March 1, 2007, Introduced by Senators JACOBS, SCHAUER and THOMAS and referred to the Committee on Finance.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 34d (MCL 211.34d), as amended by 2005 PA 12,
and by adding section 7ll.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7ll. (1) Beginning December 31, 2007, commercial rental
property is exempt from the collection of taxes under this act if
either of the following conditions occurs:
(a) An owner of that commercial rental property had claimed
and was granted a loss attributable to that commercial rental
property pursuant to section 34d(1)(h)(iii).
(b) An owner of that commercial rental property claims an
exemption as provided in this section.
(2) Commercial rental property exempt under this section is
subject to the specific tax levied under the commercial rental
property specific tax act.
(3) An owner of commercial rental property may claim an
exemption under this section by filing an affidavit with the local
tax collecting unit in which the commercial rental property is
located. The affidavit shall state that the property is owned and
occupied as commercial rental property on the date that the
affidavit is signed. The affidavit shall be on a form prescribed by
the department of treasury. One copy of the affidavit shall be
retained by the owner, 1 copy shall be retained by the local tax
collecting unit, and 1 copy shall be forwarded to the department of
treasury. The affidavit shall be filed not later than the
following:
(a) For commercial rental property in existence on the
effective date of the amendatory act that added this section, the
December 31 in the year immediately succeeding the year in which
the amendatory act that added this section becomes effective.
(b) For commercial rental property constructed after the
effective date of the amendatory act that added this section, the
December 31 in the year immediately succeeding the year in which a
certificate of occupancy for the commercial rental property is
issued.
(c) For commercial rental property for which an exemption had
not been claimed under this section, for which a transfer of
ownership occurs after the effective date of the amendatory act
that added this section, the December 31 in the year immediately
succeeding the year in which the transfer of ownership occurred. As
used in this subdivision, "transfer of ownership" means that term
as defined in section 27a.
(4) Upon receipt of an affidavit filed under subsection (3)
and unless the claim is denied under this section, the assessor
shall exempt the property from the collection of taxes under this
act effective for the year immediately succeeding the year in which
the affidavit is filed until December 31 of the year in which the
property is no longer commercial rental property.
(5) A transfer of ownership of commercial rental property does
not rescind an exemption previously claimed under this section, and
the commercial rental property transferred is subject to the
specific tax levied under the commercial rental property specific
tax act until the property is no longer commercial rental property.
An owner may rescind an exemption granted under this section only
if the exempted property is no longer commercial rental property.
Not more than 90 days after exempted property is no longer
commercial rental property, an owner shall rescind the claim of
exemption by filing with the local tax collecting unit a rescission
form prescribed by the department of treasury. An owner who fails
to file a rescission as required by this subsection is subject to a
penalty of $5.00 per day for each separate failure beginning after
the 90 days have elapsed, up to a maximum of $200.00. This penalty
shall be collected under 1941 PA 122, MCL 205.1 to 205.31, and
shall be deposited in the state school aid fund established in
section 11 of article IX of the state constitution of 1963. This
penalty may be waived by the department of treasury.
(6) If the assessor of the local tax collecting unit believes
that the property for which an exemption is claimed is not
commercial rental property, the assessor may deny a new or existing
claim by notifying the owner and the department of treasury in
writing of the reason for the denial and advising the owner that
the denial may be appealed to the state tax commission within 35
days after the date of the notice. The assessor may deny a claim
for exemption for the current year and for the 3 immediately
preceding calendar years. If the assessor denies an existing claim
for exemption, the assessor shall remove the exemption of the
property, calculate the taxable value of the property, which shall
be the taxable value the property would have had if the property
had not been exempt under this section, calculated from the date
the property was no longer commercial rental property, and, if the
tax roll is in the local tax collecting unit's possession, amend
the tax roll to reflect the denial and the local treasurer shall
within 30 days of the date of the denial issue a corrected tax bill
for any additional taxes with interest and penalties computed from
the date the taxes were last payable without interest or penalty.
If the tax roll is in the county treasurer's possession, the tax
roll shall be amended to reflect the denial and the county
treasurer shall within 30 days of the date of the denial prepare
and submit a supplemental tax bill for any additional taxes,
together with interest and penalties computed from the date the
taxes were last payable without interest or penalty. Taxes levied
in a corrected or supplemental tax bill shall be returned as
delinquent on the March 1 in the year immediately succeeding the
year in which the corrected or supplemental tax bill is issued.
