“The word ‘shall’ as used in a statute is considered to require mandatory conduct.”
How later courts described this case
- “The word ‘shall’ as used in a statute is considered to require mandatory conduct.”
Written by the judges who cited it.
The opinion
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
FRANK NALI, UNPUBLISHED
December 13, 2024
Petitioner-Appellant, 8:45 AM
v No. 368390
Tax Tribunal
CITY OF GROSSE POINTE FARMS, LC No. 20-004246-TT
Respondent-Appellee.
Before: GADOLA, C.J., and K. F. KELLY and REDFORD, JJ.
PER CURIAM.
Petitioner appeals by right the Michigan Tax Tribunal’s (“MTT”) final opinion and
judgment after remand regarding a property taxation exemption. This is the second time this case
has come before us concerning petitioner’s claim for an income-based exemption from property
taxes under MCL MCL 211.7u(1).1 We previously remanded to the MTT to reinstate petitioner’s
partial exemption granted by respondent and to consider whether petitioner was entitled to a full
exemption. On remand, the MTT concluded that petitioner’s income was above the threshold level
and denied his claim for full exemption.
Because the MTT’s final opinion and judgment was again not supported by competent,
material, and substantial evidence, we vacate it and remand the case back to the MTT for further
proceedings consistent with this opinion.
I. BASIC FACTS AND PROCEDURAL HISTORY
The facts underlying this case were set forth by this Court in petitioner’s previous appeal:
Nali owns a home in Grosse Pointe Farms. For tax year 2019, Nali sought
an exemption from his property tax obligation based on poverty. The city granted
1
Nali v City of Grosse Pointe Farms, unpublished per curiam opinion of the Court of Appeals,
issued March 30, 2023 (Docket No. 359338).
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a partial exemption, Nali filed a petition with the MTT, and the MTT determined
that Nali was entitled to a full exemption because his income fell below the poverty
guidelines adopted by the city.
For tax year 2020, Nali again requested a full exemption. In support of his
request, Nali asserted that he lived alone. He cited net business income of $5,491
and Social Security income of $11,316. He calculated his total household income
as follows: “(5491) + 1/2 (11,316) = $11,149.” The city granted him a partial
exemption, reducing the taxable value of his home from $31,765 to $10,000. The
2020 July Board of Review Change Notice indicates that the property value was
reduced due to “hardship.” Dissatisfied, Nali filed a new petition in the MTT. Nali
contended that he was entitled to a 100% exemption under MCL 211.7u.
* * *
A hearing was held in the MTT before an administrative law judge (ALJ).
Without discounting his Social Security income, Nali noted that his income was
$16,807. Nali again argued that he was entitled to a total property tax exemption.
In its answer to Nali’s petition, the city explained that it “granted the poverty
exemption and reduced the Assessed and Taxable value to $10,000 based on the
information provided.” The city denied that this modified assessment was “the
result of a clerical error or mutual mistake.” In its answer, the city did not assert
that the full taxable value of the property should be reinstated.
Hearings before the MTT Small Claims Division are not transcribed. Mich
Admin Code. R 792.10265(1). However, the ALJ’s proposed opinion and
judgment states that the city explained at the hearing that the “income threshold for
a household of one [to obtain a poverty-based property tax exemption] was $12,490
for the 2020 tax year.” The ALJ proposed reinstating the $31,765 taxable value of
the property and concluding that Nali was not entitled to a poverty exemption as
his income was more than $4,000 over the federal poverty threshold.
Nali filed objections to the ALJ’s proposed opinion and order. Nali noted
that effective December 22, 2020, the Legislature had amended MCL 211.7u(2)(e)
to state that taxpayers are entitled to a poverty exemption if they
[m]eet the federal poverty guidelines published in the prior
calendar year in the Federal Register by the [USDHHS] under its
authority to revise the poverty line under 42 USC 9902, or
alternative guidelines adopted by the governing body of the local
assessing unit provided the alternative guidelines do not provide
income eligibility requirements less than the federal guidelines. [As
enacted by 2020 PA 253.]
* * *
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The MTT Small Claims division determined that the ALJ incorrectly relied
on MCL 211.7u as amended at the close of 2020, instead of the version applicable
at the time Nali sought his poverty exemption. As a result of this error, the ALJ
incorrectly relied on a federally set 2021 poverty level of $12,490. “[T]he correct
federal poverty guideline, as published in the Federal Register on January 17, 2020,
was $12,760 for a household of one.”
