Oakland County Budget Symposium II. David Hieber ~ Oakland County

Transcription

1 Oakland County Budget Symposium II Presented by: David Hieber ~ Oakland County 1

2 Agenda IRM CPI Sheriff Deeds/Foreclosures Current Market Analysis Oakland County Outlook 2

3 IRM 2011 Inflation Rate Multiplier State Tax Commission 3

4 IRM 2011 Inflation Rate Multiplier est. Prior Year Current Year Actual 2010 Final IRM Calc Month 10/08-9/09 10/09-9/10 Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Total Median Mean Estimate Divided By = or 1.895% 4

5 IRM Inflation Rate Multiplier Taxable Value Calculations are derived by using IRM/CPI percentages. This has been mandated with the introduction of proposal A of IRM/CPI is calculated by the US Department of Labor % % % % % % % % % % % % % % % % % 5

6 IRM Inflation Rate Multiplier In February estimated a 1.73% CPI for Taxable Value estimates. In May estimated a 1.9% CPI for Taxable Value estimates Year Median 4 Month Actual MEDIAN 4 MONTH ACTUAL

7 Sheriff Deeds Foreclosures Monthly % Quarterly % CHANGE CHANGE January % February % March % TOTAL 1ST QTR % April % May % June % TOTAL 2ND QTR % July % August % September % TOTAL 3RD QTR % October November December TOTAL 4TH QTR GRAND TOTAL EOY est. 10,138 7

8 Sheriff Deeds Foreclosures 8

9 Sheriff Deeds Foreclosures 12,000 10,000 Oakland County, MI Sheriff Deeds - Foreclosures 9,242 10, ,000 7,643 6,000 4,855 4,000 2, ,170 1,755 2,024 2,168 2,623 0 Ratio: in in in in in in in 97 1 in 62 1 in 51 1 in 56 1 in 47 * Sheriff Deed totals retrieved from the Oakland County Register of Deeds office. * 2010 Count is estimated using the first 5 months of actual sheriff deeds. 9

10 Sheriff Deeds CVT 2009 Totals 10

11 Sheriff Deeds CVT 2009 Totals 11

12 Oakland County, MI Sheriff Deeds - Foreclosures Sherriff Deeds Foreclosures January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December

13 Market 2011 Sales Study 1 Year Study (used in declining markets) Establishes 2011 Taxable Value for 2011 July and December levy. Sales Study Timeframes are determined by the State Tax Commission. 13

14 Market Residential Sales Residential Sales between to Oakland County: -6% to -9% against 2010 values Year Sales Study Period for

15 Market Residential Sales Valid Sale Sold $1,350,000 Sold $725,000 Value Change -$625,000 Percentage Change -46.3% Valid Sale Sold $475,000 Sold $290,000 Value Change -$185,000 Percentage Change -39% Valid Sale Sold $135,000 Sold $59,000 Value Change -$76,000 Percentage Change -56.3% 15

16 Outlook Average QT Residential change % -4.79% -7.53% % % % % % % % % % % % % 16

17 IRM Commercial & Industrial Sales C&I Sales between to Oakland County: -12% to -14% against 2010 values Year Sales Study Period for

18 Market Commercial Sales Valid Sale Sold $900,000 Sold $800,000 Value Change -$100,000 Percentage Change -11.1% Valid Sale Sold $630,000 Sold $400,000 Value Change -$230,000 Percentage Change -36.5% Valid Sale Sold $450,000 Sold $300,000 Value Change -$150,000 Percentage Change -33.3% 18

19 Outlook What could be expected? 19

20 Outlook Budget Perspective $ Oakland County Parcel Count: 478,224 50% of Oakland County s general fund/general purpose budget relies on property taxes. This percentage was 62% just 3 years ago. 20

21 Outlook Budget Perspective WHY PROPERTY ASSESSMENTS MATTER Property tax revenue is generally the largest source for local units of government s General Fund operations. If there is one revenue source that a Finance / Budget officer needs to understand and monitor, it s property tax revenue. The connection between property assessment and the budget is a function of Proposition A concerned with individual properties. 21

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23 2011 Estimate created using sales information available to Oakland County Equalization as of New Construction, PP, and Pop-ups (uncappings) not finalized until

24 Outlook 2011 Budget Perspective Oakland County Residential Parcels where SEV=TV In 2008 for % of the County s Res Parcels In 2009 for % of the County s Res Parcels In 2010 for % of the County s Res Parcels 85% of the Res parcels SEV=TV may lose an average SEV of -8%. Prop A forces these parcels to also lose an average TV of -15%. Commercial and Industrial may lose an average of -15%. 15% of the Res parcels have the ability for the parcels to increase in TV by IRM. IRM for 2011 is % EST TV change for 2011 *2011 Residential Values estimated at 8% and the Commercial and Industrial Values are estimated at 15%. Oakland County Budget Task Force estimates 5% in Taxable Value for 2012 (subject to modification based on changing market conditions). 24

25 Appeals Impact on Revenue Oakland County Equalization Appeals received since Closed Appeals Appeals Still Open *2010 totals estimated by end of year. As of actual 2010 appeals: 171 closed, 910 open. 25

