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