NORWAY - Norway will lose several thousand dollars worth of taxes per year as part of a stipulation agreement with a local hotel that appealed its property value to the Michigan Tax Tribunal.
Calling the settlement a good compromise, members of the Norway City Council approved the agreement Monday with Norway Lodging Group, Inc., which owns the Norway Inn on U.S. 2.
According to information provided by Norway City Assessor Jim Waisanen, the Norway Inn property is assessed at a cash value of $1,288,800 and a taxable value of $644,000.
However, an appraisal submitted by Norway Lodging Group determined that the cash value of the property was only $550,000. The appraisal report cited a decline in business, due to the national recession and competition from other hotels in the area.
Based on the appraisal, information on recent hotel sales, and the results of recent Michigan Tax Tribunal cases, Waisanen advised that the city should settle the case instead of pursuing it further with the Michigan Tax Tribunal.
The stipulation agreement will reduce Norway Inn's cash value from $1,288,800 to $700,000 and its taxable value from $644,000 to $350,000.
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Yearly tax loss to the city will be $4,030.70 in city taxes, $1,244.38 in money to the Downtown Development Authority, $173.74 in administration fees, and $147.20 in county road millage money, which goes into the city's major streets and local streets funds.
Norway City Manager Ray Anderson drew a comparison between this case and Breitung Township's current Michigan Supreme Court case against a tax reduction for the Home Depot store located within the township.
"The big box stores like Home Depot and Lowe's have been successfully making these challenges and other businesses are following suit," he noted in his memo to the council. "Large hotels are now starting this process and have been very successful in getting a favorable ruling from the tribunal."
Council member George Bal asked if it would be prudent to wait for the outcome of Breitung Township's case before settling with Norway Lodging Group.
Anderson explained that Norway's case and Breitung Township's case deal with entirely different classes of property. He added that the Michigan Tax Tribunal has been siding with hotels in these types of cases almost 100 percent of the time.
Despite the future loss in revenue, council members said that entering into the stipulation agreement was the best option.
"We'll be getting more than if we went to the tax tribunal," said Mayor Jeremy Oja. "It's a better deal for us."
In other business, the council:
- Agreed to enter into a five-year contract with Terrazzo Creations & Renewal of Norway for concrete restoration work at the city's hydroelectric facility. Cost of the project will not exceed $80,000 per year, for a five-year total of $400,000.
Utility Superintendent Joe Pickart said that the project is budgeted. According to the plan, workers will repair concrete on the west powerhouse, side walls, wing walls, spillways, and main structure.
- Approved to pay up to $7,000 to Krause Power Engineering of Chippewa Falls, Wis. for miscellaneous engineering services throughout the year. Pickart noted that he usually only spends between $2,500 and $3,000 of that $7,000 budget each year.
- Agreed to spend up to $5,989 on a new golf cart and 11 new golf cart seats for the Oak Crest Golf Course. Council members Bal and Lee Meneghini voted against the motion.
Anderson said that course officials would like to bring the cart fleet up from its current number of 18 to a minimum of 20. The items are budgeted.
- Approved to pay up to $1,250 for Zambon Decorating Company of Iron Mountain to strip, sand, and stain 10 picnic tables at Marion Park. Zambon is currently in the process of re-staining the park's pavilion.
- Reapppointed Oja to a two-year term as Norway's representative on the Dickinson County Construction Code Commission.
- Heard Pickart report that the boulevard tree removal project has come to an end. A total of 133 dead or partially-dead trees were cut. Pickart added that workers are now in the process of grinding the leftover stumps.
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