Bill Text: MI SB0372 | 2013-2014 | 97th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Property tax; assessments; sale of certain agricultural property; exclude from sales ratio studies under certain circumstances. Amends secs. 8 & 27 of 1893 PA 206 (MCL 211.8 & 211.27).

Spectrum: Partisan Bill (Republican 5-0)

Status: (Passed) 2013-11-13 - Assigned Pa 0162'13 With Immediate Effect [SB0372 Detail]

Download: Michigan-2013-SB0372-Introduced.html

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SENATE BILL No. 372

 

 

May 21, 2013, Introduced by Senators CASWELL, NOFS, EMMONS, PAPPAGEORGE and BOOHER and referred to the Committee on Finance.

 

 

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending sections 8 and 27 (MCL 211.8 and 211.27), section 8 as

 

amended by 2006 PA 633 and section 27 as amended by 2012 PA 409.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 8. For the purposes of taxation, personal property

 

includes all of the following:

 

     (a) All goods, chattels, and effects within this state.

 

     (b) All goods, chattels, and effects belonging to inhabitants

 

of this state, located without this state, except that property

 

actually and permanently invested in business in another state

 

shall not be included.

 

     (c) All interests owned by individuals in real property, the

 

fee title to which is in this state or the United States, except as

 

otherwise provided in this act.

 

     (d) For taxes levied before January 1, 2003, buildings and

 

improvements located upon leased real property, except if the value

 

of the real property is also assessed to the lessee or owner of

 

those buildings and improvements. For taxes levied after December

 

31, 2002, buildings and improvements located upon leased real

 

property, except buildings and improvements exempt under section 9f

 

or improvements assessable under subdivision (h), shall be assessed

 

as real property under section 2 to the owner of the buildings or

 

improvements in the local tax collecting unit in which the

 

buildings or improvements are located if the value of the buildings

 

or improvements is not otherwise included in the assessment of the

 

real property. For taxes levied after December 31, 2001, buildings

 

and improvements exempt under section 9f or improvements assessable

 

under subdivision (h) and located on leased real property shall be

 

assessed as personal property.

 

     (e) Tombs or vaults built within any burial grounds and kept

 

for hire or rent, in whole or in part, and the stock of a

 

corporation or association owning the tombs, vaults, or burial

 

grounds.

 

     (f) All other personal property not enumerated in this section

 

and not especially exempted by law.

 

     (g) The personal property of gas and coke companies, natural

 

gas companies, electric light companies, waterworks companies,

 

hydraulic companies, and pipe line companies transporting oil or

 

gas as public or common carriers, to be assessed in the local tax

 

collecting unit in which the personal property is located. The

 

mains, pipes, supports, and wires of these companies, including the

 

supports and wire or other line used for communication purposes in

 

the operation of those facilities, and the rights of way and the

 

easements or other interests in real property by virtue of which

 

the mains, pipes, supports, and wires are erected and maintained,

 

shall be assessed as personal property in the local tax collecting

 

unit where laid, placed, or located. Interests in underground rock

 

strata used for gas storage purposes, whether by lease or ownership

 

separate from the surface of real property, shall be separately

 

valued and assessed as personal property in the local tax

 

collecting unit in which it is located to the person who holds the

 

interest. Interests in underground rock strata shall be reported as

 

personal property to the appropriate assessing officer for all

 

property descriptions included in the storage field in the local

 

tax collecting unit and a separate valuation shall be assessed for

 

each school district. The personal property of street railroad,

 

plank road, cable or electric railroad or transportation companies,

 

bridge companies, and all other companies not required to pay a

 

specific tax to this state in lieu of all other taxes, shall,

 

except as otherwise provided in this section, be assessed in the

 

local tax collecting unit in which the property is located, used,

 

or laid, and the track, road, or bridge of a company is considered

 

personal property. None of the property assessable as personal

 

property under this subdivision shall be affected by any assessment

 

or tax levied on the real property through or over which the

 

personal property is laid, placed, or located, nor shall any right

 

of way, easement, or other interest in real property, assessable as

 

personal property under this subdivision, be extinguished or

 

otherwise affected in case the real property subject to assessment

 

is sold in the exercise of the taxing power.

 

     (h) During the tenancy of a lessee, leasehold improvements and

 

structures installed and constructed on real property by the

 

lessee, provided and to the extent the improvements or structures

 

add to the true cash taxable value of the real property

 

notwithstanding that the real property is encumbered by a lease

 

agreement, and the value added by the improvements or structures is

 

not otherwise included in the assessment of the real property or

 

not otherwise assessable under subdivision (j). The cost of

 

leasehold improvements and structures on real property shall not be

 

the sole indicator of value. Leasehold improvements and structures

 

assessed under this subdivision shall be assessed to the lessee.

 

     (i) A leasehold estate received by a sublessor from which the

 

sublessor receives net rentals in excess of net rentals required to

 

be paid by the sublessor except to the extent that the excess

 

rentals are attributable to the installation and construction of

 

improvements and structures assessed under subdivision (h) or (j)

 

or included in the assessment of the real property. For purposes of

 

this act, a leasehold estate is considered to be owned by the

 

lessee receiving additional net rentals. A lessee in possession is

 

required to provide the assessor with the name and address of its

 

lessor. Taxes collected under this act on leasehold estates shall

 

become a lien against the rentals paid by the sublessee to the

 

sublessor.

 

     (j) To the extent not assessed as real property, a leasehold

 

estate of a lessee created by the difference between the income

 

that would be received by the lessor from the lessee on the basis

 

of the present economic income of the property as defined and

 

allowed by section 27(4), 27(5), minus the actual value to the

 

lessor under the lease. This subdivision does not apply to property

 

if subject to a lease entered into before January 1, 1984 for which

 

the terms of the lease governing the rental rate or the tax

 

liability have not been renegotiated after December 31, 1983. This

 

subdivision does not apply to a nonprofit housing cooperative. As

 

used in this subdivision, "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.

 

     (k) For taxes levied after December 31, 2002, a trade fixture.

 

     (l) For taxes levied after December 31, 2005, a wind energy

 

system. As used in this subdivision, "wind energy system" means an

 

integrated unit consisting of a wind turbine composed of a rotor,

 

an electrical generator, a control system, an inverter or other

 

power conditioning unit, and a tower, which uses moving air to

 

produce power.

 

     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) 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.

 

     (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). 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). 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) has not been filed shall not be included in

 

a sales study.

 

     (5) (4) 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) (5) Except as otherwise provided in subsection (6), (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 (6), (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) (6) 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) (7) 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.