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St. Clair Shores
City Assessor:
Scott T. Vandemergel, CMAE IV
Overview and Department Function
The Assessing Department consists of the City Assessor and a staff
of three full-time employees, all of whom are certified from the State Assessors
Board. The Assessing Department is the first link in the property
tax revenue chain. The Assessor's responsibility is the discovery,
listing, and valuation of all properties within the assessing jurisdiction.
The primary purpose of the Assessing Department is to estimate the fair
market value, or "true cash value," of all real and personal property
located within the City of St. Clair Shores. The department studies the
sales market and collects information about properties in order to estimate
current market value.
The Assessing Department does not create value. Rather, value
is created by economic forces in the market of buyers and sellers.
The Assessor has the responsibility to study the transactions of the market
and to appraise all property in accordance with market trends. The
Assessing Department also keeps track of ownership changes, maintains maps
of parcel boundaries, maintains legal descriptions for all land, and prepares
sketches of all buildings and summarizes their characteristics. The
office also tracks individuals and organizations eligible for exemptions
and other forms of property tax relief.
General Definitions of Assessing Terminology
Within the context of the Assessing Department and its related
activities,
it is helpful to have a familiarity of major terms and concepts relevant
to the property tax administration.
Property Types
The assessment roll consists of property located throughout the taxing jurisdiction.
There are two main categories - real property and personal property. Real property consists of permanent physical structures and the land on which they stand.
Personal property consists of business assets used in connection with commercial enterprise.
Property Classes
The two types of property - real and personal - are further subdivided into
several property classes. A few examples of each are given for reference.
- Real property in St. Clair Shores includes:
- Residential (houses, vacant lots, duplexes, condominiums)
- Commercial (office buildings, restaurants, apartment buildings,
retail stores)
- Industrial (manufacturing facilities, engineering facilities)
- Exempt (churches, government buildings, schools)
- Personal property in St. Clair Shores includes:
- Commercial (copy machines, restaurant ovens, cash registers)
- Industrial (stamping machines, grinding machines)
- Utility (electric poles and lines, gas mains, cable wires)
Proposal A
Proposal A was a dramatic ballot initiative passed by the voters of
the state of Michigan on March 15, 1994. Prior to the application
of Proposal A, for the first time in the assessment year of 1994, the method
of calculating a property tax levy was to multiply the state equalized
value by the authorized millage rate. Proposal A significantly
changed the administration process for assessments while preserving the
traditional method of calculating assessed values. In contrast to
prior practice, tax billings are now computed by means of multiplying the
taxable value by the authorized millage rate. In addition,
Proposal A changed the school funding process, which is now funded by the
State, primarily from an increase in the general sales tax from 4% to 6%.
The result of Proposal A was a typical reduction in overall property taxes
paid, but with the concession of a 50% increase in sales tax paid on consumer
goods.
State Equalized Value or Assessed Value
The State Equalized Value or Assessed Value for a property represents
50% of its estimated fair market value. The Assessed Value is computed
in the same manner as was the case prior to Proposal A. Twenty-four
month sales studies are performed by the county equalization department
to determine the total assessment increase by class (residential, commercial,
industrial, personal). Upon completion of county equalization, the
Michigan State Tax Commission uses the same procedures to equalize each
class of property in each of the 83 counties in the state. The local
assessor's responsibility is to spread appropriately the class increase
among all the various areas of the city, as determined by analysis of sales
within each area. In St. Clair Shores, for instance, there are over twenty
distinct residential areas. Each of these areas is separately analyzed and
receives a different assessment increase or decrease. The Assessed
Value for a given property may increase or decrease to any amount that sales analysis
indictates. Subsequent to the processes of county and state equalization,
the Assessed Value becomes the State EquaIized Value. In most contexts,
Assessed Value and State Equalized Value are used in an interchangeable
sense. The State Equalized Value does not become particularly relevant
to most property owners until a property sells.
