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Township tightens tax-break rules



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March 23, 2011 - Can you have $125,000 and still be considered "in poverty?" Until recently, you could when considered for property-tax exemption in Springfield Township.

"The Board of Review noticed that residents were qualifying for the exemption based on the income guidelines, while still holding a considerable amount of assets," said township Supervisor Mike Trout. "Sometimes holdings and accounts were increasing from year to year, but still remained under the asset limits. It didn't seem right. I think this is a step in the right direction."

Township Board voted unanimously, March 2, to revise the Poverty Exemption Standards.

Previous standards for exemption were $34,900 maximum income for a family of four, with maximum assets of $125,000. Assets included cash, stocks, bonds, IRAs, and other funds, but not the home.

Revised standards allow for $29,650 for family of four, maximum net assets of $50,000, liquid assets of $10,000, and exempts the home and one car.

The revision requires applicants to live on the property for at least three years, as well as limits exemption eligibility to three out of the last seven years for those under age 62 unless physically or mentally disabled.

Limiting the number of years might be an incentive to make a change and improve themselves, said Trustee Judy Hensler.

"It can't just go on and on," Hensler said. "The net assets are pretty high – it's not appropriate today. This seems like a solid plan."

Treasurer Jamie Dubre said applicants should have received a grace period before time limits take effect, but was still in favor of the revision.

"I don't want to see people get a free ride anymore," Dubre said.

When making their decision, Board of Review can consider any substantial and compelling reason to vary from the guidelines, said Trout, who as supervisor must concur with exemptions they grant.

"The Board of Review recognizes the economic times and struggles residents are experiencing," he said. "It is our intent to offer assistance to those truly in need and reduce the possibility of granting exemptions to those who are not."

"They have a lot of latitude for exemptions," said Township Assessor Vicki Sievers. "This won't really affect a lot of people.

In 2010, the Board of Review received poverty-exemption applications from 53 property owners. Full exemption was granted to 33 of them, and partial exemptions to 10. The other 10 applicants did not qualify for exemption. The exemptions reduced revenue by about $81,000.

"Circumstances change from year to year – I would expect a similar number will apply this year," Trout said.

Before 2009, Springfield's net asset limit was $250,000 and included the home.

"As property values were increasing, that amount no longer seemed reasonable," Trout said.

The board revised guidelines in 2009 to exclude principal residence from assets and reduce net asset amount to $125,000.

"The Board of Review worked within these guidelines for the last few years, determining that the amount of $125,000 seemed excessive," Trout said.

Other problems faced by the Board of Review over the past few years included new residents purchasing property and requesting Poverty Exemption at the same time.

"This seemed presumptuous to the Board of Review and it was determined that there should be a minimum period of time that a person should own and occupy the property before qualifying for the Poverty Exemption," he said.

The Township Board appointed residents Ronald Eaton, Elizabeth LaVallee, and Sheryl Wendt to two-year terms on the Board of Review, expiring Dec. 31, 2012.

Hearings were this month, with decisions in July and December.

"We don't want to kick anyone out of their house," said Eaton to the Township Board. "We have a lot of compassion for township residents, but no compassion for people working the system to get a tax break every year."

The Township Board reviews and approves exemption standards each year.

"It was discovered that Springfield Township is one of two townships in the area with the highest income limits, Trout said. "The income limits were reduced to bring them more in line with comparable townships."

Sievers collected exemption standards from surrounding townships and prepared Springfield Township's revisions.

Poverty exemptions

Springfield Township

Original

Income: $34,900 for family of four

Exempt: home

Max. net assets: $125,000

Revised

Income: $29,650 for family of four

Exempt: home and one car

Max. assets: $50,000 net, $10,000 liquid

Independence Township

Income: $28,800 for family of four

Exempt: home

Max. net assets: $100,000

Groveland Township

Income: $34,900 for family of four

Exempt: home and one car

Max. net assets: $50,000

Phil is editor for The Clarkston News. He is a veteran of the first Iraq war, having served in the U.S. Army.
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