Opinion
No. 353210
03-25-2021
THE SALVATION ARMY, Petitioner-Appellee, v. ADDISON TOWNSHIP, Respondent-Appellant.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Michigan Tax Tribunal
LC Nos. 18-003822, 18-003823, 18-003824, 18-003825 Before: BORRELLO, P.J., and BECKERING and SWARTZLE, JJ. PER CURIAM.
In this property tax dispute, respondent, Addison Township, appeals as of right from a ruling of the Michigan Tax Tribunal (MTT). The MTT concluded that pursuant to MCL 211.7o (property owned and occupied by nonprofit charitable institution), certain real property owned by petitioner, the Salvation Army, and used in connection with its Echo Grove Camp and Retreat Center was exempt from ad valorem property tax for the 2018 tax year. We affirm in part, vacate in part, and remand for further proceedings consistent with this opinion.
I. UNDERLYING FACTS
According to the evidence submitted to the MTT, the Salvation Army is a not-for-profit corporation formed in 1865 as a "Christian Mission," which operates throughout the world. Its Articles of Incorporation state its purpose, in relevant part, as follows:
The object for which it is formed is, to further the work of the Christian Church known as THE SALVATION ARMY, and to engage in charitable, educational, missionary, philanthropic, and religious work, and more particularly, charitable, educational, missionary, philanthropic and religious work of the character that has and is being conducted by the branch of the Christian church known as THE SALVATION ARMY, and to do everything, and to act and carry on every kind of operation necessary and incidental to the maintenance of such beneficial, educational, charitable, missionary, philanthropic and religious work, but that all of such work shall be conducted not for pecuniary profit . . . .More specifically, its mission "is to preach the gospel of Jesus Christ, and to meet human needs in his name without discrimination," and, relevant here, that mission includes "comprehensive youth and adult group activities" and "summer camps."
A. Echo Grove Camp and Retreat Center Operations
The Salvation Army owns and operates Echo Grove Camp and Retreat Center, which is situated on several parcels of real property in Addison Township. Echo Grove operates overnight and day camps that run nonstop during the summer months. Children of all ages attend Echo Grove's camps, where they partake of Christian education, nature programs, and recreational activities. Participants, interns, summer staff, other groups, and residents of Echo Grove Camp are on-site 24 hours a day, seven days a week. Approximately 2,000 campers attend Echo Grove's camps during the summer season, and at any given time, there can be 250-plus campers on the property. According to camp director Matt Coakley, overnight campers are usually from "areas that have a lower economic demographic" and could otherwise not afford to attend summer camp. Consistent with its charitable purposes, the Salvation Army does not operate Echo Grove Camp with an intent to make a profit and does not charge its child participants to attend summer camp. It funds the camp's operations with donations from its church members and philanthropic endeavors. Echo Grove Camp also offers a Christian day camp, where area residents can send their children during the summer months. Commensurate with the Salvation Army's mission, religion and education are interwoven into Echo Grove's programming.
The recreational activities include archery, rifle shooting, fishing, hiking, arts and crafts, games, campfires, sports, music, hayrides, boating, kayaking, water activities, obstacle courses, tower climbing, and ziplining.
Echo Grove does not make a pecuniary profit and many times sustains losses. For instance, in 2018, its operating expenses exceeded its income from donated funds by approximately $50,000.
The use of Echo Grove Camp tapers after the summer season to approximately 1,000 participants during the non-summer months. During that time, the Salvation Army utilizes Echo Grove for weekend events for its churches, and hosts youth councils, women's ministries, men's groups, weekend retreats, and adult and family programs. Additionally, Echo Grove Camp partners with other nonprofit groups, such as schools and retreat groups, who utilize Echo Grove's facilities to further their religious or educational endeavors. Echo Grove's facilities are also available for the public to rent for group events. The Salvation Army charges non-affiliated groups a nominal fee to recoup Echo Grove's costs to support such groups. According to Coakley, there are very few months where Echo Grove Camp does not have visitors.
