Michigamme Township wins ruling
Tax dispute with UPLC
MARQUETTE — The Michigan Court of Appeals has ruled in favor of Michigamme Township and against the Upper Peninsula Land Conservancy regarding a tax exemption of the UPLC’S 600-acre Indian Lake Conservation Preserve.
Earlier this month, the court affirmed the Michigan Tax Tribunal’s decision to grant the township’s summary disposition motion. The tribunal denied the UPLC’s request for a tax exemption for 2017 and 2018, and severed the 2019 request to a separate docket.
The Michigan Court of Appeals said that the UPLC does not qualify as a charitable institution because the subject property was not used or offered for the benefit of the general public or an indefinite number of people, and therefore does not qualify for a tax exemption.
The nonprofit UPLC focuses on preserving lands for conservation, outdoor recreation and the public.
The Indian Lake Conservation Preserve is a remote site located in Marquette County.
According to court documents, Mark Murphy, acting through his single-member LLC, donated the property to the UPLC via warranty deed in 2015. Following the donation, all the land around Indian Lake was owned by either the UPLC or Murphy, who had unrestricted access to the property but had a conservation easement on his private property.
The public was allowed to engage in “nondestructive activities” such as hiking and snowshoeing within the preserve, which is home to moose, loons, bald eagles and other wildlife.
The public could enter the property by walking from the Peshekee Grade, a 3-mile round trip along a road easement.
An individual also could attempt to enter the property via vehicle off a public roadway, but anyone wanting to drive into the property would have to contact a UPLC representative to open two locked gates that the surrounding property owners installed and controlled. The owners also had placed “no trespassing” and “private road” signs on the roadway leading to the first locked gate.
During a public event, individuals also would have to arrange to meet with a UPLC representative before the event to have the gates unlocked, and the gates then would be relocked during the event.
In the appeal, the UPLC argued that the tax tribunal should have considered the organization’s activities as a whole — not just regarding the subject property — when the tribunal determined whether it was a charitable institution. It also argued that it should have viewed the restrictions to the public’s access as a result of the remoteness of the property and the UPLC’s conservation efforts.
The Michigan Court of Appeals decided that the UPLC did not present its larger role as an organization outside of the connection to the occupation and use of the subject property. It also said that public events at the site were sparsely attended, occurred behind locked gates and the public had restricted access aside from those events.
UPLC Executive Director Andrea Denham said in an email that her organization and Michigamme Township disagree on the interpretation of a law that governs tax exemptions for properties owned by nonprofits.
“Essentially, the township is arguing that a nature preserve must provide ‘significant’ public access in order to be tax-exempt and is taxing the preserve as a lakeshore residence,” Denham said. “Our belief is that permanently protecting important natural places from destruction and overdevelopment is the purpose of being a nonprofit environmental organization.”
The property in question, she noted, includes “significant, unbroken habitat” for diverse and threatened wildlife, rare stands of old-growth trees and approximately 90% of the watershed for the headwaters of a river; it can never be lived on, developed or sold.”
Denham pointed out that protecting natural places provides “innumerable” benefits to people, such as healthy and productive forests, and the UPLC wants people to experience wilderness.
“To that end, ever since the preserve was donated, we have held multiple and free-to-the-public outings in the preserve each year,” Denham said. “We have continuously informed folks who were interested in visiting the remote preserve outside (of) events that they are welcome to visit and that visiting with a motorized vehicle can be arranged in advance if needed.”
She said the township let UPLC know that improved public access to the preserve was important, so UPLC worked to find the best way to create better foot-trail access to the preserve.
The UPLC in 2019 acquired 160 acres of land adjacent to Craig Lake State Park, according to Denham, who said that in partnership with the park, it built a trail connecting the park to the preserve. The trail is mostly completed.
“We believe that the protection of this nature preserve, especially with the access currently provided, is a benefit to the community and therefore the preserve should be tax-exempt,” Denham said. “The township believes the access currently provided is not significant enough to warrant a tax exemption despite the protections to the watershed and existing foot trail.”
Denham said that UPLC believes that partnering with the Michigan Department of Natural Resources on the trail has allowed the organization to meet the goals for public access to the preserve, and hopes it has satisfied the township’s concerns.
She stressed that the UPLC, which is responsible for the care of over 60 other properties across the U.P., is funded mainly through donations and grants, and having a tax exemption on the preserve is important since it does not have the funds to pay annual residential property taxes on land that can never be developed or sold.
“We hope to continue working with the township to meet our mutual goals of protecting the wild forests that define life in the U.P. while improving the lives of residents and visitors to the Michigamme area,” Denham said.
Michigamme Township Supervisor William Seppanen, who also is the secretary of the township’s board of review, said UPLC owes nearly $85,000 in taxes to date.
The debt consists of three years worth of property taxes on the 600-acre parcel — 2017, 2018 and 2019 — along with interest and administrative fees, Seppanen said.
“The last time they paid taxes was for 2016,” he noted.
Seppanen said public access to the parcel is an important part of the issue.
“The township has not been informed of public access to the property other than the two locked gates on County Road 607,” Seppanen said. “They had two events last year, and you had to go to Marquette to meet them and go to Indian Lake with them.”
He said that Michigamme Township would support making the property tax free if it was “completely open to the public.”
“In 2017 when their representatives came to the board of review, they said they were going to put signage to Indian Lake and they didn’t have parking and they didn’t have access, but you could walk in,” Seppanen said. “And, of course, because it is not accessible to people that are handicapped, the board of review denied their request for tax-free status.”
He said as far as he knows, no signage marking the property as a nature preserve has been installed.
“If they were going to open their preserve and their conservancy there and enjoy the lake, and the trails and the road that they have, it would be (considered) another tourist attraction for the township,” Seppanen said. “But, with no access and a gate that is locked and a sign that says ‘private property, no trespassing,’ how can people really go in there? And when you go in there off of County Road 607, you would have to drive in and park because you can’t park on County Road 607. There is no room.”
He said dealing with the UPLC tax tribunal request has been costly for the township, but he noted the school systems are the biggest loser in the situation.
“In my opinion, it’s kind of a private club and they want tax-free dollars and they aren’t worried about the children that it is going to affect,” Seppanen said. “Being a retired teacher, I am concerned about funding for school systems. That’s my personal opinion.”
Christie Mastric can be reached at 906-228-2500, ext. 250. Her email address is firstname.lastname@example.org. Lisa Bowers can be reached at 906-228-2500, ext. 242. Her email address is email@example.com.