Howell: 20% Property Tax Hike

 

Update from April 17, 2018: The Gadsden Center received this press release from former Howell City Councilman Doug Heins. Councilman Heins discusses several issues relevant to the proposed property tax hike. Highlights from the press release are as follows:

  • The proposed tax hike violates state statute.
  • The current city council recently voted to spend $3 million to subsidize a development project. This is money that could have been spent on police.

The entire press release is shown below (Note: edited for personal information and punctuation)

PRESS RELEASE: The City of Howell To Illegally Assess Property Owners for Police Protection


The City of Howell’s proposed use of an obscure Public Safety Special Assessment (Act 33 of 1951) process to balance the city budget for police protection is illegal states former longtime City Councilman Douglas Heins.

“A special Public Safety assessment cannot be used to sustain a government function yet the city has clearly admitted they plan to defund the police to pay for other services and debt and replace the money with an illegal special assessment” said Heins “I’ve been involved in city budgeting over the years and I can say some long-time members of this Council have made very poor budgeting decisions”

http://www.cityofhowell.org/psa/
On background the legal theory of special assessments is they create a public benefit and make property values rise because the government’s assessment improves the land and they has a right to charge the property owner a special assessment tax.
(Citation: http://www.michiganpropertytax.com/specials.htm)

Michigan's Supreme Court ruled in 1986 the only justification for a special assessment levy is to increase a property's market value, so there must be a measurable "special benefit" for the special assessment to be valid.

“City Police protection already exists, so using a special assessment to continue an existing benefit, makes it hard to legally argue our property values will increase.” Said Heins “The city is actually creating a fake hardship to justify this assessment by defunding the police.”


“The city’s process for the creating an assessment district is also questionable. The city assessor will have to be very creative in pretending there is property improvement values to justify the assessments.” Said Heins

“Every property owner needs to ask the assessor how this assessment will increase the benefit of our property because Council made a decision to defund the police department. This assessment does not create a new Public Safety benefit, but only maintains the status quo.” Said Heins

“Also, people really need to question how the city has been spending money in the past,“ said Heins “The city is crying poor but they recently locked up 3 million dollars in a vacant land deal to subsidize a development project. If the city had sold this property outright that would be 3 million more dollars in the bank right now.”

“It’s pretty clear this assessment process has the backing of the Michigan Municipal League and Howell is the test case, so if this passes without a challenge, every small city in Michigan will be doing the same thing,” said Heins

“The crazy quirk about this type of special assessment process is every property owner has to attend the public hearing and protest on the record to preserve their rights. If a protest is not recorded at the public hearing the property owner person loses the right to challenge the legality of assessment at the Michigan Tax Tribunal.”

“If the city has a case for money more they should put it to a vote, and stop making property owners jump through hoops. This is a stupid, arrogant way to ask the public for more money,“ said Heins

By law, a special assessment must apply to all properties even those exempt from taxation. “So, does the city plan to assess schools to pay for police protection? And if they do, how can the city argue that a school’s property value increases from the special assessment?” How about someone that has a vacant lot? How does vacant land get a special benefit from police protection? “Heins asked.

It’s the classic issue, of a spending problem, not a revenue problem. The city is currently using thousands of dollars in general fund money to pay downtown projects, this is money that should be used for police, not parking lots. “said Heins “Their priorities are all screwed up”


Why should every property owner be forced to file a legal challenge to the Michigan Tax Tribunal?” “It’s a gross abuse of the law’s real intent,” says Heins.

Doug Heins

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The City of Howell (Howell) is considering a plan that would raise property taxes by nearly 20%. The current millage rate is just shy of 16 mils. The proposed tax hike is 3 mils. It is important to note that this tax hike affects just the City of Howell, not Howell Township.

Howell City government officials have found a way to bypass caps on property tax rate hikes in order to regain what they consider to be a fair share of your money. Regardless of whether you own property in Howell, concerned taxpayers should take note of this legalistic maneuvering.Why? These same tactics could be employed where you live at some time in the future.

Traditionally property owners have been accustomed to tax hikes of no more than the rate of inflation or 5%, whichever is less. This rate cap was imposed decades ago when voters approved the Headlee Amendment and Proposal A.

Unfortunately for taxpayers, local policymakers can avoid these caps by creating a Special Assessment District (SAD) to raise property taxes for police services.In short here is what the City of Howell is proposing:

  1. Establish a SAD encompassing the entire City of Howell.
  2. Increase property tax rates by 3 mils within this new SAD. It is important to note that raising taxes via this SAD avoids the rate caps that property owners have been accustomed to for many decades.
  3. Approximately $860,000 of new tax revenue will be collected from property owners residing within the SAD. This new tax revenue will be used to fund a portion of the Howell Police Department. The City of Howell spends about $2.6 million/year for its police department.
  4. With this new funding in hand, the City of Howell will be able to shift $860,000 that would have otherwise been spent on police funding and use it for other purposes.

We encourage citizens, especially those living in the City of Howell, to read the documents posted on the City of Howell website (http://cityofhowell.org/psa/). These documents provide additional detail regarding this new tax hike. Of particular interest to Howell property owners is the public hearing scheduled for April 23. Citizens have an opportunity to speak directly with Howell policymakers about this tax hike. Citizens should also note that the documents describe a method by which residents of the City of Howell could force a direct vote on this issue, thereby negating the wishes of Howell policymakers.

As you read through the documents it is clear that the City of Howell holds the viewpoint that government is being shortchanged by the tax reform enacted by the Headlee Amendment and Proposal A. Their primary argument for raising taxes is the caps put in place via tax reform prevents tax revenue from increasing as fast as property values. Howell government points out that tax revenue fell quickly due to the 2008 recession. However, as property values recovered the tax caps have prevented quick revenue growth.

While their point of view shouldn't be discounted out of hand, one could argue that the inflated property values due to the "real estate bubble" prior to 2008 caused property owners to be unfairly taxed for a number of years prior to the recession. The slower increase in tax revenue experienced today offsets the unfair taxation prior to 2008.

The Gadsden Center is conducting further investigation into this issue. We will publish any significant findings as they become available.