Michigan commercial property tax assessments arrive each February and March like clockwork, often allowing property owners fewer than four months to determine if they are going to accept and pay – or fight and appeal – their assessment. While the volume of commercial tax appeals and settlements have decreased since the post-recession era of 2011 and 2012, property owners still do not want to be taxed above market rates for their commercial properties.
“Despite a strong Michigan real estate market, it’s a complex one,” said Jerome P. Pesick, managing shareholder at Steinhardt Pesick & Cohen, P.C., a Michigan-based law firm specializing in commercial property tax appeals, eminent domain and condemnation law, and land use cases. “Values are rising in certain commercial sectors, while others are stagnant or in decline. Even in a robust market, it’s important to ensure the property value assessment has not increased more than the market will justify.”
The notice of assessment given to each property owner confirms the value the local municipality has placed on the property and governs the amount of property tax due. For assessment purposes, a property’s value should be approximately half of its market value.
“In a strong economy, we see some communities assessing properties at levels substantially exceeding their values,” according to H. Adam Cohen, also a shareholder at Steinhardt Pesick & Cohen. “When that happens, the property owner can pay up or fight it by filing a petition with the Michigan Tax Tribunal.”
The last day for commercial/industrial properties to be filed with the Michigan Tax Tribunal is May 31, 2018. Cohen says the time frame for decisions by the Michigan Tax Tribunal used to be lengthy, but has eased significantly post-recession.
“Five years ago, it was not unusual to wait two t0 three years for an appeal to be heard; in recent years, it’s been closer to one year,” Cohen said. “For our commercial property owner clients who could save tens of thousands of dollars in an appeal, the tax relief is worth it. In many cases, we are able to accelerate the process by negotiating a settlement with the municipality before the appeal reaches the hearing stage.”
Both Cohen and Pesick have been intricately involved in the commercial property tax appeal process for decades.
“Like our other key practice areas of eminent domain and condemnation, it’s a niche area of the law that requires attention to detail, strong negotiation and trial skills, a keen understanding of commercial real estate, and strict adherence to deadlines,” Pesick said.
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