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Taxable Values, which directly relate to the kind of property you own, are literally only half of the equation used to compute your taxes. The other half involves the tax rate, or millage rate, that is levied by every unit of government and taxing authority within which your property is located. The annual report that organizes these rates and projects the tax dollars that they will generate is called the Apportionment Report. It is completed and must be approved by the County Board of Commissioners in October or November. Per PA 35 of 2001, the Equalization Director must file the report no later than December 1.
By way of example, if your property is within the Saline School District in Lodi Township, it will (along with every other property within this district) be subject to a millage rate of 0.9351 levied by Lodi Township, 26.8471 levied by Saline School District, 7.1532 levied by Washtenaw County, etc., for a total homestead millage rate of 32.8685. (The total millage rate applied to a property will depend upon whether the property has applied for and qualifies for the homestead, or Principle Residence Exemption (PRE), which exempts the 18.0000 school operating mills.) Since 1978, the Headlee Amendment has limited local governments’ ability to spend by reducing (or “rolling back”) millage rates proportionately to the growth in the total tax base. Each May, Equalization calculates these Millage Reduction (Rollback) Fractions for every taxing unit and authority, according to MCL 211.34d. Ultimately, the number of mills levied is left to the voters and determined by their willingness to approve new millages or renew existing ones.
Our example property in Lodi Township, if it has a Taxable Value of 200,000 and is subject to the homestead rate of 32.8685 mills, would pay a total annual tax bill of $6,573.70. The formula is as follows: (TV x Millage Rate) / 1,000.
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As part of our annual Equalization Studies, our appraisers visit a number of parcels throughout Washtenaw County. The appraiser will measure the exteriors of the structures on the property and inventory their quality and characteristics. This is done in order to estimate market value, also called True Cash Value (TCV). A short interview with the property owner is often helpful in valuing aspects of the property that cannot be directly observed. If the property owner is not home, the appraiser will leave his card for future contact.
No, Equalization is not the Assessor. The equalization process is part of the larger assessment process in the State of Michigan. A system of equalization is mandated by Article IX § 3 of the State Constitution of Michigan and is further elaborated in MCL 211.34. Its purpose is to guarantee uniformity and equity across classes of property in counties (County Equalization) and in the state as a whole (State Equalization).
The goal of Equalization’s appraisal or sales studies is not to modify individual properties’ assessments; rather, it is the function of the local Assessor to annually establish assessed and taxable values on an individual basis. The scale of Equalization is greater. Any potential impact of Equalization would affect an entire classification of property in a local unit (for example, all Commercial properties in Lodi Township, or all Residential properties in Webster Township). The value that is calculated for your property will be analyzed as part of an aggregate along with other properties.
An Equalization Study is designed to determine how closely assessed values within a classification are related to True Cash Value. It is a forward-looking comparison to the current year’s assessed value. In the State of Michigan, as mandated by the constitution, property is to be assessed at 50% of True Cash Value. The results of an Equalization Study may determine that, for example, Industrial property in Dexter City is being assessed at only 48.71% of True Cash Value going into the next assessment cycle. Whether the ratio falls above or below 50% will determine the direction in which assessments in that local classification need to move as compared to the local assessor’s independent analysis.
Appraisal studies are only conducted for property classifications in which there were an insufficient number of verified sales, and this scenario most usually applies when there are fewer parcels in any particular classification. Sample parcels within an appraisal study are chosen at random.
Any appraisers assigned to your property will always begin by knocking on your front door to introduce themselves and answer any questions related to their reason for being there. If the property owner does not wish to participate, the appraiser will leave. Please note that, in the event that no contact can be established with the homeowner after an attempt is made, the appraiser will place a contact card at the front door and then proceed with the appraisal. Unfortunately, due to the large number of parcels visited and the need to efficiently route our appraisers, we cannot make appointments in advance.
According to the State Tax Commission, “an assessor needs to canvass property in order to discover the characteristics associated with land and buildings to value real estate and to identify never reported personal property such as machinery and equipment.” Assessing officers, when engaged in their governmental function as described in MCL 691.1407, “may survey, examine, or review property at any time before or after the tax day,” per MCL 211.2. However, an assessor will never attempt to look into the windows or enter a house without first obtaining the owner’s permission.
For situations in which the property owner does not wish to participate in the study, Equalization may estimate the True Cash Value using other resources. More likely, Equalization may select an alternative property for its study sample within that classification.
Please keep in mind that participation is essential to the overall assessment process, and that your property, if chosen for the study, will be used as a benchmark in guaranteeing that everyone is assessed uniformly and equitably.
Although the local Assessor must assess each parcel in a local unit annually, Equalization is concerned with a smaller subset of properties within each classification, called a sample. Sample parcels are chosen to be representative of properties within that classification. Samples may constitute one of two types of studies: 1) sales studies, for those classifications in which a sufficient number of properties have sold to enable a market-based analysis without an appraisal, or 2) appraisal studies, for those classifications lacking a sufficient number of sales. Equalization performs over 500 such studies yearly.
For each classification, the local Assessor’s assessed values are listed alongside Equalization’s True Cash Values, whether they be sales prices or appraised values. Both columns are totaled, and the total assessed values are divided by the total sales price/appraised value. (For a sales study, further adjustments are made to account for different time periods.) The aggregate ratio that results from this division is sent to the local Assessor by December 1 for review, and the completed studies, used to project the True Cash Value for the starting bases of the next cycle, are submitted to the state by January 2. A list of the assessed-to-market ratios (called Tentative Ratios) is published in February for each local unit, by class.