Nonetheless, the ALJ properly concluded that [Nali] does
not qualify for a Poverty Exemption. Under either law, a taxpayer
must meet the poverty guidelines as established by the [USDHHS],
or [the city’s] alter[n]ative guidelines. Despite [Nali’s] contentions,
no record evidence shows that prior to the change in the law on
December 22, 2020, [the city’s] “alternative guideline” was $21,800
for a family of one. As such, the ALJ properly relied on the Federal
poverty guidelines. Nali does not dispute that [his] income was
$16,807, which exceeds that applicable Federal poverty level,
$12,760 for the 2020 tax year.
Accordingly, despite the ALJ’s error, the MTT concluded that the taxable value of
Nali’s property for the tax year at issue was $31,765 and that Nali was not entitled
to an exemption. [Nali v City of Grosse Pointe Farms, unpublished per curiam
opinion of the Court of Appeals, issued March 30, 2023 (Docket No. 359338),
unpub op at 1-4 (footnote omitted).]
On appeal, petitioner claimed “that the federal poverty guidelines should not have been
used to determine whether he was entitled to a poverty-based tax exemption because the city did
not apply those guidelines until the 2021 tax year.” Id. at 4. Instead, petitioner asserted
respondent’s alternative guidelines should have been used to determine whether he was entitled to
a poverty exemption because “the city had previously adopted its own poverty exemption
guidelines with a much higher poverty threshold.” Id. This Court found, in relevant part:
Nali did not present into evidence the Grosse Pointe Farms Hardship
Income Standards for 2020 Assessment Year. That document is no longer available
on the city’s website. The articles presented by Nali indicate that the city did not
adopt the federal poverty guidelines until 2021. Even without the city’s actual 2020
policy in hand, however, it is clear that the city had adopted a higher poverty
threshold than that set by the federal government. Fully aware of Nali’s actual
income, and not just the number he listed on the total income line of the application,
the city granted a partial poverty exemption. As Nali’s income of $16,807 was
higher than the federal poverty threshold, the city’s decision had to be based on its
own poverty income threshold. After all, the city indicated in its MTT answer that
its calculations were not based on a clerical error or a mutual mistake.
Despite that the city made a fully informed decision to grant a partial
exemption, the MTT declared that Nali’s income precluded him from any reduction
to his property tax obligation. This decision was not supported by competent,
material, and substantial evidence. Moreover, the city did not advocate for this
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position in its MTT pleading. On remand, the MTT must at least reinstate the
partial poverty exemption granted by the city and consider whether a full exemption
is supported. [Id. at 5.]
On remand, the MTT found the record lacked information necessary for it to render a
decision, and ordered petitioner to file documents relating to respondent’s 2019 alternative
guidelines. In response, petitioner claimed the MTT erred by ordering him to provide evidence of
the alternative poverty guidelines because under MCL 211.7u(2)(e), respondent had the burden of
providing the relevant alternative poverty guidelines to the tribunal. Moreover, because petitioner
previously submitted evidence that the poverty threshold was $21,800 under respondent’s 2019
alternative guidelines, and respondent did not challenge this assertion, petitioner claimed the
applicable alternative guideline threshold for 2020 was $21,800. Accordingly, petitioner requested
the MTT grant a 100% exemption for his property.
In October 2023, the MTT issued its final opinion and judgment. The MTT summarized
the parties’ evidence, stating, in relevant part:
Based on the pleadings, admitted exhibits, and sworn testimony,
Respondent contends that it still has no other information regarding the 2020
poverty guidelines. Mr. [Eric] Dunlap[2] testified that he was not the assessor at the
time and could not locate any further information beyond the known fact that the
guidelines for one person was $21,800.
Despite Dunlap’s testimony that the poverty threshold under the 2020 alternative
guidelines was $21,800, the MTT found that “[r]espondent’s income guidelin[e] for a 2020 poverty
exemption was $12,760 for a household of one.” This finding was based, in part, on articles
submitted by petitioner with a motion for reconsideration he filed after the MTT issued its ruling.
