Hillsdale City Council adopted state-mandated poverty exemption 2019 guidelines, allowing homeowners who meet federal poverty income guidelines to receive property tax relief.
“Given the makeup of Hillsdale, it’s beneficial for the people who live here,” Ward 4 Councilman Ray Briner said. “It helps a variety of people stay in their homes, and in Hillsdale.”
The city of Hillsdale’s poverty rate in 2016 was 30.5 percent, but that number doesn’t accurately reflect the real poverty in the city. Students often fall below the poverty line, as census data doesn’t account for any assistance they might receive from relatives. Further dragging the statististics down is the location of low-income housing developments in the city, according to Hillsdale Assessor Kim Thomas.
Only one household claimed the poverty exemption in 2018. The City lost $21,744 in taxable value; or roughly $850 in tax revenue when split between the City, County, Intermediate School District, and Hillsdale Community Schools.
Only a few households usually claim the exemption each year, and rarely do households repeatedly use the exemption, Thomas said.
“Most of our low income people either rent homes here, or they are in the lower income housing,” Thomas said. “Usually they are not property owners, they don’t have property taxes to pay, so there is nothing for them to apply for.”
During hard economic times, the number of applicants tends to jump. In the Great Recession, six people requested the exemption.
“The exemption hasn’t been a big discussion item,” Ward 2 Councilman Will Morrisey said. “But it’s a significant thing for the residents to have this property exemption. If the exemption didn’t exist, I’d expect some more people to lose their property. There would be foreclosures, and market forces would kick in.”
Usually residents request exemptions after getting sick or being widowed, especially if they weren’t the primary breadwinner of their families, Thomas said.
“In my experience, it is usually cases where there was an unexpected illness, where people who had been working suddenly needed a temporary assistance so they could keep up with their property,” Thomas said. “We’ve had cases where people had cancer, and while they were seeking treatment, they weren’t able to work. Or, their spouse has to take time off work to care for them, so their income drops.”
The City Council also expanded the property tax exemptions for disabled veterans in 2013, and seven veterans used the exemption in 2018.
“I’m sure that for the people who request the poverty exemptions, it’s extremely important,” Thomas said. “Even when you read the description of the exemption in the state law, it’s limited to people who are in desperate situations.”
The Michigan State Tax Commission requires Hillsdale City to approve the guidelines each year, thereby setting the standards by which the city’s assessor and Board of Review weigh requests for property tax exemption.
“In Hillsdale County, there is quite a bit of generational poverty,” said Clint Brugger, manager of the Hillsdale County Community Action Agency. “It’s quite difficult for people to navigate themselves outside of that, so those are extremely important because they help fund some issues that keep people from moving towards self-sufficiency.”