Bill Text: MI HB5680 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Property tax; assessments; placement of solar panels on residential real property; exclude from assessment of true cash value. Amends secs. 27 & 34d of 1893 PA 206 (MCL 211.27 & 211.34d).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Vetoed) 2018-12-31 - Vetoed By The Governor 12/28/2018 12/31/18 Addenda [HB5680 Detail]
Download: Michigan-2017-HB5680-Introduced.html
HOUSE BILL No. 5680
March 6, 2018, Introduced by Rep. Barrett and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 27 and 34d (MCL 211.27 and 211.34d), section
27 as amended by 2013 PA 162 and section 34d as amended by 2014 PA
164.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 27. (1) As used in this act, "true cash value" means the
usual selling price at the place where the property to which the
term is applied is at the time of assessment, being the price that
could be obtained for the property at private sale, and not at
auction sale except as otherwise provided in this section, or at
forced sale. The usual selling price may include sales at public
auction held by a nongovernmental agency or person if those sales
have become a common method of acquisition in the jurisdiction for
the class of property being valued. The usual selling price does
not include sales at public auction if the sale is part of a
liquidation of the seller's assets in a bankruptcy proceeding or if
the seller is unable to use common marketing techniques to obtain
the usual selling price for the property. A sale or other
disposition by this state or an agency or political subdivision of
this state of land acquired for delinquent taxes or an appraisal
made in connection with the sale or other disposition or the value
attributed to the property of regulated public utilities by a
governmental regulatory agency for rate-making purposes is not
controlling evidence of true cash value for assessment purposes. In
determining the true cash value, the assessor shall also consider
the advantages and disadvantages of location; quality of soil;
zoning; existing use; present economic income of structures,
including farm structures; present economic income of land if the
land is being farmed or otherwise put to income producing use;
quantity and value of standing timber; water power and privileges;
minerals, quarries, or other valuable deposits not otherwise exempt
under this act known to be available in the land and their value.
In determining the true cash value of personal property owned by an
electric utility cooperative, the assessor shall consider the
number of kilowatt hours of electricity sold per mile of
distribution line compared to the average number of kilowatt hours
of electricity sold per mile of distribution line for all electric
utilities.
(2) The assessor shall not consider the increase in true cash
value that is a result of expenditures for normal repairs,
replacement, and maintenance in determining the true cash value of
property for assessment purposes until the property is sold. For
the purpose of implementing this subsection, the assessor shall not
increase the construction quality classification or reduce the
effective age for depreciation purposes, except if the appraisal of
the property was erroneous before nonconsideration of the normal
repair, replacement, or maintenance, and shall not assign an
economic condition factor to the property that differs from the
economic condition factor assigned to similar properties as defined
by appraisal procedures applied in the jurisdiction. The increase
in value attributable to the items included in subdivisions (a) to
(o)
(p) that is known to the assessor and excluded from true
cash
value shall be indicated on the assessment roll. This subsection
applies only to residential property. The following repairs are
considered normal maintenance if they are not part of a structural
addition or completion:
(a) Outside painting.
(b) Repairing or replacing siding, roof, porches, steps,
sidewalks, or drives.
(c) Repainting, repairing, or replacing existing masonry.
(d) Replacing awnings.
(e) Adding or replacing gutters and downspouts.
(f) Replacing storm windows or doors.
(g) Insulating or weatherstripping.
(h) Complete rewiring.
(i) Replacing plumbing and light fixtures.
(j) Replacing a furnace with a new furnace of the same type or
replacing an oil or gas burner.
(k) Repairing plaster, inside painting, or other redecorating.
(l) New ceiling, wall, or floor surfacing.
(m) Removing partitions to enlarge rooms.
(n) Replacing an automatic hot water heater.
(o) Replacing dated interior woodwork.
(p) Installing, replacing, or repairing an alternative energy
system with a generating capacity of not more than 1 megawatt, the
energy output of which does not exceed usage. As used in this
subdivision, "alternative energy system" means that term as defined
in section 2 of the Michigan next energy authority act, 2002 PA
593, MCL 207.822.
