Michigan Supreme Court
Lansing, Michigan 48909
_____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED DECEMBER 18, 2001
MUSKEGON AREA RENTAL ASSOCIATION,
ROGER NIELSON, and ARTHUR JASICK,
Plaintiffs-Appellees,
v No. 118416
CITY OF MUSKEGON,
Defendant-Appellant.
__________________________________
PER CURIAM
A Muskegon city ordinance provides that before a
residential dwelling may be rented, all past due property
taxes on the property must be paid. The plaintiffs, who are
owners of rental property within the city, brought this action
challenging the validity of the ordinance on various grounds.
The circuit court granted summary disposition for the city on
all the plaintiffs’ claims, but the Court of Appeals reversed
in part, finding that the ordinance violated the Equal
Protection Clauses of US Const, Am XIV, and Const 1963, art 1,
§ 2.
We conclude that the ordinance does not violate equal
protection guarantees, reverse the judgment of the Court of
Appeals in part, and reinstate the judgment of the Muskegon
Circuit Court.
I
The city of Muskegon enacted a property maintenance code
that sets forth the maintenance standards for all existing
structures, new structures, and additions to existing
structures.1 The code also requires a property owner to
1
The purpose of the property maintenance code is stated
in Muskegon Ordinance § 4-61:
(b) Purpose. The purpose of this code is to
protect the public health, safety and welfare in
buildings intended for human habitation and
accessory structures as hereafter provided by:
(1) Establishing minimum standards for
exterior property areas, exterior structure,
interior structure, basic facilities, light and
ventilation, occupancy requirements and fire
safety. These standards are designed to be
reasonably high but, at the same time, practical
and attainable and should not be interpreted as a
guarantee to the purchaser.
(2) Fixing the responsibilities of owners,
operators and occupants of every building or
structure used or intended for commercial or
residential use or occupancy, in whole or in part.
(3) Provide for administration, enforcement
and penalties.
The provisions of this chapter shall apply to
all existing structures. Any new building
construction or additions to existing structures in
the city must comply with the requirements of the
building code as amended. The minimum standards
required under this code are designed to prevent
(continued...)
2
obtain a certificate of compliance before the owner may rent
the property.
On May 27, 1997, the city amended the ordinance to impose
additional conditions for obtaining a certificate of
compliance. Muskegon Ordinance § 4-83(b) was amended to
provide:
The City shall issue a certificate of
compliance for a rental dwelling when the city
finds that the rental dwelling, its units and
accessory structures and yards comply with the
standards set forth in this code; however, no
certificate of compliance shall be issued until all
of the following fees and debts to the city have
been paid in full:
(1) all previously billed property taxes;
(2) all current or past due special assessment
installments;
(3) water or sewer bills outstanding;
(4) all charges against the property for
mowing, cleanup, weed or debris removal and similar
charges by the city;
(5) any fees, fines, penalties or debts of any
sort arising from the provisions or enforcement of
the Property Maintenance Code.
The issue in this appeal is whether § 4-83(b)(1) violates
the principle of equal protection under the law.
1
(...continued)
fire hazard, structural deterioration, inadequate
light, air and heat and unsanitary and overcrowded
conditions which constitute a menace to the safety,
health and welfare of the occupants or to the
surrounding area.
3
II
Plaintiff Muskegon Area Rental Association is an
organization of about 145 members who own approximately 2,000
rental dwellings in the city of Muskegon. The individual
plaintiffs are members of the association. Plaintiffs brought
this action after the city attempted to enforce § 4-83(b)(1).
Among other claims not before the Court, plaintiffs alleged
that the ordinance violated their equal protection rights.
The plaintiffs argued that their equal protection rights
were violated because other businesses who must register to do
business in Muskegon are not required to pay real estate taxes
before securing a certificate of registration under another
ordinance.2 After discovery, both sides moved for summary
disposition under MCR 2.116(C)(10). The circuit court granted
the city’s motion. Regarding the equal protection claim, the
court said:
The 1990 Census of Population and Housing
shows that 45% of Muskegon’s 14,767 occupied
housing units were rental units. . . . Undisputed
sworn testimony demonstrates that a substantial
majority of rental properties which are not current
in their tax payments are deteriorated, and unsafe
for human occupancy. . . . When they deteriorate,
the City generally does not apply to receive these
tax reverted properties. . . . Tax delinquency
carries over to lack of interest in providing safe
rentals for the public. . . . Finally, the City’s
tax collection percentage is lower than the
majority of Michigan municipalities. This results
in higher interest costs when the City borrows or
issues bonds. . . .
