Bill Text: MI HB4136 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Property tax; delinquent taxes; administration of delinquent tax revolving funds; clarify. Amends secs. 87b & 87f of 1893 PA 206 (MCL 211.87b & 211.87f).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2017-05-09 - Assigned Pa 27'17 With Immediate Effect [HB4136 Detail]
Download: Michigan-2017-HB4136-Introduced.html
HOUSE BILL No. 4136
February 1, 2017, Introduced by Rep. Tedder and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 87b and 87f (MCL 211.87b and 211.87f), section
87b as amended and section 87f as added by 2016 PA 82.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 87b. (1) The county board of commissioners of any county,
on behalf of the taxing units in the county and, for purposes of
the state education tax under the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, this state, may create a delinquent
tax revolving fund that, at the option of the county treasurer, may
be designated as the "100% tax payment fund". Upon the
establishment of the fund, all delinquent taxes, except taxes on
personal property, due and payable to the taxing units in the
county, except those units that collect their own delinquent taxes
after March 1 by charter or otherwise, are due and payable to the
county, on behalf of the taxing units in the county and this state.
Money and other property and assets held in the delinquent tax
revolving fund shall be kept separate from and shall not be
commingled with any other money, property, or assets in the custody
of the county treasurer. All money, property, and assets acquired
by the county treasurer, whether as revenues or otherwise, shall be
held by it in trust for the taxing units in the county for which
the taxes are levied. The county shall have no right, title, or
interest in the delinquent tax revolving fund except for the right
to payment provided for in section 87b(7) or 87c(3). If the county
determines to borrow pursuant to section 87c or 87d, that borrowing
shall be done on behalf of the county and its taxing units and the
primary obligation to pay to the county the amount of taxes and the
interest on the taxes shall rest with the local taxing units and
this state for the state education tax under the state education
tax act, 1993 PA 331, MCL 211.901 to 211.906. If the delinquent
taxes that are due and payable to the county are not received by
the county on behalf of the taxing units in the county and this
state for any reason, the county has full right of recourse against
the taxing unit or to this state for the state education tax under
the state education tax act, 1993 PA 331, MCL 211.901 to 211.906,
to recover the amount of the delinquent taxes and interest at the
rate of 1% per month or fraction of a month or a lower rate as
established by resolution of the board of commissioners until
repaid to the county by the taxing unit. However, if the county
borrows to provide funds for those payments, the interest rate
shall not exceed the highest interest rate paid on that borrowing.
If the board of commissioners reduces the interest rate on the
recovery of uncollected delinquent taxes as provided in this
subsection, that decrease shall not apply to any year's delinquent
taxes when borrowing against that year's delinquent taxes occurred
before the board of commissioners adopted a resolution to reduce
the interest rate on the recovery of uncollected delinquent taxes.
Any amount that is due from a local taxing unit or this state for a
prior year's uncollected delinquent tax is a lien against any
future delinquent tax payments that may be payable to a local
taxing unit or this state and the lien shall be satisfied by
offsetting the amount due to the county from the local taxing unit
or this state when distributions from the delinquent tax revolving
fund are made by the county to the local taxing unit or this state
in a subsequent year. A resolution or agreement previously executed
or adopted to this effect is validated and confirmed. For
delinquent state education taxes under the state education tax act,
1993 PA 331, MCL 211.901 to 211.906, the county may offset
uncollectible delinquent taxes against collections of the state
education tax under the state education tax act, 1993 PA 331, MCL
211.901 to 211.906, received by the county and owed to this state
under this act. The fund shall be segregated into separate funds or
accounts for each year's delinquent taxes. A separate delinquent
tax revolving fund shall be created for each year's delinquent
taxes in any county that elects to borrow under section 87f. This
subsection does not restrict a foreclosing governmental unit from
selling or transferring property under section 78m or 78r.
(2) If a delinquent tax revolving fund is established, the
county treasurer shall be the agent for the county, on behalf of
the taxing units in the county and this state, and, without further
action by the county board of commissioners, may enter into
contracts with other municipalities, this state, or private
persons, firms, or corporations in connection with any transaction
relating to the fund or any borrowing made by the county pursuant
to section 87c or 87d, including all services necessary to complete
this borrowing.