B. Echo Grove Camp Facilities
Echo Grove Camp's 198-acre facility consists of its central and original main camp area, as well as several surrounding parcels that the Salvation Army has acquired over the years. Buildings and recreational facilities on the camp property include a welcome center, dormitory-style lodging, cabins, hotel-style residential units, a dining hall, a chapel, a gymnasium, a nature center, meeting rooms, a basketball court, sports and activities fields, a pool, a day camp area, a primitive camping and hiking area, nature trails, an arts and crafts center, and employee residences. Director Coakley and site and facilities manager Martin Soffran agreed that all of Echo Grove Camp's property is necessary to fulfill the Salvation Army's purpose and Christian mission.
The Salvation Army acquires real estate with money raised through capital campaigns and bequeathed to it in estate plans.
C. Use of Parcels at Issue
In its operation of Echo Grove Camp, the Salvation Army employs a camp director, a site and facilities manager, a program director, and an activities director, who reside full-time at houses situated on Echo Grove's property. The Salvation Army requires these employees to reside at the camp as a condition of their employment, and they do so year-round and pay no rent, utilities, or maintenance expenses. By all accounts, the houses serve as the employees' personal residences, albeit there is some occasional camp use, such as for fellowship, gatherings, meetings, dinners, and staff activities. Further, the camp's hay rides traverse, and participants walk through, the camp director's parcel, and the maintenance parcel contains barns and a shop building where Echo Grove's maintenance equipment, vehicle, boats, and tools are stored.
At issue in the present case are three residential parcels used as the personal residences of the camp director, the site and facilities manager, and the program director, and whether they are tax-exempt under the General Property Tax Act (GPTA) for tax year 2018. Specifically, Parcel No. A-05-21-226-009 has historically been used as the camp director's personal residence, and since November 2018 has been occupied by Coakley and his family. Parcel No. A-05-22-101-007, known as the maintenance parcel, is where Soffran and his family have resided since 2010. Parcel No. A-05-21-226-006 is known as the pastoral retreat house, and has historically been used as a residential unit for visiting pastors, officers, or guests of the Salvation Army. Beginning in January 2020, the pastoral retreat house became the personal residence of Echo Grove Camp's new program director and her family.
Testimony indicated that, for several months in 2018, Echo Grove's use of the camp director's house (A-05-21-226-009) and the pastoral retreat house (A-05-21-226-006) were "swapped." Specifically, according to Coakley and Soffran, the previous camp director used the pastoral retreat house as his personal residence from February or March 2018 to October or November 2018, during which parcel A-05-21-226-009 (the camp director's house) was used as a pastoral retreat and for some staff housing. Coakley explained that the previous camp director made the switch to better fit the needs of his family. Before and after that time, the camp director's house (A-05-21-226-009) was occupied by Echo Grove's camp director and the pastoral retreat house (A-05-21-226-006) was used as a residential unit for visiting pastors. Nevertheless, it is evident that the subject parcels consistently included a house used as a pastoral retreat and a house used as the camp director's residence.
Coakley and Soffran testified that not only is it required, but it is necessary for them to reside at Echo Grove Camp. They oversee, manage, and maintain all aspects of camp operations and property, do not have normal schedules, and are susceptible to being called to duty late at night or early in the morning any time of the year. With residents, interns, summer staff, campers, and other groups on-site day and night, these employees are on duty 24/7 and need to be close to camp operations. Coakley elaborated that the Salvation Army wants him at hand for "emergency situations and stuff," and Soffran explained that he is required to be immediately available to address such emergencies as power outages, sewage backups, and snow removal. Soffran added that it would be an "extreme hardship" for these employees to live off-site because it would increase the response time for emergency calls.
