SENATE BILL No. 811

 

 

October 30, 2003, Introduced by Senators CASSIS, KUIPERS, BIRKHOLZ, GOSCHKA, BISHOP, SIKKEMA, HAMMERSTROM, CROPSEY, GEORGE, GILBERT, PATTERSON, BROWN, VAN WOERKOM, SANBORN, JELINEK, McMANUS, HARDIMAN, STAMAS, JOHNSON and GARCIA and referred to the Committee on Commerce and Labor.

 

 

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1893 PA 206, entitled                                             

                                                                                

    "The general property tax act,"                                             

                                                                                

    by amending section 9b and 27 (MCL 211.9b and 211.27), section 9b           

                                                                                

    as amended by 1994 PA 189 and section 27 as amended by 2002 PA              

                                                                                

    744.                                                                        

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1       Sec. 9b.  (1)  All special tools are  Except as otherwise                   

                                                                                

2   provided in subsection (2), a special tool is exempt from                   

                                                                                

3   taxation  the collection of taxes under this act.                          

                                                                                

4       (2) As used in this section, "special tools" means those                    

                                                                                

5   manufacturing requisites, such as dies, jigs, fixtures, molds,              

                                                                                

6   patterns, gauges, or other tools, as defined by the state tax               

                                                                                

7   commission, that are held for use and not for sale in the                   

                                                                                

8   ordinary course of business.                                                

                                                                                

9       (2)  (3) Special tools are  A special tool is not exempt from               

                                                                                


                                                                                

1   taxation  the collection of taxes under this act if the value of           

                                                                                

2   the special  tools  tool is included in the valuation of                    

                                                                                

3   inventory produced for sale.                                                

                                                                                

4       (3) As used in this section:                                                

                                                                                

5       (a) "Special tool" means a finished or unfinished device that               

                                                                                

6   is used or is being prepared for use to produce a product or                

                                                                                

7   model for which that device is designed, and that is of such a              

                                                                                

8   specialized nature that the device's utility will cease to the              

                                                                                

9   owner or user if the product or model is discontinued.  Whether             

                                                                                

10  or not a device is a special tool shall be determined without               

                                                                                

11  regard to the device's actual economic life or useful life or the           

                                                                                

12  product's or model's life in the marketplace.  Special tool                 

                                                                                

13  includes, but is not limited to, a die, jig, fixture, mold,                 

                                                                                

14  pattern, or special gauge.  Special tool does not include a                 

                                                                                

15  standard tool.                                                              

                                                                                

16      (b) "Standard tool" means a die, jig, fixture, mold, pattern,               

                                                                                

17  gauge, or other tool that is not a special tool.                            

                                                                                

18      (c) "Utility will cease" means that if a product or model is                

                                                                                

19  discontinued, a special tool cannot be used without modification            

                                                                                

20  to produce a different product or model, notwithstanding any                

                                                                                

21  benefit from incidental use, such as the production of                      

                                                                                

22  replacement parts for the original product or model.                        

                                                                                

23      Sec. 27.  (1) As used in this act, "true cash value" means                  

                                                                                

24  the usual selling price at the place where the property to which            

                                                                                

25  the term is applied is at the time of assessment, being the price           

                                                                                

26  that could be obtained for the property at private sale, and not            

                                                                                

27  at auction sale except as otherwise provided in this section, or            


                                                                                

1   at forced sale.  The usual selling price may include sales at               

                                                                                

2   public auction held by a nongovernmental agency or person if                

                                                                                

3   those sales have become a common method of acquisition in the               

                                                                                

4   jurisdiction for the class of property being valued.  The usual             

                                                                                

5   selling price does not include sales at public auction if the               

                                                                                

6   sale is part of a liquidation of the seller's assets in a                   

                                                                                

7   bankruptcy proceeding or if the seller is unable to use common              

                                                                                

8   marketing techniques to obtain the usual selling price for the              

                                                                                

9   property.  A sale or other disposition by this state or an agency           

                                                                                

10  or political subdivision of this state of land acquired for                 

                                                                                

11  delinquent taxes or an appraisal made in connection with the sale           

                                                                                

12  or other disposition or the value attributed to the property of             

                                                                                

