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.

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.

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.

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.

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.