For the 2018 tax year, Addison Township changed the status of the subject parcels from tax-exempt to taxable. After the board of review confirmed the assessments, the Salvation Army petitioned the MTT for restoration of the tax-exempt status under MCL 211.7o(1). The MTT conducted a hearing and ruled that the subject parcels are tax-exempt on the ground that they were used solely for the purposes for which the Salvation Army was incorporated. The Township claimed this appeal.
II. STANDARD OF REVIEW
In Wexford Med Group v City of Cadillac, 474 Mich 192, 201-202; 713 NW2d 734 (2006), the Supreme Court set forth the standard of review 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. We deem the tribunal's factual findings conclusive if they are supported by competent, material, and substantial evidence on the whole record. But when statutory interpretation is involved, this Court reviews the tribunal's decision de novo. [Quotation marks and citations omitted.]"Failure to base a decision on competent, material, and substantial evidence constitutes an error of law requiring reversal." Meijer, Inc v Midland, 240 Mich App 1, 5; 610 NW2d 242 (2000). Further, "because tax exemptions upset the desirable balance achieved by equal taxation, they must be narrowly construed." Wexford Med Group, 474 Mich at 204. "However, this rule does not mean that we should give a strained construction which is adverse to the Legislature's intent." Id. (quotation marks and citation omitted).
"Though this Court will generally 'defer to the Tax Tribunal's interpretation of a statute that it is delegated to administer,' that deference will not extend to cases in which the tribunal makes a legal error. Thus, agency interpretations are entitled to 'respectful consideration' but cannot control in the face of contradictory statutory text." [West Michigan Annual Conference of United Methodist Church v City of Grand Rapids, ___ Mich App ___; ___NW2d ___ (Docket No. 352703, issued February 25, 2021), slip op 2, quoting SBC Health Midwest, Inc v City of Kentwood, 500 Mich 65, 71; 894 NW2d 535 (2017) (citations and footnotes omitted).]
III. EXEMPTION UNDER MCL 211.7o(1)
Under the GPTA, "all property, real and personal, within the jurisdiction of this state, not expressly exempted, shall be subject to taxation." MCL 211.1. Here, the Salvation Army claimed exemption of the subject parcels under MCL 211.7o(1), which "creates the ad valorem property tax exemption for charitable institutions." Wexford Med Group, 474 Mich at 199. Section 7o(1) states as follows:
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.A claimant seeking tax exemption under MCL 211.7o(1) must establish the following three elements:
(1) The real estate must be owned and occupied by the exemption claimant;A claimant is "required to establish its entitlement to exemption by a preponderance of the evidence." ProMed Healthcare v Kalamazoo, 249 Mich App 490, 495; 644 NW2d 47 (2002).
(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, 474 Mich at 203.]
The Township does not challenge the MTT's findings that the Salvation Army is a nonprofit charitable institution who owns and occupies the residential parcels at issue as part of its Echo Grove Camp, nor do we find any error in its determinations with respect to those elements. But the parties continue to dispute whether the parcels used as the personal residences of Echo Grove Camp's key employees, and as a pastoral retreat house, were occupied solely for the purposes for which the Salvation Army was incorporated for purposes of MCL 211.7o(1).
"Use of property is just one part of occupying it. The two terms are not mutually exclusive; 'use' is merely narrower than "occupy.' " Liberty Hill Housing Corp v Livonia, 480 Mich 44, 61; 746 NW2d 282 (2008).
Our courts have addressed the issue of tax exemption in the context of a charitable institution's use of its property for employee housing in only a few cases. While these cases are not directly on point, they are instructive. In Webb Academy v Grand Rapids, 209 Mich 523; 177 NW 290 (1920), our Supreme Court interpreted a predecessor of MCL 211.7o, and held that an educational institution's school building was entitled to tax exemption, even though a portion of that building was used as the personal residence of the school's founder, his wife (a teacher at the school), and her father (a lecturer), along with a student who worked in exchange for board. Id. at 532-533, 535. Regarding the residential use of the school building, the Court adopted the trial court's findings, as follows:
"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 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[.]' " Liberty Hill, 480 Mich at 52 n 6 (alterations in original). See also Webb, 209 Mich at 528.
