PROPOSAL A

By Stacy Jenkins OBSERVER STAFF WRITER

You might say, the honeymoon is over.
As homeowners in Farmington and Farmington Hills receive their annual property tax assessments in the mail this week, many will see numbers unlike they've seen in the past 14 years.
Proposal A, approved by Michigan voters in 1994, is now showing another side of the coin. Many homeowners are seeing their property values decrease, but taxes increase.
The two figures listed on the assessment are the State Equalized Value and the taxable value. The SEV is typically half the market value of the home, based on comparable home sales. The taxable value is used to calculate property taxes and is normally lower than the SEV, unless the property recently changed owners.
For years, increases in SEVs have been higher than the increases in taxable values, which are capped at the annual rate of inflation or 5 percent, whichever is less. SEVs have typically increased by 5-8 percent, creating a gap between the figures.
Farmington Hills Assessor Dean Babb said that gap is closing.
"This year, it's wholesale; everybody is seeing a reduction in their SEV," said Babb, noting the decrease ranges from 1-15 percent in Farmington Hills.
Babb said 56 percent of all Farmington Hills homeowners purchased their home prior to 1994, so the majority of homeowners will experience this situation.
"Proposal A is no longer working to their advantage," he said.
That's because the housing market has declined. The Farmington Hills Assessing Department used a 12-month sales study (from Oct. 1, 2006, to Sept. 30, 2007), neighborhood by neighborhood, to determine values for the 2008 assessment cycle.
"Nothing changes with the law because the market is down," said Babb, noting Proposal A benefited many property owners for years. "Nobody has control over that calculation. We are doing our best to be reflective of the current market."
A record number of foreclosures (more than 300 in 2007 in Farmington Hills) plays only a small part in determining values, said Babb, because they do not make up the predominant transaction in the general housing market.
While there is no recourse to the way Proposal A is affecting homeowners, Babb said he anticipates a high number of appeals at the annual Board of Review sessions, scheduled for March 10-12. Ten-minute appointments can be scheduled by calling the Assessor's Office at (248) 871-2470.
Assessments are being mailed this week and they include a brochure, "Understanding Proposal A in a Declining Market."
"Before residents pick up the phone, they should read the brochure," said Babb.

sjenkins@hometownlife.com (734) 953-2131

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