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http://www.southbendtribune.com/article/20.../910150309/1130

Michigan City schools will sue county auditor
Refusal to certify assessment will cost school $8.2 million, board says.

By STAN MADDUX
Tribune Correspondent

MICHIGAN CITY — The Michigan City school corporation will go to court to try to recover $8.2 million that would be lost to the schools from property tax assessments certified by the LaPorte County auditor.

The school board Tuesday night decided to pursue legal action and pay a majority of the legal expenses should other school corporations and government entities in LaPorte County join the lawsuit.

"We have commitments. There are others," said Jim Kintzele, Michigan City school board president.

Losing $8.2 million from a budget of about $50 million is sure to result in major cuts in areas such as student programs and staff, he said.

"If we canceled all of the sports programs, that would be less than $2 million," Kintzele said. "You just figure from there."

The school corporation wants a court order requiring LaPorte County Auditor Craig Hinchman to certify, instead, the property tax assessments from 2006 for use in current billing.

Despite objections from LaPorte County Assessor Carol McDaniel, Hinchman recently certified figures from 2005, which for the city of Michigan City would mean a $2.8 million loss next year.

McDaniel already has filed a lawsuit against Hinchman, seeking certification of the 2006 tax figures that her office approved during a reassessment that's now approaching its third year.

It's the auditor's decision whether to certify the figures.

Hinchman maintains the 2006 figures are flawed, with many over-assessed and underassessed properties.

And, Hinchman said, he cannot in good conscience place his signature on them.

"I'm trying to do what I believe is right," Hinchman said. "Sometimes, the right thing is not the popular thing to do."

The cuts in the school budget to make up for such a shortfall would actually be deeper than what they appear on the surface.

For example, $10 million of next year's budget is reserved to finance bonds taken out for construction projects and cannot be drawn from or reduced to finance daily operating costs, school board member Beryle Burgwald said.

Burgwald said there is some fat to cut but reductions in staff and programs would be inevitable.

He said that when a court decision would be handed down is not known, but he hopes it's soon.

"Time is of the essence," Burgwald said.

Michigan City Mayor Chuck Oberlie said the city will join in the lawsuit.

He said the $2.8 million the city would lose is roughly 15 percent of its general fund budget under the figures certified by Hinchman.

Oberlie is concerned there will be similar losses each year if the 2005 figures are used in the future yearly tax billing.

http://thenewsdispatch.com/main.asp?Sectio...ArticleID=26397

What's At Stake
A close look at what the reassessment debate means to taxpayers

Laurie Wink
The News-Dispatch

MICHIGAN CITY - The issue of County Auditor Craig Hinchman certifying 2005-pay-2006 property values instead of the 2006-pay-2007 reassessed values from County Assessor Carol McDaniel has been well documented.

What's at stake in the matter, however, is this: Will La Porte County have enough property tax revenue to fund county-wide taxing units, such as townships, libraries, towns, cities and school corporations?

Michigan Township Assessor Terry Beckinger helped shed light on the situation.

Michigan Township has been the focus of the tax-appeals storm generated by beach property owners who experienced dramatic jumps in their property assessed values.

The period in question was between 2005-pay-2006 and 2006-pay-2007, and the dramatic change was the result of a state-ordered trending process intended to bring properties to market value.

Beckinger said the differences in assessed values are more dramatic as property values increase.

As an example, Beckinger randomly selected a Michigan City residence of fewer than 1,000 square feet, with three bedrooms and one bathroom. The property's assessed value in 2005, before trending, was $64,500. The 2006 assessed value was $78,100 - not a big jump, according to Beckinger.

However, a house on Lake Shore Drive with an assessed value of $1.8 million in 2005 leapt to $3.8 million in 2006. Beckinger said most of the increase was the result of market appreciation between 1999 and 2005.

The differences in assessed values are even more dramatic for certain commercial and industrial properties.

The NIPSCO generating plant and land, Beckinger said, was valued at about $14 million in 2005, compared to more than $207 million in 2006.

Blue Chip Casino's assessed value went from more than $53 million in 2005 to more than $159 million in 2006. Beckinger said the dramatic increase was partially explained by the fact that the new casino boat was only partially built in 2005, and a $10 million parking garage had yet to be completed.

By using the 2005-pay-2006 assessed property values, Hinchman will reduce the base of valuation upon which the county can collect property taxes. That's because the 2005-pay-06 property taxes were based on 1999 assessed property values, whereas the 2006-pay-07 property assessments were trended ­- as required by state law - to bring them to market value.

The county receives about 70 percent of its revenue from residential property taxes, and another 16 percent from commercial property taxes.

Another large commercial property in Michigan Township, Lighthouse Place Premium Outlets, experienced a slight decline in assessed value, from about $54 million in 2005 to about $53 million in 2006. Beckinger said the difference occurred when some of the land in the mall was reclassified.

Michigan City Area Schools says it will suffer a shortfall of $8 million in tax revenue if tax collections are based on Hinchman's numbers instead of McDaniels' figures. The MCAS school board voted to take legal action to overturn Hinchman's decision.

Beckinger said he's unsure what to tell people who come to him wanting to appeal their 2006-pay-2007 property assessment. He said he has requested the state Department of Local Government Finance clarify the assessments.

"I would like to see a resolution so we can move forward with this," Beckinger said. "If we're going to stay with 2005 values, there's no sense in having people pay for property appraisals and attorneys for changes. At this point, we're really unsure."

The DLGF did caution Hinchman about his choice, saying it had never been done, but indicated Hinchman could make his own decision about the matter.

Beckinger thinks Hinchman overstepped his responsibilities and predicts significant refunds will be issued to individual property owners, particularly those living closest to Lake Michigan.

"I don't agree with it," Beckinger said, "because I think we had a system in place that we should have forged ahead (with)."

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Contact Laurie Wink at lwink@thenewsdispatch.com.