Upper Peninsula Land Conservancy v. Township of Michigamme

Summary of Facts and issues: In 2014, Mark Murphy donated a 600-acre parcel in a remote area of Michigamme to the accredited Upper Peninsula Land Conservancy (UPLC). The property hosted habitat for a variety of animals, including moose, loons, and bald eagles. The public was allowed to recreate on the property, but access was challenging. One could enter the property by walking a three-mile round trip along a road. Or one could attempt to enter the property via vehicle off a public roadway, but this entailed contacting an UPLC representative to open two locked gates that the surrounding private property owners installed and controlled. Nearby landowners also had placed 'no trespassing' and 'private road' signs on the roadway leading up to the first locked gate, although some of them, including the donor, were able to access the property more easily due to their proximity. Individuals could also enter the subject property during public events hosted thereon, but they would need to arrange to meet with an UPLC representative before the event to unlock the gates. The gates would then be relocked during the event. Three such events were held over the course of three years, 2016 through 2018, but they were sparsely attended. Based on the lack of public access, the Township denied UPLC's property tax exemption and the appeal process was started in 2017. Michigan law provides property tax exemption for land owned by conservation organizations that is held for conservation purposes and that is 'open to all residents of this state for educational or recreational use.' There is also a separate property tax exemption for 'charitable institutions.'
Holding: The Michigan Tax Tribunal ruled that there was insufficient public access to qualify for the conservation-specific exemption. In addition, the Tax Tribunal found that UPLC was not a 'charitable institution' because its activities on this specific parcel did not benefit the public at large. The Court of Appeals of Michigan affirmed, denying the property tax exemption for UPLC for 2017 and 2018. The appellate court rejected UPLC's argument that the restrictions to the public's access were a result of the remoteness of the subject property and its conservation efforts. The appellate court also ruled against UPLC's claim that its status as a charitable institution should be viewed with respect to its overall activities, and not just in relation to this specific parcel, because UPLC raised that issue for the first time in its motion for reconsideration. The appellate court further noted that the interactive map of the property on UPLC's website was of limited use because of the lack of cell phone coverage. Finally, the court suggested that it would have liked to see some sort of 'specific conservation efforts' on the parcel, rather than so-called 'passive' land management.
Analysis and Notes: Land trusts are often placed in a difficult position when abutting landowners block access roads with gates and other obstructions. This is the first case where such limits appear to have threatened a land trust's property tax exemption. UPLC felt the need to change attorneys in the middle of this lawsuit, and one of the lessons learned is to have experienced legal counsel from the outset of any suit. UPLC made certain changes in 2019 to increase public access, including a new trail to connect to a nearby state park. Resolution of taxes in 2019 and later years was severed from this lawsuit and remains outstanding, so this opinion is not the final word for UPLC. As a result of this dispute, UPLC policy now requires contacting municipalities regarding tax exemption prior to closing on a new acquisition, and an official document from the township confirming expected taxation status.