Note: Sales used in a sales study must first be verified to ensure that they are arms-length transactions that would accurately reflect the market.
From December through March, the local Assessors will have revisited their levels of assessment while comparing their own studies with the Equalization studies, and they will have finalized their assessment rolls for each individual parcel following the appeals heard by the March Boards of Review. In April of each year, Michigan counties must equalize. By law, the County Board of Commissioners must add to or subtract from the totals of any classification of property that does not reflect 50% of True Cash Value. Although rare, if a classification requires a change, the county will apply a factor to raise or reduce every property’s assessment in order to reach 50%; otherwise each classification will receive a factor of 1.0000. The revised assessments that result from this process are called County Equalized Values (CEV), and they are reflected in the Equalization Report. Once the state performs a similar process of equalization in May, the final result is the State Equalized Value (SEV).
Property Transfer Affidavits (Form 2766), Affidavits Attesting Qualified Agricultural Property Shall Remain Qualified Agricultural Property (Form 3676), and Principal Residence Exemption Affidavits (Form 2368) must be submitted to your local Assessor. Only those forms for property located in Freedom or Saline Townships may be submitted to the Equalization Department, which acts as Assessor for those two units.
This is a loaded question, and volumes can be written detailing the subject. In brief, assessing is a system of checks and balances involving the local unit Assessor and Board of Review, County Equalization and the Board of Commissioners, and State Equalization and the State Tax Commission. Beginning at the local level, the Assessor must assess property at 50% of True Cash Value. In order to first estimate value, Assessors have several approaches at their disposal, including the Sales Comparison, Income, and Cost Approach. Underlying each approach is the principle of substitution, which states that a property’s value is related to the cost it would require to obtain a substitute property with equal desirability. The Cost Approach, which involves mass appraisal, is most widely used, but all three should be applied, with consideration to property type. Real property—that is, property that includes the land along with improvements, and which is not personal property—is appraised using the state’s approved Assessor’s Manual. The manual contains costs and rates that are tied to area and building quality (Class). An appraiser inventories a property’s improvements, totals their value, and then applies a series of adjustments to the manual costs. These include: 1) a local county multiplier, provided by the state and aimed to adjust costs to the current local market, 2) an Economic Condition Factor (ECF), which the assessing officer calculates and derives based on sales of similar properties and which aims to adjust for the local market, and 3) depreciation, which takes into account the decrease in value of an improvement for any reason. To reach True Cash Value, the appraiser adds this adjusted total to the total attributable to the land and its improvements. (Land rates are established locally through a process of vacant land sales studies, which take into account land use using appropriate units of comparison.) To attain the Assessed Value (AV), the appraiser takes 50% of the True Cash Value.
Note: Equalization will also perform parallel vacant land sales studies and ECF studies, on a countywide scale, in order to independently value its sample parcels for the Equalization Studies.
Since the passage of Proposal A in 1994, Assessed Value is no longer used in computing taxes; instead, Taxable Value (TV) is now used. While Assessed Value is directly related to the local market, and could theoretically skyrocket by double digits year by year, Taxable Value is tied to and limited by the national rate of inflation, as reflected in the Consumer Price Index (CPI). Furthermore, Proposal A has limited the annual increase in Taxable Value to no more than 5%, with certain qualifications. The accurate determination of Assessed Value remains essential: In the first year following a property transfer in which there is a change in ownership resulting in a change in beneficial use, the property will “uncap” and its Taxable Value will reset to the generally higher State Equalized (Assessed) Value for that year only. Each June, Equalization reports the county’s total taxable value of all property to the state, according to MCL 211.27d.
Historically, owing to its specialized drafting staff and resources, Washtenaw County Equalization had functioned to produce and maintain tax maps for local unit Assessing Offices. In 1983, Equalization centrally coordinated an effort to map every property in the county, based on deeded legal descriptions. For those jurisdictions that may not have had the resources to maintain tax maps at the local level and which opted for county assistance, Equalization assumed responsibility for upkeep of this map. Today at Equalization, mapping is maintained electronically using geographic information systems (GIS) software, specifically ESRI ArcMap. The scope of the county’s mapping capabilities has widened to include the needs of other departments, but Property Description’s parcel and cadastral maintenance remains a critical—and, one might argue, the single most important—component of the map’s framework. Per MCL 211.10e, maintenance of the tax map remains a function specifically assigned to assessing officials. MapWashtenaw, the interactive property line map, is available online for free to the public, and paper maps can still be produced in-office for a fee. Note that this linework is only approximate and is not intended to supersede a survey.
The Land Division Act, Act 288 of 1967, spells out the requirements for dividing land, both platted and unplatted, in the State of Michigan. It was last amended in 1997 in order to improve the system for the orderly division of land, thus renaming it from the former “Plat Act” to the “Land Division Act”. Any proposed division must meet the requirements of the Act, and it may also be subject to additional local restrictions. For this reason, all applications to divide land must be submitted to the local township or city for approval. Once approved, Property Description will generate a new tax description (an abbreviated form of a legal description for purposes of assessment and taxation) and depict the child parcels on the map. This is the process only for those townships and cities that use Washtenaw’s parcel mapping services; this omits Scio Township, Ypsilanti Township, and the City of Ann Arbor, which perform these functions internally. As a result of its involvement in the land division process, Property Description has accumulated a limited archive of historical surveys, copies of which the public may obtain for a fee.