on the property, along with a student who helped with upkeep in exchange

for room and board. Id. at 532-533. This Court indicated that the “owned and

occupied” element of the exemption statute was not at issue when it noted: “That

plaintiff was in full possession and control of the premises, and maintained an

academy there, is not questioned.” Id. at 535. It then agreed with the trial court

that the property was occupied by the educational institution solely for the

purposes for which it was incorporated and that the other minor uses, such as

(…continued)
which they were incorporated . . . .” Thus, although the statute no longer stated
that “actual[]” occupancy was required, it did require that the property be both
“owned and occupied” by charitable institutions and “occupied by them solely for
the purposes for which they were incorporated.”
6
Webb Academy involved another predecessor of MCL 211.7o, 1915 CL
4001, that, in language essentially identical to that of 1893 PA 206, exempted
from taxation “[s]uch real estate as shall be owned and occupied by library,
benevolent, charitable, educational and scientific institutions incorporated under
(continued…)

8

housing incidental to the school uses, did not defeat that conclusion. Id. at 539.

Thus, this Court’s decision focused on whether the property was occupied solely

for the purposes for which the plaintiff was incorporated, not on whether actual

occupancy was required to qualify for an exemption.

Likewise, in Gull Lake Bible Conference Ass’n v Ross Twp, 351 Mich 269,

273; 88 NW2d 264 (1958), this Court noted that there was no dispute about

whether the plaintiff owned or occupied the property. In that case, the plaintiff’s

stated purpose was “[t]o promote and conduct gatherings at all seasons of the year

for the study of the Bible and for inspirational and evangelistic addresses.” Id. at

271. The plaintiff sought a property-tax exemption for charitable organizations.7

Besides a tabernacle and youth chapel (for which the tax-exempt status was not

contested), the property included an old hotel building used to house employees, a

fellowship center building, a trailer campsite for persons attending the conference

and living in trailers, cottages that were rented to persons attending the conference,

a gravel pit, a picnic area, boat docks, a bathhouse, a beach, a playground,

(…continued)

the laws of this state, with the buildings and other property thereon while occupied

by them solely for the purposes for which they were incorporated[.]”

7
Gull Lake involved another predecessor of MCL 211.7o that exempted
from taxation
[s]uch real estate as shall be owned and occupied by library,
benevolent, charitable, educational or scientific institutions and
memorial homes of world war veterans incorporated under the laws
of this state with the buildings and other property thereon while
(continued…)

9

horseshoe and badminton courts, and parking areas. Id. at 272. This Court

determined that the housing and recreational facilities on the property were

necessary to fulfill the plaintiff’s purpose. Id. at 275. Again interpreting the third

element of the tax-exemption statute, this Court held that the property was

occupied by the plaintiff solely for the purpose for which it was incorporated. Id.

at 274-275.

Finally, in Oakwood Hosp Corp v State Tax Comm, 374 Mich 524, 526;

132 NW2d 634 (1965) (Oakwood Hosp I), the plaintiff was a nonprofit

corporation that owned and operated a hospital. The plaintiff claimed a tax

exemption for property on which its hospital facilities were located.8 Id. Also on

the property were six houses that provided housing near the hospital for the

resident physicians and interns whose services and availability to the hospital at all

times were essential to the operation of the hospital. Id. at 527. This Court held

that the plaintiff was entitled to the tax exemption for the entire property,

including the houses. This Court explained that housing the doctors and interns

near the hospital was necessary to the proper functioning of the hospital. Id. at

530. Therefore, the houses were “occupied in furtherance of and for the purposes

(…continued)
occupied by them solely for the purposes for which they were
incorporated. [MCL 211.7, as amended by 1955 PA 46.]
8
At the time Oakwood Hosp I was decided, the pertinent statutory language
was identical to that in effect when Gull Lake was decided. See MCL 211.7, as
amended by 1961 PA 238.

10

for which plaintiff was incorporated and for hospital and public health purposes.”

Id.9 Thus, this Court was again called on to address the third element of the tax-

exemption statute: whether the property was occupied for the purposes for which

the claimant was incorporated. This Court simply did not address the first

element: whether the property was “owned and occupied.”10

C. PHEASANT RING v WATERFORD TWP

Five months after the Court of Appeals issued its opinion in the instant

case, the Court of Appeals decided Pheasant Ring. In Pheasant Ring, supra at

440, the petitioner was a nonprofit corporation organized to carry on educational