(3) The county treasurer shall pay from the fund any or all
delinquent taxes that are due and payable to the county and any
school district, intermediate school district, community college
district, city, township, special assessment district, this state,
or any other political unit for which delinquent tax payments are
due within 20 days after sufficient funds are deposited within the
delinquent tax revolving fund or, if the county treasurer is
treasurer for a county with a population greater than 1,500,000
persons, within 30 days after sufficient funds are deposited within
the delinquent tax revolving fund. In a county with a delinquent
tax revolving fund where the county does not borrow pursuant to
section 87c or 87d, if the county treasurer does not make payment
of the delinquent taxes to the local units within 10 days after the
completion of county settlement with all local units under section
55, the county shall pay interest on the unpaid delinquent taxes
from the date of actual county settlement at the rate of 12% per
annum for the number of days involved.
(4) Except as provided in subsection (5), the county treasurer
shall pay from the fund directly to a school district its share of
the fund when a single school district exists within a political
unit.
(5) If a local taxing unit has borrowed money in anticipation
of collecting taxes for any school district or other municipality
and the county treasurer has been so notified in writing, the
county treasurer shall pay to the local taxing unit the shares of
the fund for that school district or municipality. For purposes of
this subsection, "local taxing unit" means a city, village, or
township.
(6) The interest charges, penalties, and county property tax
administration fee rates established under this act shall remain in
effect and shall be payable to the county delinquent tax revolving
fund.
(7) Any surplus in the fund may be transferred to the county
general fund by appropriate action of the county board of
commissioners.
(8) A county board of commissioners may borrow money to create
a delinquent tax revolving fund as provided in section 87c or 87d,
or both.
(9) This section shall not supersede section 87 but is an
alternative method for paying delinquent taxes to local units.
However, where this section is used by a county, section 87 shall
not be used.
(10) Except for subsection (7), this section may be superseded
by section 87f, as provided in section 87f(1).
Sec. 87f. (1) In any county that has created a delinquent tax
revolving fund under section 87b, the county board of commissioners
may, by resolution, elect to continue the delinquent tax revolving
fund under this section. Except for section 87b(7) and all of the
powers granted to a county treasurer by sections 87b and 87c, this
section supersedes sections 87b and 87c as to a delinquent tax
revolving fund continued under this section. A resolution passed
under this subsection shall authorize the county treasurer to do
the following:
(a) Operate the delinquent tax revolving fund for delinquent
taxes returned for collection for the period during which
delinquent tax revenue notes secured by delinquent taxes pledged
from the delinquent tax revolving fund remain outstanding.
(b) In that year, issue the county's delinquent tax revenue
notes pursuant to the revenue bond act of 1933, 1933 PA 94, MCL
141.103 to 141.140, in an amount that will not exceed the aggregate
amount of the following:
(i) The delinquent taxes pledged to secure each borrowing.
(ii) At the option of the county treasurer and to the extent
authorized under subsection (6), a note reserve fund in an amount
not to exceed 15% of each borrowing.
(iii) The cost of issuance.
(2) Upon the board of commissioners' passage of the resolution
under subsection (1), the delinquent tax revolving fund shall be
continued, and the fund may be designated by the county treasurer
as the "100% tax payment fund". Thereafter, all delinquent taxes,
except taxes on personal property, due and payable to the taxing
units in the county, except those units that collect their own
delinquent taxes after March 1 by charter or otherwise, are due and
payable to the county treasurer, on behalf of the taxing units in
the county and this state. Money and other property and assets held
in the delinquent tax revolving fund shall be kept separate from
and shall not be commingled with any other money, property, or
assets in the custody of the county treasurer. All money, property,
and assets acquired by the county treasurer, whether as revenues or
otherwise, shall be held by it in trust for the taxing units in the
county for which the taxes are levied. The county shall have no
right, title, or interest in the delinquent tax revolving fund
except for the right to payment provided for in sections 87b(7) and
87c(3), and under section 22a(2) of the revenue bond act of 1933,
1933 PA 94, MCL 141.122a. If the county determines to borrow
pursuant to section 87c or 87d, that borrowing shall be done on
behalf of the county and its taxing units and the primary
obligation to pay to the county treasurer the amount of taxes and
the interest on the taxes shall rest with the local taxing units
and this state for the state education tax under the state
education tax act, 1993 PA 331, MCL 211.901 to 211.906. If the
delinquent taxes that are due and payable to the county treasurer
on behalf of the taxing units in the county and this state are not
received by the county treasurer for any reason, the county
treasurer has full right of recourse against the taxing unit or to
