Although school is out for the summer, it is a good time of year for school superintendents and administrators to review their procedures for monitoring property tax appeals.
Usually, these cases involve a dispute over the value of a property. Businesses which believe their assessments too high file a petition in the Michigan Tax Tribunal naming only the assessing unit (the township or city) as the “respondent”, but they also serve other taxing units, including the secretary of the local school district.
“Many cases are routine and pose no threat to the schools,” says Bob Rhoades, member in Dickinson Wright’s Detroit office. “Occasionally, however, a taxpayer from the top ten list seeks substantial reductions which could affect the district’s finances enough to warrant further concern.”
This is particularly true for “out of formula” school districts and intermediate school districts which can have substantial funds at issue. While the assessing unit should defend the appeals, the township operating rates are often lower than the school operating rate, its ability or motivation to defend is sometimes not up to the task in large and complex appeals.
To oppose a property tax appeal and assure the schools a seat at the table in resolving the appeal, a school district files a motion to intervene. If the schools intervene, they become a party, receive copies of all filings in the case and participate in the settlement negotiations and hearings. Intervention does not remove the city or township from the case, but it allows the school district to defend its interest.
Beyond defending appeals brought by taxpayers, Bob says there are some procedures by which a school district can seek to increase incorrect assessments. Assessing units and schools have conflicting interests affecting some types of assessment decisions. For example, a major industrial taxpayer may agree to accept a higher personal property value (which is taxed by the township but exempt from the school tax) in exchange for a lower real property value (which is taxed by all units). Whether done as a part of an exchange, or inadvertence, the treatment of real property as industrial personal property is a threat to the schools.
To learn more about Dickinson Wright’s property tax appeals practice and our school & education practice, visit www.dickinsonwright.com.
