Michigan Assessors On the Path To Raise Property Taxes
Few taxpayers realize it, but some local Michigan assessment departments are taking liberties when they reassess the value of private property.
Generally, the practice involves posting a public notice of "canvassing" and sending a worker — in some cases part-time college students — to knock on doors. If no one is home, the assessors measure the house and inspect the yard for structures they suspect are not listed on the assessment card. The only thing that will stop them is a "no trespassing" sign or a verbal rejection from citizens who answer the door.
Assessors began this practice after the State Tax Commission adopted a new guideline at a February 2012 meeting encouraging local governments to annually inspect a minimum of 20 percent of parcels in each property class every year. The idea is to cover 100 percent of property in five years, but there is no language saying what the inspection should involve or which property should be inspected. An assessor could inspect the same parcels year-after-year or be selective about which ones to inspect.
Calls to assessment departments throughout the state revealed a range of practices. The assessor from the Village of Spring Lake said there is no particular schedule of which, or when, properties are being reassessed.
The assessor for St. Ignace and Clark Township, Christina Deeren, said she does all the measurements herself and will do so if no one is home.
"I drop a tape on everything," Deeren said. "People get itchy about it, but it is amazing how many errors I find."
There is even variation of reassessment practices within close geographic areas. For example, the Township of Schoolcraft has posted a public notice of site visits, but in nearby Portage, the assessment department said all inspections are done from the street unless they get an owner's permission to measure property. A person answering the phone at the assessment office in Port Sheldon said she was not aware of any "remeasurement" programs taking place in the township
Assessors say they take these guidelines seriously because the state could audit their work and the process could cost municipalities thousands of dollars and the loss of their certification. Going door-to-door requires extensive time and labor and some municipalities, like Meridian and Clinton Township, hire temporary, part-time college students to do the work. Others, like St. Clair Shores, borrow workers from other departments when they are not busy.
Municipalities have been desperate to boost taxable values since market values fell after 2008. They are recovering and are now up nearly $1 billion statewide, according to the Michigan Tax Commission. But some communities, like Davison Township, had seen values drop as much as 25 percent drop from their peak, meaning a cut in revenue.
It is a formidable problem for townships and cities trapped by pension and retiree health care costs. Taxpayers are resistant to millage increases so raising assessed values, which are not often challenged, is an attractive option for municipalities.
Under Proposal A, municipalities are limited by how much they can tax a property. Taxable values are capped at 5 percent year-to-year or the rate of inflation, whichever is lower. By increasing assessments, known as State Equalized Values, municipalities can try to recover some of that capped loss when the property sells — that is, when the cap is lifted and the new taxable or capped value can be set to reflect the SEV.
Assessment departments also gain when sale prices go up. Year-to-year assessments are based on sales studies. While the cap on existing homes exists, the higher assessment can increase the variables in the tax calculation formula.
By reassessing property, assessors are making a judgment call on how much they believe a property will sell for. Some taxpayers debate the value of improvements. An assessor may say a pole barn increases the value by a certain amount, while a homebuyer may have no interest in the pole barn and consider it worthless. Property owners can challenge their assessments through a local review board. After that, they can appeal to the Michigan Tax Tribunal.
Taxpayers, however, can only question the value of the assessment, not the manner in which it was determined.
For nearly two years, Davison Township attempted to go inside property for reassessments. The township told taxpayers that if they denied entry, there would be a presumption of an improvement if improvements took place in the neighborhood. After taxpayer complaints, the township ended the internal inspections but reassessments continue.
State Representatives Bob Genetski, R-Saugatuck, and Mike Shirkey, R-Clarklake, have introduced bills that would give taxpayers more say in the reassessment process.
House Bill 5172 requires written permission from taxpayers before an assessor can enter any structure, dwelling unit or improvemen. If access is denied, the assessor cannot increase assessed value based on improvements to adjacent property.
House Bill 5173 clarifies language in the official assessor's manual and says property owners are not required to grant access to property. The bill also says if assessors approach a property they must take the most direct route to the front door to ask permission. The property owner would also have to give written permission on a form with official letterhead stating the purpose of the inspection, that the inspection is for one time only and can be revoked at any time and the form would have to spell out who would be doing the inspection.
Rep. Shirkey said the bills can actually protect assessors in audits because they spell out the due diligence that must be taken. But assessors don't see it that way and some have complained the bills would prohibit them from accurately doing their jobs.
"We get little response when we mail out letters," said Clinton Township Assessor James Elrod. He said mailing permission slips would be futile and getting written permission at the door would be time consuming since many property owners are not home.
Patrick Wright, director of the Mackinac Center Legal Foundation, said homeowners have protection from government inspections under the Fourth Amendment of the U.S. Constitution. He said inspectors can go as far as the "curtilage," the area where you start to see inside windows. Beyond that, he said they need a warrant.