The incidental use of the school building as a residence . . . is in the interest of and for the purpose of properly maintaining and conducting plaintiff's academy for the very object and purpose for which plaintiff was incorporated. . . . The school grounds and school building . . . are kept in order by Mr. and Mrs. Webb. They are there in the early morning to have the rooms heated and prepared for its students when the school shall open. They do some of their instructing of pupils in the evening. They are there for that purpose. They are there during vacation times for the purpose of keeping and putting said building in condition for the opening of this academy at its next term. [Id. at 533, quoting the record below.]The Court concluded that the Webbs' residential use did not defeat the property tax exemption. Id. at 532, 534-535, 538-541. In so deciding, the Court specifically addressed the Legislature's addition of the word "solely" to the exemption provision and interpreted that requirement broadly. Id. at 538-541. The Court 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 housing incidental to the school uses, did not defeat that conclusion." Liberty Hill Housing Corp v Livonia, 480 Mich 44, 52; 746 NW2d 282 (2008).
Later, in Gull Lake Bible Conference Ass'n v Ross Twp, 351 Mich 269, 271-272; 88 NW2d 264 (1958), the Supreme Court considered whether the property of a charitable institution that conducted Bible study programs during the summer, including a building used for employee housing, was entitled to tax exemption. The activities were "centered around a tabernacle and youth chapel" whose tax-exempt status was not contested. Id. In question was the status of the surrounding property owned by the institution and used in connection with its summer conference, some of which was adjacent, and all in proximity, to the tabernacle property, including an old hotel building used exclusively for employee housing during operation of the summer conference, recreational facilities, and housing for participants. Id. The Court concluded that the institution found such use of the property "advisable and necessary" to "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, and thus that the property, including employee housing, was occupied solely for the purpose for which the institution was incorporated, id. at 274-275. See also Liberty Hill, 480 Mich at 53 (discussing Gull Lake).
In addition to the building used for employee housing, the contested property included a fellowship center building, a picnic area, boat docks, a bath house, a beach, a playground, horseshoe and badminton courts, parking lots, and trailer camp sites for, and lots with cottages rented to, conference attendees. Gull Lake, 351 Mich at 272.
The Court in Liberty Hill observed as follows:
"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 occupied by them solely for the purposes for which they were incorporated.
[Liberty Hill, 480 Mich at 53 n 7 (alteration in original), quoting MCL 211.7, as amended by 1955 PA 46. See also Gull Lake, 351 Mich at 272-273.]
In Oakwood Hosp Corp v State Tax Comm, 374 Mich 524; 132 NW2d 634 (1965), the Supreme Court addressed the charitable institution exemption in the context of a nonprofit hospital's provision of housing, for a rental fee, located near the hospital for resident physicians and interns and their families "whose services and availability to the hospital at all times and on short notice are essential to the operation of the hospital." Id. at 527. The city argued that the six houses at issue were "not used . . . to operate a hospital, but instead [were] used only for residential purposes." Id. at 529. The Court, however, held that the houses were "occupied in furtherance of and for the purposes for which [the] plaintiff was incorporated and for hospital and public health purposes," even though they were used strictly as private residences for the hospital's resident physicians and interns. Id. at 530. The Court explained that the employees' services, and their need to be immediately available at all times, were essential to the hospital's operation, id. at 527, and that providing housing near the hospital was thus necessary for it to function properly, id. at 530. The Court elaborated as follows:
At the time Oakwood Hosp 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." Liberty Hill, 480 Mich at 54 n 8. The predecessor statute included the following exemption:
Such real estate as shall be owned and occupied by library, benevolent, charitable, educational or scientific institutions . . . with the buildings and other property thereon while occupied by them solely for the purposes for which they were incorporated. . . . Also real estate, with the buildings and other property thereon, owned and occupied by any nonprofit trust and used for hospital or public health purposes. [Oakwood Hosp, 374 Mich at 528, quoting 1961 CL 211.7 (Stat Ann 1961 Cum Supp § 7.7).]
