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Understanding the Effects of Proposal A
Click link below to download the complete pdf flyer addressing 2009 assessments and Proposal A Understanding the Effects of Proposal A in A Declining Real Estate Market

PDF flyer - Understanding The Effects of Proposal A  

To read the text of the flyer without downloading please scroll down this page.
 
 
DepartmentsTownship Assessor   
 
Assessor

New Assessor

Sorry for any inconvenience, but there may be delays in processing any assessing related materials as the Township works to change to a new Assessor.

Please leave a message at the extension #4 or the email below
someone will get back to you as soon as possible.

Our New Assessor, Contact Info: 

Assessor-Bob Brazeau

Telephone- 734.848.5915    ext 4

Email- Assessing@erietownship.com

The Assessor is in the office on Thursdays
(excluding holidays)

 
Public Notice Minimize

From the Assessing Department

The State Tax Commission adopted the following guideline regarding annual inspection of property within a local unit:  Local units are encouraged to annually inspect a minimum of 20% of the parcels in each property class each year.

In order to maintain accurate assessing records, Erie Township will be conducting 20% field inspections per year in order to comply with the State Tax Commission guidelines. 

During the field inspections, the Assessing Department staff will check the accuracy of township records regarding land, all buildings and update photos.  We will not come inside your home but may ask property owners to verbally verify that the data we have on record is correct.  If no one is home, we will conduct our outside inspection and leave a card requesting verification of the interior information for property owners to update and return to the Assessing Department.  Assessing Department vehicles are properly marked with Erie Township identification and we also carry proper photo identification.  Please be advised that because of weather, time constraints, or other circumstances, we will not take appointments. 

If you have any questions you can contact the Assessing Department on Thursdays.


 
Understanding the Effects of Proposal A in a Declining Real Estate Market

Proposal A

On March 15, 1994, Michigan voters approved the constitutional amendment known as Proposal A. Proposal A was designed to limit the growth in property taxes by the Consumer Price Index (CPI) until ownership in the property was transferred. 

How It Works

Prior to Proposal A, property taxes were based upon State Equalized Value (SEV). With the implementation of Proposal A, property taxes are now based upon Taxable Value. Each year, the Assessing Office must calculate the SEV for every property based upon the period as outlined by the State Tax Commission. A property's taxable status is determined as of December 31, which is called Tax Day.

Additionally, each property has a Capped Value. Capped Value is calculated by multiplying the prior year's Taxable Value, with adjustments for additions and losses, by the CPI as calculated by the State of Michigan and cannot increase by more than 5%. For 2009, the CPI has been calculated at 4.4%. Taxable Value (TV), which property taxes are based on, is defined as the lower of State Equalized Value or Capped Value. Generally speaking, this means that unless the current year SEV is less than the previous year Taxable Value multiplied by the CPI, the current years Taxable Value will increase by the CPI.

SEV = 50% of True Cash Value

Capped Value = (Prior TV-Losses) x (1 CPI*) Additions

* Percent of change in the rate of inflation or 5%, whichever is less, expressed as a multiplier

Taxable Value = The lesser of State Equalized Value or Capped Value unless there is a transfer of ownership.

  

The Equalization Timetable
With significant evidence of declining market values, the County Equalization Department has allowed local assessors to consider a 12-month sales study to determine values for the 2009 assessment cycle.
For 2009 assessments, the 12-month sales study begins October 1, 2007 and ends September 30, 2008.
Use of a 12-month study allows 2009 assessments to more accurately reflect current market conditions; however, some areas may have a limited number of current sales.
Actual Sale Price is not True Cash Value
The law defines True Cash Value as the usual selling price of a property. The Legislature and the Courts have very clearly stated that the actual selling price of a property is not a controlling factor in the True Cash Value or State Equalized Value as calculated by the Assessor. For this reason, when analyzing sales for determining assessment changes, the Assessing Office will review all sales but exclude non-representative sales from the assessment analysis.
Foreclosure Sales
Inherent in the definition on usual selling price is the assumption that the sale does not involve any element of distress from either party.
The State Tax Commission has issued guidelines concerning foreclosure sales and, generally speaking, these guidelines preclude the Assessor from considering foreclosure sales when calculating values for assessment purposes. If the assessor has verified additional market information, then these sales may be considered.
For this reason, all distressed sales, such as sales involving mortgage foreclosure or sales involving transfers to or from relocation companies, are usually not considered as typical sales in the valuation of property for assessment purposes nor are they necessarily reliable indicators of value when making market comparisons for current assessed values or appeals.
Transfers of Ownerships and Uncapping of Assessments
According to Proposal A, when a property (or interest in a property) is transferred, the following year's SEV becomes that year's Taxable Value. In other words, if you purchased a property in 2008, the Taxable Value for 2009 will be the same as the 2009 SEV. The Taxable Value will then be "capped" again in the second year following the transfer of ownership. It is the responsibility of the buyer in a transfer to file a Property Transfer Affidavit with the Assessors Office within 45 days of the transfer. Failure to file a Property Transfer Affidavit will result in a penalty of $5 per day for each day after the 45 day period with a maximum penalty of $200. Property Transfer Affidavit forms are available from the local assessor.
Again, it is important to note that a property does not uncap to the selling price but to the SEV in the year following the transfer of ownership.
 Principal Residence Exemption
If you own and occupy your home as your principal residence, it may be exempt from a portion of local school operating taxes. You may check your percentage of principal residence exemption on your "Notice of Assessment.” If the percentage exempt as "Principal Residence" is 0% on your assessment notice and you wish to claim an exemption for the current year, a Principal Residence Exemption Affidavit must be completed and filed with the Assessors Office prior to May 1. Furthermore, if you currently have a Principal Residence Exemption on your property and you no longer own and occupy the property as your primary residence, you must rescind the Principal Residence Exemption with the Assessors Office.
Forms to claim a new exemption or to rescind a current exemption are available from the local assessor.
So what does it all mean?
How can I expect my assessment to change in 2009?
As stated in the Equalization Timetable, for 2009, the time period of the sales study for assessment review is October 1, 2007 through September 30, 2008. Sales occurring after October 1, 2008 will not be reviewed until the 2010 assessment cycle.
Using more current sales data means that many SEV's in the area will be reduced again in 2009. Areas with limited sales data in the current 12 month study may have little or no sales for the Assessor to use for the 2009 assessment roll. Therefore, some assessment adjustments will be based on market activity in the surrounding neighborhoods, general market trends or be frozen until market levels can be determined. Without sufficient sales to make proper calculations, you may find that your 2009 assessment may not go down as much as you think it should.
How can my Taxable Value go up when my SEV goes down?
Remember that the definition of Taxable Value is the lesser of SEV or last year's Taxable Value (adjusted for physical changes) times the CPI. (4.4% for 2009). Since the beginning of Proposal A in 1994, overall increases in SEV have generally been greater than the increase in Taxable Value capped at the CPI. The longer a property has been owned and capped, the greater the gap between SEV and Taxable Value. Even with a decrease in SEV for 2009, if there is still a gap between SEV and Taxable Value and the 2009 SEV is greater than the Taxable Value in the previous year, the Taxable Value will increase to the limit of the CPI cap.
If, however, the 2009 SEV is lower than the calculation of last year's Taxable Value multiplied by the CPI, then the 2009 Taxable Value will be the same as the 2009 SEV.