Your property taxes and your home’s SEV
Sometime in the last week, you may have opened your mail to see a letter from the City assessor with new tax information inside about your 2008 property assessment. Each spring the City assessor sends out this information.
This year, most of us saw a different picture than we are used to seeing. In many cases, the assessed value of your house dropped, while the taxable value of your house increased.If you are like everyone else I know, you’ve found this very confusing. I’ll try my best to explain this.
Since 1995 (the Headlee Amendment, Proposal A, was passed in 1994) property tax increases have been limited to the rate of inflation or 5% per year, whichever was smaller. This held true even when property values increased significantly. This is a complex calculation that resulted from an interesting political agreement, which probably wouldn’t exist anywhere except Michigan. It also included changes in school taxes and an increase in the sales tax. This entire tax package was promoted by former governor Engler. Property taxes are calculated by multiplying the taxable value of your house by the millage rate.
The taxable value of your house is different from your houses’ assessed value. The assessed value represents 50% of the market value of a property. This is also called the State Equalized Value (SEV).The difference between these two numbers – the taxable value and the SEV – can be very small or significant, depending upon how long you have owned your home. If you owned your home before 1995, your taxable value has been going up more slowly than the SEV has increased. If you bought your home more recently, the two amounts will be closer together.
This year, the rate of inflation is 4.4%. That means that the property tax on your home can increase 4.4%. At the same time, property values have dropped.Because property values have dropped, it’s possible for your property to be worth less (this is the SEV amount) but your taxes to increase.
The following two examples are provided by the City to help clarify this confusing calculation. Both examples assume a 2008 market value of $300,000 and a 2009 market value of $275,000 with a 2009 CPI of 4.4 percent.
Example 1
2008 2009
Market Value = $300,000 Market Value = $275,000
Assessed Value = $150,000 Assessed Value = $137,500
Taxable Value = $98,000 Taxable Value = $102,312
Example 2
2008 2009
Market Value = $300,000 Market Value = $275,000
Assessed Value = $150,000 Assessed Value = $137,500
Taxable Value = $145,000 Taxable Value = $137,500
Examples Explained
In example 1, the market value decreased, but the taxable value increased by the CPI 4.4 percent because the taxable value is still less than the assessed value. In example 2, the market value decreased and the taxable value decreased as the taxable value cannot be higher than the assessed value. For property owners who have owned their property for a number of years, Proposal A created a smoothing effect on their property taxes. In years with rapidly increasing property values, property owners saw a limited increase in property taxes. As illustrated in Example 1, it also will mean small increases in property taxes in years where property values are stagnant or declining.
Appeals Process
Taxable value is simply a mathematical calculation and typically cannot be appealed. The assessed value is 50 percent of market value and can be appealed if it is believed to be too high. A reduction in a property’s assessed value will not reduce property taxes unless the reduced assessed value falls below the taxable value. For more information, contact the City of Ann Arbor assessor by going to www.a2gov.org, then under the services drop down menu click on property assessment data.

Meeting with the neighbors

On Thursday, February 26th, I came late to the meeting at Sweetwaters, with apologies. It's not always easy for me to get to a 6:00 pm meeting on time, but I try.
I was there to meet with some representatives of the North Central Neighborhood Association, to talk about the proposed Near North development proposed for North Main Street. This development is a partnership affordable housing project. Previously, I'd met with the developer and with Michael Appel, the head of Avalon Housing -- the partners proposing the development. I'd also talked with other neighbors of the proposed development, and with a few people who live in the Old Fourth Ward Historic District, and a representative of the Downtown Citizen Advisory Council (that person wore two hats).
Before we met, the Association representatives (I'm not playing coy, here, but I don't public other people's names without their permission first) had sent me their formal position statement with a cover letter. I knew the history of the development and where they stood.
I listened to them voice their concerns about the zoning in their neighborhood, and their perception that the Central Area Plan was being ignored and that there was some form of general encouragement to expand the downtown into the surrounding neighborhoods.
So we talked about this. The desire clearly exists to expand dense housing into R4C zoned neighborhoods -- the neighborhoods that are on the margins of so much of the downtown area. Right now, at least three (3) developments are planned: Near North on North Main Street, City Place on 5th Avenue between William and Hamilton, and The Moravian (formerly The Madison) on Madison between 4th and 5th avenues. All three developments are Planned Unit Developments (PUDs). At least, City Place was a PUD; it's currently being discussed with the neighborhood, and I don't know how it will be presented next.
Some members of Council have voiced the belief that, with PUDs being proposed for R4C zoned neighborhoods, it proves that R4C zoning is broken. The Council is going to consider whether R4C zoning should be re-evaluated by the Planning Department, and what its definition should be in the future.
We discussed the pressure in the Planning Department, on Planning Commission, and at Council for a dense downtown, and how and why that might spread to the nearby neighborhoods.
And then we discussed strategy.
Oddly enough, I'm not really taking sides, here. When I met with the developers, I also discussed strategy with them.I'll decide how this development looks, and whether it meets the PUD guidelines, after it's been through the Planning Department review, the Planning Commission, and I have all the paperwork in front of me at Council. I'll read the public hearing notes. I may attend the Planning Commission public hearing. I'll definitely attend the Council public hearing.
And in the meantime, I may meet with other people who want to talk about Near North. As the plan for this project becomes more developed, I'll see how it shapes up, who it affects, and how it looks.
Part of my time is spent learning and listening and making decisions about issues before Council.Part is spent advocating for neighborhoods.
Another part is looking at issues that impact the community that haven't yet come before Council.And then there are the opportunities to solve individual problems.
File this meeting under decisions before Council.