They emphasize the . . . use of the word "incidental" in Webb, and insist that occupancy here of the houses by the doctors was not merely an incidental to
their use for hospital purposes but was the exclusive use to which the houses were put. The city then mentions that in Webb the occupation by residents was in the school building proper, but would distinguish the instant case in that here the doctors are not living in the hospital building proper but in detached houses. It would seem to be stretching legal technicalities to the breaking point . . . to make decision turn on whether the dwellings are part of, attached to, or separate from the hospital building proper.
In our view, with interns and resident doctors hard to acquire and unwilling to come unless furnished housing by the hospital, and nearness of such dwellings being important to make such doctors and interns immediately available in the hospital upon hurried call or short notice, and other housing in the city near the hospital being practically unavailable for that purpose, it cannot be escaped that the houses are owned by plaintiff and occupied in furtherance of and for the purposes for which plaintiff was incorporated . . . . The entire hospital facility, including the main hospital building proper and the 6 houses used as these are, must be considered together in determining whether all of it, in combination and, as well, divisibly, serves a hospital purpose and is used therefor. We say the answer is yes, and this answer applies to the houses as well as to the main hospital building. As in Webb, the occupancy by the doctors and interns is incidental to the entire property for hospital purposes and the operation thereof as such. [Oakwood Hosp, 374 Mich at 530.]
Thus, in Oakwood Hosp, the Court, in interpreting MCL 211.7o(1), "held that the plaintiff was entitled to the tax exemption for the entire property, including the houses," because "housing the doctors and interns near the hospital was necessary to the proper functioning of the hospital," and therefore "the houses were 'occupied in furtherance of and for the purposes for which plaintiff was incorporated . . . .' " Liberty Hill, 480 Mich at 54.
The Legislature subsequently amended the statute, 1966 PA 320, to enact "a very specific exclusion, withdrawing the qualification of houses for resident physicians located on hospital property." Hosp Purchasing Serv v Hastings, 11 Mich App 500, 508 n 1; 161 NW2d 759 (1968). See the current version of MCL 211.7r (providing that property used for hospital or public health purposes is exempt from taxation, but not including "real estate and dwellings located on that acreage used for dwelling purposes for resident physicians and their families"). In Oakwood Hosp Corp v State Tax Comm, 385 Mich 704, 707-709; 190 NW2d 105 (1971) (Oakwood Hosp II), the Supreme Court again considered the hospital's provision of housing to its resident physicians and interns under the amended statute and held that the amendment specifically eliminated the tax exemption for dwellings used by resident physicians and their families. See also Liberty Hill, 480 Mich at 54 n 9. But, the Court based its decision solely on the statutory amendment, and "not on the grounds that use of the residences by the doctors was not incidental to the corporate purpose of the hospital." Baker v State Tax Comm, 43 Mich App 513, 516-517; 204 NW2d 538 (1972), remanded on other grounds sub nom Baker v Ann Arbor, 389 Mich 803 (1973), rev'd on other grounds 395 Mich 151 (1975). There is no such statutory prohibition at issue here, and this Court has recognized that "the enactment [of the amended statute] does not alter our understanding of the import of the general provision" in other contexts. Hosp Purchasing, 11 Mich App at 508 n 1.
