2017-10-26 / Front Page

Tax Work Shows Brighter Outlook Than Anticipated

City of St. Ignace Tax Rolls Reappraisal
By Gary Heinlein

Problems with the St. Ignace property tax assessment roll have turned out to be less extensive than initially thought, according to a state-assigned assessor who has been updating it since July and expects to finish in time for approval from the Michigan State Tax Commission in late November.

Ed VanderVries, hired by the Tax Commission to bring the city’s 2017 and 2018 property tax roll into compliance with state requirements, said he will use extensive residential reappraisal work completed by City Assessor Christina Deeren to speed up the process. Ms. Deeren has submitted her resignation as city assessor and is facing a state disciplinary hearing.

“We’ll use as much of her work as possible to keep down the cost to the city,” said Mr. VanderVries, who is the Van Buren County equalization director and conducts annual assessments for several municipalities in Michigan, including Moran Township. He has a lakeshore cottage in the township, west of St. Ignace along US-2.

The state temporarily assumed control of St. Ignace’s property tax roll owing to shortcomings discovered in 2015 that were to be corrected by a reappraisal of all its 1,530 residential parcels. The assessment roll contains the data used to determine summer and winter property taxes paid by property owners in the city.

When the Tax Commission discovers deficiencies, usually through a special audit process performed every five years for each municipality, it takes corrective measures, one of which can be to assume jurisdiction on behalf of the state and to hire a contractor with assessment expertise to correct them. The municipality must pay for the contractor’s work.

St. Ignace agreed February 8, 2016, to an action plan under which it would reappraise all residential property by the end of the year and implement the results in 2017. The commission took control of the city’s assessment roll last April 17 after issuing a finding that the city hadn’t complied with the agreement and that Ms. Deeren, instead, had applied an incorrect inflation rate multiplier in her 2017 residential assessments.

Inflation rate multiplier is a term used to indicate changes in the consumer price index – in other words, the rate of inflation. Since the passage of a comprehensive state property tax reform act in 1994, assessments can’t increase annually by more than 5% or the rate of inflation, whichever is less, unless a property has changed hands or undergone improvements that add to its value.

In its official takeover order on April 17, the Tax Commission said it had been notified on March 6 that “the city’s notices of assessments were inaccurate.”

Mr. VanderVries said, however, upon meeting with Ms. Deeren and examining the assessment roll, he discovered she had conducted a “usable and accurate” reappraisal of most residential property.

“She had entered an enormous amount of data,” he said. “It looks like it wasn’t entered in 2017, but in the 2018 database.”

Mr. VanderVries said he will use that data to redo the 2017 assessment roll and prepare 2018 assessments. The new assessments will affect other property categories besides residential parcels because there also were some shortcomings to correct in the city’s 2017 commercial assessments, he said.

Once the Tax Commission has certified his new assessment roll in late November, the city will have to mail new assessment notices and tax bills to property owners whose 2017 assessments are changed, he said. The state also will return control of the tax roll to the city at that point. Mr. VanderVries said property owners will have 30 days to contest the new assessments.

It’s impossible to say how the new 2017 assessments will affect property owners’ tax bills, Mr. VanderVries said. A May audit of the city’s tax rolls by another State Tax Commission contractor found that residential properties were under-assessed by $563,720, which would tend to indicate tax increases are coming.

Mr. VanderVries said, however, assessments and taxes for individual real estate parcels will depend on a sales study for the two years from October 1, 2014 through September 30, 2016. Properties that sold for prices higher than the assessor-assigned true value in a section of the city generally would drive up the assessed value of nearby properties. Properties selling at prices below the assigned value would push down the assessed value of neighboring properties.

City Manager Les Therrian said it’s a relief to know Mr. VanderVries’ work can be completed in just three to four months and won’t involve onsite reappraisal of all properties in the city.

“It’s still going to cost us some money, but this is a lot different than going through a complete reappraisal,” he said.

Mr. Therrian had said, last spring, that Ms. Deeren had completed the reappraisal work required by the Tax Commission, but just hadn’t been able to meet the commission’s 2016 year-end deadline. At the April 17 Tax Commission meeting, Ms. Deeren told the commission she had applied a state-issued multiplier “instead of making erroneous adjustments in assessments,” according to minutes of the meeting. She said she “indicated in the paper” the city would use a tentative multiplier of 1.067 and then “allowed property to take a rate-of-inflation increase where that was necessary,” the minutes record.

“I am here today to let the State Tax Commission know that all the records from the master appraisal have been completed, all properties within the City of St. Ignace have been inspected, and the records have been entered into the database,” she told the commission.

Mr. Therrian said Ms. Deeren, the city’s sole tax assessment employee, had been striving since she was hired in 2013 to transfer the city’s assessment data from paperwork to a staterequired computer software system that is used to store records electronically, as well as to update the assessment roll. Previous assessor Gene Elmer had maintained the data on paper, Mr. Therrian said.

To do that, Ms. Deeren split her work weeks between a Traverse City-area township and St. Ignace. She had left the city’s employ to accept the township assessor position in the Traverse City area in December 2016, but eventually resumed working also as St. Ignace’s assessor because the city couldn’t attract a suitable candidate to replace her, according to Mr. Therrian. He said the unfilled position during her absence was, at least in part, the reason St. Ignace was unable to complete the required residential reappraisal on time.

There are several possibilities for how the commission could proceed toward Ms. Deeren following an informal hearing, including no further action, according to its disciplinary rules.

St. Ignace’s assessment rolls have been under state scrutiny for more than a year. The Tax Commission took issue with its assessments based on a 2015 review called an Audit of Minimum Assessing Requirements (AMAR). The chief concern was that 1,239 of the city’s 1,530 residential parcels – 81% – were “on override,” Michigan Department of Treasury spokesman Ron Leix said last spring.

“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 state equalized value used in calculating a tax bill. (So, for example, a house with a true cash or market value of $100,000 would have a state equalized 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.

Based on its April 17 order, the Tax Commission first assigned Mecosta County Equalization Director Shila Kiander to conduct a review of the St. Ignace assessment roll and make a recommendation for corrective action. Her report, issued in late- May, included the finding that 1,089 of the city’s residential properties were under-assessed by more than one-half-million dollars for 2017.

She also found other deficiencies and recommended a complete reappraisal, including on-site inspections, of every property in the city. The commission then contracted with Mr. VanderVries, who said he was happy to discover such an extensive project won’t be necessary.

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 last April 17 to assume jurisdiction of the assessment roll for Allegan County’s Manlius Township, for instance, and returned to local control the assessment roll for another Upper Peninsula city, Menominee. In Menominee, a state contractor updated the 2015 and 2016 tax rolls.

Mr. VanderVries was the state contractor who corrected problems in Menominee’s tax rolls. Menominee City Manager Tony Graff told The St. Ignace News the process cost his city $25,000. 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.

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