McLaren Reg.’l Med. Ctr. v. City of Owosso

TAX EXEMPTION

McLaren Reg’l Med. Ctr. v. City of Owosso, Docket No. 244386
(Mich. Ct. App. May 3, 2007)

The Michigan Court of Appeals held that, during the 1999 and 2000
tax years, a medical center and its tax-exempt subsidiary fell within the
scope of statutorily defined property tax exemptions under state law.

Based on a recent decision by the Michigan Supreme Court discussing the charitable
institution tax exemption, the Court of Appeals held that the real property
at issue was owned during the years at issue by the medical center, a nonprofit
charitable institution, and either occupied by the medical center solely for
the purposes for which the medical center was organized, or made available
to a tax-exempt subsidiary, which occupied the space solely for the purposes
for which the subsidiary was organized. The court ruled that the property would
be exempt regardless of whether it was occupied by the medical center or by
a tax-exempt subsidiary.

The court also analyzed and determined that the medical center and its subsidiary
corporation were "nonprofit charitable institutions" because they
met all of the factors delineated by the Michigan Supreme Court that a charitable
institution must meet: (1) they were nonprofit institutions; (2) during the
tax years in question, they were organized chiefly, if not solely, for charity;
(3) they adhered to their stated nondiscrimination policies in providing medical
services; (4) they were organized to provide the community with medical services
and relieve people’s bodies from disease, suffering or constraint; (5) their
service charges did not exceed the amounts of revenue they needed for successful
maintenance; and (6) they provided charity during the tax years in question.
Accordingly, the court remanded the matter to the Tax Tribunal for entry of
judgment in favor of the medical center.