Poverty exemptions for property taxes approved in Grosse Pointe Farms, Shores

Grosse Pointe Times | Published February 24, 2021

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GROSSE POINTE FARMS/SHORES — While the image that many people have of the Grosse Pointes is one of wealthy people living in mansions, the cities are much more economically diverse than that.

Homeowners who have fallen on hard times — especially in light of the pandemic — might be able to take advantage of a temporary reduction of their property taxes, if they meet certain income guidelines. During a meeting Feb. 8 by Zoom, the Grosse Pointe Farms City Council unanimously voted to adopt state guidelines, policies and an application for a poverty exemption from property taxes.

A poverty exemption application enables a homeowner to request property tax relief from the city assessor and Board of Review because the taxes place an excessive hardship on the resident. To be eligible, a resident must first meet federal poverty standards. For 2021, the federal poverty guidelines are $12,760 in annual income for a single person, $17,240 annually for two people in the same household and $26,200 for a family of four. Applicants must make less than these amounts to qualify.

Debra Lichtenberg, Farms director of finance and operations, said adoption of the policy was required under state law.

“This is really codifying what we have already been doing and making it more transparent or available to our residents who may be eligible for a tax reduction,” Lichtenberg said.

She said that because of changes made by the state Legislature in December 2020, the Board of Review would no longer be able to deviate from state guidelines because of a “compelling reason,” such as medical expenses.

The elimination of special circumstances is one of the main changes in the law and makes the policy uniform across Michigan, said Doug Shaw, a managing partner of the Farms’ new assessor, WCA Assessing.

“There were too many exceptions that were kind of vague (before),” Shaw explained. “This (policy) provides clear-cut guidelines.”

Maximum assets are set at federal poverty levels, meaning that each person’s total assets, aside from their income and home, cannot be more than $12,760, Lichtenberg said.

“Last year, we had four (residents) that were eligible for a (property tax) reduction,” Lichtenberg said. “This (exemption) generally does not reduce the property tax to zero.”

The guidelines approved by the Farms call for at least a 50% property tax reduction for homeowners found to qualify for the exemption by the city’s Board of Review. Lichtenberg said the Farms formerly used a formula to calculate the appropriate reduction, but the new state law mandates that cities can only use reductions of 100%, 50% or 25%. She said they arrived at the 50% figure because the average reduction over the last three years in multiple communities was 40% to 50%.

The Grosse Pointe Shores City Council also voted unanimously in favor of the poverty exemption language during a meeting Feb. 16 by Zoom.

“I don’t believe we’ve ever had anybody claim a poverty exemption in our city,” Shores Mayor Ted Kedzierski said. “The standards are pretty strict.”

Kedzierski said the Michigan Tax Commission requires cities to approve these guidelines.

As was the case in the Farms, the Shores council approved a tax reduction of at least 50% for homeowners found to qualify for the exemption by the Board of Review.

Residents interested in learning more about the poverty exemption or upcoming local Board of Review meetings can visit their city’s website.

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