2
See Ordinance 1166, adopted August 11, 1998, amending
Chapter 5 of the Muskegon Code of Ordinances.
4
At oral argument, the parties explored the
link between the stated goals and the ordinance.
Plaintiff’s counsel argued there was little or no
connection between fiscal responsibility and
providing suitable housing. A landlord could be
fiscally responsible and provide horrific housing.
One could provide exemplary rental housing and owe
delinquent taxes. The Court is, however, satisfied
that the City has established the requisite
connection. In any event, it is not for this Court
to second guess local governing bodies absent a
showing that the body was arbitrary or capricious.
Kropf v City of Sterling Heights, 391 Mich [139,
161]; 215 NW2d 179 (1974). [Circuit Court opinion
issued January 19, 1999, pp 8-9.]
III
The plaintiffs appealed, and the Court of Appeals
affirmed the circuit court decision on all grounds except the
equal protection claim.3 The majority noted that an ordinance
is presumed constitutional and that the burden is on the party
challenging the ordinance to show that it is not rationally
related to a legitimate governmental interest. In finding a
violation of the Equal Protection Clauses of the Michigan and
U. S. Constitutions, the Court of Appeals majority reasoned as
follows:
We utilize the test set forth in Alexander v
Detroit, 392 Mich 30, 35-36; 219 NW2d 41 (1974), a
case involving a constitutional attack on a city
refuse collection ordinance. This test contains
two prongs: (1) whether the ordinance’s
classifications are based on natural distinguishing
characteristics and whether the classifications
bear a reasonable relationship to the object of the
ordinance and (2) whether all persons of the same
class are included and affected alike or whether
immunities or privileges are extended to an
3
244 Mich App 45; 624 NW2d 496 (2000).
5
arbitrary or unreasonable class while denied to
others of a like kind. Accord, Brittany Park
Apartments [v Harrison Charter Twp, 432 Mich 798;
443 NW2d 161 (1989)], supra, p 804.
[T]he problem here is that the ordinance
treats rental property owners differently from
other businesses. Other businesses (nonrental
properties) are required to obtain a certificate of
registration and one of the prerequisites for
obtaining such a certificate is that all
outstanding debts to defendant be paid, except real
property or income taxes. Muskegon Code of
Ordinances, § 5-9.6. Thus, defendant has created a
subset of businesses—the owners of rental dwelling
properties—and treats them entirely differently
than it treats other, nonrental property
businesses.
We hold that defendant’s ordinance violates
the guarantee of equal protection because it
violates the second prong of the test set forth in
Alexander. The ordinance does not include and
affect all persons of the same class (businesses)
and extends immunities or privileges to an
arbitrary class (businesses who are not owners of
rental properties and who are immune from the
requirement of paying real property or income taxes
before obtaining a certificate of registration),
while denying the exact immunities and privileges
to others of a like kind (businesses who are owners
of rental properties and are required to pay all
previously billed property taxes before obtaining a
certificate of compliance). Consequently, we find
that defendant’s ordinance impermissibly treats
certain components of the same class (businesses)
differently. [244 Mich App 55-57 (emphasis in
original).]
The dissent disagreed with the majority’s equal
protection analysis.
The purpose of defendant treating rental
property businesses differently than other
businesses is apparent. By requiring payment of
taxes “up front,” before units can be rented,
defendant seeks to reduce the fiscal, safety,
health, and welfare problems that result
disproportionately from rental properties.
6
The majority states that defendant’s position
regarding the rational basis for this
classification scheme “is not supported in any way
by record evidence.” Ante at 57. I first note
that the majority’s analysis in this regard ignores
the presumption of constitutionality that
defendant’s ordinance enjoys and the corresponding
heavy burden of proof that plaintiffs must bear to
show that the ordinance is unconstitutional. In
effect, the majority places the burden of proof on
defendant, as if this is a “strict scrutiny” case.
The question here is not whether defendant has
proved the rational basis for the classification
scheme. The question is whether plaintiffs have
come forward with evidence sufficient to show
defendant’s ordinance to be arbitrary and wholly
unrelated to a legitimate government purpose.
