An increase in property taxes could cause Coldwater’s historic Fisk House, home to Blue Hat Coffee, to close within the next year, according to Blue Hat owner Phillip Jewell.
Jewell, who owns the property and runs the business with his wife, Catherine, said he is currently exploring his options to get the taxes reduced with appeals to the local assessor and the state.
“We’re looking at all kinds of options: appealing, demolition, and moving the building to other local communities,” Jewell said.
When Jewell opened the business in 2011, he applied for and received an exemption from the homestead property tax. His application was granted and taxes waived entirely. With a recent property tax valuation audit by the Michigan Department of Treasury, however, the audit “resulted in a reduction of the homestead property tax exemption from 100 percent to 50 percent for the historic Fisk House owners,” according to a news statement from the City of Coldwater.
With this change, the Jewells would only receive half of the exemption that they did in years prior.
“The state determined that because we are part-business and part-living quarters, we only qualified for 50 percent of the homestead extension,” Jewell said.
The change would raise taxes on the property from $19,000 to $23,000 a year, Jewell said.
In effort to avoid paying such an increase, Jewell said he is currently working with a CPA to appeal the tax increase to the local assessor and to the state.
“We’re going to go down the path at this point of having a CPA go to the local assessor and board to see if we can get tax decreases,” Jewell said.
The Fisk House is listed with both the national historic register and the state historic register, but not the Coldwater historic district, Jewell said. This allows him and his wife to control their property because it is individually owned, but there aren’t any benefits to being a historic place as the grants and monies allocated to city governments don’t reach them.
In the meantime, Jewell has applied for a demolition permit because, he said, “the property is more valuable as empty land.”
Coldwater City Manager Keith Baker disagreed.
“We would hope he wouldn’t tear down the house as means to decrease property taxes,” Baker said.
Baker said he believes that getting rid of the house on the property would not have a significant impact on the taxes.
Rather than pursuing potential demolition, Baker said he encouraged Jewell to go through the appeals process with the Board of Review, which would allow a committee to review both the assessor and market data and look at circumstances of how the property would be valued, according to Baker.
“It’s essentially a check and balance for the local assessor,” Baker said.
Jewell said he has considered establishing a nonprofit organization for the property, and is confident he could get approval from the federal and state government to do so, depending on his goals.
“The problem is that the city would have to be OK with the loss of tax revenue,” Jewell said.
If the city were to fight it in court, Jewell could end up with significant legal fees, something he would like to avoid.
But for Jewell, he doesn’t believe that the City of Coldwater understands the value of historic buildings.
“Unfortunately historic buildings don’t seem to mean too much to the city,” Jewell said. “What does mean something to them is tax revenue.”
Baker said that the business and the building are an asset to the community.
“It was literally the only building in the area when US-12 was the main road from Detroit to Chicago,” he said.
Jewell said this project will be long-term, as they wait to see what will happen with the appeals.
“I’m going to try to keep this open, but I don’t want to keep getting taxed. There’s got to be a middle ground that we can all agree on.”
Jewell is passionate about the significance of local businesses in small-towns, but without a tax decrease, he says his business cannot survive.
“At this point, we’re slightly past breaking even,” Jewell said. “To continue to succeed, we’re going to need the support of the local area.”
If the taxes go down, Jewell says he can stay.
“If the taxes increase, then we’re going to have more faceless buildings on this street.”