In Kalamazoo Nature Ctr, Inc v Cooper Twp, 104 Mich App 657; 305 NW2d 283 (1981), the petitioner, which owned some 19 parcels totaling 515 acres, sought tax exemption status for two parcels of land, each of which contained a rent-free residence for a Nature Center employee. Id. at 660-661. The Nature Center "conduct[ed] ecology and environmental education and land conservancy programs for the benefit of the public." Id. at 660. The Center argued that "the presence of an employee is necessary for surveillance purposes to protect the property from ecological destruction or damage from trespassers" in support of its corporate purposes. Id. at 664. However, the MTT found that the need for "surveillance was at best minimal, that essentially the houses were being used as private residences for which the owner received rent in the form of a lower salary to the employee . . . ." Id. at 665. Finding no error in the MTT's denial of tax exemption for the two parcels, id at 665, this Court noted that "[i]n a period of eight years, [one employee] has expelled only three trespassers" and "[the other employee] could recall only one instance when he had reason to believe that there had been a trespasser on KNC land." Id. at 664.
Finally, in Calvin Theological Seminary v Grand Rapids, unpublished per curiam opinion of the Court of Appeals, issued August 13, 2019 (Docket No. 343662), upon which the MTT relied, this Court applied the foregoing principles in a case involving the taxable status of eleven off-campus housing properties that Calvin Seminary provided for its students. Regarding whether Calvin Seminary occupied the residences solely for the purposes for which it was incorporated, the city maintained that "Calvin Seminary's purpose is to provide religious education and that providing housing for students—three miles from campus—falls outside of this purpose." Calvin Theological Seminary, unpub op at 6. This Court rejected that argument, and concluded that "the student housing—which is provided in close proximity to the school at below-cost prices—enables students to attend Calvin Seminary and such housing is necessary for Calvin Seminary to fulfill its purposes." Id. at 7. This Court held that the MTT, analogizing the student housing in this case to the housing in Webb, Gull Lake, and Oakwood Hosp, applied sound reasoning in concluding "that the property was used solely for the purposes for which Calvin Seminary was incorporated because student housing was necessary to fulfill Calvin Seminary's purposes." Id. at 7.
As an unpublished opinion, Calvin Theological Seminary lacks binding precedential effect. MCR 7.215(C)(1). We discuss it here because the tribunal explicitly relied on it as persuasive authority. See Dep't of Environmental Quality v Waterous Co, 279 Mich App 346, 383-384; 760 NW2d 856 (2008).
These cases demonstrate that, in determining whether a charitable institution occupies residential property "solely for the purposes for which it was incorporated" under MCL 211.7o(1), it is not the mere residential use of the property that controls, but the purpose behind the residential use, i.e., whether such residential use is necessary to further the purposes for which the charitable institution was incorporated.
Although the Township asks this Court to interpret MCL 211.7o(1) more narrowly, as limiting the occupancy of the property to a single use "to the exclusion of all else," the Supreme Court in Oakwood and Gull Lake has given "liberal interpretations" to the statutory requirement that the property be occupied solely for the purposes for which the claimant was incorporated. Hosp Purchasing Serv v Hastings, 11 Mich App 500, 507-508; 161 NW2d 759 (1968). Contrary to respondent's argument, under our Supreme Court's interpretation of the statutory exemption, the property need not be exclusively used for its charitable purposes; incidental residential use of property where such use is necessary to further the charitable purposes for which the institution was incorporated does not defeat the exemption. See Liberty Hill, 480 Mich at 52-54; Oakwood Hosp, 374 Mich at 530; Gull Lake, 351 Mich at 275; Webb Academy, 209 Mich at 538-541.
Applying these principles, and analogizing the employee residences at issue to the exempt student housing in Calvin Seminary, the MTT concluded that the parcels, used as employee residences for Echo Grove's camp director, program director, and maintenance director, were occupied solely for the purposes for which the Salvation Army was incorporated. The MTT found that these employees were essential to the Salvation Army's operation of its Echo Grove Camp, which furthers the Salvation Army's charitable goals of Christian education for which it was incorporated, and that it was necessary that these employees reside in "close proximity" to the camp in case of emergencies involving camp attendees or maintenance issues. For those reasons, the MTT concluded that the Salvation Army's occupancy of the parcels for employee housing was " 'necessary and incidental to the maintenance of [its] . . . beneficial, educational, charitable, missionary, philanthropic and religious work' at Echo Grove Camp," and thus that the subject parcels were occupied solely for the charitable purposes for which the Salvation Army was incorporated. Cognizant of the limitations on our review authority, we conclude that the MTT's reasoning is consistent with the existing caselaw and that it did not misapply the law or adopt a wrong principle when weighing in on whether the parcels used for employee housing were tax exempt under MCL 211.7o(1). See Wexford Med Group, 474 Mich at 201.
