Michigan Property Tax Exemption for Private College’s Conference Center
SALT Tax Alert, February 20, 2006

Recently, the Michigan Court of Appeals upheld a property tax exemption for Calvin College in Grand Rapids for its Prince Center, a conference facility that provides meeting rooms and overnight accommodations.

The court held that the Prince Center was exempt under Michigan statute MCL Sec. 211.7n.¹

Real estate or personal property owned and occupied by nonprofit theater, library, educational, or scientific institutions incorporated under the laws of this state with the buildings and other property thereon while occupied by them solely for the purposes for which the institutions were incorporated is exempt from taxation under this act.

Although the statute states that the property must be used “solely” for the exempt purpose of the institution, the courts do not interpret this requirement to mean “exclusively.” So, the tax exemption is not lost by virtue of occasional or incidental uses for other purposes. If the primary use of a building is clearly for exempt purposes, the exemption is not lost because the building is used occasionally for social purposes or is let out to other organizations.

In this case, Calvin College presented several facts to refute Grand Rapids’ assertion that the conference center was operated as a commercial venture and not solely for its educational purpose.

• Calvin’s primary use of the facility is for its own educational purposes and any use by public organizations or private groups is secondary
• Financial information for the Prince Center showed that it was not operated for profit
• Calvin does not advertise the conference center, other than its own website and alumni magazine
• The Prince Center does not front on public property or on a public right-of-way and there are no signs to advertise the existence or availability of lodging.
• Smoking and alcoholic beverages are prohibited
• The zoning designation does not allow for commercial conferencing facility
• Facility was funded by the issuance of Michigan Higher Education Facilities Authority Bonds which are only issued for educational facilities

The fact that Calvin does not offer courses in hotel and restaurant management was not relevant to whether it was directly related to its educational purpose.

Plante & Moran can assist you in determining if a similar exemption is available to your institution. Because the window for appeal is very short, you should begin the process now to appeal the assessment before the local March Board of Review. Please contact me if you have questions and for more information.

¹ Incorporation in the state was held unconstitutional and is no longer applicable.

Disclaimer: The information provided in this memorandum is only a general summary and is being distributed with the understanding that Plante & Moran, PLLC is not rendering legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.