Estimating Taxable Value Oakland County Equalization David Hieber

Understanding Your Tax Base The need for early estimates Current market conditions Understanding trends for future estimates Making reasonable assumptions Making modifications as more data is available For more info on Proposal “A”...

Excel Worksheet with Current SEV/TV. Inflation Rate Multiplier (IRM) Estimate Market Analysis (by class: residential, commercial, etc.) TAXABLE VALUE ESTIMATE Other Factors Impacting TV

History of Oakland County’s Values Sales Study Timeframe 1 year sales study Market conditions: Sales of properties 2010 Inflation Rate Multiplier (IRM) or (CPI) = -0.3% Most properties will have reduced Taxable Values. Exceptions: New construction and uncappings (pop-ups) Sherriff Deeds: Foreclosure Crisis State Tax Commission Bulletin 6 of 2007

57% of Oakland County’s general fund/general purpose budget relies on property taxes. $ Oakland County Parcel Count: 478,169

* * 2010 Taxable and Assessed Percentages Estimated. ** 2011&2012 Taxable and Assessed Percentages Estimated by the Oakland County Budget Task Force. Oakland County, MI: Percentage Change in Assessed and Taxable Values **

1 Year Study – (used in declining markets) Establishes 2010 Taxable Value for 2010 July and December levy. Sales Study Timeframes are determined by the State Tax Commission.

Valid Sale Sold $712,000 Sold $351,000 Value Change-$361,000 Percentage Change-50.7% Valid Sale Sold $181,000 Sold $125,000 Value Change-$56,000 Percentage Change-30.9% Valid Sale Sold $270,000 Sold $130,000 Value Change-$140,000 Percentage Change-51.9% Y

RESIDENTIAL Assessed Value Addison Township-15.45% Bloomfield Township-15.28% Brandon Township-18.26% Commerce Township-14.22% Groveland Township-24.15% Highland Township-13.90% Holly Township-15.19% Independence Township-16.37% Lyon Township-17.33% Milford Township-18.01% Novi Township-11.37% Oakland Township-14.69% Orion Township-12.80% Oxford Township-14.33% Rose Township-22.40% Royal Oak Township-16.96% Southfield Township-14.65% Springfield Township-15.28% Waterford Township-23.05% West Bloomfield Township-18.20% White Lake Township-20.63% Auburn Hills-18.66% Berkley-11.98% Birmingham-9.95% Bloomfield Hills-7.78% Clarkston-16.06% Clawson-13.22% Farmington-16.71% Farmington Hills-16.60% Fenton-14.27% Ferndale-15.92% Hazel Park-19.71% Huntington Woods-13.72% Keego Harbor-16.64% Lake Angelus-15.12% Lathrup Village-23.08% Madison Heights-21.84% Northville-14.12% Novi City-12.83% Oak Park-23.23% Orchard Lake-15.35% Pleasant Ridge-15.56% Pontiac-20.82% Rochester-11.70% Rochester Hills-12.70% Royal Oak City-15.03% Southfield City-28.31% South Lyon-11.56% Sylvan Lake-15.02% Troy-15.46% Walled Lake-16.96% Wixom-15.53%

Valid Sale Sold $16,000,000 Sold $12,300,000 Value Change-$3,700,000 Percentage Change-23.1% Valid Sale Sold $4,100,000 Sold $3,000,000 Value Change-$1,100,000 Percentage Change-26.8% Valid Sale Sold $220,000 Sold $145,000 Value Change-$75,000 Percentage Change-34.1%

Addison Township-11.76% Bloomfield Township-10.60% Brandon Township-11.35% Commerce Township-13.69% Groveland Township-13.96% Highland Township-15.12% Holly Township-18.36% Lyon Township-18.39% Milford Township-13.28% Novi TownshipNA Oakland Township-16.06% Orion Township-15.96% Oxford Township-17.39% Rose Township-18.13% Royal Oak Township-15.69% Southfield Township-17.14% Springfield Township-15.12% Waterford Township-9.89% White Lake Township-14.31% Auburn Hills-16.71% Berkley-12.21% Birmingham-12.64% Bloomfield Hills-14.84% Clarkston-14.09% Clawson-11.67% COMMERCIAL Assessed Value Farmington-13.57% Farmington Hills-9.22% FentonNA Ferndale-12.52% Hazel Park-17.54% Huntington Woods-11.99% Keego Harbor-11.74% Lake AngelusNA Lathrup Village-12.57% Madison Heights-15.32% Northville-12.29% Novi City-9.18% Oak Park-13.45% Orchard Lake-11.57% Pleasant Ridge-11.84% Pontiac-17.97% Rochester-16.71% Rochester Hills-14.36% Royal Oak City-7.63% Southfield City-8.18% South Lyon-12.87% Sylvan Lake-11.93% Troy-17.45% Walled Lake-12.81% Wixom-10.28%

Valid Sale Sold $1,400,000 Sold $978,350 Value Change-$421,650 Percentage Change-30.1% Valid Sale Sold $941,000 Sold $575,000 Value Change-$366,000 Percentage Change-38.9% Valid Sale Sold $4,852,000 Sold $1,800,000 Value Change -$3,052,000 Percentage Change-62.9%

