Bill Text: MI SB0582 | 2015-2016 | 98th Legislature | Engrossed
Bill Title: Property tax; delinquent taxes; issuance of revenue notes secured by the collection of delinquent taxes by a county treasurer; allow. Amends secs. 87b & 87c of 1893 PA 206 (MCL 211.87b & 211.87c) & adds sec. 87f.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2016-04-13 - Assigned Pa 0082'16 With Immediate Effect [SB0582 Detail]
Download: Michigan-2015-SB0582-Engrossed.html
SB-0582, As Passed House, March 24, 2016
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 582
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 87b and 87c (MCL 211.87b and 211.87c), section
87b as amended by 2014 PA 126 and section 87c as amended by 2012 PA
431, and by adding section 87f.
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, .
The 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
the
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 the 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 the 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 the this state
and
the lien shall be satisfied by offsetting the amount due to the
county
from the local taxing unit or the this state when
distributions from the delinquent tax revolving fund are made by
the
county to the local taxing unit or the 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.
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. 87c. (1) A county that has created a fund pursuant to
section 87b by resolution of its board of commissioners and without
a vote of its electors may borrow money and issue its revolving
fund notes to establish or continue, in whole or in part, the
delinquent tax revolving fund and to pay the expenses of the
borrowing.
(2) If a fund is created and a county determines to borrow
pursuant to this section, the county treasurer shall be the agent
for the county, on behalf of the taxing units in the county and
this state, in connection with all transactions relative to the
fund.
(3) If provided by separate resolution of the county board of
commissioners for any year in which a county determines to borrow
for the purposes provided in this section and subject to subsection
(4), there shall be payable to the county treasurer's office from
the surplus in the fund after payment of the principal of and
interest on the notes and the expenses of the borrowing an amount
equal to the following for delinquent tax administration expenses:
(a) For any delinquent tax on which the interest rate before
sale exceeds 1% per month, 1/27 of the interest collected per
month.
(b) For any delinquent tax on which the interest rate before
sale is 1% per month or less, 3/64 of the interest collected each
month.
(c) Notwithstanding any other provision of this act or other
law to the contrary, a county shall not pay any sums due to a
county treasurer for services as agent for that county that have
not
been paid prior to the effective date of the amendatory act
that
added this subdivision.December
21, 2012.
(4) The total sum payable under subsection (3) shall not
exceed 5% of the total budget of the treasurer's office for that
year.
(5)
In the resolution authorizing the borrowing and issuance
of
notes, the delinquent taxes from which the borrowing is to be
repaid
shall be pledged to the payment of the principal and
interest
of the notes, and the proceeds of the collection of the
delinquent
taxes pledged and the interest on the proceeds shall be
placed
in a segregated fund or account and shall not be used for
any
other purpose until the notes are paid in full, including
interest.
If a county determines to
borrow pursuant to this
section, the delinquent taxes from which the borrowing is to be
repaid and, to the extent held in the delinquent tax revolving
fund, any money and other property and assets received in
connection with those delinquent taxes and revenues derived from
the delinquent taxes and money and other property and assets,
including any money in a note reserve fund, shall be pledged as
security for, and used for the payment of, the principal and
interest of the notes until the notes are paid in full, including
interest. Money and other property held in the delinquent tax
revolving fund shall be kept separate from and shall not be
commingled with any other money in the custody of the county
treasurer. The segregated fund or account shall be established as a
part of the delinquent tax revolving fund and shall be accounted
for separately on the books of the county treasurer.
(6) The proceeds of the notes shall be placed in and used as
the whole or part of the fund established pursuant to section 87b,
after the expenses of borrowing have been deducted.
(7) The notes issued pursuant to this section shall comply
with all of the following:
(a) Be in an aggregate principal amount not exceeding the
aggregate amount of the delinquent taxes pledged, exclusive of
interest.
(b) Bear interest not exceeding 14.5% per annum.
(c) Be in those denominations, and mature on the date not
exceeding 6 years after their date of issue, as the board of
commissioners by its resolution determines.
(d) May be issued at an original issue discount not to exceed
2% of the face value of the note issued.
(8) The resolution authorizing issuance of the notes may
provide that all or part of the notes shall be subject to
prepayment and, if subject to prepayment, shall provide the amount
of call premium payable, if any, the number of days' notice of
prepayment that shall be given, and whether the notice shall be
written or published, or both. Otherwise, the notes shall not be
subject to prepayment.