(3) A city or township assessor, a county equalization
department, or the state tax commission before utilizing real
estate sales data on real property purchases, including purchases
by land contract, to determine assessments or in making sales ratio
studies to assess property or equalize assessments shall exclude
from the sales data the following amounts allowed by subdivisions
(a), (b), and (c) to the extent that the amounts are included in
the real property purchase price and are so identified in the real
estate sales data or certified to the assessor as provided in
subdivision (d):
(a) Amounts paid for obtaining financing of the purchase price
of the property or the last conveyance of the property.
(b) Amounts attributable to personal property that were
included in the purchase price of the property in the last
conveyance of the property.
(c) Amounts paid for surveying the property pursuant to the
last conveyance of the property. The legislature may require local
units of government, including school districts, to submit reports
of revenue lost under subdivisions (a) and (b) and this subdivision
so that the state may reimburse those units for that lost revenue.
(d) The purchaser of real property, including a purchaser by
land contract, may file with the assessor of the city or township
in which the property is located 2 copies of the purchase agreement
or of an affidavit that identifies the amount, if any, for each
item listed in subdivisions (a) to (c). One copy shall be forwarded
by the assessor to the county equalization department. The
affidavit shall be prescribed by the state tax commission.
(4) In finalizing sales studies for property classified as
agricultural real property under section 34c, an assessor and
equalization director shall determine if an affidavit for the
property
has been filed under section 27a(7)(n). 27a(7)(o). If an
affidavit has not been filed, the property shall be reviewed to
determine if classification as agricultural real property under
section 34c is correct or should be changed. The assessor for the
local tax collecting unit in which the property is located shall
contact the property owner to determine why the property owner did
not
file an affidavit under section 27a(7)(n). 27a(7)(o). Unless
there are convincing facts to the contrary, the sale of property
classified as agricultural real property under section 34c for
which
an affidavit under section 27a(7)(n) 27a(7)(o) has not been
filed shall not be included in a sales study.
(5) As used in subsection (1), "present economic income" means
for leased or rented property the ordinary, general, and usual
economic return realized from the lease or rental of property
negotiated under current, contemporary conditions between parties
equally knowledgeable and familiar with real estate values. The
actual income generated by the lease or rental of property is not
the controlling indicator of its true cash value in all cases. This
subsection does not apply to property subject to a lease entered
into before January 1, 1984 for which the terms of the lease
governing the rental rate or tax liability have not been
renegotiated after December 31, 1983. This subsection does not
apply to a nonprofit housing cooperative subject to regulatory
agreements between the state or federal government entered into
before January 1, 1984. As used in this subsection, "nonprofit
cooperative housing corporation" means a nonprofit cooperative
housing corporation that is engaged in providing housing services
to its stockholders and members and that does not pay dividends or
interest upon stock or membership investment but that does
distribute all earnings to its stockholders or members.
(6) Except as otherwise provided in subsection (7), the
purchase price paid in a transfer of property is not the
presumptive true cash value of the property transferred. In
determining the true cash value of transferred property, an
assessing officer shall assess that property using the same
valuation method used to value all other property of that same
classification in the assessing jurisdiction. As used in this
subsection and subsection (7), "purchase price" means the total
consideration agreed to in an arms-length transaction and not at a
forced sale paid by the purchaser of the property, stated in
dollars, whether or not paid in dollars.
(7) The purchase price paid in a transfer of eligible
nonprofit housing property from a charitable nonprofit housing
organization to a low-income person that occurs after December 31,
2010 is the presumptive true cash value of the eligible nonprofit
housing property transferred. In the year immediately succeeding
the year in which the transfer of eligible nonprofit housing
property occurs and each year thereafter, the taxable value of the
eligible nonprofit housing property shall be adjusted as provided
under section 27a. As used in this subsection:
(a) "Charitable nonprofit housing organization" means a
charitable nonprofit organization the primary purpose of which is
the construction or renovation of residential housing for
conveyance to a low-income person.
(b) "Eligible nonprofit housing property" means property owned
by a charitable nonprofit housing organization, the ownership of
which the charitable nonprofit housing organization intends to
transfer to a low-income person after construction or renovation of
the property is completed.
(c) "Family income" and "statewide median gross income" mean
those terms as defined in section 11 of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1411.