26 Appeals Impact on Revenue Accrued open appeals since Expected EOY *2010 totals estimated by end of year. As of actual 2010 appeals: 171 closed, 910 open. 26

27 Appeals Impact on Revenue 27

28 Appeals Impact on Revenue Examples: Commerce Twp property owner file appeals in 2008 on a principle residence (PRE) property. MTT settled appeal in 2010 for a $20,000 reduction in taxable value in Commerce PRE rate: 28.18mils Result: Property taxes revised for 2010 and 2008, 2009, resulting in a refund of taxes for all 3 years plus interest. PRE Appeal Post Appeal Taxable Taxes Paid Taxable Corrected Taxes Refund Interest Total Refund 2008 $100, $2, $80, $2, $ $31.97 $ $95, $2, $76, $2, $ $9.70 $ $92, $2, $74, $2, $ $0.68 $ No Winter Tax refund $1, The result of one PRE appeal made in 2008 (settled in 2010 for a 20,000 taxable reduction) is a reduction of taxes amounting to $1, for the property owner. This translates to a loss in county revenue of -$ (4.19mils / 28.18mils x $1,571.48). 28

29 Appeals Impact on Revenue Examples: Commerce Twp property owners file appeals in 2008 on a non-principle residence properties. MTT settled appeal in 2010 for a $100,000 reduction in taxable value. Commerce Non-PRE rate: 46.18mils Result: Property taxes revised for 2010 and 2008, 2009, resulting in a refund of taxes for all 3 years plus interest. Non Pre Appeal Post Appeal Taxable Taxes Paid Taxable Corrected Taxes Refund Interest Total Refund 2008 $1,000, $46, $900, $41, $4, $ $4, $950, $43, $859, $39, $4, $79.03 $4, $925, $42, $832, $38, $3, $6.05 $3, No Winter Tax refund $12, The result of one Non-PRE appeal made in 2008 (settled in 2010 for a 100,000 taxable reduction) is a reduction of taxes amounting to $12,975. This translates to a loss in county revenue of -$1, (4.19mils / 46.18mils x $12,975.78). 29

30 Insert Scan 30

31 Appeals Impact on Revenue Oakland County potential loss to revenue from Appeals Oakland County - Against the Total Amount in Contention as of Real TV $3,525,198,516 Taxable in Contention Personal TV $365,520,820 Taxable in Contention Total TV $3,890,719,336 Oakland County - Against the Total Amount in Contention Oakland County (4.19mils X $3.89 billion=$16.34 million*) *DOES NOT INCLUDE INTEREST 31

32 Appeals Impact on Revenue Commerce Twp potential loss to revenue from Appeals Commerce Twp Appeals as of July 2010 Real TV $52,727,000 Taxable in Contention Personal TV $5,584,000 Taxable in Contention Total TV $58,311,000 Commerce Twp Major Taxing Authorities Tax Interest Total Commerce Twp Gov (4.5306mils) ($264,183) ($7,397) ($271,580) Huron Valley Schools (31.95mils) ($1,863,000) ($52,165) ($1,915,201) Oakland Schools (3.369mils) ($196,449) ($5,501) ($201,950) Oakland County (4.19mils) ($244,323) ($6,841) ($251,164) OC Parks, Zoo, HCMA (0.5561mils) ($32,426) ($908) ($33,334) Oakland Community College (1.58mils) ($92,131) ($2,580) ($94,711) * Assuming that a 3 yr appeal generates an interest of 2.8% on average for an appeal dating back 3 years, the above illustrates a worst case scenario for the taxable value under appeal for Commerce Twp as of

33 Outlook Average Residential change Average Residential Change 0.00% % -2.00% -4.00% -6.00% -5.00% -8.00% -7.30% * % % % % % % % 2011 Average residential value change not finalized. Average as of trend line created by extrapolating past and current residential data. 33

34 Market Other Factors These factors affect current and future years Taxable Values OAKLAND COUNTY $3.9 billion is Taxable Value is in contention at the Michigan Tax Tribunal from 2005 to Average OC millage rate of 40 mills translates to $156,000,000 in government property revenue, and $16.34 million to the Oakland County Operating (4.19mills). Personal Property has seen a -9.84% decrease in Taxable Value between the years of 2005 to The number of building permits issued between the years of 2005 to 2009 have fallen by -95%. 34

35 Outlook County Levied Taxes 2005 $2,374,653, $2,499,596, % 2007 $2,592,558, % 2008 $2,530,052, % 2009 $2,475,736, % 2010 $2,184,900, % 2011 $1,966,400, % 2012 $1,868,000, % 2013 $1,821,380, % Taxes levied by all taxing authorities of Oakland County, MI estimated based on the estimates for Taxable Values. 35

36 Outlook Oakland The Big Picture 2007 Countywide True Cash Value $154.6 Billion 2010 Countywide True Cash Value Actual $115.5 Billion Change from % 2012 Countywide True Cash Value Estimated $92.7 Billion Change from % 36