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Property tax rates in dispute for automotive companies

September 4, 2010 By Times-Herald Newspapers Leave a Comment

Photo by J. Patrick Pepper
Photo by J. Patrick Pepper

Sunflowers in full bloom last week at Ford Motor Co. World Headquarters in Dearborn. Not quite as robust are the tax payments Ford has made this year to metropolitan Detroit municipalities, as compared to years past. Last year Ford was behind a low-profile lobbying campaign that led to changes in the way the state assesses automotive company property taxes.

By CHRIS JACKETT
Sunday Times Newspapers

Cities throughout southeastern Michigan that have Ford Motor Co.-owned land are facing large potential losses in property tax revenues.

New multipliers for qualified automotive manufacturers were adopted by the Michigan State Tax Commission on Dec. 21, 2009, and were intended for the 2010-11 fiscal year, which began July 1, 2010, for most municipalities.

The 2010 multipliers decrease the rates from 2000 in every category, some by as much as 75 percent, resulting in lower property taxes being paid by Ford Motor Co., which decreases city revenue for Dearborn, Allen Park, Woodhaven, Wayne, Livonia, Sterling Heights and Flat Rock.

“Quite frankly, I was shocked,” said Dearborn assessor Gary Evanko of the new multipliers. “Ford Motor Co. commissioned a study and got the state tax commission to buy into it. They not only spearheaded it, they paid for it. It’s very unprecedented.”

For Dearborn, the new multipliers would reduce $63.1 million in property tax revenue by $4 million for the current fiscal year.

“I reviewed the study in January, and in my opinion, it’s flawed,” Evanko said. “So we chose not to use the multipliers. It’s assessed as it was in previous years. The multipliers that were in place in 2000 are still applicable today.”

Allen Park Assessor Paula Grivins said her city – which already experienced a budget crisis in July with changes at the Fire Department – would lose $140,000 in tax revenue if the new multipliers were applied.

“We weren’t informed of these until late,” Grivins said. “We didn’t know the new multipliers when we calculated (the city’s 2010-11 fiscal budget).”

Evanko and Grivins both said the new QAM multipliers are worded so that only Ford, General Motors and Chrysler can use them, as well as overseas automakers with operations in Michigan, something Grivins called an unfair advantage with which smaller American companies cannot compete.

“Directions for utilization of these, without naming names, imply that these are only for the Big Three,” Evanko said. “General Motors and Chrysler are looking to have their values reduced by these multipliers, but not seeking it with the (intensity) Ford is.”

All of the cities involved are attempting to work with Ford to sort out the situation. The problem has come to light in the past two weeks as Ford has made only partial payments on recent bills, according to both Evanko and Grivins.

“They’re not paying their full tax amounts,” Grivins said. “They’ll have a delinquency.”

Ford sent a letter Aug. 16 along with a check to Allen Park for nearly $496,000 on a bill that was nearly $710,000. The letter detailed that the $214,000 difference was calculated and paid based on the smaller 2010 multipliers. Additionally, Ford said it was seeking a refund on some of the $496,000 based on undetermined depreciation values.

The dollar amount is different in every city, but Evanko said the bill is hitting some of the other cities especially hard.

“Dollar amount becomes a much higher percentage in the city of Wayne,” Evanko said. “(The) city of Wayne just gave Ford some tremendous tax breaks in 2009 with regard to the value of current property and future property. The generosity with Ford caused them to cut (municipal) staff by one third. It’s not just Ford; it’s residential, too.

“It’s really insulting when you provide the company very generous tax benefits and then they get a slap in the face.”

As the city with the most to lose, Evanko said Dearborn officials were quick to contact Ford about setting up a meeting to discuss the issue, but have yet to agree on a meeting date.

“We have an appeal with Ford Motor Co. Dearborn hopes Ford would be willing to work with us to come up with value multipliers that are more realistic,” Evanko said. “The city of Dearborn is not averse to recognizing that some of their property is worth less than the past valuation multipliers. We’ve made an attempt to schedule a meeting and Ford was receptive to meet.”

(Contact Chris Jackett at [email protected])

Filed Under: Stories Tagged With: Ford Tax Rates

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