Allegan County Equalization Department 2011 Department Report Equalization Report Recap 2010 2011 projects January 1- December 31, 2010 Blaine R. McLeod Director of Equalization 1
Message from the Director The year 2010 proved to be challenging measuring a successive year of decline in property values. In doing so the State Tax Commission again instructed all equalization directors and assessors to utilize a single year sales study for the residential class. Exceptions to use the customary two sales studies could be requested with appropriate documentation. By using a single year sales study the impact of a declining market affects the assessments sooner. The equalization department was able to adhere to the criteria for all townships and cities in the county. The problem created from this market is a reduced number of sold properties needed to produce a valuation model. I am hopeful that the sales volume will pick up in the later part of 2011. Sincerely Blaine R. McLeod, MMAO 4 Director of Equalization 2
Allegan County... 1 Equalization Department... 1 2011 Department Report... 1 January 1- December 31, 2010... 1 Message from the Director... 2 Sincerely... 2 Organizational Chart... 4 Equalization Staff... 4 Core Services... 5 Department Mandate:... 6 Non-Mandated Services... 7 Equalization Report... 9 How we get there... 9 Reports To Get There... 10 Additional Annual Reports... 11 Apportionment Report... 11 Taxable Value Report... 12 Summary of the 2010 Equalization Studies for the 2011 Equalization Report.... 14 Current Projects... 14 3
Organizational Chart Administrator Equalization Director Deputy Equalization Director Property Appraisers (2) Equalization Techicians (1 Records Clerk (1) Equalization Staff Blaine R. McLeod, Director MMAO (4) Joel Hoevenaar, Deputy Director/Appraiser MCAO Property Appraisals & Audits Christina Torres-Oviedo, Property Appraiser MCAE Vacant, Property Appraiser MCAO Property Descriptions & Sales Analysis Joshua D. Simmons, Chief Equalization Technician Vacant, Chief Equalization Technician Customer Service and Record Processing Karen Brinks, Records Clerk 4
Core Services Below is the list of core services the department performs annually. The following report will address these services first by differentiating between mandated and non-mandated. A summary of the results of the mandated core service will conclude the report. Equalization Studies Study Results Reports Equalization by BOC L- 4024 Headlee MRF Calculation L-4028 Taxable Value Report L- 4046 Apportionment Report L- 4402 Appraisal of property Compilations of study results to local units BOC State Tax Commission. Final reporting of local unit audited MBOR Assessed value Assembles all data to compute Millage reduction Fraction for each taxing Authority Assemble and report to State Tax Commission Allegan County s Total Taxable value & PRE\NON-PRE. Assemble, Review, and prepare annual apportionment report to BOC for adoption and submission to the State Tax Commission. 5
Department Mandate: STATE CONSTITUTION (EXCERPT) CONSTITUTION OF MICHIGAN OF 1963 Article IX FINANCE AND TAXATION 3 Property taxation; uniformity; assessments; limitations; classes; approval of legislature. Sec. 3 The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law except for taxes levied for school operating purposes. The legislature shall provide for the determination of true cash value of such property; the proportion of true cash value at which such property shall be uniformly assessed, which shall not, after January 1, 1966, exceed 50 percent; and for a system of equalization of assessments. For taxes levied in 1995 and each year thereafter, the legislature shall provide that the taxable value of each parcel of property adjusted for additions and losses, shall not increase each year by more than the increase in the immediately preceding year in the general price level, as defined in section 33 of this article, or 5 percent, whichever is less until ownership of the parcel of property is transferred. When ownership of the parcel of property is transferred as defined by law, the parcel shall be assessed at the applicable proportion of current true cash value. The legislature may provide for alternative means of taxation of designated real and tangible personal property in lieu of general ad valorem taxation. Every tax other than the general ad valorem property tax shall be uniform upon the class or classes on which it operates. A law that increases the statutory limits in effect as of February 1, 1994 on the maximum amount of ad valorem property taxes that may be levied for school district operating purposes requires the approval of 3/4 of the members elected to and serving in the Senate and in the House of Representatives Michigan Compiled Law 211.34 (1) states in part. The county board of commissioners in each county shall meet in April each year to determine county equalized values which equalization shall be completed and submitted along with the tabular statement required by section 5 of Act No. 44 of the Public Acts of 1911, being section 209.5 of the Michigan Compiled Laws, to the state tax commission before the first Monday in May. 6
