By Diane Madigan
Independent Special Writer
At its regular meeting Feb. 11, the Van Buren Township Local Development Finance Authority heard a presentation on methods used to determine the property value of Grace Lake – the former Visteon Village.
The value is an issue of contention in the legal wrangling over the bonds the township backed for Visteon which will be coming up short for payment in a few years.
The LDFA had requested the township Assessing Department explain the situation and Assessment Coordinator Linda Stevenson and contracted Assessor Robert Brandmier addressed the group.
Arthur Mullen, VBT director of planning and economic development, told the LDFA there are three approaches to market value and then turned to Stevenson and Brandmier to continue.
Brandmier gave a history of the sale of the Visteon property. At the time of the sale to Sovereign Partners, Sovereign was concerned with the property value and tax abatements that were given to Visteon.
A team was formed, consisting of Stevenson, Brandmier, VBT attorney Patrick McCauley, and Trustee Phil Hart, with people from Wayne County staying in constant communication with the State Tax Commission.
Brandmier said a cost approach to assessing the value of the property was thrown out by the State of Michigan Tax Tribunal as not being a good indicator of value.
According to Brandmier, the market value approach was not used because at that time, the market was in bad shape. Even though the property was sold for $82 million it is valued at $64 million. It is illegal to value a property at sale price, he said.
He said the income approach was used. The property Visteon was still holding was put back onto the unabated/regular roll bringing tax revenue to the township and school district.
For 2012-13, Sovereign paid $22,000 more in taxes than before the sale, he said.
Brandmier said industrial property value equalization for 2014 is down 12% overall.
“This year the Visteon property assessment will not be changed,” he said, with the township making the adjustments, pluses or minuses, where they are needed.
He said the equalization is now done by property class, i.e. industrial, commercial, and residential.
Director Mullen asked for an outlook/projection for equalization and Brandmier said the residential class is increasing, commercial is a little flat and may go down a little more for another year. Industrial class is flat.
John Delaney asked from the audience if there were plans to market the out-lots for development at Sovereign.
Chairman Dotson said LDFA member Richard Gavalier brought that up at a previous meeting, asking what is the township doing to try to build, try to grow, and do some more over there to try to get some more income from that property.
VBT Supervisor Linda Combs said, again, that she would call Sovereign and set up a meeting with Director Mullen and herself and possibly Chairman Dotson to discuss that with them.
At the December meeting Supervisor Combs volunteered to check with Sovereign Partners to see if it had a broker for the property.
From the audience Carl Johnson asked Brandmier, “If you had a crystal ball what would the incremental increase look like moving forward?”
“At the Sovereign piece, it will go up very slowly,” Brandmier said, adding, the market value of those types of property don’t increase that much. If you only have one sale on that type of property every three or four years, it’s difficult to access or appraise the market value, he said.
The Independent asked if other properties in the district show any signs of growth. Stevenson said there may be an increase in personal property but they’re not due until Feb. 20.
The Independent also asked Dotson if the budget would need to be adjusted for a lack of increased tax revenue. The 2014 LDFA budget anticipates a $75,000 increase in tax revenue.
Director Mullen answered that the budget is based on projected income going forward.
Mullen added, “We’ve got a rainy day fund (bankruptcy settlement) and excess income fund (interest on settlement) to pay off the bonds through February 2018.”
“I thought you were basing that (budget) on not having this big growth going. It’s just kinda flat,” said Stevenson, who is president of the Michigan Assessors Association.
“What will happen is that we will start paying on a second class of bonds this year or next year that will increase our payments and that’s where we will really end up going underwater in the repayment,” Mullen replied. “Right now we’re almost having enough income to pay it.” He referred to the $477,496 that is not being collected in the district and is coming out of the settlement.
In other business at the Feb. 11 meeting, the LDFA:
• Approved amending the bylaws to change the frequency the LDFA meets to every other month instead of every month. This change requires township board approval. Additional special meetings can be called as needed; and
• Discussed and left unchanged the current attendance policy that states three unexcused absences by any member will result in automatic resignation. Dotson said unexcused absences will not have a per-year time frame and stressed the importance of continuity of business.
By Diane Madigan