HOUSE BILL No. 4336 February 25, 1999, Introduced by Reps. Pestka, Basham, Minore, Neumann, Quarles, Schauer, Bovin, Reeves, Brewer, Rivet, Kelly, Bob Brown, Hardman, Sheltrown, Prusi, Gieleghem, Frank, Martinez, Bogardus, Brater, DeHart, Jacobs, Dennis, Hale, LaForge, Woodward, O'Neil and Thomas and referred to the Committee on Tax Policy. A bill to amend 1976 PA 225, entitled "An act to defer the collection of special assessments on home- stead properties; to provide for conditions of eligibility for such a deferment; to prescribe the powers and duties of the department of treasury, local assessing officers, and local col- lecting officers; to provide for the advancement of moneys by the state to indemnify special assessment districts for losses from deferment of collections; to provide for the advancement of money by the state to an owner for the repayment of loans used by the owner to pay special assessments; to provide for the collection of deferred special assessments and interest thereon, and the disposition of these collections; to make an appropriation; and to prescribe penalties," by amending the title and sections 1, 2, 3, 4, 5, 6, 7, 8, 8a, 9, and 10 (MCL 211.761, 211.762, 211.763, 211.764, 211.765, 211.766, 211.767, 211.768, 211.768a, 211.769, and 211.770), the title and sections 2, 3, 4, and 10 as amended by 1980 PA 403 and section 8a as amended by 1981 PA 59, and by adding section 4a. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 01002'99 FDD 2 1 TITLE 2 An act to defer the collection of special assessments AND 3 PROPERTY TAXES on homestead properties; to provide for conditions 4 of eligibility for such a deferment; to prescribe the powers and 5 duties of the department of treasury, local assessing officers, 6 and local collecting officers; to provide for the advancement of 7moneysMONEY by the state to indemnify special assessment dis- 8 tricts AND LOCAL TAX COLLECTING UNITS for losses from deferment 9 of collections; to provide for the advancement of money by the 10 state to an owner for the repayment of loans used by the owner to 11 pay special assessments AND PROPERTY TAXES; to provide for the 12 collection of deferred special assessments AND PROPERTY TAXES and 13 interest thereon, and the disposition of these collections; to 14 make an appropriation; and to prescribe penalties. 15 Sec. 1. As used in this act: 16 (a) "Department" means the department of treasury. 17 (B) "EQUITY" MEANS THE DIFFERENCE BETWEEN TWICE THE STATE 18 EQUALIZED VALUATION OF A HOMESTEAD AND ANY OUTSTANDING MORTGAGE, 19 LAND CONTRACT, LIEN, OR OTHER ENCUMBRANCE, INCLUDING A LIEN 20 IMPOSED UNDER THIS ACT. 21 (C)(b)"Totally and permanently disabled" means a person 22as definedDESCRIBED in42 U.S.C. section 416SECTION 216(i) 23 OF TITLE II OF THE SOCIAL SECURITY ACT, CHAPTER 531, 49 STAT. 24 620, 42 U.S.C. 416. 25 (D)(c)"Homestead" means a dwelling or a unit in a 26 multiple-unit dwelling, owned and occupied as a home bytheAN 27 owner,thereof,including all contiguous unoccupied real 01002'99 3 1 property owned by thepersonOWNER. Homestead includes a 2 dwelling and an outbuilding used in connection with a dwelling, 3 situated on thelandsPROPERTY of another. 4 (E)(d)"Owner" includes a person eligible for the exemp- 5 tion specified in this act, who is purchasing a homestead under a 6 mortgage or land contract,orwho owns a dwelling situated on 7 the leased lands of another, or WHO is a tenant-stockholder of a 8 cooperative housing corporation. 9 (F)(e)"Special assessment" means an assessment against 10 real property calculated on a benefit or ad valorem basis for 11 curb and gutter, sidewalk, sewer, water, or street paving; a 12 drain; a connection fee or similar charge for a sewer or water 13 system; or the land contract on a parcel of property acquired 14 under the circumstances set forth in section3(2)3(3). 