Tax case concludes between 5 Healthy Towns Foundation and City of Dexter

submitted by 5 Healthy Towns Foundation

After nine years and more than 20 judicial actions, the courts have finally brought a conclusion to property tax disagreements between 5 Healthy Towns Foundation and the City of Dexter.

In 2012, 5 Healthy Towns Foundation (5HF) bought the Dexter Wellness Center from a for-profit business. Prior to the purchase, as a matter of due diligence, the Foundation confirmed with Scio Township’s property tax assessor (who, at the time, acted as the taxing authority for the then-Village of Dexter) that the Wellness Center would qualify for a non-profit property tax exemption. Though the Scio Township assessor concluded that the Wellness Center indeed qualified for the property tax exemption, Dexter interceded in the Township’s 2013 decision, forcing the 5HF to appeal to the Michigan Tax Tribunal (MTT) and request a ruling on 5HF’s entitlement to a property taxation exemption.

Though the MTT initially ruled 5HF was not exempt under its construction of the law then in effect, 5HF appealed that decision to the Michigan Court of Appeals (COA), which reversed the MTT and ruled in 5HF’s favor. Dexter appealed to the Michigan Supreme Court (MSC), which affirmed the COA’s decision and again ruled in 5HF’s favor.

During these proceedings, 5HF attempted to settle with Scio Township and Dexter. Scio Township agreed to the settlement offer, but the mayor of Dexter refused the offer. Though the Michigan Supreme Court affirmed that 5 Healthy Towns Foundation was exempt from property taxes, the mayor of the newly incorporated City of Dexter and the City Council attempted to end-run the Supreme Court and sought to exact taxes from 5HF from another angle: levy lessee-user tax on 5HF’s wellness center management company instead.

5 Healthy Towns Foundation contracts with a wellness center management company with expertise in medical integration. After losing the property tax exemption fight in the Michigan courts, starting in 2018, Dexter’s leadership changed gears and began pursuing the management company for lessee-user tax. This decision set off a cascade of court actions in multiple judicial venues, including the State Tax Commission, Michigan Tax Tribunal, Washtenaw County Circuit Court, Court of Appeals, and eventually, back to the Michigan Supreme Court. Over the next three years, at every level, judicial decisions were made in favor of 5HF.

In late 2021, the MSC refused to hear the final appeal filed by the City of Dexter. Marking what appears to be the final challenge to the Wellness Center’s taxable status, Dexter has agreed to the entry of a consent judgment regarding the remaining lessee-user tax assessments for tax years 2019, 2020 and 2021. That consent judgment resolves all the remaining cases in the Michigan courts.

Between the City of Dexter and 5HF, millions of dollars have been spent on attorneys. In spite of the tax battle, 5HF continued to invest in Dexter’s health and wellness efforts, providing funding for the Farm to School program, trails, school gardens, mindfulness classes, yoga in the park, and many other programs. Steve Petty, current 5HF CEO, said, “5 Healthy Towns Foundation has invested over $1.6M to support wellness in Dexter since 2013, when the tax litigation began.” He added, “The health of the general public has been and continues to be our focus. We are glad to have this significant challenge behind us.”

5 Healthy Towns Foundation (5HF) is a private foundation governed by a volunteer board of directors that serves the Michigan school districts of Chelsea, Dexter, Grass Lake, Manchester, and Stockbridge. The mission of 5HF is to cultivate improvements in personal and community wellness by encouraging people in its five healthy towns to eat better, move more, avoid unhealthy substances, and connect with others in healthy ways. For more information on 5HF, visit 5healthytowns.org.

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by Marsha Chartrand

Marsha Johnson Chartrand, a founder, writer, and copy editor with the Manchester Mirror, is a 50-year resident of Manchester. She has a long history of volunteer and community involvement.