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Now, commercial, industrial site values threaten services
The problem is happening nationwide, but a study by consulting firm PricewaterhouseCoopers and the Urban Land Institute showed metro Detroit will be hit especially hard because of the meltdown of the auto industry. The report listed the metro Detroit market as "abysmal" and dead last nationally in markets to watch for commercial real estate development and investment.
To be sure, owners of the commercial property will feel the loss of value. But so will homeowners, who count on that property to help fund services such as police and fire protection, local libraries and parks. The commercial tax hit comes on top of the decline in home values the past two years that already has crippled many municipal budgets. Many municipalities now are trying to figure out just how big of a hit they are going to have to take.
It's not always an easy calculation to make. Some commercial property is subject to tax abatements, and much of it often lies in special tax districts, such as downtown development authorities, which steer tax dollars away from the general funds of local government. While home values are based on the sale prices of comparable houses, commercial real estate can be valued by the income it generates.