9
Later, in Oakwood Hosp Corp v State Tax Comm, 385 Mich 704; 190
NW2d 105 (1971) (Oakwood Hosp II), this Court reached the opposite conclusion
because the Legislature had amended the statute to specifically exclude such
physician housing from the property-tax exemption.
10
Since Oakwood Hosp II, the Court of Appeals has addressed the tax
exemption at issue several times. See, e.g., Lake Louise Christian Community v
Hudson Twp, 10 Mich App 573, 580; 159 NW2d 849 (1968) (holding that the
religious institution did not occupy 1,300 acres of mostly unused wooded property
because the property was not frequently used for religious education), Nat’l Music
Camp v Green Lake Twp, 76 Mich App 608, 612; 257 NW2d 188 (1977) (holding
that the nonprofit educational institutions were entitled to a property-tax
exemption for 92 acres of unspoiled sand dunes on Lake Michigan because “[t]he
property was used in a manner consistent with the nature of the land in such a way
that the purpose for which the owning institution is exempt, education, was plainly
advanced”), Kalamazoo Nature Ctr, Inc v Cooper Twp, 104 Mich App 657, 665-
667; 305 NW2d 283 (1981) (holding that the nonprofit institution “occupied” 31
acres of preserved wilderness land that it did not physically enter but used for
observation and educational purposes), and Holland Home v Grand Rapids, 219
Mich App 384, 397-398; 557 NW2d 118 (1996) (holding that the nonprofit
association did not occupy the property when a retirement home on the property
was under construction on the relevant tax days). The validity of some of these
opinions is questionable in light of our holding in the instant case.

11

and other charitable activities, including establishing and supporting a transitional

community for persons with autism. The petitioner sought a property-tax

exemption for a building that it owned and rented to persons with autism. Id. at

441-442. Nothing in the Court of Appeals opinion stated that any of the

petitioner’s employees resided in the building to supervise or monitor the tenants.

Nonetheless, the Court of Appeals held that the petitioner “occupied” the home

within the meaning of MCL 211.7o(1). The Court looked to the dictionary

definition of “occupy” and then, without discussing Detroit Young Men’s Society,

Webb Academy, Gull Lake, or Oakwood Hosp I, held that the petitioner

“occupied” the building because it used the building in furtherance of its charitable

purpose. The panel held, in pertinent part:

The Township asserts that Pheasant Ring does not occupy the
property because the location of its offices is not physically on the
property at issue and it rents the property to tenants. This
interpretation of the requirements for tax exemption is too narrow
and restrictive. There is no dispute that Pheasant Ring owns the
property. Although Pheasant Ring does not use the property for its
own offices, the property is occupied by tenants of Pheasant Ring in
furtherance of its charitable purposes. This Court, in determining
whether a charitable organization “occupied” a property for purposes
of qualifying for a tax exemption, has determined that “[t]he proper
test is whether the entire property was used in a manner consistent
with the purposes of the owning institution.” Holland Home v
Grand Rapids, 219 Mich App 384, 398; 557 NW2d 118 (1996).
Under this criterion, Pheasant Ring occupied the residence.
[Pheasant Ring, supra at 442.]

12

 IV. ANALYSIS

We conclude that under the plain language of MCL 211.7o(1) and this

Court’s previous caselaw, the Court of Appeals correctly decided this case and

incorrectly decided Pheasant Ring.

First, the Court of Appeals opinion in the instant case is consistent with the

statutory language, whereas Pheasant Ring is not. Webster’s Universal College

Dictionary (1997) defines “occupy” as follows:11

—v.i. 1. to have, hold, or take as a separate space; possess,
reside in or on, or claim: The orchard occupies half the farm. 2. to
be a resident or tenant of; dwell in. 3. to fill up, employ, or engage:
to occupy time reading. 4. to engage or employ the mind, energy, or
attention of: We occupied the children with a game. 5. to take
possession and control of (a place), as by military invasion. —v.i. 6.
to take or hold possession.

We conclude that the second meaning is the one the Legislature intended. The

third, fourth, and fifth meanings in the definition are clearly not relevant here.12

11
Justice Cavanagh attacks our use of a dictionary in interpreting the
statutory language. He states: “The practice of reaching for a dictionary to define
common words in a statute risks serving to merely confirm the writer’s assumed
meaning of the word, rather than to actually advance the writer’s legal analysis.”
Post at 3. We recognize that dictionaries are merely interpretive aids used by the
court. Consumers Power Co v Pub Service Comm, 460 Mich 148, 163 n 10; 596
NW2d 126 (1999). But in a previous opinion authored by Justice Cavanagh, this
Court held: “When determining the common, ordinary meaning of a word or
phrase, consulting a dictionary is appropriate.” Title Office, Inc v Van Buren Co
Treasurer, 469 Mich 516, 522; 676 NW2d 207 (2004).
12
Although the dissent accuses us of cursorily dismissing three of the
alternative meanings of “occupy,” we see no need to discuss these definitions in
detail because they clearly do not apply. The dissent seems to prefer the third
meaning in the definition: “to fill up, employ, or engage; to occupy time reading.”
But the dictionary’s example using this meaning clearly demonstrates that the
(continued…)

13

The first meaning defines “occupy” as “to have, hold, . . . possess, . . . or claim.”

