Michigan Tax: Business owners appeal tax bills to stay afloat

Record numbers say assessments too high

BY JOHN WISELY, 29 May 2010 -- A record number of Michigan property owners are appealing their assessments to the Michigan Tax Tribunal, a wave that could bring relief to thousands of property owners -- but one that also could decimate the budgets of local governments, schools, parks and libraries.

From small-claim homeowners to high-stakes commercial and industrial corporations, everyone is looking for relief in a down economy. The deadline for larger appeals -- those of more than $20,000 -- is Tuesday. New case filings more than doubled between 2006 and 2009, and the current case load is 32,000 for claims of less than $20,000 and 11,100 for larger cases.

"Since Proposal A was adopted, this is the highest we've ever been," said Patti Halm, chairwoman of the Tax Tribunal. Proposal A, passed by voters in 1994, limited the annual increase of taxable values to 5% or the inflation rate, whichever is less.

Some legislators want to speed the appeals process so property owners don't have to wait -- in some cases three years or more -- to learn whether they won.

"These waits are unacceptable," said state Rep. Kevin Daley, R-Lum, sponsor of a bill to require a hearing within one year of an appeal. Others say arbitrary deadlines could trample due process rights.


Business owners search for relief

As the auto industry imploded, Frank Bianco worked hard to save Proto-Plastics, the Troy company his family has operated for 42 years.

He laid off employees, cut wages and benefits, sold two large presses and converted half of his 100,000-square-foot manufacturing facility to Bianco's World of Cars, a showcase for classic cars. His search for savings also led him to appeal his property tax bill to the Michigan Tax Tribunal.

Bianco said he has nothing against paying taxes but that he couldn't sell the place for nearly what the assessor claims it's worth.

"We're not looking for miracles," said Bianco, 57. "We want to stay in business, and we want to stay in Troy. We're looking for any relief we can get."

Michigan businesses, large and small, are doing the same thing in record numbers. More than 11,000 commercial and industrial property owners are waiting to have their cases heard by the tribunal, the state agency that hears tax disputes. Tuesday is the deadline for such appeals.

The argument they make is essentially the same: the value of properties has fallen sharply as Michigan's economy has stalled, and taxing authorities should recognize that.

For many commercial and industrial property owners, appealing tax assessments is almost required to control costs in a cutthroat market, said David Nykanen, a Birmingham real estate lawyer who specializes is tax appeals.

"If your neighbor does it and gets a reduction, he now has a competitive advantage over you," Nykanen said. "My case load intake the past two years has been at record levels."

Nykanen is handling Bianco's appeal. The property was valued at $4 million in 2008. Nykanen said he thinks it should be about $2.4 million now.

Appeals can take several years to be heard, but property owners who succeed are entitled to refunds of any excess taxes paid, plus interest. A bill in the Legislature would require an answer to appealing property owners within one year or granting of the reduction request automatically.

But others say part of the backlog problem stems from the size of the tribunal. It has 17 staffers to manage the case load and seven members, who review the appeals and approve or reject assessment reductions. With 11,100 business properties and more than 32,000 homeowners appealing, it takes time to work through the cases.

"Because we got such a large number" of appeals "these past couple years, the governor's office allowed us to hire hearing referees," said Halm.

Those referees meet with taxpayers and the local assessor to review appraisals and other evidence. In most cases, the two sides negotiate a settlement without a formal ruling from the tribunal, but the referee can propose a settlement figure for a tribunal member to approve.

On the other side of the battle for reductions stand cash-strapped communities, which often count on businesses to pay the bulk of the property taxes.

Oakland County taxpayers are contesting $2.5 billion in property taxes, which could force the county to repay millions in taxes.

The General Motors proving ground, for example, straddles Milford and Brighton townships. The 1,400 acres on the Milford side constitute the township's largest taxpayer, township Supervisor Don Green said.

GM has appealed its assessment, a battle that could cost the township $290,000 in tax revenue.

"That's 12% of my budget," Green said. "I'm already working on the budget issues to see what we'd do with the losses."