The MTT also found that petitioner was the only person to reside in his household in 2020 and his
household income was $16,807. Ultimately, the MTT concluded that because petitioner “failed to
meet his burden of proof that the 2020 income guidelines were different and more beneficial,” he
was not entitled to a full exemption. This appeal followed.
II. STANDARDS OF REVIEW
“Absent fraud, our review of MTT decisions is limited to determining whether the MTT
erred in applying the law or adopted a wrong legal principle.” Vanderwerp v Plainfield Charter
Twp, 278 Mich App 624, 627; 752 NW2d 479 (2008). We review de novo the MTT’s
interpretation and application of statutory provisions. Id. On de novo review, “we give respectful
consideration, but no deference” to the MTT’s legal rulings. Wasik v Auto Club Ins Ass’n, 341
Mich App 691, 695; 992 NW2d 332 (2022). “When interpreting a statute, our goal is to give effect
to the intent of the Legislature.” Andersons Albion Ethanol, LLC v Dep’t of Treasury, 317 Mich
App 208, 213; 893 NW2d 642 (2016). “If the plain and ordinary meaning of a statute’s language
2
Dunlap is respondent’s tax assessor and appeared on behalf of respondent during the proceedings
after remand.
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is clear, we will not engage in judicial construction.” Id. “If the language of the statute is
unambiguous, we must enforce the statute as written.” Id.
Tax exemptions are “narrowly construed in favor of the taxing authority.” Estate of
Schubert v Dep’t of Treasury, 322 Mich App 439, 448; 912 NW2d 569 (2017) (quotation marks
and citation omitted). The taxpayer bears the burden of proving his or her entitlement to an
exemption by a preponderance of the evidence. Gardner v Dep’t of Treasury, 306 Mich App 546,
558-559; 858 NW2d 76 (2014), rev’d on other grounds by 498 Mich 1; 869 NW2d 199 (2015).
The MTT’s factual findings are “conclusive if they are supported by competent, material, and
substantial evidence on the whole record.” Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69,
75; 780 NW2d 753 (2010) (quotation marks and citation omitted).
III. ANALYSIS
Petitioner argues on appeal that the MTT erred by ordering him to provide evidence of
respondent’s 2019 alternative exemption guidelines because respondent was required to provide
that information to the tribunal. Although we disagree that respondent was required to submit
evidence of its alternative poverty exemption guidelines to the MTT—that burden ultimately
rested with petitioner—petitioner is nevertheless entitled to relief because the MTT’s final opinion
and judgment on remand concerning the 2020 alternative guidelines was not supported by
competent, material, and substantial evidence.
Petitioner sought a poverty-based tax exemption for the 2020 tax year. MCL 211.7u
governs eligibility for the poverty exemption and sets forth the obligations of the local assessing
unit. At the time petitioner initially brought his claim before the MTT, the applicable version of
MCL 211.7u stated,3 in relevant part:
(4) The governing body of the local assessing unit shall determine and make
available to the public the policy and guidelines used for the granting of exemptions
under this section. The guidelines shall include but not be limited to the specific
income and asset levels of the claimant and total household income and assets.
[MCL 211.7u(4).]
Respondent was, therefore, required to make the exemption guidelines available to the public. See
Hughes v Almena Twp, 284 Mich App 50, 62; 771 NW2d 453 (2009) (“The word ‘shall’ as used
in a statute is considered to require mandatory conduct.”). Because nothing in the plain language
of MCL 211.7u(4) required respondent to provide the exemption guidelines to the MTT, and
petitioner had the burden of proving he was entitled to an exemption, Gardner, 306 Mich App
at 558-559, petitioner’s argument lacks merit.
Eligibility for the poverty-based tax exemption is governed by MCL 211.7u(2):
3
MCL 211.7u was amended by 2020 PA 253. The previous version of MCL 211.7u remained in
effect until December 21, 2020, after petitioner initiated these proceedings.
-5-
(2) To be eligible for exemption under this section, a person shall do all of
the following on an annual basis:
* * *
(e) Meet the federal poverty guidelines updated annually in the federal
register by the United States department of health and human services under
authority of section 673 of subtitle B of title VI of the omnibus budget
reconciliation act of 1981, Public Law 97-35, 42 USC 9902, or alternative
guidelines adopted by the governing body of the local assessing unit provided the
alternative guidelines do not provide income eligibility requirements less than the
federal guidelines. [MCL 211.7u(2)(e).]