13  regulated public utilities by a governmental regulatory agency              

                                                                                

14  for rate-making purposes is not controlling evidence of true cash           

                                                                                

15  value for assessment purposes.  In determining the true cash                

                                                                                

16  value, the assessor shall also consider the advantages and                  

                                                                                

17  disadvantages of location; quality of soil; zoning; existing use;           

                                                                                

18  present economic income of structures, including farm structures;           

                                                                                

19  present economic income of land if the land is being farmed or              

                                                                                

20  otherwise put to income producing use; quantity and value of                

                                                                                

21  standing timber; water power and privileges; and mines, minerals,           

                                                                                

22  quarries, or other valuable deposits known to be available in the           

                                                                                

23  land and their value.  In determining the true cash value of                

                                                                                

24  personal property owned by an electric utility cooperative, the             

                                                                                

25  assessor shall consider the number of kilowatt hours of                     

                                                                                

26  electricity sold per mile of distribution line compared to the              

                                                                                

27  average number of kilowatt hours of electricity sold per mile of            


                                                                                

1   distribution line for all electric utilities.                               

                                                                                

2       (2) The assessor shall not consider the increase in true cash               

                                                                                

3   value that is a result of expenditures for normal repairs,                  

                                                                                

4   replacement, and maintenance in determining the true cash value             

                                                                                

5   of property for assessment purposes until the property is sold.             

                                                                                

6   For the purpose of implementing this subsection, the assessor               

                                                                                

7   shall not increase the construction quality classification or               

                                                                                

8   reduce the effective age for depreciation purposes, except if the           

                                                                                

9   appraisal of the property was erroneous before nonconsideration             

                                                                                

10  of the normal repair, replacement, or maintenance, and shall not            

                                                                                

11  assign an economic condition factor to the property that differs            

                                                                                

12  from the economic condition factor assigned to similar properties           

                                                                                

13  as defined by appraisal procedures applied in the jurisdiction.             

                                                                                

14  The increase in value attributable to the items included in                 

                                                                                

15  subdivisions (a) to (o) that is known to the assessor and                   

                                                                                

16  excluded from true cash value shall be indicated on the                     

                                                                                

17  assessment roll.  This subsection applies only to residential               

                                                                                

18  property.  The following repairs are considered normal                      

                                                                                

19  maintenance if they are not part of a structural addition or                

                                                                                

20  completion:                                                                 

                                                                                

21      (a) Outside painting.                                                       

                                                                                

22      (b) Repairing or replacing siding, roof, porches, steps,                    

                                                                                

23  sidewalks, or drives.                                                       

                                                                                

24      (c) Repainting, repairing, or replacing existing masonry.                   

                                                                                

25      (d) Replacing awnings.                                                      

                                                                                

26      (e) Adding or replacing gutters and downspouts.                             

                                                                                

27      (f) Replacing storm windows or doors.                                       


                                                                                

1       (g) Insulating or weatherstripping.                                         

                                                                                

2       (h) Complete rewiring.                                                      

                                                                                

3       (i) Replacing plumbing and light fixtures.                                  

                                                                                

4       (j) Replacing a furnace with a new furnace of the same type                 

                                                                                

5   or replacing an oil or gas burner.                                          

                                                                                

6       (k) Repairing plaster, inside painting, or other                            

                                                                                

7   redecorating.                                                               

                                                                                

8                                                                                (l) New ceiling, wall, or floor surfacing.                                          

                                                                                

9       (m) Removing partitions to enlarge rooms.                                   

                                                                                

10      (n) Replacing an automatic hot water heater.                                

                                                                                

11      (o) Replacing dated interior woodwork.                                      

                                                                                

12      (3) A city or township assessor, a county equalization                      

                                                                                

13  department, or the state tax commission before utilizing real               

                                                                                

14  estate sales data on real property purchases, including purchases           

                                                                                

15  by land contract, to determine assessments or in making sales               

                                                                                

16  ratio studies to assess property or equalize assessments shall              

                                                                                

17  exclude from the sales data the following amounts allowed by                

                                                                                

18  subdivisions (a), (b), and (c) to the extent that the amounts are           

                                                                                

19  included in the real property purchase price and are so                     

                                                                                

20  identified in the real estate sales data or certified to the                

                                                                                

21  assessor as provided in subdivision (d):                                    

                                                                                

22      (a) Amounts paid for obtaining financing of the purchase                    

                                                                                

23  price of the property or the last conveyance of the property.               

