TRAVERSE CITY — A dust-up over the Traverse City Convention & Visitors Bureau's tax-exempt status prodded city officials to send audit letters to governments, churches, and other nonprofit organizations that claim a property tax exemption in the city.
About 335 properties in the city are fully tax-exempt, and a number of nonprofits have tax exemptions for personal property. City officials want the agencies to assert there have been no changes to their organization or how the property is used. It also asks the nonprofits to provide supportive documentation, such as their last income tax return, bylaws, balance sheet, and nonprofit designation by the Internal Revenue Service.
"We had discussions about this at the end of last year when questions came up about how Munson Medical Center, the Chamber of Commerce, and the Visitors Bureau are taxed," said City Manager Jered Ottenwess. "The assessor thought it appropriate to look into it more ... because their office hasn't done it in the past."
Assessor Polly Cairns said tax-exempt properties should be regularly reviewed. Any change of use should be reported to her office, but it's not unusual for such changes to be overlooked, whether the property is taxed or tax-exempt, she said.
Once the city receives nonprofits' documentation officials will review those materials to verify the tax-exempt status.
Mayor Michael Estes said several commissioners were surprised to learn the Visitors Bureau wasn't on the tax rolls because the property is owned by a foundation that's supposed to be for educational purposes. Some commissioners compared it to the Traverse City Chamber of Commerce, a similar organization that was denied such an exemption.
Estes said the city needs to set a policy on how the city handles all tax-exempt requests, as opposed to having scenarios such as the Visitors Bureau situation "come through the back door.
"We need to establish a policy of how we should pursue this," Estes said. "Do we support any organization that makes application, or do we require substantial evidence."
The vast majority of tax-exempt parcels, about 200, are owned by city, county, state or federal governments. Schools account for 26 parcels and churches have 37 properties.
Area nonprofits claim about 66 more properties from the tax rolls. They include well-known names such as Munson Medical Center and others that raise questions, such as Michigan Bell Telephone Co. or Asgard Enterprises. Asgard Enterprises is an assumed name for Goodwill Industries.
Phil Murphy, executive director for Old Town Playhouse, said he doesn't know what to think after he received a notice in the mail that was addressed to TC Civic Players, Inc.
"It's an old name that hasn't been used in years, so it's probably a good thing they are doing some updating," Murphy said.
Assembling the city-requested documents "will be a little bit of a hassle," Murphy said, because it's not something the organization ordinarily has to provide.
"But I'm not concerned about our status," Murphy said. "It shouldn't be a problem."
The audit originally was scheduled for discussion with the city commission on Monday but was postponed until February. Cairns set a Feb. 10 deadline for responses and Ottenwess wanted to wait to see what kind of response Cairns receives.