HomeMy WebLinkAboutResolutions - 2009.07.15 - 9779MISCELLANEOUS RESOLUTION #09 134 June 15, 2009
BY: Finance Committee, Tom Middleton, Chairperson
IN RE: DEPARTMENT OF MANAGEMENT AND BUDGET! EQUALIZATION DIVISION —
APPROVAL OF CONTRACT FOR OAKLAND COUNTY EQUALIZATION DIVISION
ASSISTANCE SERVICES WITH THE MICHIGAN STATE TAX COMMISSION
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Chairperson, Ladies and Gentlemen:
WHEREAS the Equalization Division provides a number of services to local units of
government including original assessments, reappraisals, and file maintenance; and
WHEREAS the State Tax Commission has requested appraisals in similar nature for
Telephone and Telegraph Systems in the County of Oakland as part of a reappraisal project; and.
WHEREAS, the State Tax Commission has requested an appraisal of parcel # 88-20-28-
302-031 in the City of Troy.
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of
Commissioners hereby approves entering into the attached Contract for Oakland County
Equalization Division Assistance Services covering the term March 1, 2009 through July 1. 2009
with the State Tax Commission, which has been signed by its authorized signatories.
BE IT FURTHER RESOLVED that the FY 2009 Budget be amended to include this
contract for the amount of $1,500.00 as follows:
GENERAL FUND (#10100)
1020501-186020-631813
9090101-186030-730359
FY 2009
Equalization — Reimb. of Equal. Svcs $1,500
Non-Dept — Contingency 1,500
Total S 0
BE IT FURTHER RESOLVED that the Board of Commissioners' Chairperson is
authoriemd to siyn thib contract.
BE IT FURTHER RESOLVED that the Oakland County Clerk shall receive and file the
executed contract with the concerned unit of government as required by law.
Chairperson. on behalf of the Finance Committee, I move the adoption of the foregoing
resolution.
FINANCE COMMITTEE
FINANCE COMMITTEE
Motion carried unanimously on a roll call vote with Gingell absent.
a5s1Rev 4-051
JENNIFER M GRANHOLM
GOVERNOR
STATE OF MICHIGAN
DEPARTMENT OF TREASURY
LANSING
ROBERT J. KLEINE
STATE 7REASURER
January 12, 2009
David M. Hieber, Dir.
Oakland County
250 Elizabeth Lk Rd., Ste 1000 W
Pontiac, MI 48341
Dear David M. Hieber:
The State Tax Commission is seeking your assistance. As I am sure you are aware, the
Commission is responsible for setting the value for all Telephone and Telegraph Systems the
State of Michigan. In 2006, a statutory change went into effect that required these companies to
be valued in the same manner as other taxpayers, Therefore, in 2006 the Commission was
required to develop tables for the valuation of the personal property and establish a value for
each building owned by the company. Through some recent litigation, it has become apparent
that the values placed on some of the larger facilities may not a.ccuratcly reflect the current
market and condition of the facilities. Therefore, we are asking that you provide the
Commission with a valuation for the buildings contained on the attached list. I am also
enclosing a document prepared by one of the phone companies that discusses some of the unique
issues involved in valuation of their facilities and discusses the need to take into account
functional and economic obsolescence.
The Commission has received funding to pay for the cost of these appraisals and will reimburse
you $1 500 for each facility you appraise. We would ask that you contact my office in writing
January 30, 2009 to indicate if you will or will not participate. If you agree to participate, the
appraisals will be due by March 1, 2009. Thank you for your cooperation and assistance in this
important matter.. Please contact me at 517-241-0917 or Kevin VanGieson at 517-241-4338
should you have any questions.
Kelli Sobel, Executive Secretary
State Tax Commission
Enc. Building Information
Guidelines for Valuing Telephone Buildings
P.O BOX 30471 • LANSING, MiCHIGAN 49909-7971
www,michigan.govifreasury • (517) 335-3429
JENNIFER M. C;PA4NHOLM
(30VPNioa
STATE OV
DEPARTMENT OF TREASURY
LANSLNO
ROBERT J. KLEINE
STATE TREASURER
DATE: May 1,2009
TO: Assessors
FROM! Kclli Sobel, State Tax Commission
SUBRCT: Telephone Company Reappraisal Project
The State Tax Commission is seeking your assistance. As I ain sore you are aware, the
Commission is responsible for setting the value for all Telephone and Telegraph Systems in the
State of Michigan. In 2006, a statutory change went into effect that required these companies to
be valued in the same manner as other taxpayers. Therefore, in 2006 the Commission was
required to develop tables for the valuation of the personal property and establish a value for
each building owned by the company. Through some recent litigation, it has become apparent
that the values placed on some of the larger facilities may not accurately reflect the current
market and condition of the facilities. Therefore, we are asking that you provide the
Commission with a valuation for the buildings contained on the attached list.
