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Local tax free land

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07/28/2015 - It has been said that nothing is certain in this world except death and taxes, but for some property owners in the Birmingham/Bloomfield area, there is no requirement to pay property taxes. While the vast majority of property owners in the nearly 23,000-acre area that makes up Birmingham, Bloomfield Township and Bloomfield Hills must pay property taxes, about four percent of property in the area is exempt from taxes.

"Take a suburban community, such as Birmingham, and there is an expectation that the city will be fundamentally supported by primarily residential property taxes along with some commercial tax, but in that mix will be a range of buildings that won't be tax generating," said Birmingham Planning Board member Robin Boyle, who also works as a professor in urban studies and planning at Wayne State University.

Of the some 3,074 acres of land that make up the city of Birmingham, about 10 percent is exempt from property taxes. That land includes small parcels of land that don't have much value on their own, such as right-of-way road easements, as well as highly-coveted downtown property, such as churches or government-owned buildings, like the Baldwin Library or the Birmingham City Hall.

Religious institutions, schools and government facilities are often considered the cornerstones of a suburban community, and as such the owners of such properties qualify for various tax exemptions.

In total, there are more than three dozen real property tax exemptions available in the Michigan General Property Tax Act, which offer partial or full tax exemptions to religious entities, various non-profit organizations, governmental entities, educational facilities, parks, disabled veterans and others.

"It's sort of a cost of creating community," Boyle said. "Parks, high schools, elementary schools and more facilities that would be seen as the precursor of today's not-for-profits, like community-based elderly facilities. That was very much the calculus of a suburban community, but that is shifting because we are seeing far more non-profits and an expansion of the religious base."

For communities with a large number of non-profits, educational facilities and government buildings, the expansion of tax-exempt lands can pose problems with revenue. A national report on tax-exempt lands published in 2012 by Governing magazine found about 30 percent of Baltimore's entire assessed value about $15.1 billion is made up of property owned by governments, non-profits and other tax-exempt organizations. Tax-exempt lands may also pose a problem for university towns and some state capitals that have a higher percent of government-owned property.

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