this state for the state education tax under the state education
tax act, 1993 PA 331, MCL 211.901 to 211.906, to recover the amount
of the delinquent taxes and interest at the rate of 1% per month or
fraction of a month or a lower rate as established by resolution of
the board of commissioners until repaid to the county treasurer by
the taxing unit. However, if the county treasurer borrows to
provide funds for those payments, the interest rate shall not
exceed the highest interest rate paid on that borrowing. If the
board of commissioners reduces the interest rate on the recovery of
uncollected delinquent taxes as provided in this subsection, that
decrease shall not apply to any year's delinquent taxes when
borrowing against that year's delinquent taxes occurred before the
board of commissioners adopted a resolution to reduce the interest
rate on the recovery of uncollected delinquent taxes. Any amount
that is due from a local taxing unit or this state for a prior
year's uncollected delinquent tax is a lien against any future
delinquent tax payments that may be payable to a local taxing unit
or this state and the lien shall be satisfied by offsetting the
amount due to the county from the local taxing unit or this state
when distributions from the delinquent tax revolving fund are made
by the county treasurer to the local taxing unit or this state in a
subsequent year. A resolution or agreement previously executed or
adopted to this effect is validated and confirmed. For delinquent
state education taxes under the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, the county may offset uncollectible
delinquent taxes against collections of the state education tax
under the state education tax act, 1993 PA 331, MCL 211.901 to
211.906, received by the county and owed to this state under this
act. The fund shall be segregated into separate funds or accounts
for each year's delinquent taxes.
(3) The delinquent taxes returned to the county treasurer
shall remain the property of the local units of government and the
county treasurer shall solely serve as a collection agent for those
delinquent taxes, with a county treasurer or other foreclosing
governmental unit authorized to perform collection functions under
sections 78 to 78s.
(4) All of the taxes, interest, fees, and charges required to
be collected by the county treasurer by this act related to
delinquent taxes shall remain in full force and effect in the event
this section applies.
(5) Subject to the limitations of subsections (1) and (6), the
county treasurer shall have the power to borrow money and issue
delinquent tax revenue notes as permitted by the revenue bond act
of 1933, 1933 PA 94, MCL 141.101 to 141.140, for the purpose of
continuing the delinquent tax revolving fund. Delinquent tax
revenue notes issued pursuant to the revenue bond act of 1933, 1933
PA 94, MCL 141.101 to 141.140, shall be secured by a statutory lien
on the delinquent taxes from which the borrowing is to be repaid
and all other property and assets and any revenues derived from the
delinquent taxes and other property and assets that are held in the
delinquent tax revolving fund. The lien shall automatically attach
without further action or authorization by the county. The lien on
the delinquent taxes and all other property and assets that are
held in the delinquent tax revolving fund and any revenues derived
from those sources shall be valid and binding from the time the
notes are executed and delivered. The lien shall automatically
attach and be effective, binding, and enforceable against the
county, its successors, transferees, and creditors, and all others
asserting rights, regardless of whether those parties have notice
of the lien and without the need for any physical delivery,
recordation, filing, or further act. In addition, the amounts
collected that are subject to the lien shall be held in trust for
the owners of the notes authorized by this subsection. Any property
eligible to be conveyed and properly conveyed to a land bank fast
track authority as tax reverted property, as defined by section
3(q) of the land bank fast track act, 2003 PA 258, MCL 124.753, or
to this state or a person, city, village, township, or county
pursuant
to section 78m or 78r of the general property tax act,
1893
PA 206, MCL 211.78m and 211.78r, shall
be released from any
lien created under this section.
(6) The resolution adopted pursuant to subsection (1)
authorizing the county treasurer to issue delinquent tax revenue
notes pursuant to the revenue bond act of 1933, 1933 PA 94, MCL
141.101 to 141.140, shall be approved by the county board of
commissioners and, in a charter or unified county, the chief
executive officer of the county in the manner authorized under the
charter or by law. The resolution shall also specify the following:
(a) The existence of a note reserve, if any, to meet any
possible future deficiencies in the note and interest redemption
account created for a note.
(b) The reasonable excess amount of the reserve authorized to
be created to secure the delinquent tax revenue notes and the
maximum size of the reserve, which shall not exceed 15% of the
principal amount of the notes to be issued.
(c) The amount of any excess delinquent taxes, if any, that
may be set to fund or provide for a reserve for future deficiencies
in amounts available to repay the county's delinquent tax revenue
notes.
(d) Any additional security under section 7b(5) or (6) of the
revenue
bond act of 1933, 1933 PA 94, MCL 141.1076.141.107b.