15 Special assessment does not include charges for current service. 16 Sec. 2. (1) The payment of special assessmentsassessed17 AND PROPERTY TAXES LEVIED and due and payable on a homestead in 18 any year in which the owner meets all of the terms and conditions 19 of this act shall be deferred until 1 year after the owner's 20 death, subject to further order by the probate court or until the 21 homestead or any part of the homestead is conveyed or transferred 22 to another or a contract to sell THE HOMESTEAD is entered into. 23 The death of a spouseshallDOES not terminate the deferment of 24 special assessments OR PROPERTY TAXES for a homestead owned by 25 husband and wife under tenancy by the entireties as long as the 26 surviving spouse does not remarry. Special assessments AND 01002'99 4 1 PROPERTY TAXES deferred under this act may be paid in full at any 2 time. 3 (2) If the collecting officer or the department determines 4 that legal or equitable title to a homestead or any part of a 5 homestead for which special assessments OR PROPERTY TAXES are 6 deferred under this act is conveyed or transferred or a contract 7 to sell the homestead or part of a homestead is entered into, and 8 the deferment is not terminated, the owner or owner's estate 9shall beIS subject to an interest rate of 1% per month or 10 fraction of a month, on the amount deferred, computed from the 11 date of conveyance, transfer, or contractual agreement. The 12 amount of interest shall be payable to the collecting officer and 13 transmitted by that office pursuant to section 9. 14 (3) The department shall notify each owner whose special 15 assessments OR PROPERTY TAXES are authorized to be deferred under 16 this act that if legal or equitable title to the homestead or any 17 part of the homestead is conveyed or transferred or a contract to 18 sell the homestead or part of the homestead is entered into, the 19 deferment is terminated and the amount deferred is immediately 20 due and payable, plus interest as provided in subsection (2). 21 Sec. 3. (1) An owner of a homestead who is 65 years of age 22 or older,orwho is totally and permanently disabled, WHO 23 CLAIMS A DEPENDENCY EXEMPTION UNDER SECTION 30(2) OF THE INCOME 24 TAX ACT OF 1967, 1967 PA 281, MCL 206.30, FOR A CHILD WHO IS LESS 25 THAN 18 YEARS OLD, OR WHO IS AN ADULT IN NEED OF PROTECTIVE SERV- 26 ICES AS DEFINED IN SECTION 11 OF THE SOCIAL WELFARE ACT, 1939 27 PA 280, MCL 400.11, AND WHO IS a citizen of the United States, a 01002'99 5 1 resident of this state for 5 or more years, and the sole owner of 2 the homestead for53 or more years is eligible for the defer- 3 ment of special assessments AND PROPERTY TAXES LEVIED on that 4 homestead pursuant to this act, IF THE EQUITY IN THAT OWNER'S 5 HOMESTEAD IS NOT LESS THAN 25% OF TWICE THE STATE EQUALIZED VALU- 6 ATION OF THAT HOMESTEAD. The owner and the owner's spouse shall 7 not have received during the last calendar year household income 8 as defined in section 508 ofAct No. 281 of the Public Acts of91967, as amended, being section 206.508 of the Michigan Compiled10Laws,THE INCOME TAX ACT OF 1967, 1967 PA 281, MCL 206.508, in 11 excess of$8,000.00; this amount shall be increased to12 $10,000.00.for the determination of eligibility for a defer-13ment after December 31, 1982.The gross amount oftheA spe- 14 cial assessment DEFERRED UNDER THIS ACT, exclusive of interest, 15 shall not be less than $300.00. 