TRAVERSE CITY -- Property tax assessments are down by 10 percent or more in Monterey Wheeler's East Bay Township subdivision, providing homeowners there a rare tax cut.
But a potential $240 tax savings isn't enough to ease Wheeler's pain. She winces over the lost value in her home of seven years.
"In a word, it's offensive, when you spend money and time to keep it nice," Wheeler said. "I would rather pay more and have the property worth what it was when we bought it."
Across town, in Leelanau County's Elmwood Township, Carol Clarke frets her assessment notice will show that the house she's owned for three years will have lost value yet again.
"You buy a house and a year later it's not worth what you paid for it," Clarke said. "All we have is this house."
Property tax assessment notices will begin showing up in regional mailboxes in about a month, and initial studies by county equalization directors in Grand Traverse, Leelanau, Benzie, Antrim and Kalkaska counties show residential assessments will drop on average 6.5 percent in Grand Traverse to 15.5 percent in Antrim.
Values in some townships could fall by 20 percent or more, while a few isolated areas won't see any changes.
"The farther you get away from Traverse City, the more residential values drop, said Thomas Longanbach, Benzie County's equalization director.
Longanbach hasn't finalized his data but expects to see overall residential losses between 8 percent and 10 percent, with some outlying areas recording drops up to 20 percent. The story is similar in Kalkaska County.
Foreclosures used in new data
County equalization directors study home sales and compare numbers to the previous year's assessments to determine if overall values in a township or city should rise or fall.
Last year, those studies showed reductions mostly below 5 percent, but this year assessors used foreclosure sales in calculations to better reflect true market values.
Areas that witness large drops will mean tax cuts for more residents as their assessments slip below their homes' taxable values.
Traverse City properties continue to retain most of their value, but overall residential property values will fall about 2 percent this year. That's the first decline in the city's residential tax base since 1994, city assessor Debra Chavez said.
Neighboring East Bay Township residents will see their property values slide by an average of 10 percent. Wheeler's English Woods subdivision, atop Holiday Hills and adjacent to the Vasa Trail, will be especially hard hit.
But changes mean different things to different residents, depending on their circumstances.
Wheeler and her husband considered moving to a smaller home, but they spoke with a real estate agent and determined they couldn't afford to sell in a flagging market.
Down the street from Wheeler, Donald Cunkle said he's not overly bothered by the home value loss. He'll appreciate a tax cut while it lasts.
"If it saves me a little in tax money now, that's all right. But if I had to sell, I'd take a loss, even if I could find a buyer."
Gap shrinks
Most area homeowners will see their state equalized value, commonly referred to as the assessed value, decrease, but property taxes are based on a home's taxable value.
When a house is purchased, taxable and assessed values are set at the same level the first year. Assessed value changes with the housing market, and homes bought before the recent real estate downturn often saw regular increases of 5 percent or higher.
A gap is created when the assessed value grows faster than the taxable value, and the longer a house is owned by the same person, the larger the gap.
"We went through darn near 15 years of growth, and you had a fairly significant gap between taxable and assessed, and that gap is what is really starting to shrink," said Laurie Spencer, Grand Traverse County's equalization director.
Robert Englebrecht, Antrim County's equalization director, expects 53 percent of all residential parcels to have the same taxable and assessed values in 2010, up 10 percent from last year.
Just 7,700 residential parcels in Grand Traverse County had taxable values that matched the assessed value in 2007. That number pushed past 14,280 last year and Spencer expects a similar jump this year.
But with more than 50,000 residential parcels, the majority of homeowners in Grand Traverse County won't see much tax relief.
That's why long-term residents of English Woods, such as neighbors Barry Gorbutt and George Hanks, will watch their assessments drop but not their taxes.
"I didn't expect any. I've never had a tax decrease," Hanks said.
Hanks and Gorbutt aren't pleased about their home values, but they're not overly concerned because neither family plans to move soon. And Hanks said he knows it could be worse.
"I'm not hurting as much as my kids in the downstate area; their property values have fallen a lot more than ours," he said.
State officials calculated a negative inflation rate of 0.3 percent, so all taxable values without new construction will drop by at least that amount.
The change will save Gorbutt $5.37 in taxes this year.
"How are they possibly going to fix the septage plant without my $5," joked Gorbutt, of the county's troubled treatment facility.
Less for local government
But local government officials aren't laughing. Those $5 bills add up.
Englebrecht estimates Antrim County's tax base will slide about 5 percent, not including new construction.
"That's a $500,000 decrease just to the county's budget," he said.
In Traverse City, one of the few places with significant new construction, three large new commercial projects, a couple new homes, and some remodeling projects should erase the city's 2 percent deficit and keep the city's tax base about even, Chavez said.
Grand Traverse County officials have not yet calculated their expected losses this year, but the county commission plans to begin budget deliberations about six months earlier than usual to address expected shortfalls this year and next.
"I think the tax base is going to go down again next year," Spencer said. "I'm not sure we've started the recovery yet."
