## Facts

- Walmart Real Estate Business Trust owned and occupied a roughly 184,000-square-foot big-box retail store in the City of Bad Axe.
- For tax year 2019, the City assessed the property with a taxable value of $4,329,500.
- Walmart petitioned the Michigan Tax Tribunal, arguing the City’s valuation improperly relied on an assumed lease that did not exist and failed to value the fee simple interest actually held and conveyed in a sale.
- At an evidentiary hearing, Walmart’s appraiser valued the property as an owner-occupied, fee simple estate.
- The City’s appraiser applied an income approach premised on a hypothetical market lease (as if the property were leased to a tenant).
- The Tax Tribunal credited Walmart’s market analysis and methodology, found the City’s appraisal not credible, and valued the property as unencumbered by any lease.
- The Tribunal set 2019 values at: true cash value $4,270,000; state equalized value $2,135,000; taxable value $2,135,000.
- The City appealed as of right to the Michigan Court of Appeals.

## Issues

1. Whether the Tax Tribunal committed an error of law or adopted a wrong legal principle by valuing the property as fee simple, rather than using a hypothetical leased-fee valuation based on a non-existent lease.
2. Whether the Tribunal’s acceptance of Walmart’s appraisal and rejection of the City’s hypothetical-lease methodology were supported by competent, material, and substantial evidence on the whole record.

## Decision

- The Michigan Court of Appeals affirmed the Tax Tribunal’s judgment.
- The court held the Tribunal did not commit legal error or apply a wrong legal principle by valuing the owner-occupied property as a fee simple estate unencumbered by a lease.
- The court held the Tribunal’s factual findings and credibility determinations were supported by competent, material, and substantial evidence.

## Legal Principles

- Appellate review of Tax Tribunal decisions is limited: absent fraud, reversal requires an error of law or adoption of a wrong legal principle; factual findings are upheld if supported by competent, material, and substantial evidence on the whole record.
- True cash value for ad valorem taxation generally reflects fair market value (usual selling price), unless statute provides otherwise.
- For an owner-occupied property with no lease, valuation may properly focus on the fee simple interest; a valuation premise built on a non-existent, hypothetical lease may be rejected as inconsistent with the property rights being taxed.
- The Tax Tribunal is the finder of fact on valuation disputes, including weighing competing expert appraisals and resolving credibility conflicts, and may make an independent determination of value from the record.

## Conclusion

The Court of Appeals upheld the Tax Tribunal’s reduced 2019 valuation because the Tribunal properly valued the Walmart property as fee simple, owner-occupied real estate and reasonably rejected the City’s income approach that assumed a hypothetical lease not present in the actual property interest.


Walmart Real Est. Bus. Tr. v. City of Bad Axe, No. 358930, 2022 WL 12071984 (Mich. Ct. App. Oct. 20, 2022)