Tax trappings

Disagreements over industrial and commercial property tax assessment s can cost municipalities a fistful of cash — and some local leaders say it’s gotten out of hand.
Marie Havenga
Dec 18, 2013

Spring Lake Township Board members recently discussed how firmly they want to defend their tax assessment values, noting that a trip to the Michigan Tax Tribunal in Lansing can cost more than $10,000 in appraisal, legal and administration fees.

Grand Haven City Manager Pat McGinnis said the city is facing the same difficulties. Since 2007, they've seen 68 tax disputes reach the state Tax Tribunal, with a high of 18 in 2010 and a low of five this year.

McGinnis said some out-of-state tax consulting companies are preying on local businesses, offering to cut their taxes for a slice of the savings.

“These are predatory practices at the expense of all of our taxpayers,” McGinnis said.

Typically, the tax consulting company will suggest a property value that is a fraction of what the city feels it's worth, according to McGinnis. Because the numbers are so far apart, instead of being settled at the local level by the Board of Review, the case goes to the state Tax Tribunal.

“They know at that point it gets costly for us,” said McGinnis of the $185-per-hour attorney fees. “We’re looking at being into it for thousands (of dollars) to defend a legitimate value.”

McGinnis noted that the long-term effect of such practices could be devastating to municipalities.

“If everyone did it, it would gut our system,” he said. “The business may pay less in taxes, but the overall effect will be having to raise the taxes on everyone else to put that cop ... or snowplow on the street.”

McGinnis said it can be a difficult balancing act knowing how far to fight. Sometimes the fight can cost more than the tax dollars a victory would bring.

Entities such as the local library, county and public schools receive the bulk of collected taxes, yet the municipalities pay the cost of fighting disputed assessments.

McGinnis said Grand Haven “rigorously defends” its tax values, but sometimes it’s not worth it.

“We suck it up and give up money to avoid the fight,” he said. “We’ve got to make these values stick.”

McGinnis suggested a change that could help alleviate the problem of out-of-town companies from filing property assessment disputes on behalf of local businesses — requiring personal appearances. Currently, it is not necessary to appear in person to file a dispute. The property tax appeal consultant can submit documents to the assessor and Board of Review by mail.

If the case isn’t resolved at the local level — which McGinnis says likely will not happen because of the huge difference in value perception — it goes to Lansing, where the money meter really starts ticking.

Not every local government is putting up a fight. Grand Haven Township Manager Bill Cargo said he considers property tax disputes part of a government’s job, noting that the 1 percent administrative fee added to tax bills helps defray costs.

“We have a couple of different (disputes) every year,” he said. “I don’t have any complaints against the process.”

To read more of this story, see today’s print or e-edition of the Grand Haven Tribune.

Comments

christopher

Cargo is right on this one. The process is not flawed on its own. Remember the costs involving a dispute is NOT one-sided. The business also has costs involved. If the municipalities are paying $185 an hour for attorney fees, maybe it is time for the municipalities to negotiate a better deal with their attorney instead of belly aching about citizens who are simply exercising their right of appeal.

MYOB

Careful Municipalities on your complaining about this issue. There are still plenty of homeowners paying taxes on assessed values 20% to 30% higher then what their house is worth. Fortunately for you they are unaware or don't have the means to dispute their assessed value.

MYOB

These properties are only worth what someone is willing to pay, not what the "city feels its worth". Or, needs them to be worth to support payroll.

Say no to new taxes

I 've got news for Pat Mcginnis, if those assessments were set at realistic rates to begin with, you wouldn't have an increasing amount of appeals. The ONLY way a business pays less in tax is if Lansing agrees the assessment was to high. MYOB is right, quit setting them to increase you're operating revenue, while hoping no one appeals the increase in valuation.

bigdeal

I don't read where there is an increasing amount of appeals anywhere in this story. "a high of 18 in 2010, to a low of 5 this year." is a decrease.
It is everyone's right to dispute an assessment they feel is too high. Go on Zillow.com and see what homes sell for around you, similar to yours. This is the true valuation- what someone will pay. Several years ago I disputed my assessment due to the dropping value of homes and the glut of homes on the market at severely reduced prices. My dispute was granted, and my taxes reduced. Don't be afraid to dispute your tax bill. it is your right.
As for Mcginnis' threat of higher taxes or less cops or plows...
1. Less cops is always better
2. City plows don't work weekends anyway.
My suggestion would be to get rid of excess at the city hall. Remove the assistant city manager and give all their work to Mcg to combine both jobs. It is all the rage in business circles right now. That would free up a ton of money for snow plows, eh?

LessThanAmused

Bingo!

I'll be down to city hall soon to contest my tax bill. The city says my house is currently worth $126,000, which is down from the amount they said it was worth 5 years ago, but I just spent my own money a couple months ago to hire an appraiser to come and give my place the once over and he came back with a number about 40,000 less than the city's number.

I think the more realistic number is somewhere in between those two numbers, but I'm going to be taking the appraiser's 17 page report with the glossy photos and circles and arrows on the back of each page (Arlo Guthrie, Alices' restaurant) down to City Hall to the folks who come up with those goofy numbers and see if I can help them get their feet back on the ground.

I'd also suggest getting rid of the assistant positions if cash is tight. Administration for the city is just as top heavy as it is in the school system. Those that do the least, take the most.

And really how is the city and how it operates any different than the way we have to run our households? If economic times are hard we have to cinch up the ole belt and spread what we have around a little thinner to cover as much as possible, the city needs to operate in the same fashion and I'd much rather see a snowplow occasionally then another assistant who stuggles to fill up a day with viable work.

bigdeal

ha! Going to push their numbers to 6 this year? lol. Better look up one of those out of state blood suckers to help you out with that. Maybe Mr McGinnis has a list of them for you.

newspaperlawyer

People do you really get the services that you pay for now. Many years ago the city of Grand Haven plowed neighborhood streets when needed. Now on the weekend they only plow the emergency route streets.... and the downtown area does not need plowing now with the heating system. All I see is lots of money and time being spent along the beachfront pushing sand and snow. I really don't today we get the service which we had in pass. NO leaf or trash pickup, Yes we have public safety.. but we had 5 fireman in the station taking care of city instead on relying on mutual aid from other departments and milking those communities for the extra help or sending the public safety officers out into the twp and leaving the city vacant of police protection and the front line fire truck out of the area. Its time to cut some costs to the tax payers. A start would be contracting police services with the county sheriff. I believe we already pay for police services with county tax dollars.

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