We would ask that you provide a brief narrative appraisal with all three approaches to value
should be considered. The following valuation methods are to be used in the appraisal project:
• The income approach would be desirable but likely impossible.
• The market approach would be desirable but not likely to find sales of similar telephone
properties.
• The cost approach will likely provide the most weight in value.
The State Tax Commission will defend the appraisals once they are received and reviewed for
information. ALL supporting documentation is to be included with the appraisal and a PDF
format is highly desirable. Thc assessor should retain a copy for their records in case questions
arise,
The Commission has received funding to pay for the cost of these appraisals and will reimburse
you $1,500 for each facility you appraise. We would ask that you contact my office in writing
by May 30, 2009 to indicate if you will or will not participate. If you agree to participate, the
appraisals will be due by july 15, 2009, Thank you for your cooperation and assstance in this
important matter. Please contact me. at 517-241-0917 or Kevin VanGieson at 517-241-433g
should you have any questions.
wAvirnIctivn Doldtrqa$Iiry
8,55 (Rev 44)-31
Sincerely,
JENNIFER M GRANHOLM
GovERNoR
STATE OF MICHIGAN
DEPARTMENT OF TREASURY
LANSING
ROBERT J..KLEINE
5TATE TREASURER
May 21, 2009
Dave Hieber, Director
Oakland County Equalization
250 Elizabeth Lake Road
Suite 1000W
Pontiac, MI 48341
Dear Mr. Hiebcr:
Thank you for agreeing to participate in the telephone company reappraisal project for the State
Tax Commission. We have received the appraisal for parcel 88-20-28-302-031. Enclosed you
will find a contract to provide the appraisal work. Please sign and return a copy to my office -
that we can initiate payment for the appraisal work you have completed. Thank you.
Kai Sobel, Excutive Secretary
State Tux Commission
Enc: Contract for Telephone Company Reappraitials
P.O BOX 30471 • LANSING, MICHIGAN 45909-7971
www,michigan.govnieasury • (517) 335-3429
.:nEAo; iF
JENNIFER M. GFRANHOLM
GOVERNOR
ROBERT J. KLEINE
:-..;TA fE7REASUN=R
Istk,
&Too
DEPARTMENT OF TREASURY
LA NSINO
c,?
JUL 0 7 .10 June 29, 2009
1)iid fl ieber
250 Elizabeth Lk Rd. Ste 1000
P4.)ntiac MI 48341
Dear Mr. 'Heber:
Inc Michigan Department of Treasury is seeking your assistance with valuation areal property
for select parcels under your jurisdictioft Attached is a May I , 2009 memo lrom Kai Sobel that
provides additional background on this project.
Attached, please bind a copy of a contract that you will need to sign in order to proceed to ensure
that your local unit/county will be paid for the work to be completed by not later than July 15,
2009As part of the contract; please had attached a list of the parcel(s) to be valued. The
Department will pay $1,500 per parcel, once the documentation is approved by Kelli .Sobel, the
Contract Compliance. Officer. You will also need to submit an invoice on your letterhead,
In order to encumber the necessary funds, we are requesting you return a signed copy of the
contract within 10 business days to the attention of Colleen 1-lorsunyer:
Iy mail: Michigan Department of Treasury, Purchasing Division, 430 W. Allegan Street,
Lansing ME 48922 or by e-mail: horstmyere@michigan.gov or by fax 517-373-6941.
Thank you for your attention to this request,
mICH$GAN DEPARTMENT OF TREASURY • LANSING. MICHIGAN 422
www.mnchigan gov/treasury • (S17) 373-32GO
Michigan Department of Treasury
State Tax Commission
Telephone Property Appraisals
Oakland County
I. DELIVERABLES
A. Appraise real property of telephone and telegraph companies within Michigan
pursuant to Public Act 610 of 2002. Reporting of the appraisal results shall
be made according to the requirements of this contract and the Uniform
Standards of Professional Appraisal Practice, Standard 2, for a summary
appraisal report or a restricted use format report. The appraisal procedures
must be in compliance with the current edition of the Uniform Standards of
Professional Appraisal Practice, Standard 1.