16 (2) The maximum dollar amount of household income required 17 by subsection (1) to be eligible for the deferment of special 18 assessments OR PROPERTY TAXES under this act shall be adjusted 19 each year, beginning on January 1, 1984, pursuant to the annual 20 average percentage increase or decrease in the Detroit consumer 21 price index--all itemsas defined and reported by the United 22 States department of labor, bureau of labor statistics.The23adjustment shall be made by multiplying the annual average per-24centage increase or decrease in the Detroit consumer price index25for the prior calendar year by the current maximum dollar amount26of the household income requirement as adjusted by this27subsection. The resultant product shall be added to the maximum01002'99 6 1dollar amount of the household income requirement as adjusted by2this subsection and then rounded off to the nearest whole number,3which shall be the new household income requirement for the cur-4rent year.5 (3)After January 1, 1975, aA person65 years of age or6olderwhootherwisequalifies under this section for deferral 7 of special assessments OR PROPERTY TAXES whofailsFAILED to 8 pay a prior delinquent special assessment OR PROPERTY TAX 9 ASSESSMENT andtherebylostthe propertyHIS OR HER HOMESTEAD 10 to the local unit of government who purchased the property 11 through tax sale may reacquire the property from the local unit 12 of government through a land contract.TheA land contract for 13 aparcel of propertyHOMESTEAD reacquired underthe circum-14stances set forth inthis subsection shall be treated as a spe- 15 cial assessment for purposes of this act. 16 (4)The owner of a homestead who is 65 years of age or17older or is totally and permanently disabled, a citizen of the18United States, a resident of this state for 5 or more years, and19the sole owner of the homestead for 5 or more years, in the year20the special assessment was levied, andA PERSON WHO QUALIFIES 21 UNDER THIS SECTION FOR DEFERRAL OF SPECIAL ASSESSMENTS OR PROP- 22 ERTY TAXES who has borrowed money from a lending institution to 23 pay a special assessment OR PROPERTY TAXES beforethe effective24date of this subsection, shall beJANUARY 8, 1981 IS eligible to 25 receive money from the special revolving fund created in section 26 10, to be usedfor the purpose of repayingTO REPAY the lending 27 institution the principal amount used by the person to pay the 01002'99 7 1 special assessment OR PROPERTY TAXES. The department shall cause 2 a lien on the homestead in favor of the state to be recorded with 3 the appropriate register of deeds, indicating the amount of the 4 money paid and identifying the homestead. Money paid from the 5 fund under this subsection shall be treated as if the money had 6 been paid as deferred PROPERTY TAXES OR special assessment. 7 Sec. 4. An owner may apply to the local assessing officer 8 for deferment of the payment of special assessments on the 9 owner's homestead. AN OWNER MAY APPLY TO THE DEPARTMENT FOR 10 DEFERMENT OF THE PAYMENT OF PROPERTY TAXES LEVIED ON THE OWNER'S 11 HOMESTEAD. The application shall be made upon an affidavit form 12 to be furnished and made available by the department at conven- 13 ient locations throughout the state. The affidavit form shall 14 contain the following statement in 10-pointboldfaceBOLDFACED 15 type located immediately above the affiant's signature: "If this 16 deferment is authorized the state will place a lien on your 17 property." THE AFFIDAVIT SHALL CONTAIN A STATEMENT THAT THE 18 OWNER APPLYING FOR THE DEFERMENT OF SPECIAL ASSESSMENTS OR PROP- 19 ERTY TAXES UNDER THIS ACT HAS RECEIVED OR HAS APPLIED FOR ALL 20 CREDITS AVAILABLE TO THAT OWNER UNDER SECTIONS 520 AND 522 OF THE 21 INCOME TAX ACT OF 1967, 1967 PA 281, MCL 206.520 AND 206.522. A 22 person making a false affidavit for the purpose of obtaining 23 deferment of special assessments OR PROPERTY TAXES under this act 24 is guilty of perjury. If the homestead is owned jointly by hus- 25 band and wife, each spouse shall sign and file the affidavit. If 26 the homestead is encumbered by a mortgage or an unpaid balance on 27 a land contract, a deferment of special assessments OR PROPERTY 01002'99 8 1 TAXES shall not be made without the written consent of the 2 mortgagee or the land contract vendor, which shall be filed with 3 the affidavit. The affidavit shall be filed with the local 4 assessing officer FOR THE DEFERMENT OF SPECIAL ASSESSMENTS AND 5 WITH THE DEPARTMENT FOR THE DEFERMENT OF PROPERTY TAXES at least 6 30 daysafterBEFORE the due date of a special assessment or 7 installment of a special assessment OR PROPERTY TAX BILL for 8 which deferment is requested. 