I conclude they have not. There has been no
showing that rental properties are not
disproportionately tax delinquent compared to
properties owned by other businesses. In fact, the
record includes admissions by members of the
Muskegon Area Rental Association that allowing
rental properties to become delinquent is a common
business practice. Defendant has articulated
reasons why its failure to promptly receive taxes
when due causes fiscal problems, and plaintiffs
have offered no evidence to suggest that those
problems do not result from tax delinquencies.
Thus, if the purpose of the classification scheme
here was simply to encourage prompt payment of
taxes for fiscal reasons, by enacting a special
penalty against a class of property owners who
disproportionately are tax delinquent, the
classification would pass constitutional muster.
However, defendant has articulated other
reasons for treating rental property owners
differently than other businesses. In sum,
defendant’s position is that the deteriorating
conditions of residential properties are commonly
the result of or exacerbated by the failure to pay
taxes when due. This seems a common sense
conclusion to anyone familiar with “urban blight.”
It is certainly at least “rational speculation” on
defendant’s part. See Alexander v Merit Systems
Protections Bd, 165 F3d 474, 484 (CA 6, 1999)
(“legislative choice is not subject to courtroom
factfinding and may be based on rational
speculation unsupported by evidence or empirical
7
data”). Again, plaintiffs have not shown that
there is no relationship between housing
deterioration and tax delinquency or otherwise
proved that the classification scheme at issue here
has no “rational basis” in this regard. [244 Mich
App 61-62.]
The city filed an application for leave to appeal to this
Court.4
IV
We review de novo a trial court’s decision to grant or
deny summary disposition. Hazle v Ford Motor Co, 464 Mich
456, 461; 628 W2d 515 (2001). After reviewing the evidence in
the light most favorable to the nonmoving party, the court
must grant summary disposition if there is no genuine issue of
material fact. Hazle, supra at 461.
V
The tests applicable to challenges based on the Equal
Protection Clauses are well established and were recently
summarized in Crego v Coleman, 463 Mich 248, 259; 615 NW2d
218(2000):
When a party raises a viable equal protection
challenge, the court is required to apply one of
three traditional levels of review, depending on
the nature of the alleged classification. The
highest level of review, or "strict scrutiny," is
invoked where the law results in classifications
based on "suspect" factors such as race, national
origin, or ethnicity, none of which are implicated
in this case. Plyler v Doe, 457 US 202, 216-217;
102 S Ct 2382; 72 L Ed 2d 786 (1982). Absent the
implication of these highly suspect categories, an
equal protection challenge requires either
4
The plaintiffs did not cross-appeal on the issues
decided against them by the Court of Appeals.
8
rational-basis review or an intermediate,
"heightened scrutiny" review.
In this case, the categorization does not involve suspect
classifications, to which “strict scrutiny” analysis applies,
nor does it involve classifications to which the courts apply
a heightened level of scrutiny, such as illegitimacy and
gender. Id. at 260. Thus, the ordinance is reviewed under
the rational-basis test. As we explained in TIG Ins Co v
Treasury Dep’t, 464 Mich 548, 557-558; 629 NW2d 402 (2001):
“Rational basis review does not test the
wisdom, need, or appropriateness of the
legislation, or whether the classification is made
with 'mathematical nicety,' or even whether it
results in some inequity when put into practice."
Crego v Coleman, 463 Mich 248, 260; 615 NW2d 218
(2000). Rather, it tests only whether the
legislation is reasonably related to a legitimate
governmental purpose. The legislation will pass
"constitutional muster if the legislative judgment
is supported by any set of facts, either known or
which could reasonably be assumed, even if such
facts may be debatable." Id. at 259-260. To prevail
under this standard, a party challenging a statute
must overcome the presumption that the statute is
constitutional. Thoman v Lansing, 315 Mich 566,
576; 24 NW2d 213 (1946). Thus, to have the
legislation stricken, the challenger would have to
show that the legislation is based "solely on
reasons totally unrelated to the pursuit of the
State's goals," Clements v Fashing, 457 US 957,
963; 102 S Ct 2836; 73 L Ed 2d 508 (1982), or, in
other words, the challenger must "negative every
conceivable basis which might support" the
legislation. Lehnhausen v Lake Shore Auto Parts Co,
410 US 356, 364; 93 S Ct 1001; 35 L Ed 2d 351
(1973).
