2013-03-07 / Front Page

Suttons Bay businesses take tax fight to tribunal

By Eric Carlson Of The Enterprise staff

The owners of five commercial properties in Suttons Bay Township claim they’re paying too much in property taxes and have taken their complaints to the Michigan Tax Tribunal in Lansing.

A spate of tax assessment challenges in one area of the county in one property class represents a disturbing trend, according to Leelanau County Equalization Department director Laurie Spencer.

Spencer said she is helping Suttons Bay Township tax assessor Kit Wilson gather data that could help officials figure out whether the tax assessment challenges are merited or whether there is a systemic problem with how commercial properties are being assessed.

She added, however, that no data indicate that commercial properties are routinely being overassessed anywhere in Leelanau County.

Wilson heads Michigan Assessing Service, Inc., which performs tax assessments for numerous municipalities in the region. Wilson said that she, too, was studying the matter thoroughly, but declined to comment further on the advice of an attorney.

Last year, the owners of Murdick’s Fudge Shoppe in downtown Suttons Bay successfuly challenged the township’s tax assessment to a state Tax Tribunal referee and had the taxable value of their property reduced from $263,000 to $165,000.

“Whenever something like that happens in a community — and when it’s well publicized in the local newspaper as it was here — it should be no surprise when the owners of similar properties in the community follow suit,” Spencer said.

In fact, the number of state Tax Tribunal cases has gone up dramatically in certain areas of the state since the 2008 recession began. Many who bought commercial properties at top dollar back in 2008 or before are now feeling the pinch, Spencer said.

Suttons Bay Township supervisor Rich Bahle said last week that his township board will need to decide within the next couple of months whether the township will fight the Tax Tribunal challenges.

By law, the township supervisor also serves as a member of the township’s Board of Review, which is normally the first stop for property owners who want to challenge their tax assessment. A change in state law a few years ago, however, allows some challenges to be taken directly to the Tax Tribunal and bypass local Boards of Review.

Township Board of Review meetings are slated to take place all over Leelanau County and the State of Michigan this month as they do every year.

Those taking a complaint to the Tax Tribunal may opt to have a referee rule on their case — as the owners of Murdick’s Fudge Shoppe did — or take their case to the full Tax Tribunal. The latter is exactly what the owners of five commercial properties in downtown Suttons Bay have done. They are:

 Lobdell Enterprises, owner of Boone’s Prime Time Pub located at 102 N. St. Joseph Ave. True cash value of the property according to the assessor is $257,064. The owner claims it’s worth only $128,600. Potential lost tax revenue is $2,835.

 Fifth Third Bank, owner of its own bank building at 120 N. St. Joseph Ave. True cash value of the property according to the assessor is $787,422. The owner claims it’s worth only $185,000. Potential lost tax revenue is $13,297.

 Leatherbuck L.L.C., an Ohio company that owns the building at 318 N. St. Joseph Ave. housing several businesses including Video Express and the Hang- On Express restaurant. True cash value of the property according to the assessor is $530,276. The owner claims it’s worth only $150,000. Potential lost tax revenue is $8,394.

 Village Inn Properties, owner of the Village Inn located at 201 N. St. Joseph Ave. True cash value of the property according to the assessor is $725,531. The owner claims it’s worth only $425,000. Potential lost tax revenue is $6,633.

 Northwestern Bank, owner of several tax parcels within the Stone Schoolhouse property at 513 N. St. Mary’s Ave. True cash value of the property according to the assessor is $622,883. The owner claims it’s worth only $339,800. Potential lost tax revenue is $6,248.

 Northwestern Bank, owner of several additional tax parcels within the Stone Schoolhouse property at 513 N. St. Mary’s Ave. True cash value of the property according to the assessor is $547,673. The owner claims it’s worth only $339,800. Potential lost tax revenue is $4,583.

“It’s worth noting that three of these are bank-owned properties, two of them from foreclosures,” Spencer said. “And only a small portion of the potential lost tax revenue would be lost by Suttons Bay Township, so the township needs to decide whether it’s worth the expense and effort to fight these challenges in the full Tax Tribunal,” she added.

Suttons Bay Public Schools and the Village of Suttons Bay would have the most to lose if the property owners win in the Tax Tribunal. Of the $41,996 in potential lost tax revenues for multiple units of government in all five cases combined, the top three losses would be $17,124 from the school district, $8,870 from the village and $3,088 from the township.

Spencer explained that one of the disconnects that commonly occurs in tax assessment challenges is the difference between comparable sales data — which most local tax assessors use to determine true cash value — and capitalization rates that are based on how much income the property is taking in.

“When business owners hire someone to do an appraisal,” Spencer explained, “their numbers are sometime based on capitalization rates that apply to other areas of the state, and may not really reflect what’s happening locally,” she said. “But we’re in the process of gathering our own data to see what might be going on, and to ensure that the process local assessors are using is sound.”

Bahle said he does not know when, or even if, the state Tax Tribunal will hear the current cases coming from Suttons Bay Township, most of which were filed last year. The Michigan Tax Tribunal is currently experiencing a backlog, and it could be many months before the full tribunal will be able to consider the local cases, he said.

Ironically, the Leelanau Club at Bahle Farms, a golf course in which supervisor Rich Bahle has a financial interest, last year filed a Tax Tribunal challenge in neighboring Bingham Township where the golf course is located. Bahle Farms L.L.C. asserts that the $2.2 million true cash value placed on the property by Bingham Township assessor Angela Friske is too high.

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