As an initial matter, we do not find persuasive respondent's argument that the exempt status of the subject property is jeopardized for the reason that the Salvation Army's Articles of Incorporation do not specifically state that Echo Grove Camp is one of its charitable objects. The Articles broadly state that the Salvation Army is "to do everything, and to act and carry on every kind of operation necessary and incidental to the maintenance of such beneficial, educational, charitable, missionary, philanthropic, and religious work . . . ." And, testimony clearly established that the Salvation Army's charitable work is carried on through its operation of Echo Grove Camp. Notably, the Salvation Army's mission states that its programs include "comprehensive youth and adult group activities" and "summer camps." The MTT did not err in finding that the operation of Echo Grove Camp furthered the Salvation Army's charitable purposes for which it was incorporated. Thus, the pertinent question is whether the MTT erred in concluding that the Salvation Army's use of the subject parcels as housing for Echo Grove Camp's key employees was necessary in furtherance of the Salvation's Army's charitable purposes at Echo Grove.
As the MTT noted, the Township did not dispute the tax-exempt status of the main camp.
A. CAMP DIRECTOR'S AND SITE AND FACILITIES MANAGER'S RESIDENCES
There is no dispute that the Salvation Army provided rent-free housing as an employment benefit for Echo Grove's camp director and its site and facilities manager for the relevant tax year, or that the attendant parcels were used primarily for those personal residential purposes. Standing alone, such residential use would not further the Salvation Army's charitable purposes; but when considered in relation to camp operations, it becomes evident that the Salvation Army did not merely provide housing for those employees as part of their compensation. Such occupancy was necessary to facilitate the proper operation and management of the camp in furtherance of its charitable purposes. The evidence thus supported the MTT's finding that those employees "are essential to the operation of the camp because they oversee the staff and activities, as well as maintain the camp."
The evidence also established that the Salvation Army required those employees to reside at camp property as a term of employment, and supported the MTT's findings that it was necessary for them to live in "close proximity" to the camp so that they could be readily available to respond effectively to issues that might arise. Accordingly, the use of those two parcels for employee residences directly benefited, and related to, the charitable activities of the Salvation Army, thereby distinguishing these parcels from a house used in the usual manner as a private home strictly for the convenience of the occupant. That is, the residential use of those parcels was in "the interest of and for the purpose of" properly maintaining and conducting Echo Grove Camp, in furtherance of the Salvation Army's corporate purposes. On this record, the MTT did not err in concluding that the occupancy of the houses by these key employees for their residential use was necessary to further, and incidental to, the Salvation Army's charitable purposes of providing Christian education at Echo Grove Camp.
We note that the Salvation Army maintained a degree of control over the employees' use of the housing. The residents were obliged to conduct themselves in accord with "The Soldier's Covenant," and refrain from consuming alcohol or tobacco on the premises. And camp director Coakley testified that, if the Salvation Army needed to use his house, or any of the other employee residences, for any reason, they would have no choice but to allow it because the houses were camp property.
As the Township notes, the showing of the necessity for employee housing in this case is arguably not as strong as in Oakwood Hosp, 374 Mich at 530, where residents and interns were difficult to come by and unlikely to make themselves available unless furnished housing, other housing was "practically unavailable" near the hospital, and the physicians' availability to the hospital at all times was essential to the hospital's regulatory accreditation. But, the necessity for Echo Grove's key employees to reside on-site cannot be overlooked in the setting of an overnight children's camp and retreat facility, especially given Echo Grove's extensive facilities and the large number of participants who stay on the property, particularly children campers.