These parts of the definition are synonymous with ownership.13 Because the

statute uses the conjunctive term “owned and occupied,” however, the Legislature

must have intended different meanings for the words “owned” and “occupied.”

Otherwise, the word “occupied” would be mere surplusage. “Courts must give

effect to every word, phrase, and clause in a statute, and must avoid an

interpretation that would render any part of the statute surplusage or nugatory.”

Koontz v Ameritech Services, Inc, 466 Mich 304, 312; 645 NW2d 34 (2002).

Thus, the Legislature must have intended the term “occupy” to mean the other

aspect of the dictionary definition: to “reside in or on” or “to be a resident or

tenant of; dwell in.” This aspect of the definition especially makes sense when

viewed in its specific context;14 it is “real or personal property” that must be

(…continued)
third meaning does not make sense in the context of the statute. One cannot “fill
up” property the way one can fill up time reading. The fourth meaning does not
apply because one cannot “engage or employ the mind, energy, or attention of” an
inanimate object such as real property. Finally, it is preposterous to suggest that
the Legislature intended the exemption to apply only if a nonprofit charitable
institution conducted a successful military invasion of the property.
13
Webster’s Universal College Dictionary (1997) defines “own” as “to
have or hold as one’s own; possess.”
14
A word that is defined in various ways is given meaning by its context or
setting. Koontz, supra at 318.

14

“occupied.” “Reside” means “1. to dwell permanently or for a considerable time;

live. 2. (of things, qualities, etc.) to be present habitually; be inherent ([usually

followed] by in).” Webster’s Universal College Dictionary (1997). Thus, aided

by this dictionary definition, we conclude that to occupy property under MCL

211.7o(1), the charitable institution must at a minimum have a regular physical

presence on the property.15

Using this definition, the Court of Appeals in the instant case correctly held

that petitioner did not occupy property that it leased to others and did not

physically reside in.16 In this situation, the tenants, not petitioner, actually

“occupied” the property. We agree with the Court of Appeals that “to find that the

non-profit [sic] corporate owner/lessor occupies the properties by virtue of leasing

them to tenant-occupants, even though the tenancy is consistent with the non-

profit’s [sic] corporate purposes, requires a ‘significant stretch’.” Liberty Hill,

supra at 2 (emphasis in original.) The Pheasant Ring panel’s holding that a

nonprofit corporation occupies a property merely by virtue of the fact that the

15
A charitable institution does not automatically occupy property if it has
occupancy rights to the property. The term “occupy” requires more than merely
having the “right to occupy.” As we have explained, the charitable institution
must actually occupy the property, i.e., maintain a regular physical presence there.
16
Petitioner is correct, however, that the fact that it charged the tenants rent
does not disqualify it from the exemption. See Wexford Med Group, supra at 215
(“A ‘charitable institution’ can charge for its services as long as the charges are
not more than what is needed for its successful maintenance.”).

15

property is being used in a manner consistent with the corporation’s purpose is at

odds with the statute’s plain language.

The Court of Appeals holding in the instant case is further supported by this

Court’s decisions in Webb Academy, Gull Lake, and Oakwood Hosp I. Although

those decisions did not focus on the occupancy requirement of the statute, but

focused instead on the part of the statute requiring that the property be occupied

“solely for the purposes for which it was incorporated,” the plaintiffs in those

cases were actually physically present on the property when they engaged in

activities that carried out their nonprofit goals. Here and in Pheasant Ring, on the

other hand, the petitioners were not present on the property.

V. RESPONSE TO THE DISSENT

The dissent and petitioner incorrectly conclude that the term “occupy” is

synonymous with “use.”17 In arguing that “occupy” means “use,” the dissent

selectively quotes the fifth of five suggested meanings of “occupancy” in Black’s

Law Dictionary (8th ed).18 The first definition of “occupancy” suggested,

17
Similarly, the Court of Appeals in Lake Louise Christian, supra at 578,
and Kalamazoo Nature Ctr, supra at 665-667, erred in concluding that “occupy” is
synonymous with “use.”
18
Justice Cavanagh’s dissent states that it quotes Black’s Law Dictionary
merely “to draw attention to the inadequacy of a dictionary-driven approach to
statutory interpretation.” Post at 3. Yet Justice Cavanagh does not explain what
interpretive aid, other than his own personal vocabulary, he would prefer us to use
to define the statutory term. Further, when it comes to actually interpreting the
statutory language, Justice Cavanagh, despite his criticism of our reliance on a
dictionary, himself turns to the dictionary definition. The dissent states that the
(continued…)

16

however, reads: “The act, state, or condition of holding, possessing, or residing in

or on something; actual possession, residence, or tenancy, [especially] of a

dwelling or land.” Id. (emphasis added). This definition is consistent with the

first two meanings of “occupy” suggested in Webster’s Universal College

Dictionary (1997), one of which we adopt today.

