Property Owners Warn Reassessment Could Force More Tax Foreclosures

A Hartland Township proposal to reassess more than $700,000 in delinquent sewer taxes was under fire Wednesday from attorneys representing several property owners who would share the higher bills — about a 6 percent increase each.

Attorney John D. Staran warned the concern that future delinquencies would also be reassessed could trigger a wave of additional foreclosures from owners who have been paying their taxes on parcels now largely undeveloped but targeted for commercial and residential projects.

"What you're really going to do if you move forward with this … you're going to create a major disincentive for anybody else in this district to make another single payment on their special assessment," said Staran, who represents developer Andrew Giovannetti of Birmingham, during a public hearing.

"You're also forcing them to make a decision they should never have to make — whether they should have to walk away from their property because it's basically being rendered valueless. Between the market and this indefinite liability, it's a tough decision to make folks."

But Hartland Township Manager James Wickman said the township is required under state law to spread the reassessment over the nearly 30 parcels in the tax district called SAD 4. He said officials have to look at the health of the entire sewer system.

"The township is thoroughly sympathetic," Wickman said. "These are difficult economic times. … These are difficult decisions."

Wickman said the board — which didn't discuss the issue after the hearing — could vote as soon as Tuesday on the reassessment. If approved, property owners who filed objections could appeal the decision to the Michigan Tax Tribunal.

Multiple questions

SAD 4 was set up in 2005 to pay for $12 million in new sewer infrastructure to expand at three ends of the current system. The land includes mostly undeveloped parcels zoned for commercial or mixed-use development at M-59 and Pleasant Valley Road, U.S. 23 and Clyde Road and M-59 near the township's western border. It's a 20-year assessment.

The recession has scuttled several planned developments, including one for housing on 30-acres east of the . Property owner Martin Daniels of Hartland said the developer backed out of the a deal to buy the land, which has no sewer hook-ups, and now the assessments owed exceed the land value and the additional taxes would make the situation worse. His attorney Carl F. Jarboe argued the reassessment can't exceed the value of the improvement under state law.

"There's not been a benefit realized to the property," Jarboe said. "The value received is minimal at best."

But Wickman said the value is the sewer capacity that was purchased, which he also noted even with the reassessment is far less than neighboring Tyrone Township.

The group also questioned the speed of the decision, penalties and interest on the amount and legality of the proposal. But Wickman said penalties and interest were charged by the county and that the board has been discussing options on how to handle sewer delinquencies for several months.

"We don't like it, either," said Wickman, in reference to interest and penalities passed on.

More problems on the horizon

Staran and Giovannetti noted after the meeting there are already five more properties in the final stages of the tax foreclosure process that prove their point that more districtwide reassessments in the hundreds of thousands of dollars if not more than $1 million are probable.

That would set up a scenario that Giovannetti says would make it difficult for him to keep making payments and inhibit future development in Hartland by anyone. His 39 acres was planned for office space and residential and currently costs him about $25,000 a year for the sewer assessment. (The amount varies by parcel based on its sewer capacity purchased from the township).

"If this goes through … Hartland Township as a municipality will have an extremely difficulty time in the future of ever issuing another special assessment for any water line or any street because who's going to want to come to Hartland knowing that the deal changes?"  Giovannetti said. "The precedence of something like this is long range."

But Wickman said the properties now facing foreclosure are more valuable and much of the taxes owed could be repaid.

Wickman said there could be other options such as the township buying distressed land at auction or buying back sewer capacity that could minimize future reassessments.

"I don't believe that's going to have a negative impact in development that was going to occur," he said.