9 SEC. 4A. THE APPLICATION PROVIDED FOR IN SECTION 4 SHALL 10 CONTAIN BOTH OF THE FOLLOWING: 11 (A) A STATEMENT THAT THE OWNER APPLYING FOR THE DEFERMENT 12 HAS PROPERTY AND CASUALTY INSURANCE ON THAT OWNER'S HOMESTEAD IN 13 AN AMOUNT NOT LESS THAN THE AMOUNT OF ALL SPECIAL ASSESSMENTS AND 14 PROPERTY TAXES DEFERRED. 15 (B) AN ASSIGNMENT TO THE STATE OF THE OWNER'S INTEREST IN 16 THE PROPERTY AND CASUALTY INSURANCE ON THAT OWNER'S HOMESTEAD IN 17 AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF ALL SPECIAL ASSESSMENTS 18 AND PROPERTY TAXES DEFERRED. 19 Sec. 5. (1) Upon receipt of the affidavit, the local 20 assessing officer FOR THE DEFERMENT OF A SPECIAL ASSESSMENT AND 21 THE DEPARTMENT FOR THE DEFERMENT OF PROPERTY TAXES shall promptly 22 examine it to determine if the applicant meets the requirements 23 of this act and shall make an inspection of the property and 24 property records and conduct an investigation and survey asit25deemsnecessary. An applicant shall not be compelled to supply 26 information not reasonably essential to a proper determination of 27 the eligibility of the owner and the homestead for the relief 01002'99 9 1 provided under this act. The local assessing officer FOR THE 2 DEFERMENT OF A SPECIAL ASSESSMENT AND THE DEPARTMENT FOR THE 3 DEFERMENT OF PROPERTY TAXES shall promptly makeitsA decision 4 with respect to an application under this section and shall 5 notify the applicant ofitsTHAT decision not later than the 6 due date for a special assessment OR FOR THE PROPERTY TAXES 7 involved in the application. A decision of the local assessing 8 officershall beIS final except as otherwise provided 9pursuant toUNDER the STATE constitution OF 1963. 10 (2) THE DEPARTMENT SHALL ANNUALLY DO ALL OF THE FOLLOWING 11 FOR THE DEFERMENT OF PROPERTY TAXES UNDER THIS ACT: 12 (A) DETERMINE THAT THE PERSON ON WHOSE BEHALF PROPERTY TAXES 13 ARE DEFERRED IS ELIGIBLE FOR THE DEFERRAL OF PROPERTY TAXES UNDER 14 SECTION 3. 15 (B) SECURE AN ASSIGNMENT TO THIS STATE OF ANY CREDIT ALLOWED 16 UNDER SECTIONS 520 OR 522 OF THE INCOME TAX ACT OF 1967, 1967 17 PA 281, MCL 206.520 AND 206.522, PAYABLE TO THE PERSON ON WHOSE 18 BEHALF THE PROPERTY TAXES ARE DEFERRED DURING THE PERIOD IN WHICH 19 PROPERTY TAXES ARE DEFERRED ON THAT PERSON'S HOMESTEAD, WHICH 20 CREDIT SHALL BE APPLIED TO ANY LIEN IMPOSED ON THAT HOMESTEAD 21 UNDER THIS ACT. 22 (C) DETERMINE THAT THE PERSON ON WHOSE BEHALF PROPERTY TAXES 23 ARE DEFERRED HAS PROPERTY AND CASUALTY INSURANCE ON HIS OR HER 24 HOMESTEAD IN AN AMOUNT NOT LESS THAN THE AMOUNT OF ALL SPECIAL 25 ASSESSMENTS AND PROPERTY TAXES DEFERRED AND THAT THE PERSON ON 26 WHOSE BEHALF PROPERTY TAXES ARE DEFERRED HAS ASSIGNED TO THE 27 STATE HIS OR HER INTEREST IN THAT PROPERTY AND CASUALTY INSURANCE 01002'99 10 1 IN AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF ALL SPECIAL ASSESSMENTS 2 AND PROPERTY TAXES DEFERRED. 