By TOM LAVENTURE
Bessemer — When it’s one, two three strikes you’re out regarding municipal property assessment reviews — the Michigan Tax Commission has created the option of a designated assessor to step in and bring the taxing unit into compliance.
The Gogebic County Commission designated Kathy Jo Koval, the director of the county Equalization department, as its designated assessor at their Tuesday meeting. The action completes the interlocal agreement process that was already approved by local governments in the cities of Bessemer, Ironwood and Wakefield, and the townships of Bessemer, Ramsay, Ironwood, Marenisco, Wakefield and Watersmeet.
“The designated assessor came about in 2018,” Koval said.
The Tax Commission requires the county and its cities and townships to identify a designated assessor as an option to address problems with local assessment records, deficiencies or assessment methods when they continue to be in non-compliance with a five-year Audit of Minimum Assessing Requirements (AMAR). The AMAR is the standard with which the state is working to bring consistency among all municipal valuation processes.
“Everybody has their own way of doing things and part of the reason for the AMAR is to standardize CAMA (Computer Assisted Mass Appraisal) data standards,” Koval said.
This is a fairly recent development in the auditing process and there were differences in how assessments were reviewed among the municipalities in the most recent 2019 AMAR for Gogebic County, she said. This is an indication there will likely be changes and improvements prior to the next review in 2025.
The role of the designated assessor will also likely be more clear by 2025, Koval said. As of now a municipality with a compliance issue will be tasked by the state Tax Commission to submit a corrective action plan with a date of completion.
The local databases are sent to an independent firm for an audit, and annual reviews are conducted until the local municipality is in compliance or a third noncompliance review calls for further action. Ultimately, the state Tax Commission would make the decision if a compliance issue rises to the level of failing the AMAR, Koval said.
“If they pass the third time they are good for five years,” she said. “But if they fail the municipality has three options.”
The municipality can choose to hire a new assessor, who must have a level three or level four certification as a Michigan Certified Assessing Officer. The second option is for the state Tax Commission to assume jurisdiction and contract with a firm to make the corrections. The third option is for the designated assessor to intervene, while the state Tax Commission could also deny the designated assessor and pursue a different course of action, she said.
The preferred option is more or less case-by-case, she said.
If the taxing commission determines that a municipality’s assessment process is non-compliant the municipality would then assume any costs associated for bringing the municipality into compliance, she said. While the annual $765 designated assessor retainer fee is divided into $85 for each local unit, she said contracting with the designated assessor for a compliance issue could cost a municipality in the hundreds of thousands of dollars, which has already occurred in one Michigan county.
Koval has her own duties as county evaluation director. She said there is a stipulation in her contract that should her duties be required as a designated assessor for another taxing unit that she could hire an outside source to assist.
The local assessor has the responsibility of appraising the value of residential, agricultural, commercial and industrial real property in their jurisdiction. The information is combined with other local population, sales and income data that is used in the equalization process for the county.
“The local assessors are the people in the field who know their properties,” Koval said.
The county equalization office selects certain properties for their own valuation studies and then meets with the local assessors to confirm values or make adjustments, she said. So it makes sense that standardized methods and reporting would make it easier to track data and ensure the work is being done to a standard, she said.
Each assessor is graded on different points of the assessment process including all of their data. Failing the AMAR would first result in a corrective action plan with a reasonable period of time when a second audit will show the deficiencies have been corrected or another corrective action is applied. A third noncompliance audit result would require external intervention options to include the designated assessor.
The key is to ensure that compliance issues are caught during the day-to-day work and are resolved long before the AMAR, she said. The county Equalization office can be present when local assessors are meeting with the state Tax Commission to provide guidance or information when there is conduction or misunderstanding.
Koval said that while she is working with local assessors on compliance issues that were identified in the 2019 AMAR, there is not a situation yet in which she is in a situation to serve as the designated assessor.
“I work real hard with trying to be a resource for the local units,” Koval said. “We do talk a lot and I do have good relationships with most of my assessors.”
Koval said Equalization is a unique office and so provides annual board of review training for county officials. This training includes the assessment processes and has proven to be more effective when it’s done locally to offer more time to discuss information and make it easier to understand, she said.
“What needs to happen is the supervisors and the city managers have to take a more active role in looking at this (AMAR) review, because there is the potential to cost a lot of money for non-compliance,” Koval said.