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.
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. 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
(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
(a) All sales of property located in the local tax collecting
unit by a lending institution which acquired the property sold
(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.