However, if the property has been transferred to a bona fide
purchaser before additional taxes were billed to the seller as a
result of the denial of a claim for exemption, the taxes, interest,
and penalties shall not be a lien on the property and shall not be
billed to the bona fide purchaser, and the local tax collecting
unit if the local tax collecting unit has possession of the tax
roll or the county treasurer if the county has possession of the
tax roll shall notify the department of treasury of the amount of
tax due, interest, and penalties through the date of that
notification. The department of treasury shall then assess the
owner who claimed the exemption under this section for the tax,
interest, and penalties accruing as a result of the denial of the
claim for exemption, if any, as for unpaid taxes provided under
1941 PA 122, MCL 205.1 to 205.31, and shall deposit any tax,
penalty, and interest collected into the state school aid fund. The
denial shall be made on a form prescribed by the department of
treasury.
(7) An owner of commercial rental property exempt under this
section shall inform a prospective buyer of that commercial rental
property that the commercial rental property is subject to the
specific tax levied under the commercial rental property specific
tax act.
(8) The department of treasury shall make available the
affidavit forms and the forms to rescind an exemption, which may be
on the same form, to all city and township assessors, county
equalization officers, county registers of deeds, and closing
agents.
(9) As used in this section, "commercial rental property"
means real property that meets all of the following conditions:
(a) Is classified as commercial real property or industrial
real property under section 34c.
(b) All or a portion is subject to a lease or is offered for
lease.
Sec. 34d. (1) As used in this section or section 27a, or
section 3 or 31 of article IX of the state constitution of 1963:
(a) For taxes levied before 1995, "additions" means all
increases in value caused by new construction or a physical
addition of equipment or furnishings, and the value of property
that was exempt from taxes or not included on the assessment unit's
immediately preceding year's assessment roll.
(b) For taxes levied after 1994, "additions" means, except as
provided in subdivision (c), all of the following:
(i) Omitted real property. As used in this subparagraph,
"omitted real property" means previously existing tangible real
property not included in the assessment. Omitted real property
shall not increase taxable value as an addition unless the
assessing jurisdiction has a property record card or other
documentation showing that the omitted real property was not
previously included in the assessment. The assessing jurisdiction
has the burden of proof in establishing whether the omitted real
property is included in the assessment. Omitted real property for
the current and the 2 immediately preceding years, discovered after
the assessment roll has been completed, shall be added to the tax
roll pursuant to the procedures established in section 154. For
purposes of determining the taxable value of real property under
section 27a, the value of omitted real property is based on the
value and the ratio of taxable value to true cash value the omitted
real property would have had if the property had not been omitted.
(ii) Omitted personal property. As used in this subparagraph,
"omitted personal property" means previously existing tangible
personal property not included in the assessment. Omitted personal
property shall be added to the tax roll pursuant to section 154.
(iii) New construction. As used in this subparagraph, "new
construction" means property not in existence on the immediately
preceding tax day and not replacement construction. New
construction includes the physical addition of equipment or
furnishings, subject to the provisions set forth in section
27(2)(a) to (o). For purposes of determining the taxable value of
property under section 27a, the value of new construction is the
true cash value of the new construction multiplied by 0.50.
(iv) Previously exempt property. As used in this subparagraph,
"previously exempt property" means property that was exempt from ad
valorem taxation under this act on the immediately preceding tax
day but is subject to ad valorem taxation on the current tax day
under this act. For purposes of determining the taxable value of
real property under section 27a:
(A) The value of property previously exempt under section 7u
is the taxable value the entire parcel of property would have had
if that property had not been exempt, minus the product of the
entire parcel's taxable value in the immediately preceding year and
the lesser of 1.05 or the inflation rate.
(B) The taxable value of property that is a facility as that
term is defined in section 2 of 1974 PA 198, MCL 207.552, that was
previously exempt under section 7k is the taxable value that
property would have had under this act if it had not been exempt.
(C) The taxable value of property that was commercial rental
property that was previously exempt under section 7ll is that
property's adjusted taxable value under the commercial rental
property specific tax act in the immediately preceding year.
(D) (C)
The value of property previously exempt under any
other section of law is the true cash value of the previously
exempt property multiplied by 0.50.
