                           STATE OF MICHIGAN

                            COURT OF APPEALS



HARMONY MONTESSORI CENTER,                                             UNPUBLISHED
                                                                       October 13, 2016
               Petitioner-Appellant,

v                                                                      No. 326870
                                                                       Tax Tribunal
CITY OF OAK PARK,                                                      LC No. 00-370214

               Respondent-Appellee.


Before: TALBOT, C.J., and O’CONNELL and OWENS, JJ.

O’CONNELL, J. (dissenting).

       I respectfully dissent.

       The majority opinion and the tribunal both conclude that Harmony Montessori Center
(Harmony) cannot be a charitable organization because it charges its students tuition and fees for
services. I respectfully disagree. The majority’s conclusion is also directly contrary to Wexford
Med Group v City of Cadillac, 474 Mich 192, 215; 713 NW2d 734 (2006). Because I conclude
that Harmony is a charitable organization under MCL 211.7o, I would reverse and remand.

         I agree with the majority in its statement of the standard of review and application of
MCL 211.7n. My disagreement lies with its application of MCL 211.7o, the charitable
institution exception.

       MCL 211.7o(1) provides an exemption for property owned by a charitable institution:

       Real or personal property owned and occupied by a nonprofit charitable
       institution while occupied by that nonprofit charitable institution solely for the
       purposes for which that nonprofit charitable institution was incorporated is
       exempt from the collection of taxes under this act.

To qualify as a charitable institution, “it is the overall nature of the institution, as opposed to its
specific activities, that should be evaluated.” Wexford, 474 Mich at 213. The Tribunal should
consider the following factors when evaluating the charitable nature of an institution:

               (1) A “charitable institution” must be a nonprofit institution.



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               (2) A “charitable institution” is one that is organized chiefly, if not solely,
       for charity.

               (3) A “charitable institution” does not offer its charity on a discriminatory
       basis by choosing who, among the group it purports to serve, deserves the
       services. Rather, a “charitable institution” serves any person who needs the
       particular type of charity being offered.

               (4) A “charitable institution” brings people’s minds or hearts under the
       influence of education or religion; relieves people’s bodies from disease,
       suffering, or constraint; assists people to establish themselves for life; erects or
       maintains public buildings or works; or otherwise lessens the burdens of
       government.

              (5) A “charitable institution” can charge for its services as long as the
       charges are not more than what is needed for its successful maintenance.

               (6) A “charitable institution” need not meet any monetary threshold of
       charity to merit the charitable institution exemption; rather, if the overall nature of
       the institution is charitable, it is a “charitable institution” regardless of how much
       money it devotes to charitable activities in a particular year. [Id. at 215.]

The Tribunal may not focus solely on the amount of free services an organization provides when
determining whether the organization is charitable in nature. Id. at 213.

       Most of the Wexford factors are not in issue because Oak Park has stipulated to them.
Harmony Montessori Ctr v City of Oak Park, unpublished opinion per curiam of the Court of
Appeals, issued February 18, 2014 (Docket No. 312856); slip op at 4. Considering only the
second factor, similar to the petitioner in Wexford, Harmony established that it does offer
reduced rates of tuition to children in financial need. The Tribunal found that such rates existed,
though only a few students received them. The record does not establish that Harmony gives any
preferential treatment to those students who can pay full-price tuition or discriminates in any
manner against children seeking a Montessori education. See Wexford, 474 Mich at 216-217.
And similar to the petitioner in Wexford, Harmony established that its costs are not fully
subsidized by tuition. Instead, Harmony also holds fundraisers and accepts donations. See
Wexford, 474 Mich at 217.

         Under the majority’s conclusion, any educational charity that collects tuition for its
services is not a charity under Wexford, as any amount of tuition will go to partially making up
financial deficits. This is directly contrary to Wexford, in which the Michigan Supreme Court
stated that the Tribunal may not focus solely on the amount of free services an organization
provides. Id. at 213. Instead, a charitable organization “need not meet any monetary threshold
of charity to merit the charitable institution exemption” and “if the overall nature of the
institution is charitable, it is a ‘charitable institution’ regardless of how much money it devotes to
charitable activities in a particular year.” Id. at 215.

       In this case, Harmony is a nonprofit organization that provides nondiscriminatory
educational services to children and does not charge more than it needs for its successful
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maintenance. I would conclude that the Tribunal in this case adopted a wrong principle when it
based its decision regarding Harmony’s charitable nature solely on the fact that Harmony
charges tuition and fees.

       I would reverse the decision of the tribunal.

                                                         /s/ Peter D. O’Connell




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