Michigan Compiled Law 211.34 (3) states: The county board of commissioners of a county shall establish and maintain a department to survey assessments and assist the board of commissioners in the matter of equalization of assessments, and may employ in that department technical and clerical personnel which in its judgment are considered necessary. The personnel of the department shall be under the direct supervision and control of a director of the tax or equalization department who may designate an employee of the department as his or deputy. The director of the county tax or equalization department shall be appointed by the county board of commissioners. The county board of commissioners, through the department, may furnish assistance to local assessing officers in the performance of duties imposed upon those officers by this act, including the development and maintenance of accurate property descriptions, the discovery, listing, and valuation of properties for tax purposes, and the development and use of uniform valuation standards and techniques for the assessment of property. The Equalization Department s function is to measure the level of assessment in each of the 7 property classifications in each of the 24 townships, and 9 cities to determine if the average level of assessment in each class of property is at the constitutionally required level of 50 percent. This is accomplished through the annual sales and appraisal study process. Non-Mandated Services Parcel Map Base Layer Outside Services Mapping maintenance service contracts Contract service to local units. i.e. assessment notice Personal property statements 7
Mapping Michigan Compiled Law also allows the Equalization Department to act in an advisory capacity to the local units and provide them with assessment related services including, production of assessment rolls, assessment change notices and personal property notices. By Resolution of the County Board of Commissioner s the department provides mapping services utilizing the Allegan County Land Information Services mapping software. The Equalization Departments Equalization Technician performs the mapping and sales qualification process. This technician reads, analyzes and data enters all 33 units land transfer documents and creates and assigns new parcels numbers to all splits and combinations. When complete this information is sent to the local governmental unit. The department lost one of its two Equalization Technicians December 31, 2010 for budgetary reasons. As a result the repositioning of parcels is done as time becomes available. The department also provides and performs a number of other services to the townships and cities. Service Statistics % change 1. Mapping services 598 splits/combinations +3.1% 2. Tax Maps 9027 +4.9% 3. Map Maintenance (repositioning, etc) 15 hours per week (-100) Other Services 2010 4. Pre Audit of Assessment Roll 11units ( -7 units) 5. Assessment rolls 14 units + 5 units 6. Assessment rolls for county use 33 (-33) 7. Valuation Change Notices (11 units) 22067 + 6.8% 8. Personal Property Statements (13 units) 1197 + 64% 8
Equalization Report How we get there 1. Recorded real estate documents are reviewed and qualified as arms length or not. 2. Documents are mapped and data entered. 3. Sales are sorted by property class. All Agricultural, Commercial, Industrial, Developmental and Residential sales of 10 plus acres are distributed to the appraisers for review and verification. 4. Sample selection for appraisal studies created. 5. Field inspections and interviews begin. 6. Sales analysis and appraisals are completed and reporting begins. Number of Sales in Residential sales studies Number of Residential Arms Length Sales Year 2008 2009 % change 2010 % change Number 1958 791-59.60% 1045 +32% *Time frame 2 yrs 1 yr 1 yr * The time frame used can be 1 year or 2years determined by market trend. If there is a declining market a single year time frame is used. Beginning in 2009 a single year time frame was ordered to be used by the State Tax Commission and continued to use in 2010 for residential property giving immediate weight to the declining market. The number of appraisals and sales inspections budgeted for 2010 was estimated to remain near 1,314 including sales. The actual number of study parcels for 2010 including sales was 1,265 or 95.59% of the estimate. The difference in estimated and actual is due to the inability to contact some property owners. The schedule for completion of this work is October 1 st for all appraisals and November 1 st for sales verification. 9
Projected number of Appraisals and Sales Inspections 2011 Property Class No. Appraisals No. Sales Total No. of studies Agricultural 480 26 506 27 Commercial 392 44 436 32 Industrial 272 5 277 31 Developmental 37 0 37 8 ECF study parcels 6 6 Building sites 42 42 Total 1181 123 1304 98 Reports Produced To Get There The equalization studies are summarized on the below required reports and supplied to the appropriate local unit of government for their review and comments. After the local units review and accept the reports they are communicated to the State Tax Commission with additional recap sheets of the entire county. Interim Status Report- report of current study year activity L-4015 - Sales Study L-4015a - Appraisal Study Listing L-2793 - Sales Ratio analysis single year and two year (rev. 2010) L-4018- Analysis for Equalized Valuation L -4023 - Analysis for Equalized Valuations L- 3127 - Certification Recommended County Equalization Valuation by Equalization Director L-4023 Analysis for Equalized Valuation L-4024 - Real and Personal Property Totals February Publication of Tentative Ratios and Factors 10
