Zoning district, tax assessor classifications not the same thing

Some improperly use tax assessor classifications as an indicator of zoning district, but they are not the same and one should never base zoning decisions on property tax classifications.

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A common misperception is the belief that the tax classification on one’s property tax bill is the same as the property’s zoning district.

They are not the same. Michigan State University (MSU) Extension specialists in planning and zoning often receive questions on this topic, especially in situations where the tax classification seems to be at odds with the zoning district. (Related articles: March board of review is landowners opportunity to protest property tax issue; Qualified agricultural property exemption not necessarily tied to property classification). To understand these two distinct concepts, tax classification and zoning district, property owners must look to Michigan’s General Property Tax Act and the local zoning ordinance, respectively.

Tax classification

The tax assessor classifies real property and takes that data to study property values in a given area. The assessor will group all of a certain type of residential property so residential values are only being compared to like residential land for the equalization process. Towards that, the General Property Tax Act (MCL 211.34c) requires that by the first Monday in March, the local assessor must classify all the property within the local jurisdiction.

The General Property Tax Act (MCL 211.34c(2)) provides for uniformity in property assessments and taxation and strictly defines each of the six tax classifications for real property in Michigan. The tax classification assigned to a given property is determined based on how that land is currently being used. The six classifications are:

  • Agricultural (includes sub-classifications for agricultural: improved, vacant, building on leased land, and other agricultural categories)
  • Commercial (includes sub-classifications for commercial: improved, vacant, renaissance zones, condominiums, personal property, and more)
  • Industrial (includes sub-classifications for industrial: improved, vacant, renaissance zones, personal property, and more)
  • Residential (includes sub-classifications for residential: improved, vacant, condominiums, and more)
  • Timber (includes sub-classifications for timber: cutover, Commercial Forest Act, and more)
  • Developmental (includes sub-classifications for vacant, improved, leaseholder approved, and more. This classification is used near population centers where uses are changing)

Within each classification, the tax assessor also has many possible sub-classifications that can be utilized. The State Tax Commission publishes a guide that explains each of these classification in further detail and also outlines the appeals process for property owners that disagree with their tax classification.

In short, tax classifications are determined by the local assessor based on the current use of the property.

Zoning classification

Zoning district names may have the same titles (agricultural, commercial, industrial and residential), but they have a different purpose.

A local government adopts a master plan using a process spelled out in the Michigan Planning Enabling Act (MCL 125.3801 et seq.). Part of the plan will include discussion on zoning and will include a future land use map. The master plan expresses a future vision for a community and shows where different forms of growth should occur and where various uses should occur in the community.

The local government then might adopt a zoning ordinance using processes, protocols and restrictions spelled out in the Michigan Zoning Enabling Act (MCL 125.3101 et seq). A zoning ordinance includes a zoning map that shows zoning districts. Over time the zoning map is updated and gradually starts to look like the future land use map.

Those zoning districts are often given names denoting what type of development can occur, such as commercial or light industrial. There is no standardization of zoning district names in Michigan. Some communities name their zoning districts after a colloquial place name, or neighborhood name, such as Spartyville Heights. Others just use a letter-number system such as R-1, R-2, etc. Residential R-1 might be the least dense single-family area in one community, but the densest multiple family area in another community.

While the names may be informative, one needs to look to the details in the zoning ordinance to see what that district is about and what land uses and building forms might be allowed. If you are interested in learning more about planning and zoning in Michigan, check out MSU Extension’s Citizen Planner program at www.CitizenPlanner.msu.edu.

In short, zoning districts are established by the local zoning ordinance and regulate the allowable uses of that property based on a community’s master plan.

Zoning and tax classification are not the same

Simply stated, zoning is permitted land use while property classification is uniform taxation. Because of these differences, one should never base zoning decisions on what appears on a property tax bill or assessment notice. Zoning is talking about what the use and building forms can and cannot be today and in the immediate future. Tax classifications, meanwhile, talk about the actual use already on the land. The tax assessor is classifying property based on what the current use of parcels are, for purposes of comparing like-land in order to calculate property values and generally uses a statewide classification system with uniform names.

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