Meijer tax appeal could cost twp. $43K
August 24, 2011 - Oxford Township is facing the possibility of having to refund up to $43,205 in local property tax revenues if its one and only big box store – and fifth largest taxpayer – is successful in an appeal to reduce its taxable value by a total of $4.3 million over a two-year period.
"You can ask for anything, but what what's asked for and what ends up being settled are two totally different things," said township Treasurer Joe Ferrari. "It's going to have an effect, but I don't anticipate those numbers."
The Grand Rapids-based Meijer, Inc. is appealing the value of its Oxford store for 2010 and 2011 to the Michigan Tax Tribunal.
Oakland County's Equalization Division, which does the township's assessing, determined the true cash value of the Oxford Meijer to be $11.9 million last year and $10.1 million this year.
The county also determined the Oxford Meijer's assessed and taxable values, which are equal, to be $5.97 million for last year and $5.07 million for this year.
However, Meijer contends the true cash value of its Oxford location should be $7.3 million and $6.205 million for 2010 and 2011, respectively.
As a result, the corporation is claiming the assessed and taxable values should be much lower as well – $3.65 million for last year and $3.1 million for this year.
"I think their number is extremely low," Ferrari said.
Phone calls seeking comment from Meijer's media relations folks were not returned.
Meijer's basing its appeal in part on a 2010 decision by the state tax tribunal to significantly reduce the taxable values of a Target store in the City of Novi for the 2008-10 tax years. The taxable values in that case were reduced by $891,905 for 2008; $1.8 million for 2009; and $1.99 million for 2010.
"A lot of these big-box retailers are appealing their property tax assessments, alleging that their property is over-assessed and not worth as much," said attorney Hans Rentrop, of the Adkison, Need & Allen, the Bloomfield Hills firm which handles the township's tax issues. "They're alleging, like everyone else, that the property values have declined and because of that decline, their assessed valuations are too high and they're being taxed too much. This is common throughout Oakland County."
However, Rentrop indicated the values that resulted from the Target/Novi case "just seemed too low to a lot of assessors."
"It just seemed like it was not consistent with what the going rates were," he explained. "The result of that is now, you have an appeal out there with a value that most of us think is too low and every big box appeal that comes forward (is using that decision to say) here's what the value of the properties are in this area. They're using that as sort of a starting point."
If Meijer's appeal in Oxford is successful and the tax tribunal agrees with the values presented by the corporation, then the township would be forced to refund monies for each of the local millages it levies.
This would result in the following losses – $4,065 from the township general fund; $3,653 parks/rec.; $12,474 police; $10,697 fire/EMS/ALS; $6,333 fire/library bond debt; and $5,983 library operations.
Meijer pays the fifth most property taxes in the township, according to Ferrari.
The big box retailer is below Lake Villa Mobile Home Community, Independence Village of Waterstone, Detroit Edison and American Axle & Manufacturing. Meijer is right above American Aggregates on that list.
To defend itself against this appeal, the township board recently voted to hire Larry McKnight, an expert assessor/appraiser, to appraise the Oxford Meijer.
"I don't know all the intricacies of big box appraisal. That's why there are only a few really, good specialized appraisers out there that can do this stuff," Rentrop said. "We took some time to find a good one for the Meijer appeal . . . He comes highly recommended and has good credentials."
"You want to address these issues when they come up," Ferrari noted. "You don't want to be lax because once you have a value set, it goes from there for the future. You want to make sure a correct value is set, then you go from there."
Ferrari is confident McKnight's appraisal will justify the original values set by the county. "I think his appraisal will be more of a reflection of an accurate number than what the opposing party (Meijer) is requesting," Ferrari said. "Theoretically, I think it will be closer to our number than it is to their number."
Because McKnight's being used to defend against similar Meijer appeals in Commerce and White Lake, the township is sharing his appraisal services with these two communities and thus each one is paying him $6,300 as opposed to $9,500.
"It's a good decision by the officials of those communities to save money," Rentrop noted. "If we can get an appraisal that substantiates a higher value and therefore can be used not only in the Meijer (appeal), but potentially elsewhere (in other big box tax appeals), that's a good investment.
"While there are obviously some risks involved in terms of expending the money, there are also significant rewards if it's successful."
The Oxford school district has agreed to split the township's cost 50/50, meaning it will pay $3,150 for the appraiser.
If Meijer's appeal were successful, the school district, according to Ferrari's calculations, would be responsible for refunding the corporation approximately $77,000 for the district's non-homestead operating tax and about $30,000 for the school bond debt tax.
According to Tim Loock, assistant superintendent of business and operations, if Meijer's appeal was successful, the state would essentially reimburse the school district for the any operating tax monies it was required to refund with the exception of any interest owed the corporation.
However, there would be no state reimbursement for money refunded from the bond debt tax. "What potentially could happen there is we might end up having to borrow more, down the road, from the school bond loan fund to service our debt because we've had to use some of (the) tax money we've collected to repay that appeal," Loock said.
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.