Capped Value
Capped Value is a new term that was introduced with the inception of
Proposal A. Capped Value is computed as: (the prior year's Taxable Value - losses)
x (the lower of 1.05 or the Consumer Price Index factor) + additions.
The CPI factor is synonymous with the rate of inflation and is determined
by the Michigan State Tax Commission for use by all assessing departments
in the state. The result of the formula is that Proposal A limits
the capped value from increasing by more than the lesser of 5% or the rate
of inflation, unless an addition to value has been added or there has been
a transfer of ownership in the preceding calendar year. For the year 2006, the rate of inflation factor
is
1.033.
Taxable Value
Taxable Value is also a new term that was introduced with the inception
of Proposal A. Taxable value, for a given year, is the lower of that
year's State Equalized Value or that year's capped value (see above).
The essential significance of this is that a Taxable Value generally may
not increase by more than 5% in a given year. Of the three valuation
numbers listed in this section, the Taxable Value is the number which is
of key interest to residents and property owners.
A good rule of thumb
is that for every $1,000 in taxable value change there is about $40 increase in annual property taxes for a homestead property, depending
on the school district to which it pays taxes.
Example Illustrating Typical Value Changes:
The following example would be typical for St. Clair Shores this year:
Given:
Assume 3.1% assessment increase for 2006;
3.3% inflation factor; $150,000 market value for 2005
2005 SEV: $75,000
2005 Taxable Value: $65,000
2005 Capped Value: $65,000
2006 Assessed Value: $77,325 ($75,000 x 1.031)
2006 Capped Value: $67,145 ($65,000 x 1.033)
2006 Taxable Value: $67,145 (lesser of AV/CV)
Assessed Value Change: $2,325 ($77,325 - $75,000)
Taxable Value Change: $2,145 ($67,145 - $65,000)
Additional Taxes: $85.80 ($2,145 X .040)
"Uncapping the Taxable Value"
Another important provision of Proposal A is the concept of "uncapping
the taxable value." The spread between the Assessed Value and Taxable
Value may increase substantially over time, particularly with economic
conditions of low inflation and strong real estate sales. In the
case of a property that has sold, in the assessment year following the
transfer of ownership, the Taxable Value and the Assessed Value are set
to the same number. It is entirely possible for a situation to
exist where identical houses on the same street may have dramatically different
tax bills, resulting from one house having been recently sold and one which
has not been recently sold. The impact of this provision increases
over time.
Assessment Appeal Process
Proposal A has not changed the right of taxpayers to appeal their assessments.
The first level of appeal is direct contact with the assessor. Many
"appeals" are simply misunderstandings or misinterpretations of facts which
can be resolved effectively in the office. The next level of appeal
is to the Board of Review. The board of review is comprised of three members,
all of whom are St. Clair
Shores residents. The board members are typically professionals familiar
with real estate valuations, such as agents, brokers, or appraisers.
Dates, times, and locations for meetings are printed on the annual change of assessment
notice. Applicants appearing before the Board of Review are advised
to bring information that helps to substantiate claims of over-assessment,
such as photographs, appraisals, and listings of comparable sales.
Meetings are informal and are usually held in the City Council Chambers
at City Hall. The Board begins meetings on the Tuesday following
the first Monday of March of every year. Notification of the Board's
decision is provided by mail no later than the first Monday in June.
The next level of appeal must be made by June 30 to the Michigan Tax Tribunal (MTT).
The MTT is a quasi-judicial body that provides a structured, semi-formal
court setting in front of a hearing referee. In rare instances, appeals
may proceed to the Michigan Court of Appeals and Michigan Supreme Court.
2006 Assessment Roll Preparation
The equalization ratios for the 2006 assessment roll as determined by the Macomb County Equalization Department, are
as follows:
| Property Class
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Ratio
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% Increase Required to Equalize
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| Residential
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48.51
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3.1%
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| Commercial
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48.05
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4.1%
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| Industrial
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49.63
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0.7%
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Consumer Price Index (CPI) for taxable value increases:
3.3%
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