We reject the dissent’s argument that interpreting “occupied” to mean

“reside[d] in or on” is incongruous with the Legislature’s second use of

“occupied” in MCL 211.7o(1). Contrary to the dissent’s argument, a charitable

institution may reside on property for charitable purposes, rather than simply

dwelling on the property for no reason other than dwelling itself. For example, the

doctors and interns in Oakwood Hosp I resided in physicians’ housing “in

furtherance of and for the purposes for which plaintiff was incorporated and for

hospital and public health purposes.” Oakwood Hosp I, supra at 530.

The dissent argues that charitable institutions do not typically reside in a

place because they are inanimate. Clearly, just as inanimate things may not “use”

property, they may not “reside” on property. Charitable institutions, however, are

not merely inanimate bodies; they are made up of people. A charitable

institution’s members, employees, or volunteers may dwell on the property or at

(…continued)
term “‘occupied’ should be understood as synonymous with ‘used,’ because it is
the most appropriate definition for that context.” Post at 5. Justice Cavanagh
appears to derive this definition from Black’s Law Dictionary, which he quotes
earlier in his opinion.

17

least be habitually present on the property, which is consistent with the meaning of

“reside.” The dissent contends that a charitable institution may not “reside in”

certain property, such as a swimming pool. Although one obviously cannot dwell

in a swimming pool, one can maintain a regular physical presence at the pool (e.g.,

by habitually swimming there) or on the property that contains the pool. Either

would generally be sufficient to occupy the property.

In citing Oakwood Hosp I to support its argument that the term “occupied”

means “used,” the dissent conflates the following two factors for determining

whether the tax exemption under MCL 211.7o(1) applies:

(1) The real estate must be owned and occupied by the
exemption claimant;

* * *

(3) the exemption exists only when the buildings and other
property thereon are occupied by the claimant solely for the
purposes for which it was incorporated. [Wexford Med Group,
supra at 203.]

As discussed, the Oakwood Hosp I Court addressed only the third factor. The

Court held that the nonprofit corporation occupied physicians’ housing for the

purposes for which it was incorporated. The Oakwood Hosp I Court’s mention of

the nonprofit corporation’s “use” of the property was a reference to this Court’s

holding in Webb Academy that housing is exempt only when it is incidental to the

use of the entire property for charitable purposes. Further, the Court’s discussion

of the “use” of property is not inconsistent with our interpretation of the term

“occupy.” It is certainly consistent for a charitable institution to use property on

18

which it maintains a regular physical presence. Use of property is just one part of

occupying it. The two terms are not mutually exclusive; “use” is merely narrower

than “occupy.”

The dissent would hold that a charitable institution may occupy property by

using it without maintaining a physical presence there. Such an interpretation

leads to one of the following two unsatisfactory conclusions: (1) a charitable

institution can occupy property without actually being physically present or (2) a

charitable institution need only use the property sporadically or perhaps even once

to occupy it. Neither of these conclusions is consistent with proper meaning of the

term “occupy.” Rather, a charitable institution must maintain a regular physical

presence on the property to occupy the property under MCL 211.7o.

VI. CONCLUSION

Petitioner did not occupy the real property to qualify for a property-tax

exemption under MCL 211.7o(1). Although petitioner owned the housing, it

leased the housing to others for their own personal use and had no regular physical

presence in the housing. Thus, petitioner did not occupy the housing under the

plain language of the statute and this Court’s interpretations of the predecessors of

MCL 211.7o. Because petitioner cannot satisfy all the requirements of MCL

211.7o(1), it is not entitled to an exemption from property taxes during the tax

19

years at issue. Accordingly, we affirm the judgment of the Court of Appeals in the

instant case and overrule Pheasant Ring to the extent that it is inconsistent with

this opinion.

Maura D. Corrigan
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman

20

 STATE OF MICHIGAN

SUPREME COURT

LIBERTY HILL HOUSING
CORPORATION,

Petitioner-Appellant,

v No. 131531

CITY OF LIVONIA,

Defendant-Appellee.

WEAVER, J. (concurring in the result only).

The question before this Court is whether the petitioner is exempt under

MCL 211.7o(1)1 from paying property tax on property it uses for the charitable

purpose of providing housing for low-income families, low-income individuals,

and disabled individuals. Specifically, does the petitioner “occupy” the subject

property, as the term “occup[y]” is contemplated as a requirement for exemption

from property tax under MCL 211.7o(1)?