(9) The sale and award of notes shall be conducted and made by
the treasurer of the county issuing them at a public or private
sale. If a public sale is held, the notes shall be advertised for
sale once not less than 5 days before sale in a publication printed
in the English language and circulated in this state that carries
as a part of its regular service notices of the sales of municipal
bonds and that has been designated in the resolution as a
publication complying with these qualifications. The notice of sale
shall be in the form designated by the county treasurer. The notes
may be sold subject to the option of the county treasurer and the
county treasurer may withhold a part of the issue from delivery if,
in his or her opinion, sufficient funds are available before
delivery of the notes to make full delivery unnecessary to the
purposes of the borrowing.
(10) The notes are full faith and credit obligations of the
county issuing them and, subject to section 87d, if the proceeds of
the taxes pledged are not sufficient to pay the principal and
interest of the notes when due, the county shall impose a general
ad valorem tax without limitation as to rate or amount on all
taxable property in the county to pay the principal and interest
and may reimburse itself from delinquent taxes collected.
(11) If the resolution provides and subject to section 87d,
the notes may be designated general obligation tax notes.
(12) Notwithstanding any other provisions of this section and
section 87d, all the following apply:
(a) Interest on the notes may be payable at any time provided
in the resolution, and may be set, reset, or calculated as provided
in the resolution.
(b) Notes issued under this section may have 1 or more of the
following attributes:
(i) Made the subject of a put or agreement to repurchase by
the county treasurer.
(ii) Secured by a letter of credit issued by a bank under an
agreement entered into by the county treasurer or by any other
collateral that the resolution may authorize.
(iii) Callable as set forth in the resolution.
(iv) Reissued by the county treasurer once reacquired by the
county treasurer under any put or repurchase agreement.
(c) The county treasurer may by order do 1 or more of the
following:
(i) Authorize the issuance of renewal notes.
(ii) Refund or refund in advance notes by the issuance of new
notes, whether the notes to be refunded have or have not matured.
(iii) Issue notes partly to refund notes and partly for any
other purposes authorized by this act.
(iv) Buy and sell any notes issued under this section.
(d) Renewal, refunding, or advance refunding notes shall
comply with all of the following:
(i) Shall be sold and the proceeds applied to the purchase
redemption or payment of the notes to be renewed or refunded.
(ii) Shall not be subject to the revised municipal finance
act, 2001 PA 34, MCL 141.2101 to 141.2821.
(iii) May be sold or resold at a public or private sale.
(iv) May pledge the delinquent taxes pledged in the issue to
be refunded in advance after the original issue is defeased by the
advance refunding issue.
(e) Notes may be issued secured by a second lien on delinquent
taxes, interest, and county property tax administration fees
already the subject of a first lien because of the issuance of a
prior note issue.
(f) Any notes issued may be secured in whole or in part under
a trust or escrow agreement, which agreement may also govern the
issuance of renewal notes, refunding notes, and advance refunding
notes. The agreement may authorize the trustee or escrow agent to
make investments of any type authorized in the agreement.
(13) The notes issued under this section and interest on the
notes shall be payable in lawful money of the United States of
America and shall be exempt from all taxation by this state or a
taxing authority in this state.
(14) The notes issued under this section may be made payable
at a bank or trust company, or may be made registrable as to
principal or as to principal and interest under the terms and
conditions specified in the authorizing resolution or by the county
treasurer when awarding the notes.
(15) Notwithstanding 1966 PA 293, MCL 45.501 to 45.521, a
county operating under a home rule charter shall not be restricted
by the provisions of the home rule charter in connection with the
powers granted to the county to issue notes by sections 87b and 87d
and this section. The treasurer of a county described in this
subsection, notwithstanding any charter provisions to the contrary,
shall have all of the powers granted to county treasurers by
sections 87b and 87d and this section.
(16) If the treasurer authorizes on the order authorizing the
notes, any notes issued may be secured in whole or in part under a
trust or escrow agreement. That agreement may authorize the trustee
or escrow agent to make investments of any type authorized in the
agreement.
(17) Notes issued under this act are exempt from the revised
municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.
(18) 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), 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.