Farmington-15.69% Farmington Hills-15.26% FentonNA Ferndale-17.12% Hazel Park-16.62% Huntington WoodsNA Keego HarborNA Lake AngelusNA Lathrup VillageNA Madison Heights-14.90% Northville-9.53% Novi City-9.43% Oak Park-13.69% Orchard LakeNA Pleasant Ridge-12.58% Pontiac-17.94% Rochester-13.15% Rochester Hills-14.39% Royal Oak City-8.83% Southfield City-11.88% South Lyon-15.82% Sylvan Lake-11.26% Troy-17.36% Walled Lake-14.18% Wixom-9.18% INDUSTRIAL Assessed Value Addison Township-11.92% Bloomfield Township-17.70% Brandon Township-7.65% Commerce Township-15.38% Groveland Township-13.21% Highland Township-15.72% Holly Township-16.15% Lyon Township-16.64% Milford Township-18.79% Novi TownshipNA Oakland Township-13.10% Orion Township-16.03% Oxford Township-14.94% Rose Township-18.32% Royal Oak Township-16.62% Southfield TownshipNA Springfield Township-16.58% Waterford Township-9.97% White Lake Township-14.30% Auburn Hills-18.80% Berkley-12.77% Birmingham-12.47% Bloomfield HillsNA ClarkstonNA Clawson-14.09%

2007 Taxable Value$209, Property Taxes$6, Taxable Value$132, Property Taxes$3,978 Change in Property Taxes -$2,311 Change in County Revenue -$ Taxable Values Estimated.

2009 Taxable Value $134, Property Taxes $4, Taxable Value$134, Property Taxes$4,029 Change in Property Taxes -$13 Change in County Revenue -$ IRM of -0.3% will cause properties similar to this example to lower the Taxable Value even if there is a gap between SEV and TV Taxable Values Estimated.

2007 Taxable Value$ 275, Property Taxes$13, Taxable Value$199, Property Taxes$9,968 Change in Property Taxes -$3,829 Change in County Revenue -$ Taxable Values Estimated.

2009 Taxable Value$988, Property Taxes$49, Taxable Value$985, Property Taxes$49,297 Change in Property Taxes -$148 Change in County Revenue -$ IRM of -0.3% will cause properties similar to this example to lower the Taxable Value even if there is a gap between SEV and TV Taxable Values Estimated.

1,192% increase in the number of Sheriff Deeds from in 5971 in 5391 in in in in in in in 97 1 in 62 1 in 51 Oakland County in Totals Estimated As of

Monthly %Quarterly % 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

AUBURN HILLS1 in 59 BERKLEY1 in 77 BIRMINGHAM1 in 53 BLOOMFIELD HILLS1 in 82 CLARKSTON1 in 43 CLAWSON1 in 67 FARMINGTON1 in 82 FARMINGTON HILLS1 in 73 FENTONNA FERNDALE1 in 44 HAZEL PARK1 in 28 HUNTINGTON WOODS1 in 117 KEEGO HARBOR1 in 46 LAKE ANGELUSNA LATHRUP VILLAGE1 in 36 MADISON HEIGHTS1 in 45 NORTHVILLE1 in 79 NOVI CITY1 in 91 OAK PARK1 in 35 ORCHARD LAKE1 in 84 PLEASANT RIDGE1 in 252 PONTIAC1 in 38 ROCHESTER1 in 77 ROCHESTER HILLS1 in 81 ROYAL OAK CITY1 in 74 SOUTHFIELD CITY1 in 32 SOUTH LYON1 in 62 SYLVAN LAKE1 in 83 TROY1 in 106 WALLED LAKE1 in 53 WIXOM1 in 82 ADDISON 1 in 92 VILLAGE OF LEONARD BLOOMFIELD1 in 82 BRANDON 1 in 72 VILLAGE OF ORTONVILLE COMMERCE 1 in 75 VILLAGE OF WOLVERINE LAKE GROVELAND1 in 116 HIGHLAND1 in 67 HOLLY TOWNSHIP 1 in 46 VILLAGE OF HOLLY INDEPENDENCE1 in 70 LYON TOWNSHIP1 in 117 MILFORD TOWNSHIP 1 in 80 VILLAGE OF MILFORD NOVI TOWNSHIPNA OAKLAND TOWNSHIP1 in 102 ORION TOWNSHIP 1 in 67 VILLAGE OF LAKE ORION OXFORD1 in 82 ROSE 1 in 46 VILLAGE OF OXFORD ROYAL OAK1 in 58 SOUTHFIELD 1 in 86 VILL OF BINGHAM FARMS VILL OF FRANKLIN VILL OF BEVERLY HILLS SPRINGFIELD1 in 78 WATERFORD1 in 48 WEST BLOOMFIELD1 in 62 WHITE LAKE1 in 63 Community Sheriff Deed totals estimated as of

Bulletin 6 of 2007 Guidelines for Foreclosure Sales Sheriff deeds are never included in sale studies. Bank sales to private individuals are to reviewed in accordance to these guidelines.