3 Sec. 6. The department shall pay the entire balance owing, 4 including delinquent amounts, of the special assessment OR PROP- 5 ERTY TAX of an applicant who qualifies under this act. The 6 department shall transmit to the collecting officer the sum of 7 money required to indemnify the local special assessment district 8 OR LOCAL TAX COLLECTING UNIT for a revenue loss resulting from 9 the deferment of the special assessment OR PROPERTY TAX. At the 10 same time, the department shallcause the recording ofRECORD a 11 lien in favor of the state with the register of deeds OF THE 12 COUNTY IN WHICH THE HOMESTEAD IS LOCATED and notify the county 13 treasurer OF THE COUNTY IN WHICH THE HOMESTEAD IS LOCATED of the 14 special assessment OR PROPERTY TAXES deferred, indicating the 15 amount deferred for PROPERTY TAXES AND FOR each special assess- 16 ment and identifying the homestead.TheIF PAYMENT IS MADE AS 17 REQUIRED BY THIS SECTION, THE county treasurer shall keep a 18 record of the notice and shall require that the homestead be 19 included in the subsequent return of delinquent taxes by each 20 collecting officer, that the property is identified on the delin- 21 quent roll as provided in this act, and that the amount of spe- 22 cial assessment OR PROPERTY TAXES shown on the roll as due and 23 unpaid are the same as the amount approved by the department for 24 deferment. The sum received by the collecting officer from the 25 department shall be distributedto the several special assess-26ment districts in direct proportion to their respective shares of27the total of special assessments deferredin the same manner 01002'99 11 1 that distribution would be made had the same amount been received 2 from the payment of the special assessments OR PROPERTY TAXES. 3TheIF PAYMENT IS MADE AS REQUIRED BY THIS SECTION, THE col- 4 lecting officer shall enter on the current tax roll opposite each 5 homestead for which deferment is allowed a notation that payment 6 is deferred pursuant to this act. 7 Sec. 7. The treasurer ofanyA city, township, or vil- 8 lage, required byAct No. 206 of the Public Acts of 1893, as9amended, being sections 211.1 to 211.157 of the Michigan Compiled10LawsTHE GENERAL PROPERTY TAX ACT, 1893 PA 206, MCL 211.1 TO 11 211.157, to make a return of delinquent taxes to the county trea- 12 surer, shall include in the delinquent tax roll all homesteads 13 for which deferment of special assessmentsareOR PROPERTY 14 TAXES IS approved, and shall enter on the delinquent tax roll 15 opposite eachsuch itemSPECIAL ASSESSMENT OR PROPERTY TAX LEVY 16 a notation that payment is deferredpursuant toUNDER this 17 act. In a city collecting its own delinquent taxes, the trea- 18 surersimilarlyshall note on the city tax record of each 19suchproperty FOR WHICH SPECIAL ASSESSMENTS OR PROPERTY TAXES 20 ARE DEFERRED that payment is deferredpursuant toUNDER this 21 act. The collection of special assessments OR PROPERTY TAXES 22 deferredfor all such homesteadsUNDER THIS ACT shall be made 23thereafter onlyin accordance with this act, any law, ordi- 24 nance, or charter to the contrary notwithstanding. 25 Sec. 8. Upon termination of the deferment of special 26 assessments OR PROPERTY TAXES under this act, the collection 27 procedures ofAct No. 206 of the Public Acts of 1893, as01002'99 12 1amendedTHE GENERAL PROPERTY TAX ACT, 1893 PA 206, MCL 211.1 TO 2 211.157, and any provisions of any law, ordinance, or charter 3 applicable to the collection of delinquent taxes in a city col- 4 lecting its own delinquent taxes, suspendedby the terms of5 UNDER this act during the period of deferment, shall again apply 6 to the deferred special assessmentsthe same as they would have7applied had noOR PROPERTY TAXES AS IF A deferment HAD NOT been 8 authorized and all of the special assessments OR PROPERTY TAXES 9 had been levied initially in the third year preceding the calen- 10 dar year in which the deferment was terminated, except that the 11 provisions of those laws, ordinances, and charters with respect 12 to collection fees, interest, penalties, and other charges shall 13 not be applicable to the collection of, or foreclosure of the 14 lien for special assessments OR PROPERTY TAXES deferred. 