When my husband received his property tax statement last winter on the building we own in Royal Oak, he decided to fight the increase in taxes.
I’ve filed objections over tax increases before with regard to our home. This was before the housing bubble burst and home prices were still on the rise. Sensible minds like mine knew that a small house built on an out-lot adjacent to Woodward Avenue couldn’t possibly be worth a half a million dollars. Woodward Avenue, otherwise known as the M-1, is the major artery out of Detroit. It’s a busy four-lane highway where pedestrians and bicyclists are routinely run over by speeding drivers who think it’s the GM test track, and no one wants to live near it, especially during Dream Cruise weekend.
Fighting a tax assessment on a home is relatively easy. It’s not hard to pull up comparisons on similar houses that have recently sold in your area. Taking photos of your own hovel helps. You make an appointment with the tax board and county assessor and plead your case.
I found it interesting at my last fight that the assessor thought a small rodent ridden porch was part of the house. Let’s see, there’s no heat, no electricity, it's full of mice and you can’t live in it – yes! that qualifies as living space. The county mistakenly counted the basement square footage as part of the house even though there was no access to the outside and no windows.
Her exact words to me were “Well, you should be happy your house is assessed at $482,000.”
My reply was “Would you buy this place for that much? Do you know anyone who would? Because I’ll sell it in a heartbeat if you can get me that kind of money.” I could see the two real estate agent/residents who were on the review board snickering behind her back.
They lowered the value to $400K, and after a year on the market we sold it for $100K less than that. That’s because it wasn’t worth what the county said it was worth.
Commercial property is an entirely different animal. For one thing, you can’t get comps from anyone. Believe me, I’ve tried. A run-down building in Detroit may have sold for $100,000 and a similar one two blocks away might have fetched a million. There’s no rhyme or reason to why anyone would pay anything for commercial property.
So when the tax man said our building is now worth $450K, we laughed. Come on. It’s Michigan. Have the tax men been living under a rock? Are they blind?
Our building isn’t worth the lot it’s sitting on. With two dozen other empty buildings for sale or lease on our street alone, we couldn’t sell this place for $1 and a Diet Coke. We recently had an agent come over and give us his opinion. With business drying up, we don’t really need this place. Maybe $200K he says, but I know he was lying through his teeth trying to get the listing. Should anything catastrophic happen, I am already reconciled to the fact that I’ll pack up my clothes, leave our Michigan property to squatters, and never take a single look back.
Lest anyone think that we’re living in the lap of luxury, let me describe the building in question. It’s a 50-year-old story and a half cinder block building with a flat roof (problematic in the winter), maybe 3000 square feet. It’s big enough for an office, a classroom and storage. There have been no major improvements since the carpet went in 11 years ago, and I can’t remember the last time it was painted. (Who can afford it?) The birds have built nests in our vents, and somehow escape into the drop ceiling, where they make their way into the office. If you’ve never been dive-bombed by a sparrow, be thankful; you’re not missing anything.
We lease out a quarter of it to a psychologist whom we never see and who sometimes doesn’t pay rent for months. (Could it be because he has no clients? Ya think?) The “For Lease” sign was on the outside of our building for two years before we snagged that one. The previous tenant neglected to pay rent for six months and then moved out in the dead of night – and went bankrupt.
The reason we bought the place was not to make money but to avoid paying rent. I know it’s worth less than what we paid for it in 1995, but it has provided a roof over our heads. But to say it’s worth anything at all is simply wishful thinking.
Ah, but the fight to lower the tax bill isn’t as easy as it is for a residence. In response to my husband’s request, the city of Royal Oak forwarded the information to the State of Michigan. It appears that fighting a tax assessment for commercial property goes straight to Department of Labor and Economic Growth (doublespeak for Bureaucratic Clubhouse), where it is handled by the Michigan Tax Tribunal.
Instead of the state choosing a local Royal Oak shyster, er, counselor, to represent them in the proceedings, they are opting to go the distance with the big guns. That’s right; they called in chi-chi lawyers from tony Bloomfield Hills. These are the kind of guys who can still afford a membership at Oakland Hills, still eat dinner at exclusive restaurants and hang around the Maserati dealership in their off time.
Our respondent’s first request for documents is intimidating and reads like a first year law text book. There are 51 “interrogatories” for the respondent (that’s us) and 34 more regarding the production of the documents we will be submitting. I can see why some might take a look at it and run screaming.
My husband’s first response was to freak out. It’s too much information to gather during the oncoming busy season. “I’ll back out this year, but next year I’ll let them have it!” So I took a look.
Many of the questions have little to do with the subject of taxes or the value of the property. For example, they want to know who provided financing from 1995 and what the payments were. They also want to know the “historical average tenant turnover,” how much we pay for pest control (0) among other things, and copies of our environmental reports. I don’t know what to say about that, since we share our space with several nesting sparrows. Should I produce my own research paper and give myself an A+?
After a deeper look, I decided this was totally doable, so I’m taking my case to the tribunal. I realize some of those vacant properties on my street are tax foreclosed, and the city and county are out the money they could have been collecting if there wasn’t a major depression going on. That doesn’t mean they can raise the value of my worthless building to something of worth and expect me to pay to make up the difference.
I’d rather see them dismantle the Bureaucratic Clubhouse and let the county do it.