Pursuant to MCR 7.302(G)(1), in lieu of granting leave to appeal, I concur

in affirming the Court of Appeals holding that petitioner did not occupy the

1
MCL 211.7o(1) states: “Real or personal property owned and occupied by
a nonprofit charitable institution while occupied by that nonprofit charitable
institution solely for the purposes for which that nonprofit charitable institution
was incorporated is exempt from the collection of taxes under this act.”
(continued…)
subject property as contemplated under MCL 211.7o(1), and I agree with

overruling Pheasant Ring v Waterford Twp, 272 Mich App 436; 726 NW2d 741

(2006), but would overrule it to the extent that its holding is inconsistent with my

opinion.

I. FACTS

Petitioner Liberty Hill is a nonprofit organization incorporated under the

laws of Michigan. Petitioner’s charitable purpose is to provide housing for low-

income or disabled individuals, in addition to low-income families. The tenants of

the property at issue lease the housing under traditional landlord-tenant

agreements. Petitioner collects rent from the tenants, charges late fees when the

deadline for rent passes, and requires security deposits.

Petitioner requested a tax exemption from respondent city of Livonia for

tax years 2003 and 2004, arguing that it qualified for exemption as a charitable

organization occupying property in furtherance of its charitable purpose. The case

was heard in the Michigan Tax Tribunal (MTT), which denied petitioner’s request

for an exemption. Petitioner appealed in the Court of Appeals, which affirmed the

MTT’s ruling in an unpublished opinion per curiam.2 Petitioner then sought leave

to appeal in this Court.

(…continued)

2
Liberty Hill Housing Corp v City of Livonia, unpublished opinion per
curiam of the Court of Appeals, issued May 16, 2006 (Docket No. 258752).

2

 While the application for leave to appeal in the instant case was pending,

the Court of Appeals issued a published opinion in Pheasant Ring v Waterford

Twp. The petitioner in Pheasant Ring was a nonprofit organization, similar to

petitioner in this case, that leased housing to persons with autism under a

traditional landlord-tenant agreement. The petitioner in Pheasant Ring requested a

property-tax exemption under MCL 211.7o(1). In Pheasant Ring, the Court of

Appeals held that the petitioner did “occupy” the property in a manner that

qualified for the exemption. The decision was not appealed in this Court.

To clarify whether a charitable organization that leases property to others as

part of its charitable purpose “occupies” the property under MCL 211.7o(1), this

Court ordered oral argument on the application, directing the parties to address

“whether Pheasant Ring v Waterford Twp . . . was correctly decided.”3

II. STANDARD OF REVIEW

Questions of statutory construction are reviewed de novo. Grimes v Dep’t

of Transportation, 475 Mich 72, 76; 715 NW2d 275 (2006). “‘[E]xemption

statutes are to be strictly construed in favor of the taxing unit.’” Ladies Literary

Club v Grand Rapids, 409 Mich 748, 753; 298 NW2d 422 (1980) (citation

omitted).

3
Liberty Hill Housing Corp v City of Livonia, 477 Mich 1018 (2007).

3

 III. ANALYSIS

To qualify for an exemption under the text of MCL 211.7o(1), the claimant

must satisfy a three-part test: (1) the real estate must be owned and occupied by

the exemption claimant, (2) the exemption claimant must be a nonprofit charitable

institution incorporated under the laws of this state, and (3) the buildings and other

property thereon must be occupied by the claimant solely for the purposes for

which it is incorporated. Wexford Med Group v City of Cadillac, 474 Mich 192,

203; 713 NW2d 734 (2006). The issue in common between Pheasant Ring and

the instant case is whether the petitioners “occupied” their respective properties in

a manner that meets the first and third elements of the exemption test. In both

cases, the properties were leased as housing to tenants with special needs.

With regard to the petitioner in this case, the Court of Appeals held that

petitioner did not occupy the property because it had leased the property to tenants

and had thus given up its right to occupy the property. The Court of Appeals in

Pheasant Ring, on the other hand, criticized that argument as being “too narrow

and restrictive.” Pheasant Ring, 272 Mich App at 442. The Pheasant Ring panel

then went on to hold that, because the petitioner had used the property in

furtherance of its charitable purpose, it had occupied the property for the

charitable purpose. Id.

I agree with the Court of Appeals in the instant case, and further conclude

that the Pheasant Ring panel incorrectly interpreted the term “occupied” to mean

“used.” I note that long-established law requires this Court to give a narrow

4

construction to statutes creating tax exemptions. Ladies Literary Club, 409 Mich

at 753. I interpret the term “occupied” in the narrowest sense, looking only at the

language used in MCL 211.7o(1). The statute requires a claimant to perform two

actions before a charitable exemption can be granted: (1) the charitable

organization must own the property and (2) the charitable organization must

occupy the property.4 The statute makes the occupancy requirement distinct from

the ownership requirement, and it makes no mention of “using” the property.