Additional Annual Reports Millage Reduction Fraction Calculations, MCL 211.34d Millage reduction fractions are calculated by the Director of Equalization and communicated with all tax jurisdictions and the appropriate neighboring counties that may share a taxing jurisdiction i.e. School Districts, Libraries and Community Colleges etc. in late May for intra-county and inter-county by the first week of June. The Allegan County Equalization Director is responsible for calculating roll back fractions for 52 taxing jurisdictions. 24 Townships 7 Cities 2 Villages 11 School Districts 8 Authorities 18 Other governmental units that cross county lines are calculated by the neighboring counties. The summary reports of the millage roll back fractions are: L-4028 - Millage Reduction Fraction Calculation L-4028 IC - Complete Millage Reduction Fraction Calculation Apportionment Report In October the Apportionment Report is prepared for and presented to the Board of Commissioners detailing the millage rates being requested by all taxing jurisdictions for approval. The Millage Request Report, L-4029 is to be delivered by the local clerks to the Allegan County Clerk on or before September 30th. This information is compiled by the equalization department, reviewed for compliance and proper application of the millage reduction fraction and reported to the County Board of Commission on the L-4402 Apportionment Report at the October apportionment meeting. From this information the Certification From The County As To Tax Rate That Must Be Levied For The Current Year is produced for each of the 33 units of government listing the applicable millages rates of each taxing jurisdiction in that Township or City. This certificate also lists the special assessments and drain amounts to be levied. 11
Taxable Value Report In June the taxable value report L-4046, is compiled by the Equalization Director and sent to the State Tax Commission. It is a summary of each local unit s taxable value as approved by their board of review and reported to the Equalization Department after the May 1 st principle residence exempt deadline. This information is shown below as of April 7th and will change only in the distribution of value between Principle and Non Principle exemptions in the June 2011 report. The total taxable will remain unchanged. TAXABLE VALUE CHANGES AND PROJECTIONS Actual % Property Class 2009 TV 2010 TV Change 09/10 2011 Taxable Value Actual % Change 10/11 Agricultural $304,252,239 301,422,639-9.91 $306,449,321 1.67 Commercial $391,820,172 395,276,103 0.88 $378,618,709-4.21 Industrial $205,706,201 182,256,868-11.40 $175,101,005-3.93 Residential $3,115,863,180 2,957,266,295-5.09 $2,915,748,577-1.40 Timber- Cutover N/A N/A N/A N/A N/A Developmental $7,551,994 6,379,689-15.52 $6,737,910 5.62 Personal Property $349,587,439 355,380,034 1.66 $363,842,707 2.38 Total $4,374,781,225 4,197,981,628-4.041 $4,146,498,229-1.22 As demonstrated in the chart above the taxable value decreased as the result of declining property values even though inflation rate multiplier used in the capped value formula was 1.7%. This rate is determined by the State of Michigan annually, and is calculated beginning Oct. 1 2009 thru Sept. 30, 2010 using the Federal Consumer Price Index. Although assessed values continued to fall creating the possibility of reducing taxable value, some taxable values will increase after application of the 1.7% inflation rate multiplier due to the gap that exists between state equalized value and taxable value. 12
The 2011 equalized value of the county decreased by 3.71%... The taxable decreased by 1.22%. This reduced the gap between assessed value and taxable value by 3.3% from 2010 to 2011. (See graph below) ALLEGAN COUNTY-WIDE 2001 TO 2011 CHANGE IN GAP BETWEEN EQUALIZED AND TAXABLE VALUE 7000000000 4885259382 5885644744 6000000000 5245793934 5636526971 5859138283 5454071889 5251939260 5000000000 3969264804 4275885016 4591867887 4000000000 3680672006 3869212894 4123003041 4244166515 4374781225 4197981628 4146498229 3000000000 3019164275 3183712735 3407613586 3613773880 2822279671 CEV 2000000000 TAXABLE 1000000000 Percent Change 0 0.304 0.315 0.343 0.348 0.352 0.356 0.367 0.387 0.339 0.299 0.2666 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 13
Summary of the 2010 Equalization Studies for the 2011 Equalization Report The table below is a summary of state equalized values of previous years and the county equalized values for the current year. The table makes a comparison between years and lists the percent of change between each. As shown in the % change column the current year s values have been significantly reduced. The 2011 value change of the county declined by 3.71% Assessed and True Cash Value per Study ASSESSED VALUE CHANGES AND PROJECTIONS Property Class 2009 SEV 2010 SEV % Change 09/10 2011 Recommend CEV % Change 10/11 Agricultural $636,937,874 $626,420,960-1.65 $607,360,947-3.04 Commercial $495,006,249 $490,782,144-0.853 $439,862,863-10.37 Industrial $232,601,424 $206,786,887-11.10 $193,296,862-6.52 Residential $4,123,432,930 $3,758,205,385-8.86 #3,627,380,811-3.48 Timber- Cutover N/A N/A 0.00% N/A Developmental $21,421,760 $16,307,000-23.88 $20,030,300 22.83 Personal Property $349,738,046 $355,569,513 1.67 $364,007,478 9.24 Total $5,589,138,283 $5,454,071,889-6.91 $5,251,939,261-3.71 Current Projects The department s property appraisers have selected the parcels to be included in the 2011 appraisal study and are currently preparing them for field inspection. The projected study count is 1,181 appraisals and 123 sales for a total of 1,304. It is not known at this time if the appraisal staff will need to perform appraisal studies in the residential class. This will be decision will be made later in the year based on the sales volume. 14