January 22, 2009, Introduced by Rep. Calley and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 27 (MCL 211.27), as amended by 2003 PA 274.
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
except as otherwise provided in this section, or at
forced sale, except as otherwise provided in this section. The
usual selling price may include sales at public auction, including
sales of property in foreclosure, 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; and mines, minerals, quarries, or other
valuable deposits 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
(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
(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 and purchases of property in foreclosure, 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) 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.
(5) Beginning December 31, 1994, 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, "purchase price" means the total
agreed to in an arms-length transaction,
and not at a forced
sale including the sale of
property in foreclosure, paid by
the purchaser of the property, stated in dollars, whether or not
paid in dollars.
(6) 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.