In other words, to qualify for a poverty exemption in 2020, petitioner’s income must have either
been below the 2020 federal poverty threshold or below the alternative poverty threshold adopted
by respondent in 2020, so long as the alternative threshold was above the federal threshold.
In finding that petitioner was not entitled to a full exemption, the MTT claimed it was
“obvious” that petitioner did “not possess information relevant to 2019 or 2020 poverty
guidelines.” But petitioner did possess information regarding the 2019 poverty guidelines, as
attached to petitioner’s motion for reconsideration was the final opinion and judgment from his
2019 tax exemption proceedings, in which the MTT clearly found that the “alternative guidelines
adopted by Respondent for the subject household for the [2019 tax year] provide for an income
level of $21,800.” Thus, petitioner had information relevant to the 2019 alternative guidelines and
presented that information to the MTT. Even if petitioner had not submitted this information, it
was irrelevant to the MTT’s determination of whether petitioner was entitled to an exemption in
2020, because only the 2020 guidelines were relevant under MCL 211.7u(2)(e).4
In Docket No. 359338, this Court noted that petitioner “did not present into evidence the
Grosse Pointe Farms Hardship Income Standards for 2020 Assessment Year. That document is
no longer available on the city’s website.” Nali, unpub op at 5. While it is true that petitioner did
not submit the 2020 alternative guidelines as evidence, the MTT stated in its summary of evidence
and conclusions of law that respondent could not locate any information or documentation
regarding the 2020 alternative guidelines. It raises the question as to how petitioner could have
accessed the 2020 alternative guidelines if respondent—the owner of the document—was unable
to locate the information.
Although petitioner was unable to submit evidence of respondent’s 2020 alternative
guidelines, the record supports his contention that respondent’s poverty threshold in 2020 was
$21,800. As stated in MTT’s summary of the evidence, respondent’s assessor, Eric Dunlap,
“testified that he was not the assessor [in 2020] and could not locate any further information
beyond the known fact that the guidelines for one person was $21,800.” (Emphasis added.)
4
Under the current version of the statute, the federal poverty guidelines or alternative guidelines
from the “prior calendar year” are used to determine whether an individual is entitled to a tax
exemption. See MCL 211.7u(2)(e) as amended by 2020 PA 253.
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Dunlap’s testimony supports petitioner’s assertion that the poverty threshold was $21,800 under
the 2020 alternative guidelines. But rather than rely on, or even acknowledge this evidence, the
MTT concluded the applicable 2020 poverty threshold was $12,760 for one person on the basis of
two articles submitted by petitioner in his motion for reconsideration. The first article explained
that to be eligible for the poverty tax exemption, “a resident must first meet federal poverty
standards. For 2021, the federal poverty guidelines are $12,760 in annual income for a single
person[.]” Similarly, the second article addressed the amendment of MCL 211.7u, stating that a
majority of Michigan communities used the prior year’s federal poverty standards to determine
eligibility for the poverty tax exemption. The article stated that “[u]nder 2020’s guidelines, the
poverty threshold is $12,760 for one person and goes up by $4,480 for each additional person in
the household.” Thus, the poverty threshold referenced in the articles was not the threshold under
respondent’s alternative guidelines, but rather the federal guidelines.
The MTT failed to acknowledge this fact, and applied the federal guidelines without
making any determination regarding the poverty threshold under respondent’s alternative
guidelines. Because the evidence from Dulap demonstrated that the poverty threshold under
respondent’s 2020 alternative guidelines was $21,800, and petitioner’s annual household income
was $16,807, petitioner qualified for a full exemption under the alternative guidelines adopted by
respondent. Accordingly, we find plaintiff is entitled to relief because the MTT erred in applying
the law, Vanderwerp, 278 Mich App at 627, and the MTT’s final opinion and judgment was
unsupported by competent, material, and substantial evidence, Briggs Tax Serv, LLC, 485 Mich
at 75.
The MTT’s final opinion and judgment is vacated, and the matter is remanded for further
proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ Michael F. Gadola
/s/ Kirsten Frank Kelly
/s/ James Robert Redford
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