VI
In this case, the city has advanced legitimate objectives
for its ordinance, including encouraging prompt payment of
9
property taxes to minimize the fiscal problems associated with
delinquent taxes due on rental properties and promoting
appropriate maintenance of rental properties. Thus,
plaintiffs must show that the ordinance is not rationally
related to those objectives. We conclude that the plaintiffs
have not met that burden for the reasons articulated in the
Court of Appeals partial dissent.
The Court of Appeals majority explained its finding of an
equal protection violation by stating that the ordinance
does not include and affect all persons of the same
class (businesses) and extends immunities or
privileges to an arbitrary class (businesses who
are not owners of rental properties and who are
immune from the requirement of paying real property
or income taxes before obtaining a certificate of
registration), while denying the exact immunities
and privileges to others of a like kind (businesses
who are owners of rental properties and are
required to pay all previously billed property
taxes before obtaining a certificate of
compliance). [244 Mich App 56-57.]
This analysis is incomplete. The majority concludes that
there is an equal protection violation simply because two
classes of businesses are treated differently. If that were
all that is required, then virtually any classification could
be successfully challenged. The rational basis test requires
that the plaintiff also demonstrate that there is no rational
basis for the challenged distinction. As to that
consideration, the Court of Appeals majority said:
[W]e find that plaintiffs have met their
burden of showing that the classification
established by the ordinance is not rationally
related to a legitimate governmental interest
10
because the ordinance subjects a subset of
businesses to a financial requirement to operate
and does not include or affect the entire class,
thus extending a privilege to a certain set of
businesses while denying that privilege to another
(rental dwellings). Accordingly, we find this
distinction to be a violation of equal protection.
[244 Mich App 57 (emphasis added).]
Manifestly, this conclusion merely repeats the majority’s
previous observation that the city has treated these
properties differently than others, and fails to analyze the
reasons supporting that legislative decision.
As noted in the dissent, the plaintiffs have not disputed
the city’s claims that residential rental properties are
disproportionately delinquent compared to other classes of
property and that the failure to receive taxes when due causes
the city fiscal problems. Nor did the plaintiffs refute the
city’s explanation of the distinction between owners of
residential rental properties who must obtain certificates of
compliance pursuant to the property maintenance code and
owners of other businesses who must obtain certificates of
registration. By encouraging timely payment of taxes,
interest and penalties are avoided. This, in turn, frees
funds to maintain the property, thereby promoting the health,
safety, and welfare of residents.5 These concerns do not
5
Interestingly, in its analysis of the plaintiff’s due
process claim, the Court of Appeals majority found this
justification a rational basis for the ordinance:
[W]e agree with defendant that requiring
rental owners to pay delinquent property taxes
(continued...)
11
necessarily apply to other businesses, which are more likely
to be tenants rather than owners of leased property.
Although legitimate arguments can be made regarding the
wisdom of the approach taken by the city in addressing the
problems of delinquent taxes and the failure to maintain
residential rental property, it is not for the courts to
substitute their judgment for that of legislative bodies on
such questions of economic and social policy. We affirm that
as long as the ordinance is rationally related to the city’s
legitimate purposes, it does not violate equal protection
guarantees.
VII
Because the plaintiffs have not overcome their
considerable burden of demonstrating that the city lacked any
5
(...continued)
before receiving a certificate of compliance is
reasonably related to defendant's stated purpose of
protecting the safety, health, and welfare of those
inhabiting dwellings and of eliminating
deteriorated dwellings from the city.
Uncontroverted affidavits of city officials
indicate that houses in the city that revert to the
state because of tax delinquency are normally
rental properties and are usually dilapidated when
they do revert to the state.
Accordingly, we conclude that there is a
rational relationship between the requirement that
any delinquent property taxes be paid before a
certificate of compliance can be issued for a
rental dwelling unit and the city's legitimate
interest in providing safe and habitable rental
dwellings to its citizens. Consequently,
defendant's ordinance does not violate the
substantive due process rights of plaintiffs. [244
Mich App 54-55 (emphasis added).]
12
rational basis for its ordinance, the city was entitled to
summary disposition on the equal protection claim.
Accordingly, we reverse the judgment of the Court of Appeals
in part, and reinstate the judgment of the Muskegon Circuit
Court.
CORRIGAN , C.J., and CAVANAGH , WEAVER , KELLY , TAYLOR , YOUNG , and
MARKMAN, JJ., concurred.
13