Unintended Consequences

[Accountable]

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Michigan Supreme Court Looks at Property Rights in Church Parking Lot Case

Detroit Free Press

John Gallagher

October 5, 2006



Oct. 5--Property rights versus economic development will be argued in the Michigan Supreme Court this morning.



Michigan's highest court will hear oral arguments in the case of Perfecting Church, a Detroit congregation that inadvertently lost a parking lot to tax foreclosure in 2003. Wayne County sold the lot at auction to investors Michael Kelly and Matthew Tatarian. But a Wayne County judge reversed the decision soon after the sale and gave title to the parking lot back to the church.



The Supreme Court must now decide whether Perfecting Church can keep its parking lot, or whether a property owner who loses title in a case like this can get only monetary damages from the county that seized the land.

At stake are not only thousands of similar tax seizures throughout Michigan, but also the fate of efforts to speed up the economic revitalization of older cities such as Detroit.



Perfecting Church argues that it should not lose its property through what appeared to be an oversight at the county tax office. But Wayne County officials, as well as development officials throughout Michigan, argue that older cities need to get thousands of tax-delinquent properties back into productive use through sales that are legally binding.



Catharine LaMont, president of LaMont Title, a Detroit company that insures projects done in the city, said in July that the case presents a real dilemma.

"You don't want the government to be able to take property without notice, without due process," she said then. "On the other hand, how does any governmental unit get the property back into taxpaying hands?"



Kelly and Tatarian may have the law on their side.



A 1999 streamlining of the state's tax laws said property owners who lose their land in this way were entitled only to monetary damages from the county involved -- not the return of the land. The Supreme Court must decide whether that 1999 rewriting of the tax law was constitutional.



That 1999 law was a well-meaning attempt to redevelop cities such as Detroit. By streamlining the tax foreclosure and re-sale procedures, lawmakers hoped to speed up the return of tens of thousands of tax-delinquent parcels to productive use.



But with a mounting number of property owners losing their land with seemingly little notice, the case of the church's parking lot has become the most significant property rights case in Michigan this year.



After hearing arguments today, the court may issue a ruling as late as next summer.

[Adam Zapple]

Well, my personal view is that the government has no business taxing my personal property and then seizing what never belonged to them in the first place if I fail to pay my taxes. It's not as if I am defaulting on a loan. That said, the law is the law. If the proper procedures were followed in selling the tax delinquent property, then Kelly and Tatarian should get their parking lot back.

[Clint]

The trend toward taking property for the economic growth of a community has to stop. It will end up in a system where all I have to do is make the case that what I want to do on your property will produce more tax revenue and jobs to force you to sell to me.

[Clint]

Diuretic wrote: But isn't it the case that if the taxes had been paid there would have been no seizure?
How does a church not pay taxes?

[Clint]

Diuretic wrote: No idea - simple negligence or an outright refusal but both of those seem to be somewhat strange.
Most churches take advantage of their tax exempt status. I suppose there are some who render unto Ceasar that which is Ceasar's. Rare....very rare.

[Clint]

Good point and it could be the case depending on local terms used. Even so, the point of the article, if I understand it, is that government is taking property from people so it can be put to a higher use. I don't think government should be able to take property unless it is through a legal condemnation process for a publicly owned project. It should never take property because it can generate more money in the hands of the new owner. Whether or not the property is "productive" is up to the legal owner.

The court decided the property belongs to the church. The County messed up and the County should pay damages to Tatarian and Kelly for the mistake they made according to the court's finding.

[Accountable]

In this case, the story isn't clear whether the taxes weren't paid, or the taxes were paid but there was some sort of procedural snafu, or the courts snatched the property away too quickly (no doubt salivating over the promised increase in tax revenue).

Perfecting Church argues that it should not lose its property through what appeared to be an oversight at the county tax office. But Wayne County officials, as well as development officials throughout Michigan, argue that older cities need to get thousands of tax-delinquent properties back into productive use through sales that are legally binding. Personally, I think that providing parking for people to come receive spiritual guidance is a very productive use for property.

The attitude reflected in this next statement is wat really gets my goat.Catharine LaMont, president of LaMont Title, a Detroit company that insures projects done in the city, said in July that the case presents a real dilemma.

"You don't want the government to be able to take property without notice, without due process," she said then. "On the other hand, how does any governmental unit get the property back into taxpaying hands?"Is it gov't duty to distribute land based on tax revenue now? If a land owner wants to raze all the buildings, plow eveything under, and let it lay fallow for a generation, no one should have any say to the contrary.