1. The county must recommend a True Cash Value (as defined by Michigan
Compiled Laws 211.27).
2. Property must be appraised using recognized real property
appraisal techniques, which will consider and appropriately apply the
three recognized valuation approaches (market/sales approach, cost
approach, or income approach). It is recognized that it will be almost
impossible for the income approach to he used and that there may not be
enough sales to appropriately use the sales approach and therefore, it is
acceptable to provide a value using only the cost approach. See
Appendix A for guidelines for valuating telecommunications real estate.
The county must possess the flexibility to correct deficiencies of its
valuation methodology based on written direction from the Contract
Compliance Inspector Kelli Sobel.
B. Work papers and hard copies of appraisal documents (corresponding to the
electronic submission mentioned above) must be submitted to the State Tax
Commission upon electronic submission of the appraisal.
1. Work papers must include at a minimum:
a. Ali field notes and calculations
b. All income notes
c All sales comparison notes.
Appraisal documents must include at a minimum:
a. Completed appraisal record cards (located
http://www. m ichiqa n .qo v/docume pdf)
b Sales comparison approaches (if performed)
c. Income approaches (if performed),
The work papers and all copies of appraisals will be the property of the State.
G. Appraisals must be completed and submitted to the State Tax
Commission no later than July 15, 2009.
B. PARCELS TO APPRAISE (1) Parcels #63-71-01-28-300-501
III. TOTAL CONTRACT VALUE $1,500.00
County Acceptance of Appraisal Requirements.
County Representative Name: ti I I ck-cot
County Representative Signature:
Date:l Ijfl
Guidelines for Valtting We State Assessed Appendix A
[Zeal Estate of Telecommunications Companies
Companies
Page 7
of Miehi2...nt Bell Telephone, will instead need only a few switching centers situated
regionally around the country. Smaller companies may require only one switching
laci.ity in the stifle , This will C:Vine a situation in which die major polion
equipment ;:„pace. in today's larger buildings will not be needed. It is important to
recognize that this change is in addition to all of thc changes that we have seen to
date, and it will take lacilitiett that are largely unused today and cause them to be
even less utnized in the ruture.
Given changing technology over the last 20 years there is little or no demand for
telecommunications spac.e, For example. telecom hotel facilities were hricfly found
in large ,sban areas such as Detroit. There was some development of such properties
in the late 1990s where we saw sonic traditional office buildings and warehouses
around the tiountry converted to telecom equipment hotel space in anticipation oldie
tt.ilcA..ommunicatiom. homn that never came. With the victual collapse or the
telecommunications industry in early 2000, most of those telecom hotel locations
were eventually converted back to traditional
l'oday the icieplione, roil]pancs own far more available squore footage than they use.
In fact demand is shrinking for traditional telecommunicra ion real estate facilities' as
techisolog, continues to reduce the footprint required for 'telecommunications
equipment., and competition from cmble companies and teehmilo,gy substitution to
vyireiess. cause traditional wireline companies to lose access lines at the rate or
rougii„• (Pt-. per year for the larger companies. Tne rate of access line loss is actually
increasing as competition from the cable television and wireless carriers intensi nes.
OS We look forward, die migratiQii to IP h.:.chnology will int .rcase the
at existing 1-cal e.;..tare facilities substantit.ity more than past icentis.
Ch;),:p.cfrtistiesof Bui)dings os:ed to Fronse Equipment
'11-W IOIT21 buildings used for teiccommunications that are situated in C'.c bigger cities
were very likely originally constructed in the 1920s. As telecommitnictaion services
brecaine nik.ire pervasive the equipment needs expanded, and there were often major
lluilding additions to provide the capacity to house the necessary equipment. The
First additions were typically in the 1940s and 1950s. 'rhe last additions were
typically in the 1970s. Therefore, most of the building construction was done in the
electromechanical era of telecommunication technology. As a result, the buildings
often have unique characteristics in terms of mechanical systems imd floor layout as
compared to building that were designed and consutuetcd at one time. Such things as
eievalors, loading docks, and adequate parkirm are frequently lacking as a result,
Cuideiines Coy Volt;ln:g the State Assessed Appendix A.