Thus, I reject the Pheasant Ring interpretation that “using” the property is

equivalent to occupying the property because that interpretation goes beyond the

text of the statute. Given the statute’s use of the term “occupied,” a claimant must,

at a minimum, have occupancy rights to the property before it can qualify as

having “occupied” that property.

By leasing the property to tenants, the petitioner in this case gave up its

right to occupy the property during the term of the lease. Because petitioner could

not occupy the property by reason of its own agreement, it cannot now claim that

it “occupied” the property for purposes of MCL 211.7o(1). The tenants were the

only occupants of the property during the tax years at issue.

4
The occupation must be in furtherance of the organization’s charitable
purpose.

5

 IV. CONCLUSION

Petitioner did not occupy the property at issue during tax years 2003 and

2004 because petitioner had contracted away its occupancy rights in the form of

lease agreements. Thus, petitioner cannot satisfy the requirements of MCL

211.7o(1) for exemption from property taxes for tax years 2003 and 2004.

Accordingly, I concur with the majority in affirming the Court of Appeals

holding in the instant case and overruling the Court of Appeals opinion in

Pheasant Ring v Waterford Twp, but would overrule it to the extent that it is

inconsistent with my opinion.

Elizabeth A. Weaver

6

 STATE OF MICHIGAN

SUPREME COURT

LIBERTY HILL HOUSING
CORPORATION,

Petitioner-Appellant,

v No. 131531

CITY OF LIVONIA,

Respondent-Appellee.

CAVANAGH, J. (dissenting).

I dissent from the majority opinion, which holds that Liberty Hill Housing

Corporation, a nonprofit organization that leases housing to disabled or low-

income individuals, did not qualify for the charitable-institution property-tax

exemption under MCL 211.7o(1) because it did not occupy the properties at issue.

I disagree that the Legislature intended the term “occupy,” as used in MCL

211.7o(1), to mean “reside in or on” or “to be a resident or tenant of; dwell in.”

This cannot be the meaning intended by the Legislature because it is inconsistent

with the statute’s subsequent use of the term and the statute’s purpose.

The key issue in this case is the meaning of the term “occupied” as it is

used in MCL 211.7o(1), which exempts from taxation “[r]eal or personal property

owned and occupied by a nonprofit charitable institution . . . .” The majority

opinion rejects the definition of “occupied” that denotes ownership, “to have, hold,
. . . possess, . . . or claim,” reasoning that the term “occupied” must mean

something other than ownership because MCL 211.7o(1) uses the conjunctive

phrase “owned and occupied.” Ante at 13-14. But there are several definitions for

the term, so ruling out the meaning that denotes ownership only eliminates one

alternative. The entire entry for the term “occupy” in the dictionary used by the

majority opinion suggests six different meanings:

—v.t. 1. to have, hold, or take as a separate space; possess,
reside in or on, or claim: The orchard occupies half the farm. 2. to
be a resident or tenant of; dwell in. 3. to fill up, employ, or engage:
to occupy time reading. 4. to engage or employ the mind, energy, or
attention of: We occupied the children with a game. 5. to take
possession and control of (a place), as by military invasion. —v.i. 6.
to take or hold possession. [Webster’s Universal College Dictionary
(1997).]

Moreover, consulting a different dictionary yields additional variations of the

definition, illustrating a hazard of singularly employing dictionary definitions to

discern legislative intent. For example, Black’s Law Dictionary (8th ed)

articulates one definition of “occupancy” as “the use to which property is put,”

which bears some relation to the third Webster’s definition: “to fill up, employ, or

engage.”1 The majority cursorily dismisses three of the alternative Webster’s

1
The other four alternative definitions include:
1. The act, state, or condition of holding, possessing, or
residing in or on something; actual possession, residence, or tenancy,
[especially] of a dwelling or land. . . . 2. The act of taking
possession of something that has no owner (such as abandoned
property) so as to acquire legal ownership. . . . 3. The period or term
during which one owns, rents, or otherwise occupies property.
(continued…)

2

definitions as “clearly not relevant,” but accuses me of selectively quoting from

Black’s Law Dictionary. Ante at 13, 16. However, I have not presented

alternative dictionary definitions to argue that “my” dictionary is more

authoritative than the majority’s dictionary; rather, I raise them to draw attention

to the inadequacy of a dictionary-driven approach to statutory interpretation. The

practice of reaching for a dictionary to define common words in a statute risks

serving to merely confirm the writer’s assumed meaning of the word, rather than

to actually advance the writer’s legal analysis.2 While dictionaries are certainly

useful tools of statutory interpretation, there are circumstances in which consulting

a dictionary will not itself resolve the proper meaning of a statutory word or

phrase.

