April 28, 2009, Introduced by Senators SANBORN, KAHN, BARCIA and PAPPAGEORGE and referred to the Committee on Finance.




     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.




     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;


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




     (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) 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 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.


     (7) Beginning January 1, 2010, for any sales ratio study


performed, the assessor shall prepare a report indicating all of


the following:


     (a) All sales of property located in the local tax collecting


unit by a lending institution which acquired the property sold


through foreclosure.


     (b) All sales of property identified in subdivision (a) that


were included in the sales ratio study.


     (c) All sales of property identified in subdivision (a) that


were not included in the sales ratio study and the reason each sale


was not included in the sales ratio study.


     (8) A report prepared pursuant to subsection (7) shall be


submitted to the board of review and made available to the public


not later than February 1 in each tax year.