The City of East Lansing recently sent property owners their 2021 tax assessment notices, and through the end of the week, property owners are welcome to get in touch with the Assessor’s office for the annual Assessor’s Review, which provides an informal opportunity for homeowners to address concerns regarding their tax assessment.
Due to the pandemic, the office hours-like function of the Assessor’s Review has moved entirely virtual — via phone, email and Microsoft Teams — and according to a press release from City of East Lansing Assessor David Lee, property owners who wish to participate in the review should contact Martha Townsend (517-319-6880 or firstname.lastname@example.org) to initiate the review process.
The review process allows property owners who may have an issue with their assessment or who just a question to get answers and potentially remedy any actual miscalculations or errors in their assessment without having to go to the Board of Review for a formal appeal.
Lee spoke with ELi on Tuesday to explain what goes into an assessment and to encourage people to take part in the Assessor’s Review, because it can potentially help property owners save money on their tax bills, and it helps Lee and his staff have more accurate information about the City’s property market.
What is an assessment and how are they determined?
Lee explained that there are three determined values for each parcel that play in a role in determining a property owner’s tax liability, a term used to describe the amount they ultimately owe. Those values are assessed value, capped value, and taxable value.
Assessed value, Lee said, is half of the assessor’s estimate of market value of the parcel, and has no upper limit.
Capped value is determined by a rough formula, Lee said, of taking the taxable value from the prior year, accounting for physical changes to the parcel, and factoring in the rate of inflation. It’s capped because there is a state-imposed annual limit on the increase in value — 5% or the rate of inflation, whichever is lower. Lee noted that the 2021 statewide inflation rate is 1.4%.
Finally, there is taxable value, which in most cases is the lower of either the capped or assessed value.
Multiply the taxable value by the local millage rate and you have the property owner’s tax liability (what they will owe) for 2021.
There is one exception to the capped value rules. When a property is sold or transferred to a new owner, the new owner cannot immediately benefit from the cap. This means that, for the first year a new property owner pays taxes, they’ll be using the assessed value as their taxable value. For the rest of their time owning the property, they’ll benefit from the cap.
The cap is beneficial to most East Lansing property owners as the value of their property will likely increase faster than the rate of inflation, Lee said, noting that the “market has been strong in the area,” for a stretch of years.
“It’s more complicated than I wish it was,” Lee said, “but it is what it is. That’s what we deal with.”
How does the assessor’s review work?
Basically, property owners get a chance to take some time with Lee or a member of his staff to discuss their assessment. Lee said the issues and questions they field run the gamut, from people upset about an increase in their tax bill to the merely curious.
Lee also noted that as accurately as his office tries to assess the parcels in the City, they “don’t have perfect knowledge” of all the properties around the City. He offered the hypothetical example of someone buying a lot with a house that’s been unoccupied for years and had a leaking roof.
“We’re probably not going to know about that,” Lee said. “But you know, if the new owner comes in and says, ‘Well, here’s the situation — here are documents, here’s pictures of the drywall damage, here’s estimates for repairs,’ they can make us aware of those types of situations. And then we can make corrective action in the assessed value that we’ve put out there. And we can do that informally, without the need for a Board of Review appeal.”
That’s a clear example of the process benefiting the property owner — the leaky roof owner would have their assessment lowered. But these interactions also help Lee and his staff.
“We can learn about individual properties, but somebody might come in and say, ‘Well, this is going on in our neighborhood. We’ve got this really bad influence that, you know, you should be aware of or take into consideration’ because we haven’t thought of that before. And then we might make an adjustment to not just their property, but anybody else’s who’s affected by it,” Lee said.
Lee encouraged property owners to take part in the assessor’s review, especially if they’re apprehensive about going to a formal Board of Review appeal. The interaction with his office is informal and aimed at helping get things right.
The assessor’s review runs through this Friday (Feb. 26), and Lee will submit finalized assessments to the Board of Review — comprised of five City Council-appointed members — by Tuesday, Mar. 2.
And again, those wishing to take part in the review can contact Martha Townsend (517-319-6880 or email@example.com).