(d) "Low-income person" means a person with a family income of
not more than 60% of the statewide median gross income who is
eligible to participate in the charitable nonprofit housing
organization's program based on criteria established by the
charitable nonprofit housing organization.
(8) For purposes of a statement submitted under section 19,
the true cash value of a standard tool is the net book value of
that standard tool as of December 31 in each tax year as determined
using generally accepted accounting principles in a manner
consistent with the established depreciation method used by the
person submitting that statement. The net book value of a standard
tool for federal income tax purposes is not the presumptive true
cash value of that standard tool. As used in this subsection,
"standard tool" means that term as defined in section 9b.
Sec. 34d. (1) As used in this section or section 27a, or
section 3 or 31 of article IX of the state constitution of 1963:
(a) For taxes levied before 1995, "additions" means all
increases in value caused by new construction or a physical
addition of equipment or furnishings, and the value of property
that was exempt from taxes or not included on the assessment unit's
immediately preceding year's assessment roll.
(b) For taxes levied after 1994, "additions" means, except as
provided in subdivision (c), all of the following:
(i) Omitted real property. As used in this subparagraph,
"omitted real property" means previously existing tangible real
property not included in the assessment. Omitted real property
shall not increase taxable value as an addition unless the
assessing jurisdiction has a property record card or other
documentation showing that the omitted real property was not
previously included in the assessment. The assessing jurisdiction
has the burden of proof in establishing whether the omitted real
property is included in the assessment. Omitted real property for
the current and the 2 immediately preceding years, discovered after
the assessment roll has been completed, shall be added to the tax
roll pursuant to the procedures established in section 154. For
purposes of determining the taxable value of real property under
section 27a, the value of omitted real property is based on the
value and the ratio of taxable value to true cash value the omitted
real property would have had if the property had not been omitted.
(ii) Omitted personal property. As used in this subparagraph,
"omitted personal property" means previously existing tangible
personal property not included in the assessment. Omitted personal
property shall be added to the tax roll pursuant to section 154.
(iii) New construction. As used in this subparagraph, "new
construction" means property not in existence on the immediately
preceding tax day and not replacement construction. New
construction includes the physical addition of equipment or
furnishings, subject to the provisions set forth in section
27(2)(a)
to (o). (p). For purposes of determining the taxable value
of property under section 27a, the value of new construction is the
true cash value of the new construction multiplied by 0.50.
(iv) Previously exempt property. As used in this subparagraph,
"previously exempt property" means property that was exempt from ad
valorem taxation under this act on the immediately preceding tax
day but is subject to ad valorem taxation on the current tax day
under this act. For purposes of determining the taxable value of
real property under section 27a:
(A) The value of property previously exempt under section 7u
is the taxable value the entire parcel of property would have had
if that property had not been exempt, minus the product of the
entire parcel's taxable value in the immediately preceding year and
the lesser of 1.05 or the inflation rate.
(B) The taxable value of property that is a facility as that
term is defined in section 2 of 1974 PA 198, MCL 207.552, that was
previously exempt under section 7k is the taxable value that
property would have had under this act if it had not been exempt.
(C) The value of property previously exempt under any other
section of law is the true cash value of the previously exempt
property multiplied by 0.50.
(v) Replacement construction. As used in this subparagraph,
"replacement construction" means construction that replaced
property damaged or destroyed by accident or act of God and that
occurred after the immediately preceding tax day to the extent the
construction's true cash value does not exceed the true cash value
of property that was damaged or destroyed by accident or act of God
in the immediately preceding 3 years. Except as otherwise provided
in this subparagraph, for purposes of determining the taxable value
of property under section 27a, the value of the replacement
construction is the true cash value of the replacement construction
multiplied by a fraction, the numerator of which is the taxable
value of the property to which the construction was added in the
immediately preceding year and the denominator of which is the true
cash value of the property to which the construction was added in
the immediately preceding year, and then multiplied by the lesser
of 1.05 or the inflation rate. However, after December 31, 2011,
for purposes of determining the taxable value of property under
section 27a, if the property's replacement construction is of
substantially the same materials as determined by the state tax
commission, if the square footage is not more than 5% greater than
the property that was damaged or destroyed, and if the replacement
construction is completed not later than December 31 in the year 3
years after the accident or act of God occurred, the replacement
construction's taxable value shall be equal to the taxable value of
the property in the year immediately preceding the year in which
the property was damaged or destroyed, adjusted annually as
provided in section 27a(2). Any construction materials required to
bring the property into compliance with any applicable health,
sanitary, zoning, safety, fire, or construction codes or ordinances
shall be considered to be substantially the same materials by the
state tax commission for the sake of replacement construction under
this section.