Can be accurately estimated by May Median Method 2010 Actual IRM: -0.3% or (IRM) Inflation Rate Multiplier = For property tax year 2010, the inflation rate multiplier is equal to the ratio of fiscal year 2009 average consumer price index divided by the fiscal year 2008 average consumer price index.

Prior YearCurrent Year Month10/07-9/0810/08-9/09 Oct Nov Dec Jan Feb Mar Apr May NA June NA July NA Aug NA Sept NA Total Median Mean Estimate Divided By =0.993or -0.69% 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.

% % % % % % % % % % % % % % % % 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.

SEV TV Analysis Oakland County 2008 SEV$74,491,081,562 Oakland County 2008 TV$64,745,976,336 Oakland County 2009 SEV$67,858,986,149 Oakland County 2009 TV$62,416,676,895 Misconception – a 8% gap between 2009 SEV and 2009 TV will allow TV to increase by at least IRM. Explanation Analysis can not be performed as a total. SEV and TV calculation must be performed on a parcel by parcel basis.

 A worksheet with current State Equalized Value (SEV) and Taxable Values (TV) for every parcel in community/county. A simple export of the data out of the BSA Assessing software will provide all the needed starting values. Approximately 95% of the communities in Michigan use BSA Assessing.  Create columns on worksheet with simple formulas to mimic the forces of Proposal “A” on a single parcel’s SEV by classification (i.e. Residential, Commercial, Industrial, etc…)

(1) 2010 AV = 2009 SEV multiplied by Estimated SEV Change for (2) 2010 TV = 2009 TV multiplied by Estimated IRM for (3) 2010 Final TV = IF/THEN: If the 2010 AV is less than the 2010 TV, use the 2010 AV. (2)(3)(1) Est Commercial Change: -14.0% or.86 Est IRM: -.3% or ,090 X 0.86 = ,580 X = 61,395 If (1)>(2), then chose (2), otherwise chose (1). PINClass2009 AV2010 AV2009 TV2010 TV2010 Final TV $125,090$107,577$61,580$61,395

Exported Create

Oakland County 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 (Estimated) 65% of the Res parcels SEV=TV may lose an average SEV of 15%. Prop “A” forces these parcels to also lose an average TV of -15%. Commercial and Industrial may lose an average of -14.5%. 35% of the Res parcels are required to decrease in TV by the IRM. IRM for 2010 is -0.3%. -13% EST TV change for 2010 *2010 Residential Values estimated at -15% and the Commercial and Industrial Values are estimated at -14.5%.

480% Increase in Taxable Value (totaling $2.8Billion) under appeal at the Michigan Tax Tribunal from 2008 to Currently there is $11.4 million in total tax dollars under appeal against the county operating millage (Major Appeals). Personal Property has seen a -5.5% 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%.

o 2008 Estimate of Taxable Value was $64,467,600,000 o 2008 Actual Taxable Value is $64,745,976,336 o 2009 Estimate of Taxable Value was $62,479,867,000 o 2009 Actual Taxable Value is $62,416,676,895 o 2010 Estimate of Taxable Value is $54,302,508,000 Tax Tribunals will reduce this Taxable Value difference further during the course of 2009 and 2010.

Residential Sales between to Sales: ratio (-9.1%) against proposed 2010 values Year Sales Study Period for o When comparing sales prices on the current sales, we discovered that the market is still dropping at a similar rate compared to last year at this time. We will continue to analyze the market conditions monthly and make modification to our Taxable Value estimate accordingly.

80% of the Res parcels SEV=TV may lose an average SEV of -15%. Prop “A” forces these parcels to also lose an average TV of -15%. Commercial and Industrial may lose an average of -20%. 20% of the Res parcels have the ability for the parcels to increase in TV by IRM. IRM for 2010 is 2.3%.** -12.5% EST TV change for 2011 *2011 Residential Values estimated at -15% and the Commercial and Industrial Values are estimated at -20% CPI estimated at 2.3%. ** IRM was generated by averaging the IRM from The actual 2011 IRM can not be calculated due to lack of data. Oakland County Budget Task Force estimates -5% in Taxable Value for 2012 (subject to modification based on changing market conditions). Oakland County 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 (Estimated)

2007 Countywide True Cash Value $154.6 Billion 2009 Countywide True Cash Value $135.7 Billion Change in TCV -$19 Billion 2007 Countywide True Cash Value $154.6 Billion 2009 Countywide True Cash Value $135.7 Billion Change in TCV -$19 Billion 2011 Countywide True Cash Value Estimated $96.3 Billion Change from 2007 to 2011 Change in TCV -$58.3 Billion or % 2011 Countywide True Cash Value Estimated $96.3 Billion Change from 2007 to 2011 Change in TCV -$58.3 Billion or %

 All communities should have access to this data in their assessing system for creating this estimate.  Reviewing market trends is crucial in predicting future tax base (declining sales, increasing foreclosures, etc…)  Modification to estimate as more data becomes available.  2010 Oakland County Taxable Value = -13%  2011 Oakland County Taxable Value = -12.5%  2012 Oakland County Taxable Value = -5%* *2012 Taxable Value estimate assumes we have hit the bottom of the real estate market in 2011.