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Property Assessments

Assessment Notices

Late each winter, "Notice of Assessment, Taxable Valuation, and Property Classification" forms are mailed late in February.  As the notice clearly states, it is not a tax bill.  However, the information on this notice will affect the tax bill you receive on the following December 1st.

We have worked very hard to develop a notice that provides more information in a format that is a little easier to understand.  However, this business of assessments and property taxes is complicated.  Proposal A in 1994 made it even more complicated.  So if you have questions, please call the Township Hall (269-434-6227) or the Assessor (269-353-9193) for more information.

Assessment Tutorial

What does it all mean?  Market value, assessed value, equalization factor, state equalized value, Proposal A, taxable value, consumer price index, homestead exemption, millage - it's all too complicated and confusing, right?  Well, let's see if we can make some sense of it.

Let's start with market value.  When the Assessor estimates the market value of your property, he uses a two year sales study of similar properties in our community.  This is fairly easy to do in a suburban community where lot sizes are the same and the houses were all built at approximately the same time with similar square footages and types of construction.  However, in our community, it's not so simple.  Many of our properties are "one of a kind".  This is when the Assessor really earns his salt.  He must do his best to fairly assess your property using the comparable information that is available to him.  He has a long list of things he looks for regarding both your land and any buildings (called improvements) that may be on your land.  Eventually, he determines the market value.

From here, determining the assessed value is relatively easy.  In Michigan, the assessed value is one-half the market value.

Our Assessor is not the only guy using sales studies to estimate the value of properties in our community.  One of the Van Buren County Equalization Director's jobs is to double check the work of our Assessor.  If they determine Columbia Township's assessments are too low, they apply an equalization factor to our assessed values. 

The state equalized value or S.E.V. is simply the assessed value multiplied by the equalization factor.  If the Assessor is doing a good job, the equalization factor will be 1.0000 so the S.E.V. will equal the assessed value.  This has been the case in Columbia Township for many years.

Things really got interesting in 1994 when the voters passed Proposal A.  Proposal A changed a lot of things and, fortunately, lowered our property taxes considerably by changing the ways the schools and municipalities are financed.  To put it briefly, schools and municipalities get much of their revenue from the State of Michigan's increased sales tax in the form of State Shared Revenue.

In addition to lowering our property taxes in 1994, Proposal A limited how fast our property taxes increase each year.  A new value called the taxable value was created.    Our tax bills are now based on the taxable value.  Each annual increase to your taxable value is limited to the consumer price index (C.P.I.) or 5%, which ever is lower (two exceptions are explained later).  The C.P.I. is a measure of the rate of inflation.  This table list the C.P.I. for each year since 1994. 

The effect of this new scheme is shown in the following chart.  The assessed value and S.E.V. continues to increase as the market value of our properties increases.  However, beginning in 1994, the taxable value increases have been limited to the C.P.I.

If you improve your property by building an addition, for example, both the assessed value and the taxable value will increase accordingly. 

As you can see, over time, the difference between the assessed value and the taxable value widens.  There is one catch: title transfer.  The result of most types of title transfers (sale, land contract, etc.) is to "uncap" the taxable value.  "Uncapping" means the taxable value is reset up to the assessed value.  The following chart shows an example where the property is sold in 1997 - the result is uncapping for 1998 taxes.

Uncapping is required by law but too few realtors explain this to property buyers.  When the tax bill arrives the next year, the increase above the previous owner's tax bill amount may be startling.  

Once the taxable value is uncapped, it follows the rules of annual increases limited by the C.P.I. until there is another transfer of title.

Another feature of Proposal A is the homestead exemption.  For property taxes, the homestead exemption has the effect of reducing the school operating tax to zero dollars - a significant tax reduction!  The basic qualification for the homestead exemption is simply to own and occupy the property in question as your principle residence.  The Assessor can provide more information.  Application forms are available from the Assessor or the Township Hall.