A Replacement Roof Caused an Office Building’s Property Tax Assessment to Increase, the Court of Appeals Held (Again)

On Oct. 27, 2026, the Michigan Court of Appeals revisited whether a replacement roof on a commercial building was an “addition” that caused the taxable value to increase. The Court of Appeals’ published opinion issued in 2024 – reaching the same conclusion – was vacated by the Michigan Supreme Court and the case remanded for the Court to consider the Tax Tribunal’s jurisdiction. On remand, the Court of Appeals clarified that the Tax Tribunal has jurisdiction to determine whether property qualifies as an addition and whether an assessment complies with applicable statutes and constitutional provisions, but it lacks jurisdiction to decide claims that a tax statute itself conflicts with the Michigan Constitution. Taxpayers seeking to challenge the constitutionality of the statutory definition of “addition” must pursue those claims in circuit court.

Honigman represented the Michigan Manufacturers Association as amicus curiae before the Michigan Supreme Court. Although the Court of Appeals’ remand opinion is unpublished and not precedential, it underscores the importance of taxpayers and their advisors carefully evaluating jurisdictional and procedural issues early in a dispute, as the way claims are pleaded and the forum in which they are brought can significantly affect the course and outcome of the litigation.

The Knier Powers case concerned whether a newly installed roof on an existing office building qualified as new construction and therefore an addition under Michigan’s General Property Tax Act. If so, the value attributable to the roof could be added to the property’s taxable value without regard to the annual cap.

The Court of Appeals previously upheld the Michigan Tax Tribunal’s ruling that the installation of a new roof on the office property was an “addition” to the property, allowing the property’s taxable value to increase beyond the general statutory cap. The Court of Appeals held the term additions is statutorily defined to include “new construction” and the term “new construction” is defined as property not in existence on the previous year’s tax date. 

On Mar. 25, 2026, the Supreme Court issued an Order vacating the Court of Appeals decision and remanding the case to the Court of Appeals. The taxpayer had argued at both the Tax Tribunal and Court of Appeals that the new roof was not an “addition” as that term is used in the Michigan Constitution, Const 1963, art 9, §3 and that the statutory definition of the term conflicts with the Constitution. On remand, the Court of Appeals was required to determine whether the Tax Tribunal had jurisdiction to decide this constitutional issue and what impact that has on the Court of Appeals decision. The Supreme Court also mandated that the Court of Appeals determine whether the taxpayer was required to raise the issue in a circuit court action, citing its prior decisions in Toll Northville v Northville Twp, 480 Mich 6 (2008) and WPW Acquisition Co v Troy, 466 Mich 117 (2002), both of which were cases in which the taxpayer alleged the unconstitutionality of the statutory definitions of “additions” in Circuit Court actions. 

On remand, the Court of Appeals reaffirmed its conclusion that the roof qualified as an addition and clarified the limits to the Tax Tribunal’s jurisdiction. The Court explained that the Tax Tribunal has jurisdiction to determine whether an assessment complies with applicable statutes and constitutional provisions, including whether property qualified as an addition. Knier Powers Martin & Smith LLC v Bay City, unpublished per curium opinion of the Court of Appeals, issued Oct. 27, 2026 (Docket No. 366114), pp 2-4. However, the Tax Tribunal lacks jurisdiction to determine whether a statute itself is unconstitutional. Id at 5-7. Relying on longstanding precedent, including Toll Northville and WPW Acquisition Co, the Court of Appeals held that a claim alleging the statutory definition of “addition” conflicts with Michigan’s Constitution must be brought in circuit court, not the Tax Tribunal. Id. at 7-10.  The Court of Appeals vacated the portion of its prior opinion suggesting that the Tax Tribunal could decide the constitutional question, while not disturbing its conclusion that the roof was an addition to the property. Id., at 10-11. 

Knier Powers Martin & Smith LLC v Bay City, ___ Mich App ___ (Aug. 8, 2024, Docket No. 366114), vacated and remanded ___ Mich ___ (Mar. 25, 2026), on remand, ___ Mich App ___ (Oct. 27, 2026, Docket No. 366144).