Bay City considers expanding poverty tax exemption for owner-occupied homes

Bay City officials heard a presentation Feb. 16 on a proposed expansion of the city’s poverty tax exemption for owner-occupied homes.

City Assessor Wade Slavik told the commission that residential taxable values in Bay City rose sharply — about 14% from 2024 to 2025 — and that the assessing office has been reviewing similar programs in nearby jurisdictions. City appraiser Selena Christopher said the existing poverty exemption reduces taxable value for owner-occupied properties that meet federal poverty thresholds after annual application and income-and-asset verification and that the city currently receives only a small number of applications each year.

Christopher summarized local estimates: roughly 14,500 single-family homes in the city, about 10,000 of those owner-occupied, and a 21.5% poverty rate across residents. She told the commission staff identified roughly 300 homeowners who appear to be living in poverty and eligible under current program rules.

Under the proposal the commission discussed, homeowners at or below the federal poverty level would receive a 50% reduction in local taxable value; households up to 50% above the poverty line would receive a 25% reduction. Slavik said the current baseline policy had provided a 25% reduction to qualifying households and that the assessed change would shift the first tier to a 50% reduction. He estimated the city’s budgetary impact at about $25,000 in lost taxable revenue annually, and stressed coordination with the county treasurer’s office because of foreclosure risks.

Commissioners asked detailed questions about application rates, other local programs and tradeoffs. Commissioner Cubitt said the city received roughly 11 applications in 2025, representing about $5,000 in foregone tax dollars; she urged exploring whether a discretionary approach — including occasional 100% local exemptions used sparingly — could be added for households facing extreme hardship. Slavik said a 2023 state law created constraints on local board discretion under a tiered system but that the commission could, by resolution, authorize broader local exemptions (for example, 100%) while acknowledging that households receiving a 100% local exemption would not receive Michigan Homestead Credit reimbursements.

Commissioners also discussed outreach: Christopher and Slavik said low application counts reflect outreach gaps and that many eligible homeowners do not learn about the exemption until facing tax foreclosure. Slavik described staff efforts to educate applicants about state credits and tax-filing assistance programs so residents can pursue the Michigan Homestead Credit where eligible.

At the end of discussion the commission moved the item from the regular agenda and then, after a motion to approve the program, voted to refer the policy back to staff to explore adding targeted discretion and more generous options for extreme hardship. No final change to the ordinance or resolution language was adopted at the Feb. 16 meeting; staff were asked to return with draft language and fiscal projections.