This case presents such a circumstance—in which consulting dictionaries

yields a number of possible meanings of the term “occupied.” As a result,

discerning the most appropriate meaning requires further analysis. Several

principles of statutory construction aid in determining how the term “occupied”

should be understood in MCL 211.7o(1). A phrase must be construed in light of

the phrases around it, not out of context. Koontz v Ameritech Services, Inc, 466

(…continued)
4.The state or condition of being occupied. [Black’s Law Dictionary
(8th ed).]
2
See Hoffman, Parse the sentence first: Curbing the urge to resort to the
dictionary when interpreting legal texts, 6 NYU J Legis & Pub Pol’y 401 (2003).

3

Mich 304, 318; 645 NW2d 34 (2002). Similarly, when construing a statute, a

court must read it as a whole. G C Timmis & Co v Guardian Alarm Co, 468 Mich

416, 421; 662 NW2d 710 (2003). Particularly relevant here is the commonsense

principle that “‘“[i]dentical language should certainly receive identical

construction when found in the same act.”’” Empire Iron Mining Partnership v

Orhanen, 455 Mich 410, 426 n 16; 565 NW2d 844 (1997), quoting Tryc v

Michigan Veterans’ Facility, 451 Mich 129, 155; 545 NW2d 642 (1996) (Riley, J.,

dissenting).

When a statute repeats terms, it is logical to infer that they have the same

meaning in each instance. The statute at issue here uses the term “occupied” twice

within the same sentence: “Real or personal property owned and occupied by a

nonprofit charitable institution while occupied by that nonprofit charitable

institution solely for the purposes for which that nonprofit charitable institution

was incorporated is exempt from the collection of taxes under this act.” MCL

211.7o(1) (emphasis added). The statute’s two uses of the term “occupied” should

be consistent in meaning. But interpreting “occupied” to relate to residency, as the

majority opinion suggests, is incongruous with the statute’s second use of the term

“occupied.” That interpretation would require that an institution resided in

property solely for a particular purpose. One’s residency of property does not

commonly have any purpose other than residency, or dwelling, itself. By contrast,

the use of property might be for a particular purpose. It would be entirely

appropriate to state that an institution used property solely for a particular purpose,

4

such as a medical, educational, or recreational purpose. The second instance of

“occupied” should be understood as synonymous with “used,” because it is the

most appropriate definition for that context. Interpreting “occupied” to relate to

use would also be appropriate for the first instance of the term, which confirms

that the Legislature intended this meaning.

Additionally, interpreting “occupied” as synonymous with “used” comports

with the function of the statute, whereas interpreting “occupied” to relate to

residency does not. The exemption described in MCL 211.7o(1) applies only to

nonprofit charitable institutions; it never applies to individuals. Applying the term

“reside” to an institution is a strained and odd interpretation. Unlike people,

institutions are inanimate and do not typically reside in a place. Notably, the

majority articulates the following definition of “reside” from Webster’s: “1. to

dwell permanently or for a considerable time; live. 2. (of things, qualities, etc.) to

be present habitually; be inherent ([usually followed] by in).” Ante at 15. The

first definition of “reside” clearly does not apply to institutions, because

institutions do not dwell or live anywhere. The second definition of “reside” does

not apply because an institution would not be inherent in a particular piece of

property.

Further, the statute applies broadly to “real or personal” property, not

simply residential property. Not all property that is eligible for exemption is

susceptible to being resided in. For example, if a nonprofit charitable institution

owned land that contained a swimming pool, it would be inapt to state that the

5

institution occupied the swimming pool in that it resided in the pool. But it would

be entirely appropriate to state that the institution occupied the swimming pool in

that it operated the pool and, further, that it operated the pool in fulfillment of its

charitable purpose.3 Thus, the term “occupied” must be construed so that it

applies to the broad range of property that could be exempt under MCL 211.7o(1).

Finally, Michigan caselaw supports interpreting the term “occupied” to

mean “used” in the context of this exemption. In Oakwood Hosp Corp v State Tax

Comm, 374 Mich 524; 132 NW2d 634 (1965), the predecessor of MCL 211.7o

was at issue. The statute exempted from taxation property that was “owned and

occupied” by “library, benevolent, charitable, educational or scientific institutions

. . . while occupied by them solely for the purposes for which they were

incorporated.” Id. at 528. This Court held that houses owned by the plaintiff

hospital, which were used for dwelling purposes for resident physicians and their

families, were exempt under this provision. Id. at 530-532. The hospital charged

the residents $100 a month to defray the cost of the housing, which was located at

the edge of the hospital property and fronted a public street in a residential

neighborhood. This Court reasoned that the houses were built to be necessary

accessories to the hospital, because there was a shortage of housing close to the

3
Despite its devotion to the dictionary, the majority departs from its chosen
definition when it is convenient or necessary to do so, such as in the swimming-
pool hypothetical. The shortcomings of its chosen dictionary definition lead the
majority to craft its own definition of “occupy”—to maintain a regular physical
presence. Ante at 18.