(v) Replacement construction. As used in this subparagraph,
"replacement construction" means construction that replaced
property damaged or destroyed by accident or act of God and that
occurred after the immediately preceding tax day to the extent the
construction's true cash value does not exceed the true cash value
of property that was damaged or destroyed by accident or act of God
in the immediately preceding 3 years. For purposes of determining
the taxable value of property under section 27a, the value of the
replacement construction is the true cash value of the replacement
construction multiplied by a fraction the numerator of which is the
taxable value of the property to which the construction was added
in the immediately preceding year and the denominator of which is
the true cash value of the property to which the construction was
added in the immediately preceding year, and then multiplied by the
lesser of 1.05 or the inflation rate.
(vi) An increase in taxable value attributable to the complete
or partial remediation of environmental contamination existing on
the immediately preceding tax day. The department of environmental
quality shall determine the degree of remediation based on
information available in existing department of environmental
quality records or information made available to the department of
environmental quality if the appropriate assessing officer for a
local tax collecting unit requests that determination. The increase
in taxable value attributable to the remediation is the increase in
true cash value attributable to the remediation multiplied by a
fraction the numerator of which is the taxable value of the
property had it not been contaminated and the denominator of which
is the true cash value of the property had it not been
contaminated.
(vii) An Prior
to May 14, 2002, an increase
in the value
attributable to the property's occupancy rate if either a loss, as
that term is defined in this section, had been previously allowed
because of a decrease in the property's occupancy rate or if the
value of new construction was reduced because of a below-market
occupancy rate. For purposes of determining the taxable value of
property under section 27a, the value of an addition for the
increased occupancy rate is the product of the increase in the true
cash value of the property attributable to the increased occupancy
rate multiplied by a fraction the numerator of which is the taxable
value of the property in the immediately preceding year and the
denominator of which is the true cash value of the property in the
immediately preceding year, and then multiplied by the lesser of
1.05 or the inflation rate.
(viii) Public services. As used in this subparagraph, "public
services" means water service, sewer service, a primary access
road, natural gas service, electrical service, telephone service,
sidewalks, or street lighting. For purposes of determining the
taxable value of real property under section 27a, the value of
public services is the amount of increase in true cash value of the
property attributable to the available public services multiplied
by 0.50 and shall be added in the calendar year following the
calendar year when those public services are initially available.
(c) For taxes levied after 1994, additions do not include
increased value attributable to any of the following:
(i) Platting, splits, or combinations of property.
(ii) A change in the zoning of property.
(iii) For the purposes of the calculation of the millage
reduction fraction under subsection (7) only, increased taxable
value under section 27a(3) after a transfer of ownership of
property.
(d) "Assessed valuation of property as finally equalized"
means taxable value under section 27a.
(e) "Financial officer" means the officer responsible for
preparing the budget of a unit of local government.
(f) "General price level" means the annual average of the 12
monthly values for the United States consumer price index for all
urban consumers as defined and officially reported by the United
States department of labor, bureau of labor statistics.
(g) For taxes levied before 1995, "losses" means a decrease in
value caused by the removal or destruction of real or personal
property and the value of property taxed in the immediately
preceding year that has been exempted or removed from the
assessment unit's assessment roll.
(h) For taxes levied after 1994, "losses" means, except as
provided in subdivision (i), all of the following:
(i) Property that has been destroyed or removed. For purposes
of determining the taxable value of property under section 27a, the
value of property destroyed or removed is the product of the true
cash value of that property multiplied by a fraction the numerator
of which is the taxable value of that property in the immediately
preceding year and the denominator of which is the true cash value
of that property in the immediately preceding year.
(ii) Property that was subject to ad valorem taxation under
this act in the immediately preceding year that is now exempt from
ad valorem taxation under this act. For purposes of determining the
taxable value of property under section 27a, the value of property
exempted from ad valorem taxation under this act is the amount
exempted.
(iii) An Prior
to December 31, 2007, an adjustment
in value, if
any, because of a decrease in the property's occupancy rate, to the
extent provided by law. For purposes of determining the taxable
value of real property under section 27a, the value of a loss for a
decrease in the property's occupancy rate is the product of the
decrease in the true cash value of the property attributable to the
decreased occupancy rate multiplied by a fraction the numerator of
which is the taxable value of the property in the immediately
preceding year and the denominator of which is the true cash value
of the property in the immediately preceding year.
