HOUSE BILL No. 4102

 

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

 

auction sale 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

 

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 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

 

consideration 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.