15hereunder.The lien for deferred special assessments OR PROP- 16 ERTY TAXES shall be for the amount of the special assessments OR 17 PROPERTY TAXES only and shall not have any additional fee, penal- 18 ty, or interest added except as provided in this act. 19 Sec. 8a. (1) Except for an owner or owner's estate qualify- 20 ing for deferment of special assessments under this act before 21 January 8, 1981, the payment of special assessments OR PROPERTY 22 TAXES deferred under this act made by the owner or owner's estate 23 shall include interest computed for periods after January 8, 24 1981, at a rate of 1/2 of 1% per month or fraction of a month. 25 (2) The department shall notify each owner whose special 26 assessments OR PROPERTY TAXES are authorized to be deferred under 27 this act of the interest rate provided in this section. 01002'99 13 1 (3) The lien created in section 6 for special assessments OR 2 PROPERTY TAXES deferred under this act shall includean amount3ofinterest as provided in this section. 4 (4) The department of treasury shall refund to each owner 5 who, beforethe effective date of this subsectionJANUARY 8, 6 1981, paid their special assessment OR PROPERTY TAXES and was 7 subject to the interest payment of subsection (1), an amount 8 equal to the difference between the interest paid and the inter- 9 estwhichTHAT would have been due at a rate of 1/2 of 1% per 10 month or fraction of a month. 11 (5) If a deferment of a special assessment was terminated by 12 an owner solely by payment of the deferred special assessment 13 after January 8, 1981, and before the effective date of this sub- 14 section, the owner may reapply within 60 days of the effective 15 date of this subsection to the local assessing officer for rein- 16 stitution of the previously deferred special assessment and the 17 department of treasury shall refund the amount of the special 18 assessment paid and redeferred to the owner. 19 Sec. 9. Upon receipt of payment of special assessments OR 20 PROPERTY TAXES deferred under this act, the collecting officer 21 shallforthwithtransmit the amount received to the department 22 as reimbursement for the sumstheretoforeadvanced,to 23 indemnify the local special assessment districts OR LOCAL TAX 24 COLLECTING UNIT. 25 Sec. 10. (1) There is created a special revolving fund 26 within the department to pay special assessments AND PROPERTY 27 TAXES under this act and the sum of $3,000,000.00 of the 01002'99 14 1 principal of the Michigan veterans' trust fund shall be used for 2 this investment purpose. 3 (2) An amountwhichTHAT is paid by the department to a 4 local assessment district OR LOCAL TAX COLLECTING UNIT for a 5 deferred special assessment OR DEFERRED PROPERTY TAXES shall be 6 paid from the special revolving fund created in subsection (1). 7 (3) From the amounts received by the department as payment 8 for deferred special assessments OR PROPERTY TAXES under this 9 act, the department shall credit, on a quarterly basis, 1/2 of 10 the total amount received to the special revolving fund created 11 in this section, and shall transmit the remainder of this quar- 12 terly payment to the Michigan veterans' trust fund UNTIL THE INI- 13 TIAL $3,000,000.00 SET FORTH IN SUBSECTION (1) IS REPAID TO THE 14 MICHIGAN VETERANS' TRUST FUND. 15 (4) AFTER THE INITIAL $3,000,000.00 SET FORTH IN 16 SUBSECTION (1) IS REPAID TO THE MICHIGAN VETERANS' TRUST FUND, 17 THE DEPARTMENT SHALL CREDIT, ON A QUARTERLY BASIS, THE TOTAL 18 AMOUNT RECEIVED TO THE SPECIAL REVOLVING FUND CREATED IN THIS 19 SECTION. 20 (5)(4)Interest received pursuant to section 8a, and 21 civil penalties received pursuant to section 2, shall be credited 22 in full to the special revolving fund created in this section. 23 (6)(5)Amounts required to be transmitted to the Michigan 24 veterans' trust fund under subsection (3) shall be reduced by the 25 amount of principal and earningswhich wasreturned to the 26 Michigan veterans' trust fund beforethe effective date of this27subsectionJANUARY 8, 1981. 01002'99