(vi) An increase in taxable value attributable to the complete
or partial remediation of environmental contamination existing on
the immediately preceding tax day. The department of environmental
quality shall determine the degree of remediation based on
information available in existing department of environmental
quality records or information made available to the department of
environmental quality if the appropriate assessing officer for a
local tax collecting unit requests that determination. The increase
in taxable value attributable to the remediation is the increase in
true cash value attributable to the remediation multiplied by a
fraction, the numerator of which is the taxable value of the
property had it not been contaminated and the denominator of which
is the true cash value of the property had it not been
contaminated.
(vii) Public services. As used in this subparagraph, "public
services" means water service, sewer service, a primary access
road, natural gas service, electrical service, telephone service,
sidewalks, or street lighting. For purposes of determining the
taxable value of real property under section 27a, the value of
public services is the amount of increase in true cash value of the
property attributable to the available public services multiplied
by 0.50, and shall be added in the calendar year following the
calendar year when those public services are initially available.
(c) For taxes levied after 1994, additions do not include
increased value attributable to any of the following:
(i) Platting, splits, or combinations of property.
(ii) A change in the zoning of property.
(iii) For the purposes of the calculation of the millage
reduction fraction under subsection (7) only, increased taxable
value under section 27a(3) after a transfer of ownership of
property.
(d) "Assessed valuation of property as finally equalized"
means taxable value under section 27a.
(e) "Financial officer" means the officer responsible for
preparing the budget of a unit of local government.
(f) "General price level" means the annual average of the 12
monthly
values for the United States consumer price index Consumer
Price Index for all urban consumers as defined and officially
reported
by the United States department Department
of labor,
bureau
Labor, Bureau of labor statistics.Labor Statistics.
(g) For taxes levied before 1995, "losses" means a decrease in
value caused by the removal or destruction of real or personal
property and the value of property taxed in the immediately
preceding year that has been exempted or removed from the
assessment unit's assessment roll.
(h) For taxes levied after 1994, "losses" means, except as
provided in subdivision (i), all of the following:
(i) Property that has been destroyed or removed. For purposes
of determining the taxable value of property under section 27a, the
value of property destroyed or removed is the product of the true
cash value of that property multiplied by a fraction, the numerator
of which is the taxable value of that property in the immediately
preceding year and the denominator of which is the true cash value
of that property in the immediately preceding year.
(ii) Property that was subject to ad valorem taxation under
this act in the immediately preceding year that is now exempt from
ad valorem taxation under this act. For purposes of determining the
taxable value of property under section 27a, the value of property
exempted from ad valorem taxation under this act is the amount
exempted.
(iii) Prior to December 31, 2013, an adjustment in value, if
any, because of a decrease in the property's occupancy rate, to the
extent provided by law. For purposes of determining the taxable
value of real property under section 27a, the value of a loss for a
decrease in the property's occupancy rate is the product of the
decrease in the true cash value of the property attributable to the
decreased occupancy rate multiplied by a fraction, the numerator of
which is the taxable value of the property in the immediately
preceding year and the denominator of which is the true cash value
of the property in the immediately preceding year.
(iv) A decrease in taxable value attributable to environmental
contamination existing on the immediately preceding tax day. The
department of environmental quality shall determine the degree to
which environmental contamination limits the use of property based
on information available in existing department of environmental
quality records or information made available to the department of
environmental quality if the appropriate assessing officer for a
local tax collecting unit requests that determination. The
department of environmental quality's determination of the degree
to which environmental contamination limits the use of property
shall be based on the criteria established for the categories set
forth in section 20120a(1) of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.20120a. The
decrease in taxable value attributable to the contamination is the
decrease in true cash value attributable to the contamination
multiplied by a fraction, the numerator of which is the taxable
value of the property had it not been contaminated and the
denominator of which is the true cash value of the property had it
not been contaminated.
