2017-05-04 / Front Page

State Takes Over Property Tax Roll

By Gary Heinlein

The State of Michigan temporarily has taken control of St. Ignace’s property assessment roll—used to determine annual property taxes—as a result, it says, of shortcomings that were discovered in 2015 and that the city was supposed to have corrected through a reappraisal of its 1,530 residential parcels by the end of last year.

Michigan’s State Tax Commission voted unanimously to assume jurisdiction of the city’s assessment roll April 17, issuing a finding that the city hadn’t completed the 2016 reappraisal, or at least hadn’t implemented the results of it. The assessment roll contains the data that will be used to determine summer and winter property taxes paid by residential property owners in the city.

It’s impossible to say what impact the Tax Commission-ordered takeover will have on property taxes paid by an individual homeowner this year until state-hired contractors examine the rolls, find the problems, and correct them, said Michigan Treasury Department deputy public information officer Ron Leix. The Treasury Department oversees assessments and property tax collections.

Mecosta County Equalization Director Shila Kiander is the state’s contractor for the first phase of the process.

“I think it’s not very common to have a(n assessment) roll seized by the state,” Ms. Kiander said, but “If I were a taxpayer, I would be happy to know my (property’s) values will be assessed the same as everyone else’s.”

St. Ignace City Manager Les Therrian said he’s disappointed by the Tax Commission decision because City Assessor Christina Deeren, while not meeting the end-of-2016 deadline, now has completed the required reappraisal. He said he believes she only needs time to enter the new data into the city’s assessment computer software system and was planning to work on that last Saturday, April 29.

At a St. Ignace City Council meeting Monday night, May 1, Mr. Therrian said Ms. Kiander had contacted him about the tax roll. He said he hopes the Tax Commission will accept the work completed by Ms. Deeren, rather than charge the city for a repeat appraisal.

In an earlier interview, Mr. Therrian said Ms. Deeren, the city’s sole tax assessment employee, has been striving since she was hired in 2013 to transfer the city’s assessment data from paperwork to a state- required computer software system that is used to store records electronically and update assessments from year to year. Previous assessor Gene Elmer had maintained the data on paper, Mr. Therrian said.

The job involves long hours in front of a computer monitor punching in numbers for each parcel on the assessment roll, while also tending to other duties of the office, he said. Among those duties: an assessor is supposed to reappraise 20% of the parcels in each real estate category each year, so that every parcel in the city is reappraised every five years. Reappraisals require visits by the assessor to each building and piece of land. For a time, Ms. Deeren shared assessor duties with serving as the city’s zoning enforcement officer.

Ms. Deeren left the city’s employ to accept a township assessor position in the Traverse City area last December, but eventually resumed working as St. Ignace’s assessor because the city couldn’t attract a suitable candidate for the vacancy, according to Mr. Therrian. Mr. Therrian said the unfilled position during her absence for a few months was, at least in part, the reason St. Ignace was unable to complete the required residential reappraisal until this spring.

Ms. Deeren now is splitting her work weeks between the Traverse City-area township and St. Ignace, working four 10-hour days there, then commuting to St. Ignace to work on the city’s assessment roll each Friday and Saturday, Mr. Therrian said. The St. Ignace News attempted to reach Ms. Deeren downstate by phone and e-mail, but she hadn’t responded by press time.

State takeover of a municipality’s tax rolls, while unusual, is not unprecedented, according to the Treasury’s Mr. Leix. The Tax Commission also voted April 17 to assume jurisdiction of the assessment roll for Allegan County’s Manlius Township, for instance, and recently returned to local control the assessment roll for another Upper Peninsula city, Menominee. In Menominee, state contractors updated the 2015 and 2016 tax rolls through a process similar to the one prescribed for St. Ignace, Mr. Leix said.

The process will start with Ms. Kiander’s review. As an assessment consultant, Ms. Kiander, takes on two to three state-ordered reviews each year and teaches assessor continuing education courses in northern Michigan. She will identify any deficiencies and report to them in June, according to a notice to the city from State Tax Commission Executive Director Heather Frick.

She “can go there and work with local officials in an educational effort, find the deficiencies, and take the next step to correct them,” Mr. Leix told The St. Ignace News.

The Tax Commission then will hire a contractor to correct any deficiencies in time for this year’s residential summer and winter tax bills and update the 2018 assessment roll before returning control to the city, according to Mr. Leix. St. Ignace will have to reimburse the state for time and expenses that involves.

Those costs won’t be known before Ms. Kiander’s report indicates the scope of the job. Menominee City Manager Tony Graff said the process cost his city $25,000 for the time spent by a state-hired tax assessor, plus incidental costs. For comparison, Menominee is more than triple the size of St. Ignace. It has a population of 8,548, while St. Ignace has 2,424 residents.

St. Ignace already has mailed property owners their 2017 assessment notices. Because the Tax Commission-ordered review is likely to change many of them, Ms. Kiander said, the city probably will have to send out new ones.

The Tax Commission took issue with St. Ignace’s assessments following a review called an Audit of Minimum Assessing Requirements (AMAR), Mr. Leix said. Chief concerns were that 1,239 of the city’s 1,530 residential parcels – 81% – were “on override,” and that the city had not properly calculated and documented economic condition factors (ECF) required by state law, he said.

“Override” means an assessor varied from the standard process for determining the “true cash value” – the amount it’s worth on the market – of a real estate parcel. One-half the true cash value normally is the “taxable value” used to calculate an owner’s tax bill. (So, for example, a house with a true cash or market value of $100,000 would have a taxable value of $50,000.) There are legitimate reasons for using overrides on certain parcels, but the Tax Commission says fewer than one percent of those in a municipality should be on override status at any given time.

“Economic condition factors” (ECFs) are multipliers used to tailor assessments to local market conditions and building costs. They’re based on prices brought by comparable, recently-sold buildings and land.

Mr. Therrien said when Ms. Deeren came on board, she started bringing the assessment database up to date by focusing on commercial parcels, businesses such as retail stores and offices, as directed by state officials. When the state conducted its 2015 AMAR review of the St. Ignace assessment roll, which it does in each municipality every five years, Ms. Deeren hadn’t had time to update residential properties, he said.

Because the AMAR review led to what the Tax Commission labeled as deficiencies in residential assessments, it directed the city to reappraise all parcels in that category, according to minutes of the April 17 commission meeting. St. Ignace agreed February 8, 2016, to complete the project by the end of that year, the commission says.

Ms. Kiander said a complete reappraisal is a major undertaking. She said the last time she and an assistant did that, for a governmental unit with fewer than 1,000 parcels, the process took about seven months.

At the April 17 hearing, Ms. Deeren told the Tax Commission that she had to carry the residential override into 2017 because the full reappraisal hadn’t been completed.

“Instead of making erroneous adjustments on my assessments, I took a multiplier that was given to me by the state,” she said, according to Tax Commission meeting minutes.

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