6

hospital and the resident physicians needed to be available to serve at the hospital

on short notice. Id. at 527. It concluded that “[t]he houses are used as part of the

hospital operation and are incidental thereto. Exemption under the statute

applies.” Id. at 532 (emphasis added).4 Clearly, Oakwood interpreted the term

“occupied” to mean the use of the property. The focus in Oakwood was not

simply who physically “resided in” the property, but whether the use of the

property was within the hospital’s scientific purpose. This Court viewed the

resident physicians as an extension of the hospital because they were so integral to

the hospital’s purpose; accordingly, their tenancy and use of the housing was

attributed to the hospital.

Therefore, if the term “occupied” is understood to relate to the use to which

property is put, the question here is whether Liberty Hill occupied the properties

when it leased them to these particular tenants. The relationship between Liberty

Hill and its tenants is analogous to the relationship between the hospital and the

medical residents in Oakwood. A hospital’s narrow purpose is to provide medical

care at the hospital, but Oakwood recognized that enabling medical residents to

get to the hospital quickly was necessary to that purpose. Accordingly, even

though actual medical care did not occur in the houses, the relationships between

4
The majority’s argument that Oakwood and the other cases addressing this
exemption did not concern the “owned and occupied” element of the exemption
statute is irrelevant because the term “occupied” should have the same meaning in
both instances in the statute.

7

the medical residents, their housing, and the hospital were so intertwined that this

Court regarded housing the medical residents as an operation of the hospital that

was within its scientific purpose. The fundamental purpose of Liberty Hill is to

enable low-income or disabled people to live independently, rather than in

institutions or group homes. The physical manifestation of Liberty Hill’s

operations is not just its central office, but also in having Liberty Hill’s tenants

occupy the houses. If Liberty Hill’s tenants do not live in the houses, Liberty

Hill’s purpose is not fulfilled.

Further, the tenancy arrangements demonstrate a unique relationship

between Liberty Hill and its tenants. All Liberty Hill tenants are referred by

Community Living Services, Liberty Hill’s parent corporation. Liberty Hill’s

sample lease appears to be a standard lease, except that it includes a provision that

“Community Living Services shall assist the tenant in complying with the terms of

this lease.” Unlike a standard landlord-tenant relationship, Liberty Hill has

specifically agreed to work with the tenant to fulfill the lease requirements.

Further, Community Living Services contracts to provide a number of services to

Liberty Hill tenants at the properties. Support services include transportation,

personal-care assistance, support for work, recreation, community involvement,

and health-care service. The aid given in a particular tenant’s home could amount

to care being provided 24 hours a day, seven days a week, depending on the

tenant’s needs. Thus, between assisting the tenant with complying with the lease

8

and providing support services, it is clear that Liberty Hill operates in the

properties, even though the tenants physically reside in them.

In addition to the services that Liberty Hill provides through Community

Living Services, the financial arrangements indicate that Liberty Hill does not

have a standard landlord-tenant relationship with its tenants. All of Liberty Hill’s

tenants qualify for Supplemental Security Income, which amounts to

approximately $600 a month and is usually the only source of income for each

tenant. Tenants pay no more than one-third of their income to rent, usually about

$200 a month. Liberty Hill receives governmental funds and donations that offset

the remainder of the housing-related expenses, such as the mortgage, insurance,

and maintenance. But in four of the last five years, Liberty Hill has operated at a

deficit. The financial circumstances indicate that Liberty Hill is not leasing the

houses as a typical landlord, but is leasing the houses as an integral part of its

mission. Just as the houses in Oakwood would not have been exempted from

taxation if they had been rented to people unrelated to the hospital, the Liberty Hill

houses would not be exempt if they were rented to tenants who were not referred

by Community Living Services and who did not meet Liberty Hill’s criteria.

Leasing the properties to particular low-income or disabled tenants and

maintaining a relationship with them was integral to Liberty Hill’s operation.

Thus, Liberty Hill occupied the properties within the meaning of MCL 211.7o(1)

because it used the properties as part of its institutional mission. Moreover, it

occupied the properties solely for the purposes for which it was incorporated, as

9

required by MCL 211.7o(1). I would reverse the judgment of the Court of

Appeals.

Michael F. Cavanagh
Marilyn Kelly

10