(i) For taxes levied after 1994, losses do not include
decreased value attributable to either of the following:
(i) Platting, splits, or combinations of property.
(ii) A change in the zoning of property.
(j) "New construction and improvements" means additions less
losses.
(k) "Current year" means the year for which the millage
limitation is being calculated.
(l) "Inflation rate" means the ratio of the general price
level for the state fiscal year ending in the calendar year
immediately preceding the current year divided by the general price
level for the state fiscal year ending in the calendar year before
the year immediately preceding the current year.
(2) On or before the first Monday in May of each year, the
assessing officer of each township or city shall tabulate the
tentative taxable value as approved by the local board of review
and as modified by county equalization for each classification of
property that is separately equalized for each unit of local
government and provide the tabulated tentative taxable values to
the county equalization director. The tabulation by the assessing
officer shall contain additions and losses for each classification
of property that is separately equalized for each unit of local
government or part of a unit of local government in the township or
city. If as a result of state equalization the taxable value of
property changes, the assessing officer of each township or city
shall revise the calculations required by this subsection on or
before the Friday following the fourth Monday in May. The county
equalization director shall compute these amounts and the current
and immediately preceding year's taxable values for each
classification of property that is separately equalized for each
unit of local government that levies taxes under this act within
the boundary of the county. The county equalization director shall
cooperate with equalization directors of neighboring counties, as
necessary, to make the computation for units of local government
located in more than 1 county. The county equalization director
shall calculate the millage reduction fraction for each unit of
local government in the county for the current year. The financial
officer for each taxing jurisdiction shall calculate the compounded
millage reduction fractions beginning in 1980 resulting from the
multiplication of successive millage reduction fractions and shall
recognize a local voter action to increase the compounded millage
reduction fraction to a maximum of 1 as a new beginning fraction.
Upon request of the superintendent of the intermediate school
district, the county equalization director shall transmit the
complete computations of the taxable values to the superintendent
of the intermediate school district within that county. At the
request of the presidents of community colleges, the county
equalization director shall transmit the complete computations of
the taxable values to the presidents of community colleges within
the county.
(3) On or before the first Monday in June of each year, the
county equalization director shall deliver the statement of the
computations signed by the county equalization director to the
county treasurer.
(4) On or before the second Monday in June of each year, the
treasurer of each county shall certify the immediately preceding
year's taxable values, the current year's taxable values, the
amount of additions and losses for the current year, and the
current year's millage reduction fraction for each unit of local
government that levies a property tax in the county.
(5) The financial officer of each unit of local government
shall make the computation of the tax rate using the data certified
by the county treasurer and the state tax commission. At the annual
session in October, or, for a county or local tax collecting unit
that approves under section 44a(2) the accelerated collection in a
summer property tax levy of a millage that had been previously
billed and collected as in a preceding tax year as part of the
winter property tax levy, before a special meeting held before the
annual levy on July 1, the county board of commissioners shall not
authorize the levy of a tax unless the governing body of the taxing
jurisdiction has certified that the requested millage has been
reduced, if necessary, in compliance with section 31 of article IX
of the state constitution of 1963.
(6) The number of mills permitted to be levied in a tax year
is limited as provided in this section pursuant to section 31 of
article IX of the state constitution of 1963. A unit of local
government shall not levy a tax rate greater than the rate
determined by reducing its maximum rate or rates authorized by law
or charter by a millage reduction fraction as provided in this
section without voter approval.
(7) A millage reduction fraction shall be determined for each
year for each local unit of government. For ad valorem property
taxes that became a lien before January 1, 1983, the numerator of
the fraction shall be the total state equalized valuation for the
immediately preceding year multiplied by the inflation rate and the
denominator of the fraction shall be the total state equalized
valuation for the current year minus new construction and
improvements. For ad valorem property taxes that become a lien
after December 31, 1982 and through December 31, 1994, the
numerator of the fraction shall be the product of the difference
between the total state equalized valuation for the immediately
preceding year minus losses multiplied by the inflation rate and
the denominator of the fraction shall be the total state equalized
valuation for the current year minus additions. For ad valorem
property taxes that are levied after December 31, 1994, the
numerator of the fraction shall be the product of the difference
between the total taxable value for the immediately preceding year
minus losses multiplied by the inflation rate and the denominator
of the fraction shall be the total taxable value for the current
year minus additions. For each year after 1993, a millage reduction
fraction shall not exceed 1.
