City Assessor Sam Guich
The Assessor’s Office must annually appraise all real and personal property not exempt by law at its true cash value or market value as of December 31. All such property is accordingly assessed the following year at one-half of its true cash value as required by State statute and the City of Monroe Charter. This assessed value ultimately becomes the State Equalized Value (SEV), which, subject to the provisions of Proposal A passed by the State electorate in March, 1994, may become the taxable value upon which millage rates are applied by local taxing authorities for operating revenues.
The assessment roll as prepared by the Assessor’s Office for presentation to the March Board of Review is literally two rolls. Each parcel requires an assessed value upon which county and State equalization occurs, and a taxable value upon which levies are made by local taxing authorities. Taxable value, the annual growth of which is limited to the lesser of the rate of inflation of five-percent, cannot exceed SEV. Exceptions to the annual taxable value growth limitation are transfers of ownership, and new construction.
The mass assessment of a universe of real property is typically based on a combination of the comparative sales approach to value and a variation of the cost approach to value. Vacant land is typically assessed based on the comparative sales approach, while improved parcels are typically assessed based on the cost approach variation.
The cost approach begins with land or site values which have been estimated by a mass application of the comparative sales approach. Buildings and other land or site improvements are measured, priced as new from standardized cost schedules, and then depreciated to arrive at building values. The sum of the land and building/improvement values is the market value of a parcel of property, one-half of which becomes the assessed value of that parcel. The variation in the cost approach occurs in the development of an Economic Condition Factor (ECF), which adjusts the standardized cost schedules to neighborhood market conditions.
Commercial and industrial real property is typically mass-appraised by utilizing the foregoing cost approach variation in conjunction with the income capitalization approach, which measures the market value of property based on its ability to produce rental income. The comparative sales approach is applied as a check against the values estimated by the cost and income capitalization approaches.
The Assessor’s Office monitors real estate market activity throughout the year and makes adjustments for changing market conditions and building permit activity in preparing the assessment roll. Residential sales (i.e., approximately 460-real parcels per year) are closely monitored in 55 residential neighborhoods and used as benchmarks to estimate neighborhood Economic Condition Factors and market values of 6,702-residential real parcels (those properties with and without structures built on them).
Commercial and industrial sales (i.e., approximately 50-real parcels per year) are closely monitored in 16-commercial and industrial neighborhoods in the city and are used as benchmarks to estimate neighborhood Economic Condition Factors and market values of 694-commercial and industrial real parcels. Additionally, income and expense information is solicited annually for all leased commercial and industrial real property (i.e., 375 to 400 parcels) and extensively analyzed for estimation of stabilized net operating incomes and capitalization rates by property type for utilization in the income capitalization approach.
Personal property is assessed in Michigan on a type of honor system whereby a property owner annually reports original acquisition costs of all taxable personal property on an affidavit or statement. The Assessor’s Office depreciates these original costs based on standardized State Tax Commission (STC) multipliers to arrive at the true cash value, and resultant assessed and taxable value, of such property. The State Tax Commission adopted new multipliers starting with the 2000 assessment year which has increased depreciation and accordingly decreased values. The Assessor’s Office processes about 1,150-personal property statements annually, 1,044 of which result in an assessment.
An ad valorem, or value-based, tax may invite disputes relative to the value of one’s property. If a dissatisfied property owner is not satisfied by the action taken by the City Board of Review, the Assessor’s Office must then defend the value estimates before the Michigan Tax Tribunal if further challenged. Approximately 200-assessments are appealed to the City Board of Review annually, while three to five of these assessments are further appealed to Michigan Tax Tribunal.
The Assessor’s Office processes approximately 950-property ownership changes and approximately 700-homestead exemption changes annually, calculates millage rollback fractions, and prepares summer and winter tax rolls, including ad valorem [non-abated taxes], Industrial Facilities Tax (IFT) and Obsolete Properties Tax (OPT) [abated taxes], and Downtown Development Authority (DDA) and Brownfield Redevelopment Authority (BRA), upon which tax increment revenues are captured. The ad valorem (9,185), IFT (48), OPT (4), DDA (768), and nine BRA rolls (191) consist of the respective numbers of parcels as noted in parentheses.
Additionally, the Assessor’s Office prepares special assessment rolls, works with other City departments as necessary in operations relating to tax levies/certifications, property ownership/acquisitions/sales, lot splits/combinations, and special assessment roll billing, and assists the public on a walk-in basis or on the telephone.
The usual annual Economic Condition Factor studies were performed for all residential neighborhoods for the 2004 assessment roll. Other than new construction, commercial real property 2002 assessments were factored across the board by three-percent (3%) with overridden values for the 2003 assessment roll, while industrial real property 2002 assessments were carried over unchanged to the 2003 assessment roll with overridden values. With the exception of one commercial neighborhood for which an Economic Condition Factor study was performed, 2004 commercial and industrial real property assessments are based on the removal of these value overrides. Values were changed as necessary for the 2004 assessment roll as a result of building permit work performed during 2003.
Each city and township in Michigan is rated by the State Assessor’s Board (SAB) as a Level I (lowest) II, III or IV (highest) assessing unit based on total State Equalized Value (SEV) or as a percentage of commercial and industrial SEV relative to total SEV. The State Assessor’s Board rating requires that an individual licensed by the State Assessor’s Board at that level of certification must certify the assessment roll. The City of Monroe is rated at Level IV, and staffing consists of the City Assessor (Level IV), two Property Appraisers (Level III) and one half-time Appraiser I (Level 1) which is shared with the Fire Department due to a staffing reduction. The Appraiser I also is the primary assignee of clerical duties when required.