Laura J. Genovich (P72278) | Foster, Swift, Collins & Smith, PC | 1700 E Beltline Avenue NE Suite 200 | Grand Rapids, MI 49525 | 616-726-2200

1. Michigan Townships Association (MTA)
2. Michigan Association of School Boards (MASB)
3. Michigan Association of Counties (MAC)
4. Michigan State Bar Public Corporation Law Section (PCLS)

This appeal arises out of Appellant Chelsea Health and Wellness Foundation’s attempt to obtain a 100% property tax exemption for its $10 million fitness center. Appellant charges its members market rates for gym memberships – up to $185/month for a family of four – but purports to be a “charity” because it offers a 50% “scholarship” program to low-income
individuals. Low-income individuals must obtain a doctor’s note and visit the fitness center at least twice per week to receive the discounted rate, but those requirements do not apply to
members who pay the full rate. In the tax years at issue, Appellant had zero members enrolled in its “scholarship” program and thus provided no charity. Because Appellant requires low-income individuals
to jump through “extra hoops” to receive a discounted rate, Appellant did not “serve any person who needs the particular type of charity being offered.” MCL 211.7r exempts certain clinics and real property “used for hospitals or public health purposes.” The plain language of the statute makes clear that the exemption only applies to clinics, hospitals, and related health care facilities, and not more
broadly to any facility (like a gym) that conceivably advances public health but that does not provide medical services. Construing the statute to apply to Appellant’s fitness center would expand the exemption far beyond what the Legislature plainly intended and would create a tremendous tax loophole for the fitness industry. Finally, the Tribunal erroneously held that Appellant’s facility “lessens the burdens of government.” The record does not establish that the state has an affirmative obligation to provide physical fitness facilities or to prevent obesity, and thus there is no “burden” that Appellant could be alleviating.

Chelsea Health & Wellness Foundation appealed a March 2014 Board of Review denial of a requested charitable exemption from property taxation under MCL 211.7o.