(iv) A decrease in taxable value attributable to environmental
contamination existing on the immediately preceding tax day. The
department of environmental quality shall determine the degree to
which environmental contamination limits the use of property based
on information available in existing department of environmental
quality records or information made available to the department of
environmental quality if the appropriate assessing officer for a
local tax collecting unit requests that determination. The
department of environmental quality's determination of the degree
to which environmental contamination limits the use of property
shall be based on the criteria established for the categories set
forth in section 20120a(1) of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.20120a. The
decrease in taxable value attributable to the contamination is the
decrease in true cash value attributable to the contamination
multiplied by a fraction the numerator of which is the taxable
value of the property had it not been contaminated and the
denominator of which is the true cash value of the property had it
not been contaminated.
(i) For taxes levied after 1994, losses do not include
decreased value attributable to either of the following:
(i) Platting, splits, or combinations of property.
(ii) A change in the zoning of property.
(j) "New construction and improvements" means additions less
losses.
(k) "Current year" means the year for which the millage
limitation is being calculated.
(l) "Inflation rate" means the ratio of the general price level
for the state fiscal year ending in the calendar year immediately
preceding the current year divided by the general price level for
the state fiscal year ending in the calendar year before the year
immediately preceding the current year.
(2) On or before the first Monday in May of each year, the
assessing officer of each township or city shall tabulate the
tentative taxable value as approved by the local board of review
and as modified by county equalization for each classification of
property that is separately equalized for each unit of local
government and provide the tabulated tentative taxable values to
the county equalization director. The tabulation by the assessing
officer shall contain additions and losses for each classification
of property that is separately equalized for each unit of local
government or part of a unit of local government in the township or
city. If as a result of state equalization the taxable value of
property changes, the assessing officer of each township or city
shall revise the calculations required by this subsection on or
before the Friday following the fourth Monday in May. The county
equalization director shall compute these amounts and the current
and immediately preceding year's taxable values for each
classification of property that is separately equalized for each
unit of local government that levies taxes under this act within
the boundary of the county. The county equalization director shall
cooperate with equalization directors of neighboring counties, as
necessary, to make the computation for units of local government
located in more than 1 county. The county equalization director
shall calculate the millage reduction fraction for each unit of
local government in the county for the current year. The financial
officer for each taxing jurisdiction shall calculate the compounded
millage reduction fractions beginning in 1980 resulting from the
multiplication of successive millage reduction fractions and shall
recognize a local voter action to increase the compounded millage
reduction fraction to a maximum of 1 as a new beginning fraction.
Upon request of the superintendent of the intermediate school
district, the county equalization director shall transmit the
complete computations of the taxable values to the superintendent
of the intermediate school district within that county. At the
request of the presidents of community colleges, the county
equalization director shall transmit the complete computations of
the taxable values to the presidents of community colleges within
the county.
(3) On or before the first Monday in June of each year, the
county equalization director shall deliver the statement of the
computations signed by the county equalization director to the
county treasurer.
(4) On or before the second Monday in June of each year, the
treasurer of each county shall certify the immediately preceding
year's taxable values, the current year's taxable values, the
amount of additions and losses for the current year, and the
current year's millage reduction fraction for each unit of local
government that levies a property tax in the county.
(5) The financial officer of each unit of local government
shall make the computation of the tax rate using the data certified
by the county treasurer and the state tax commission. At the annual
session in October, the county board of commissioners shall not
authorize the levy of a tax unless the governing body of the taxing
jurisdiction has certified that the requested millage has been
reduced, if necessary, in compliance with section 31 of article IX
of the state constitution of 1963.
(6) The number of mills permitted to be levied in a tax year
is limited as provided in this section pursuant to section 31 of
article IX of the state constitution of 1963. A unit of local
government shall not levy a tax rate greater than the rate
determined by reducing its maximum rate or rates authorized by law
or charter by a millage reduction fraction as provided in this
section without voter approval.
(7) A millage reduction fraction shall be determined for each
year for each local unit of government. For ad valorem property
taxes that became a lien before January 1, 1983, the numerator of
the fraction shall be the total state equalized valuation for the
immediately preceding year multiplied by the inflation rate and the
denominator of the fraction shall be the total state equalized
valuation for the current year minus new construction and
improvements. For ad valorem property taxes that become a lien
after December 31, 1982 and through December 31, 1994, the
numerator of the fraction shall be the product of the difference
between the total state equalized valuation for the immediately
preceding year minus losses multiplied by the inflation rate and
the denominator of the fraction shall be the total state equalized
valuation for the current year minus additions. For ad valorem
property taxes that are levied after December 31, 1994, the
numerator of the fraction shall be the product of the difference
between the total taxable value for the immediately preceding year
minus losses multiplied by the inflation rate and the denominator
of the fraction shall be the total taxable value for the current
year minus additions. For each year after 1993, a millage reduction
fraction shall not exceed 1.