                                                                                

24      (b) Amounts attributable to personal property that were                     

                                                                                

25  included in the purchase price of the property in the last                  

                                                                                

26  conveyance of the property.                                                 

                                                                                

27      (c) Amounts paid for surveying the property pursuant to the                 


                                                                                

1   last conveyance of the property.  The legislature may require               

                                                                                

2   local units of government, including school districts, to submit            

                                                                                

3   reports of revenue lost under subdivisions (a) and (b) and this             

                                                                                

4   subdivision so that the state may reimburse those units for that            

                                                                                

5   lost revenue.                                                               

                                                                                

6       (d) The purchaser of real property, including a purchaser by                

                                                                                

7   land contract, may file with the assessor of the city or township           

                                                                                

8   in which the property is located 2 copies of the purchase                   

                                                                                

9   agreement or of an affidavit that identifies the amount, if any,            

                                                                                

10  for each item listed in subdivisions (a) to (c).  One copy shall            

                                                                                

11  be forwarded by the assessor to the county equalization                     

                                                                                

12  department.  The affidavit shall be prescribed by the state tax             

                                                                                

13  commission.                                                                 

                                                                                

14      (4) As used in subsection (1), "present economic income"                    

                                                                                

15  means for leased or rented property the ordinary, general, and              

                                                                                

16  usual economic return realized from the lease or rental of                  

                                                                                

17  property negotiated under current, contemporary conditions                  

                                                                                

18  between parties equally knowledgeable and familiar with real                

                                                                                

19  estate values.  The actual income generated by the lease or                 

                                                                                

20  rental of property is not the controlling indicator of its true             

                                                                                

21  cash value in all cases.  This subsection does not apply to                 

                                                                                

22  property subject to a lease entered into before January 1, 1984             

                                                                                

23  for which the terms of the lease governing the rental rate or tax           

                                                                                

24  liability have not been renegotiated after December 31, 1983.               

                                                                                

25  This subsection does not apply to a nonprofit housing cooperative           

                                                                                

26  subject to regulatory agreements between the state or federal               

                                                                                

27  government entered into before January 1, 1984.  As used in this            


                                                                                

1   subsection, "nonprofit cooperative housing corporation" means a             

                                                                                

2   nonprofit cooperative housing corporation that is engaged in                

                                                                                

3   providing housing services to its stockholders and members and              

                                                                                

4   that does not pay dividends or interest upon stock or membership            

                                                                                

5   investment but that does distribute all earnings to its                     

                                                                                

6   stockholders or members.                                                    

                                                                                

7       (5) Beginning December 31, 1994, the purchase price paid in a               

                                                                                

8   transfer of property is not the presumptive true cash value of              

                                                                                

9   the property transferred.  In determining the true cash value of            

                                                                                

10  transferred property, an assessing officer shall assess that                

                                                                                

11  property using the same valuation method used to value all other            

                                                                                

12  property of that same classification in the assessing                       

                                                                                

13  jurisdiction.  As used in this subsection, "purchase price" means           

                                                                                

14  the total consideration agreed to in an arms-length transaction             

                                                                                

15  and not at a forced sale paid by the purchaser of the property,             

                                                                                

16  stated in dollars, whether or not paid in dollars.                          

                                                                                

17      (6) For purposes of a statement submitted under section 19,                 

                                                                                

18  the true cash value of a standard tool is the net book value of             

                                                                                

19  that standard tool as of December 31 in each tax year as                    

                                                                                

20  determined using generally accepted accounting principles in a              

                                                                                

21  manner consistent with the established depreciation method used             

                                                                                

22  by the person submitting that statement.  The net book value of a           

                                                                                

23  standard tool for federal income tax purposes is not the                    

                                                                                

24  presumptive true cash value of that standard tool.  As used in              

                                                                                

25  this subsection, "standard tool" means that term as defined in              

                                                                                

26  section 9b.