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Appeals 'down significantly' at Boards of Review



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March 14, 2012 - It's Board of Review time again in Oakland County, but the number of people showing up to appeal the assessed values of their properties is down.

"We're seeing a significant reduction in the amount of people that are challenging their assessments," said Dave Hieber, manager of the Oakland County Equalization Division, which does the assessing for 31 communities. "Our call volume and appointment schedules are down significantly from last year. 2011 was down from 2010. 2009 is still our peak year for Board of Review protests since Proposal A (took effect)."

Boards of Review began convening in Oxford Township last week and Addison Township this week.

Hieber believes the number of assessment protests is down because the real estate market isn't in a free fall like it was in 2009.

"The market was dropping real fast in 2009," he said.

The flood of protests three years ago was the result of people not understanding why their assessed value was so different from the asking or sold prices of homes around them, according to Hieber. It didn't make sense to them.

"People had more of an argument from a real world standpoint," Hieber said.

Hieber said what most folks usually don't understand is that "assessments always lag behind current market conditions."

The county determines the State Equalized Value (SEV) of properties based on home sales during a 12-month period that begins every Oct. 1 and ends every Sept. 30. Assessments are generally mailed out in late January or early February.

All things considered, the SEVs of residential properties in Oxford and Addison townships didn't fare too bad in the 2012 assessments.

The SEV of residential properties, which is equal to 50 percent of a property's fair market value, increased by an average of 0.8 percent in Oxford, while Addison's SEVs decreased by 3.34 percent on average.

As always, Hieber noted the averages reported here are for the entire community, not individual properties, which can vary from neighborhood to neighborhood.

"I would have to say that being down around 3 percent is the average for the county," Hieber said. "Some communities are still down in the double-digits and others are up slightly."

For instance, Hazel Park's SEVs fell by an average of 19.82 percent (the biggest decrease in the county), while Groveland Township's SEVs increased by 2.3 to 2.4 percent (the biggest increase in the county).

Hieber said although cities like Madison Heights, Pontiac and Oak Park are still experiencing double-digit percentage drops in SEV, "the townships in the north and west areas seem to be flattening out a little bit faster."

Hieber noted the number of Board of Review appeals is also down because most property owners are no longer having situations where their SEV is going down, but the their taxable value is going up. That happened a lot in 2009 and 2010, which resulted in a large number of challenges.

"It was counter-intuitive to what people thought should happen," he said. "But that's the way Proposal A works."

Approved by state voters in March 1994, Proposal A caps a property's taxable value (unless there's a transfer of ownership or new construction) and limits increases to the rate of inflation (as measured by the Consumer Price Index) or 5 percent, whichever is less.

For people who have owned their home for many years, the decrease in assessed values didn't lower their taxable values because there's such a great disparity between their SEV and taxable value due to the capping effect of Proposal A.

A drop in the higher SEV won't affect the much lower taxable value at all unless it drops below the capped value, which is the prior year's taxable value adjusted for inflation. Taxable value is the lesser of SEV or capped value. As a result, taxable values keep increasing on these properties with the rate of inflation.

But these days that's no longer a factor as most SEVs have dropped to the point where they're equal to the home's taxable value.

"Ninety-plus percent of the houses in Oakland County have seen their values drop to the point where they're paying taxes on their SEV and they really don't have that Proposal A gap between (SEV and taxable value) now," Hieber said.

As a result, Hieber said, "Taxable value is still projected to go down countywide by 3 percent for this year."

"Addison is projecting to be down between 2.5 and 3.5 percent (in taxable value) ," he noted. "We're looking at about 2 percent for Oxford, so they're a bit better than the average."

Looking ahead to next year, Hieber said, "Countywide, I think we're going to be better in 2013 than we were in 2012. I'm hopeful that the residential values are improving."

He pointed out that this year, there were 17 communities in the county that experienced either no change or slight increases in their residential SEV averages. "That number's going to continue to improve," Hieber said. "We will still have some down areas in the remaining 35 (communities), but hopefully a good percentage of those communities will be up for 2013 as well."

One positive sign Hieber sees is the fact that "the number of foreclosures for January and February are down compared to last year."

Although he believes there are "still too many foreclosures on the market compared to 1990s," the decrease indicates the county is on "on the right track."

"It's going in the right direction. It's not increasing," he said.

Foreclosed properties usually negatively impact the values of other homes in a neighborhood because quite often banks sell them at reduced prices.

year's taxable value adjusted for inflation. Taxable value is the lesser of SEV or capped value. As a result, taxable values keep increasing on these properties with the rate of inflation.

But these days that's no longer a factor as most SEVs have dropped to the point where they're equal to the home's taxable value.

"Ninety-plus percent of the houses in Oakland County have seen their values drop to the point where they're paying taxes on their SEV and they really don't have that Proposal A gap between (SEV and taxable value) now," Hieber said.

As a result, Hieber said, "Taxable value is still projected to go down countywide by 3 percent for this year."

"Addison is projecting to be down between 2.5 and 3.5 percent (in taxable value) ," he noted. "We're looking at about 2 percent for Oxford, so they're a bit better than the average."

Looking ahead to next year, Hieber said, "Countywide, I think we're going to be better in 2013 than we were in 2012. I'm hopeful that the residential values are improving."

He pointed out that this year, there were 17 communities in the county that experienced either no change or slight increases in their residential SEV averages. "That number's going to continue to improve," Hieber said. "We will still have some down areas in the remaining 35 (communities), but hopefully a good percentage of those communities will be up for 2013 as well."

One positive sign Hieber sees is the fact that "the number of foreclosures for January and February are down compared to last year."

Although he believes there are "still too many foreclosures on the market compared to 1990s," the decrease indicates the county is on "on the right track."

"It's going in the right direction. It's not increasing," he said.

Foreclosed properties usually negatively impact the values of other homes in a neighborhood because quite often banks sell them at reduced prices.

CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.
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