(8) The compounded millage reduction fraction for each year
after 1980 shall be calculated by multiplying the local unit's
previous year's compounded millage reduction fraction by the
current year's millage reduction fraction. Beginning with 1980 tax
levies, the compounded millage reduction fraction for the year
shall be multiplied by the maximum millage rate authorized by law
or charter for the unit of local government for the year, except as
provided by subsection (9). A compounded millage reduction fraction
shall not exceed 1.
(9) The millage reduction shall be determined separately for
authorized millage approved by the voters. The limitation on
millage authorized by the voters on or before April 30 of a year
shall be calculated beginning with the millage reduction fraction
for that year. Millage authorized by the voters after April 30
shall not be subject to a millage reduction until the year
following the voter authorization which shall be calculated
beginning with the millage reduction fraction for the year
following the authorization. The first millage reduction fraction
used in calculating the limitation on millage approved by the
voters after January 1, 1979 shall not exceed 1.
(10) A millage reduction fraction shall be applied separately
to the aggregate maximum millage rate authorized by a charter and
to each maximum millage rate authorized by state law for a specific
purpose.
(11) A unit of local government may submit to the voters for
their approval the levy in that year of a tax rate in excess of the
limit set by this section. The ballot question shall ask the voters
to approve the levy of a specific number of mills in excess of the
limit. The provisions of this section do not allow the levy of a
millage rate in excess of the maximum rate authorized by law or
charter. If the authorization to levy millage expires after 1993
and a local governmental unit is asking voters to renew the
authorization to levy the millage, the ballot question shall ask
for renewed authorization for the number of expiring mills as
reduced by the millage reduction required by this section. If the
election occurs before June 1 of a year, the millage reduction is
based on the immediately preceding year's millage reduction
applicable to that millage. If the election occurs after May 31 of
a year, the millage reduction shall be based on that year's millage
reduction applicable to that millage had it not expired.
(12) A reduction or limitation under this section shall not be
applied to taxes imposed for the payment of principal and interest
on bonds or other evidence of indebtedness or for the payment of
assessments or contract obligations in anticipation of which bonds
are issued that were authorized before December 23, 1978, as
provided by section 4 of chapter I of former 1943 PA 202, or to
taxes imposed for the payment of principal and interest on bonds or
other evidence of indebtedness or for the payment of assessments or
contract obligations in anticipation of which bonds are issued that
are approved by the voters after December 22, 1978.
(13) If it is determined subsequent to the levy of a tax that
an incorrect millage reduction fraction has been applied, the
amount of additional tax revenue or the shortage of tax revenue
shall be deducted from or added to the next regular tax levy for
that unit of local government after the determination of the
authorized rate pursuant to this section.
(14) If as a result of an appeal of county equalization or
state equalization the taxable value of a unit of local government
changes, the millage reduction fraction for the year shall be
recalculated. The financial officer shall effectuate an addition or
reduction of tax revenue in the same manner as prescribed in
subsection (13).
(15) The fractions calculated pursuant to this section shall
be rounded to 4 decimal places, except that the inflation rate
shall be computed by the state tax commission and shall be rounded
to 3 decimal places. The state tax commission shall publish the
inflation rate before March 1 of each year.
(16) Beginning with taxes levied in 1994, the millage
reduction required by section 31 of article IX of the state
constitution of 1963 shall permanently reduce the maximum rate or
rates authorized by law or charter. The reduced maximum authorized
rate or rates for 1994 shall equal the product of the maximum rate
or rates authorized by law or charter before application of this
section multiplied by the compounded millage reduction applicable
to that millage in 1994 pursuant to subsections (8) to (12). The
reduced maximum authorized rate or rates for 1995 and each year
after 1995 shall equal the product of the immediately preceding
year's reduced maximum authorized rate or rates multiplied by the
current year's millage reduction fraction and shall be adjusted for
millage for which authorization has expired and new authorized
millage approved by the voters pursuant to subsections (8) to (12).
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 312
of the 94th Legislature is enacted into law.