(Editor’s Note: Sally Murray, our Peninsula Township Assessor, clarifies some facts and misconceptions about the Purchase of Development Rights (PDR) program. For more about the program and how it works, click here. – jb)
The Purchase of Development Rights (PDR) millage proposal is on the ballot for your consideration on August 2, 2022. There are many “Vote Yes” and “Vote No” signs scattered about the community, along with a fair amount of conflicting public comment. This article is an attempt to consolidate facts and address observed misconceptions.
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As most residents are aware, PDR is a millage-funded program that enables Peninsula Township to limit the development rights on certain eligible properties. PDR has had a striking impact on the township, as evidenced by large tracts of open land and multiple panoramic viewsheds. Farmers and landowners who were experiencing pressure to subdivide their land received compensation in exchange for giving up development rights.
Participation by farmers and landowners is voluntary, and land within the program is not and will not be open to the public.
The PDR program began in 1994 and was renewed by the voters of Peninsula Township in 2002. When a millage is enacted, it has an impact on your taxes. However, many taxpayers are not aware of how the property tax structure works. In order to understand the implications, here is a brief tutorial (preferably with your most recent tax bill in hand).
Properties are assessed annually and several valuations are computed:
• Assessed Value, or AV (represents half of market value, based on a trailing two-year sales study period)
• State Equalized Value, or SEV (AV as adjusted by the county and state equalization process)
• Taxable Value, or TV (used to determine tax liability — this is the value that millages are levied against)
Taxable values increase annually by the rate of inflation or 5 percent, whichever is less. They are also impacted by new construction, demolition, and transfers of ownership. Taxable values are somewhat fickle. Two seemingly identical properties can have very different taxable values.
Taxable values are not representations of market value. To a large degree, they are most impacted by the duration of ownership and “status quo” use — that is, no new construction or demolitions. Property owners who’ve owned their properties for many years will often have a significantly lower TV than AV. That is because market pressure (AV) often increases significantly faster than inflationary pressure (TV).
A review of the Peninsula Township assessment roll reveals that the median TV of agricultural and residential properties is $163,700.
All millages are subject to the Headlee Millage Reduction fraction (MRF). This is why, when a millage is enacted, the millage rate often “erodes” over time. The MRF intends that, ignoring additions and losses, any current operating millage must be reduced if it would produce more tax dollars, adjusted for inflation, than it did last year.
Now … what does this all mean?
If the “No” votes prevail, the PDR millage will not be renewed, voters will no longer pay any taxes associated with the program beginning with this coming winter’s tax levy, and no future development rights will be purchased through the township’s PDR program.
If the “Yes” votes prevail, voters will continue participating in the PDR program by way of additional financial (tax) contributions. A review of the most recent tax bill reveals that the MRF has reduced the original 2.0000 mills down to 1.7123 mills. That is a difference of 0.2877 mills.
This difference, as applied to the median township TV, results in an extra $47 per year, or $3.92 per month.
In order to determine your own unique additional obligation, review your most recent tax bill and perform the following computation: (0.2877/1,000) x Taxable Value.
-Sally Murray, Assessor, Peninsula Township