The trend of falling property values in the Lower Peninsula is beginning to creep across the Mackinac Bridge this year as Mackinac County saw a slowing of the increase in the state equalized value (SEV) for property. County taxpayers are noticing a 4.48% increase in taxable values, but a smaller increase in the equalized values of their homes. For 2008, the county reports a 1.3% increase in the SEV, while last year the increase was 7.59%, and in 2006 it was 5.6%.

The equalization report, which was adopted by the County Commission Tuesday, April 15, is designed to maintain equitable levels of property assessments among local units of government throughout the county.

The adopted 2008 equalized value for the county is $1.3 billion.This represents an increase of $17.3 million over 2007.

Taxable values, this year, increased by $887,734,589, or 4.48%. The 2007 taxable value increase was 6.07%.

"Our [real estate] market," said Mr. Fenlon, "is showing a little bit of a slowdown."

The more than 90 foreclosures finished or underway in the county between 2007 and today will likely pull residential property values down, and perhaps commercial values, Mr. Fenlon said. He foresees a probable decrease in property values overall for next year.

This year, county taxpayers want to know why the SEV is showing little change from last year, while taxable values continue to rise, Mr. Fenlon said. Proposal A, which allows for an annual increase by the rate of inflation, is the reason. Unless legislators change Proposal A to freeze any increase in the taxable value when the SEV decreases, he said, taxpayers will continue to see an increase in property values.

Since 1995, the difference between SEV and taxable values has increased until this year. The gap between the two has begun to close, said Mr. Fenlon.

Proposal A went into effect in 1994.

In the county and across the state, the majority of property values have risen higher than the rate of inflation. Proposal A limits the growth of the taxable value. Taxable values increase each year by the inflation rate, the uncapping of sold property, and new construction. The 2008 inflation rate was 2.3%.

While the assessed value of a home is half of what an assessor determines is the market value, the taxable value is the amount on which property taxes are based. Assessors generally take the taxable value from the previous year and multiply it by the rate of inflation, unless there is new construction or a property transfer. When the market value of a home is greater than the taxable value, under Proposal A, property taxes can continue to rise even as assessed values decline.

This year, said Mr. Fenlon, the SEV for commercial construction dropped by 0.8%, and residential and timber cut had a weak increase of 1.43%.

The sale of homes and property has slowed and more foreclosures are expected, he said, and they will affect taxable values in the future. The 2008 equalization report includes only a few foreclosures and people were not listing recreational property for sale yet, a situation that could change, said Mr. Fenlon, and affect 2009 numbers.

Clark Township saw a drop of approximately $11 million in true cash value in the residential classification, said Mr. Fenlon, although with a $300 million SEV, it doesn't really show overall.

For 2007 and 2008, 52 foreclosures took place, he said, and about 40 foreclosures are in process now and will impact next year's equalization report. Of those, three were commercial. The bulk of pending foreclosures in the county are in the City of St. Ignace with 15, Clark Township with 10, and Moran Township with seven. As these enter into the market, appraisers will have to consider if they affect other appraisals in a neighborhood, and real estate agents will be looking at them as they perform their comparable home cost analysis.

"They probably will pull our residential classes down," he said of the coming foreclosures, "and even some of our commercial classes."

For next year, Mr. Fenlon foresees the potential for a decrease in property value overall in the county.

The highest equalized value in Mackinac County is in Clark Township with an SEV of $310,203,856, followed by the City of Mackinac Island with an SEV of $289,747,557.

Ranked in order of SEV, other townships are Moran with $123.1 million, Portage with $117.8 million, the City of St. Ignace with $111.3 million, Garfield with 110.9 million, Newton with $63.9, Brevort with $49.6 million, Bois Blanc with $47.4 million, Marquette with $47 million, St. Ignace Township with $39.5 million, Hudson with $22.4 million, and Hendricks with $11.2 million.