Charitable tax exemption applicable only to property physically occupied by charitable corporation.(Recent Court Decisions)(Liberty Hill Housing Corp. v. City of Livonia)

The Supreme Court of Michigan ruled that a nonprofit corporation was not entitled to a property tax exemption for houses leased to charitable beneficiaries when the corporation maintained no physical presence on the properties.

Liberty Hill Housing Corporation (Liberty) is a nonprofit organization whose mission is to provide affordable housing to low-income individuals and to persons with disabilities. Liberty owns 51 single-family homes in the Detroit area that it leases to qualified tenants under traditional lease agreements. In 2003 and 2004, Liberty sought a charitable tax exemption for five such houses in the city of Livonia. The city denied the exemption, which is applicable to property "owned and occupied by a nonprofit charitable institution while occupied by that nonprofit charitable institution solely for the purposes for which it was incorporated." The trial court found that Liberty did not occupy the houses and so was not entitled to the exemption. Liberty appealed.

On appeal, Liberty argued that within the exemption statute, the term occupy meant charitable use of the property and not physical occupation by the institution. The state supreme court disagreed, finding that the exemption is limited to property containing a charity's offices and operations. For a charitable ...