Focusing on the rent-free nature of the employee housing, the Township argues that the Salvation Army's provision of such housing was strictly a wage benefit, which did not further its charitable purposes. There is no question that providing rent-free housing to its key employees as an employment benefit likely enabled the Salvation Army to obtain their services at a lower wage rate. See Kalamazoo Nature Ctr, 104 Mich App at 664 (recognizing that, although not labeled as rentals, where employees accept reduced wages in exchange for housing, "a monetary benefit nonetheless flows to [the institution] from its employees as a result of their occupancies"). However, where, as here, the employee housing is necessary to permit them to carry out the institution's corporate purposes, that the on-site housing is also an employment benefit should not defeat the tax exemption. That benefit is merely incidental to the residential use of the parcels necessary to further the Salvation Army's charitable goals. See Oakwood Hosp, 374 Mich at 527, 530 (that the hospital retained a monthly charge from the salaries of physicians and interns who resided in the hospital-provided housing did not destroy the exempt status of the housing "occupied in furtherance of and for the purposes for which [the] plaintiff was incorporated"). The Township argues that "[l]eft unchecked, the Petitioner can seek out, purchase an unlimited amount of residential homes in Addison Township and declare those residential homes tax exempt," but the Salvation Army's entitlement to the exemption under MCL 211.7o(1) remains constrained by the requirement that any such property be occupied solely for the charitable purposes for which it was incorporated.
For these reasons, we hold that the MTT did not err in concluding that the parcels occupied as the residences of the camp director and the site and facilities manager are entitled to tax exemption under MCL 211.7o(1).
B. PASTORAL RETREAT HOUSE
Based on the record evidence, we conclude that the MTT erred in determining that the parcel historically used as the pastoral retreat house (A-05-21-226-006) was entitled to tax exemption on the basis that it was used as the personal residence of Echo Grove Camp's program director. The MTT's ruling concerned the 2018 tax year, but the program director did not begin residing in the pastoral retreat house until January 2020.
Under the GPTA, "[t]he taxable status of persons and real and personal property for a tax year shall be determined as of each December 31 of the immediately preceding year, which is considered the tax day . . . ." MCL 211.2(2). Thus, in determining whether a parcel qualifies for exemption under MCL 211.7o(1) for a particular tax year, the tribunal must consider how the property was used on December 31 of the year before. See Bomarko, Inc v Rapistan Corp, 207 Mich App 649, 652; 525 NW2d 518 (1994) (the taxable status of the subject property for 1990 taxes was determined as of December 31, 1989), citing MCL 211.2. Accordingly, the taxation status of the property in question for the 2018 tax year is determined as of December 31, 2017.
There is no dispute that the program director did not begin residing at the subject parcel until January 2020. As of December 31, 2017, the property was being used as a pastoral retreat house—a residential unit for visiting pastors and guests of the Salvation Army. Accordingly, the MTT's finding—that the pastoral retreat parcel at Echo Grove Camp was exempt from tax under MCL 211.7o(1) based on the personal residency of the program director—was not supported by the evidence. The MTT did not otherwise address the parcel's use as a pastoral retreat as it relates to the Salvation Army's charitable purposes. Because the MTT's "factual findings are upheld unless they are not supported by competent, material, and substantial evidence," Meijer, Inc, 240 Mich App at 5, we vacate the MTT's determination with respect to the pastoral retreat parcel and remand for reconsideration of whether the Salvation Army's use of the parcel as a pastoral retreat during the time relevant warrants tax exemption under MCL 211.7o(1).
Affirmed in part, vacated in part, and remanded to the MTT for further proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ Stephen L. Borrello
/s/ Jane M. Beckering
/s/ Brock A. Swartzle