(8) The compounded millage reduction fraction shall be
calculated by multiplying the local unit's previous year's
compounded millage reduction fraction by the current year's millage
reduction fraction. The compounded millage reduction fraction for
the year shall be multiplied by the maximum millage rate authorized
by law or charter for the unit of local government for the year,
except as provided by subsection (9). A compounded millage
reduction fraction shall not exceed 1.
(9) The millage reduction shall be determined separately for
authorized millage approved by the voters. The limitation on
millage authorized by the voters on or before April 30 of a year
shall be calculated beginning with the millage reduction fraction
for that year. Millage authorized by the voters after April 30
shall not be subject to a millage reduction until the year
following the voter authorization which shall be calculated
beginning with the millage reduction fraction for the year
following the authorization. The first millage reduction fraction
used in calculating the limitation on millage approved by the
voters after January 1, 1979 shall not exceed 1.
(10) A millage reduction fraction shall be applied separately
to the aggregate maximum millage rate authorized by a charter and
to each maximum millage rate authorized by state law for a specific
purpose.
(11) A unit of local government may submit to the voters for
their approval the levy in that year of a tax rate in excess of the
limit set by this section. The ballot question shall ask the voters
to approve the levy of a specific number of mills in excess of the
limit. The provisions of this section do not allow the levy of a
millage rate in excess of the maximum rate authorized by law or
charter. If the authorization to levy millage expires after 1993
and a local governmental unit is asking voters to renew the
authorization to levy the millage, the ballot question shall ask
for renewed authorization for the number of expiring mills as
reduced by the millage reduction required by this section. If the
election occurs before June 1 of a year, the millage reduction is
based on the immediately preceding year's millage reduction
applicable to that millage. If the election occurs after May 31 of
a year, the millage reduction shall be based on that year's millage
reduction applicable to that millage had it not expired.
(12) A reduction or limitation under this section shall not be
applied to taxes imposed for the payment of principal and interest
on bonds or other evidence of indebtedness or for the payment of
assessments or contract obligations in anticipation of which bonds
are issued that were authorized before December 23, 1978, as
provided by section 4 of chapter I of former 1943 PA 202, or to
taxes imposed for the payment of principal and interest on bonds or
other evidence of indebtedness or for the payment of assessments or
contract obligations in anticipation of which bonds are issued that
are approved by the voters after December 22, 1978.
(13) If it is determined subsequent to the levy of a tax that
an incorrect millage reduction fraction has been applied, the
amount of additional tax revenue or the shortage of tax revenue
shall be deducted from or added to the next regular tax levy for
that unit of local government after the determination of the
authorized rate pursuant to this section.
(14) If as a result of an appeal of county equalization or
state equalization the taxable value of a unit of local government
changes, the millage reduction fraction for the year shall be
recalculated. The financial officer shall effectuate an addition or
reduction of tax revenue in the same manner as prescribed in
subsection (13).
(15) The fractions calculated pursuant to this section shall
be rounded to 4 decimal places, except that the inflation rate
shall be computed by the state tax commission and shall be rounded
to 3 decimal places. The state tax commission shall publish the
inflation rate before March 1 of each year.
(16) Beginning with taxes levied in 1994, the millage
reduction required by section 31 of article IX of the state
constitution of 1963 shall permanently reduce the maximum rate or
rates authorized by law or charter. The reduced maximum authorized
rate or rates for 1994 shall equal the product of the maximum rate
or rates authorized by law or charter before application of this
section multiplied by the compounded millage reduction applicable
to that millage in 1994 pursuant to subsections (8) to (12). The
reduced maximum authorized rate or rates for 1995 and each year
after 1995 shall equal the product of the immediately preceding
year's reduced maximum authorized rate or rates multiplied by the
current year's millage reduction fraction and shall be adjusted for
millage for which authorization has expired and new authorized
millage approved by the voters pursuant to subsections (8) to (12).