Estate oricieeommunftations Companies -
Companies
Page 3
Mere are addWonal unique aspects riAdted to buildings that were construotd to
house telecommunication equipment from the I 920s throur4h the I 970s that are
problenE;ne its Incy are consider.".d for curcent market uses:
• 'they typically fuck adequate heating systems because the bui l.ding were
warmed by the heat given off from operating the telecommunications network
equipment
▪ i leavy cooling C4ipacity due lo the heat from ecuipment make the cooling_
ysiems too expensive to operate fur :.r.enera I office, residential and sloraue
!Y;3e.';',
•!'reavy floor loads io accommodate the heavy electromechanical equipmern of
the era, extra heavy cum.struetion during the coo war to withstand nucicar
attack, 1.tld a lack of windows Cor added security all are unnecess'cwy for mos.i,
G.ses and necessitate conversion costs, "f he heavy C:111M1-0.:lion and seoirity
make conversion to alternative uses more costly than the typical
• tlie buildiniis generally lack tire proteetten systetm
• ile floor 0..)ve.ring and mechanied piping insulation often eonta in
\.vhieh is eNpensive to remedicitc.
• -ceight clevatotts are often not iwaiLOcIle to all floors re.quir'mg larprer items ot`
equipment to be placed in the buildings with the use of cranes through
,..Teitings in the exterior walls on tippet
•LGading OOC l a re often not preent. As an !,-Oternative thei-e may be a vat1.2 Lu
!he baset»ent
• Iniklegtmte Foridn.,:!,is char-act:1..0Th of buildin2:: in centNl ilut:inecs ilicIriCiS
• They are generally not. ADA. compliarr.;
vaI uation Concepts
The proper con:;ept of value in Michigan lbr administration of the property tax is true
cash V2lue„ which the Miehiil.an courts have found to be equivalent to value in
exchan$4e, or Fair market value. True cash value is contrasted with value it: use, the
value to a specific owner or user of the properly. Value in use is not the Michigan
legal standard and, consequently, the value to the owner of its own
!clecommtinftations building is irrelevant to the lef:.,.at standard of true. cash value.
For example, in .Thriliy Royal Oak„ Inc (Q.- A!ei, f,i. p Ckv of Ro.y.al Oak, ,t \4 P1
455, 462-63 (I 9S(), the MTT held:
Guidelines for Valuing the State Asse.sscr.,d Append iX A
IZal Estate of Telecommunications Companies
Companies
Page 4
Use of actual cost .. bases the estnnate on the value in use ot'
the subject because it veiliteS lo the operofion of
the PefitiOnerS . bialHes'S.
Ni1C1 211.27 . . requires use of the cash value. being "the
Jsual selling price . which could he obtained at private sale,
." Value in use simply does not fneasure this dellnitiou of
value. Value in use and the statutory standard ;.n .c two distinct
concepts of value, a(kit,tal
the highest and best use of the property nit.Ist be determined: The highest and best
use as though vacant is ;hat reasonable alternative Lse hart yields the highest land
valoe. The highest and best use of roperty a:;.: improved is tbat use that s:iould be
inndc of a property as it eNists. Al) oNisting property should be renovated or DAnincd
as is as loriz. as it continues to contribute, to the total market value of the property, or
unt',I the renin from a new improvement would more titan oft -Set the cost of
demo!i4Cmq tie. existing building and eonstructing a new one_ Ilfe highest and hest
use (...r-r1e. hirildhws cui-:-ently owned by telteot runun tear iOflS companies to hose
equipment is frequently for some othr use such as storage or general ofrce.
Approaches to Value
In developing each approach to value it s crucial that the market data be ,,,zathered to
support estimates and conclusions, Ruildings used for telecommun;cations typically
.lave characier"Isties thal are undesirable in the marketplace. Although they have
tatustr.,..1 chi teteristics they are ddapta5le to alternative. use,. This co,ideticed
by the ;nue!: different uses and equipment that are situated in the buildings Ioday as
compared to those fbr which they were originally designed. e.g. telephone operators,
elecfromec.hanical cquipmi:au., etc.
(\,si ripr()uL..1)
In applying the cost approach all forms of physical d oteriordi on and
obsolescence should be identified, measured and deducted.
• Functional obsolescence is frequently evident in the form of excess ceiling
heights and heavy floor loads, inadequate heating systems, super-adequate
power and cooling systems (which lead to excessive operating costs), a lack
of adequate accc'.s,S, insufficient parking, etc.
• External obwresce.nce MUSt also be considered, particularly because of the
current poor real estate market. The buildings to be appraised were typically
built for the current owner, Even if such buildinu„s were new as of the
appraisal date, they would likely suffer from economic obsolescence s ince
typical buyers are not paying the cost of consimetion fbr buildings designed
Guidelines for Valuing the State Assessed Appendix A
meril Es late offeecommunications Companies
panics
Page
COT in today's market. In ;,-,ddition, given changes ill lf;:chnoli.Ty (here
e:enerally no demand for buildings adapted for traditional telecommunications
uses: Moreover, that de:trand is expected to decrease ever) further in the
future.
Market Approach or Sales Comparison Approach
• There are generally vety few if any sales of telecommunications proiwrties.
There is also little if ally denaind for telecommunications space. Relevant
comparable Sales are likely to he buildings used for warehouse or 0'ft -ice
space.
• In the markei approach it is necessary to reconize the linique aspects or
wiecommuniom kw company equipment building that no longer cotrisibute to
value. I ligh ceiling heights, lack of windows, insufficient heating kr other
uses, etc. are generaLy detriments to value in today's market place.
Accordingly, those characteristics generally requite ridhitrnew to ;he
comparz:ble sales used ic he mark.L,rt approach.
Income Ai:inroad'
• Because the buildings to he appraised are typically owner occtipied and there
generally fl Ic if any demand for telecommunications space, a typical
buyer's projected reins may be based on ‘varehouse or office me. !--kr.vcvcr,
the appraiser rilt1S1 also Make appropriate deductions for the present value of
converion costs, and los., of i -iccine during the conversion and rera -up
period:
(iiyen the depre s sed state of the Michigan econort:y it is frequently not
feasible to f.:,oni-cia the pr,,perties at the appi .aia1 date. Instead theappraised
property wouirl be held for development until such time as the redeveloped
pe_rty can be rented or sold at a price neeesary to :justify conver:zion. This
analysis mmt be done in toms of precnt value with recognition of all ct the
eo!..:ts 10 hold the property until development is feasible.
0.)i-relation
• Ali approaches should be carefully considered with particular emphasis on
those indicators of value that ate hest supported by actual matl,ei data.
Guidelines ror Valuing the‘-,-tate Assessed Appendix A
Real RNItite Of Telecunmunications Companies
Companies
Page
Summary
Fair inin-ket value cannot he determined without consideration and analysis of actual
market saies and market rental data. The state assessed real estate of the traditional
telecommunications companies typically reflect underutilized properties with the
expeetation that their utilization levels will dccrt...ase further in the future. They arc
typically dder properties that are adaptable to othev uses, '[heir highest and hest use
is generally sorreth in t; tdier than their current use. General office zuld storage wses
are often round to be the most likely alternatives Jr prospective purchasers. In
addiC:on, the buildings Crepently hole some atypical chal'acteristics that are not
sought alter in the maretplace and must he recognized in appraising the properties.
Therefore conversion costs associated with alternative uses arc an important
consideration. The appraiser Inas] make appropriate adjustments for physical
deterioration as well as functional and external obsolescence.
Resolution #09134 July 15, 2009
Moved by Capello supported by Woodward the resolutions (with fiscal notes attached) on the Consent
Agenda be adopted (with accompanying reports being accepted).
AYES: Burns, Capeilo, Coleman, Coulter, Douglas, Gershenson, Gingen, Gosselin, Greimel,
Hatcriett, Jackson, Jacobsen, Long, McGillivray, Middleton, Nash, Potter, Potts, Runestad,
Schwartz, Scott, Taub, Woodward, Zack, Bullard. (25)
NAYS: None, (0)
A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the Consent
Agenda were adopted (with accompanying reports being accepted).
I HEREBY APPROVE THE FOREGOiNG RESOLUTION
ACTING PURSUANT TO 1973 PA 139
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I. Ruth Johnson, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true
and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on July 15,
2009, with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac. Michigan this 15th day of July, 2009.
Gat
Ruth Johnson, County Clerk