HOUSE BILL No. 4529 April 20, 1999, Introduced by Reps. DeWeese, Reeves, Sheltrown, Jelinek, Middaugh, Gosselin, Voorhees, Spade, Woodward, Caul, Sanborn, Vear, Tabor, Garcia, Julian, Bradstreet, Stamas, Green, Cassis, Rick Johnson, Jellema and Raczkowski and referred to the Committee on Agriculture and Resource Management. A bill to amend 1893 PA 206, entitled "The general property tax act," by amending section 27 (MCL 211.27), as amended by 1994 PA 415. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 27. (1) As used in this act, "TRUE cash value" means 2 the usual selling price at the place where the property to which 3 the term is applied is at the time of assessment, being the price 4 that could be obtained for the property at private sale, and not 5 at auction sale except as otherwise provided in this section, or 6 at forced sale. The usual selling price may include sales at 7 public auction held by a nongovernmental agency or personwhen8 IF those sales have become a common method of acquisition in the 9 jurisdiction for the class of property being valued. The usual 10 selling price does not include sales at public auctionwhereIF 11 the sale is part of a liquidation of the seller's assets in a 00344'99 FDD 2 1 bankruptcy proceeding orwhereIF the seller is unable to use 2 common marketing techniques to obtain the usual selling price for 3 the property. A sale or other disposition by the state or an 4 agency or political subdivision of the state of land acquired for 5 delinquent taxes or an appraisal made in connection with the sale 6 or other disposition or the value attributed to the property of 7 regulated public utilities by a governmental regulatory agency 8 for rate-making purposesshallIS notbe consideredcontrol- 9 ling evidence of true cash value for assessment purposes. In 10 determining the TRUE CASH value, the assessor shall also consider 11 the advantages and disadvantages of location; quality of soil; 12 zoning; existing use; present economic income of structures, 13 including farm structures; present economic income of land if the 14 land is being farmed or otherwise put to income producing use; 15 quantity and value of standing timber; water power and privi- 16 leges; and mines, minerals, quarries, or other valuable deposits 17 known to be available in the land and their value. 18 (2) The assessor shall not consider the increase in true 19 cash value that is a result of expenditures for normal repairs, 20 replacement, and maintenance in determining the true cash value 21 of property for assessment purposes until the property is sold. 22 For the purpose of implementing this subsection, the assessor 23 shall not increase the construction quality classification or 24 reduce the effective age for depreciation purposes, except if the 25 appraisal of the property was erroneous before nonconsideration 26 of the normal repair, replacement, or maintenance, and shall not 27 assign an economic condition factor to the property that differs 00344'99 3 1 from the economic condition factor assigned to similar properties 2 as defined by appraisal procedures applied in the jurisdiction. 3 The increase in value attributable to the items included in sub- 4 divisions (a) to (o) that is known to the assessor and excluded 5 from true cash value shall be indicated on the assessment roll. 6 This subsection applies only to residential property. The fol- 7 lowing repairsshall beARE considered normal maintenance if 8 they are not part of a structural addition or completion: 9 (a) Outside painting. 10 (b) Repairing or replacing siding, roof, porches, steps, 11 sidewalks,andOR drives. 12 (c) Repainting, repairing, or replacing existing masonry. 13 (d)Replacement ofREPLACING awnings. 14 (e) Adding or replacing gutters and downspouts. 15 (f) Replacing storm windows or doors. 16 (g)InsulationINSULATING or weatherstripping. 17 (h) Complete rewiring. 18 (i) Replacing plumbing and light fixtures. 19 (j)New furnace replacingREPLACING a furnace WITH A NEW 20 FURNACE of the same type or replacing AN oil or gas burner. 21 (k)Plaster repairsREPAIRING PLASTER, inside painting, or 22 other redecorating. 23 (l) New ceiling, wall, or floor surfacing. 24 (m) Removing partitions to enlarge rooms. 25 (n) Replacing AN automatic hot water heater. 26 (o) Replacing dated interior woodwork. 00344'99 4 1 (3) A city or township assessor, a county equalization 2 department, or the state tax commission before utilizing real 3 estate sales data on real property purchases, including purchases 4 by land contract,for the purpose of determiningTO DETERMINE 5 assessments or in making sales ratio studiesfor the purpose of6assessing or equalizingTO ASSESS PROPERTY OR EQUALIZE assess- 7 ments shall exclude from the sales data the following amounts 8 allowed by subdivisions (a), (b), and (c) to the extent that the 9 amounts are included in the real property purchase price and are 10 so identified in the real estate sales data or certified to the 11 assessor as provided in subdivision (d): 12 (a) Amounts paid for obtaining financing of the purchase 13 price of the property or the last conveyance of the property. 14 (b) Amounts attributable to personal property that were 15 included in the purchase price of the property in the last con- 16 veyance of the property. 17 (c) Amounts paid for surveying the property pursuant to the 18 last conveyance of the property. The legislature may require 19 local units of government, including school districts, to submit 20 reports of revenue lost under subdivisions (a) and (b) and this 21 subdivision so that the state may reimburse those units for that 22 lost revenue. 23 (d) The purchaser of real property, including a purchaser by 24 land contract, may file with the assessor of the city or township 25 in which the property is located 2 copies of the purchase agree- 26 ment or of an affidavit thatshall identifyIDENTIFIES the 27 amount, if any, for each item listed in subdivisions (a) to (c). 00344'99 5 1 One copy shall be forwarded by the assessor to the county 2 equalization department. The affidavit shall be prescribed by 3 the state tax commission. 4 (4) As used in subsection (1), "present economic income" 5 means for leased or rented property the ordinary, general, and 6 usual economic return realized from the lease or rental of prop- 7 erty negotiated under current, contemporary conditions between 8 parties equally knowledgeable and familiar with real estate 9 values. The actual income generated by the lease or rental of 10 property is not the controlling indicator of its TRUE cash value 11 in all cases. This subsection does not apply to property subject 12 to a lease entered into before January 1, 1984 for which the 13 terms of the lease governing the rental rate or tax liability 14 have not been renegotiated after December 31, 1983. This subsec- 15 tion does not apply to a nonprofit housing cooperative subject to 16 regulatory agreements between the state or federal government 17 entered into before January 1, 1984. As used in this subsection, 18 "nonprofit cooperative housing corporation" means a nonprofit 19 cooperative housing corporation that is engaged in providing 20 housing services to its stockholders and members and that does 21 not pay dividends or interest upon stock or membership investment 22 but that does distribute all earnings to its stockholders or 23 members. 24 (5) Beginning December 31, 1994, the purchase price paid in 25 a transfer of property is not the presumptive true cash value of 26 the property transferred. In determining the true cash value of 27 transferred property, an assessing officer shall assess that 00344'99 6 1 property using the same valuation method used to value all other 2 property of that same classification in the assessing 3 jurisdiction. As used in this subsection, "purchase price" means 4 the total consideration agreed to in an arms-length transaction 5 and not at a forced sale paid by the purchaser of the property, 6 stated in dollars, whether or not paid in dollars. 7 (6) THE ASSESSOR SHALL DETERMINE THE TRUE CASH VALUE OF 8 PROPERTY SUBJECT TO A FARMLAND DEVELOPMENT RIGHTS AGREEMENT UNDER 9 PART 361 OF THE NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION 10 ACT, 1994 PA 451, MCL 324.36101 TO 324.36117, IN THE SAME MANNER 11 AND USING THE SAME FACTORS AS FOR PROPERTY CLASSIFIED AS AGRICUL- 12 TURAL REAL PROPERTY UNDER SECTION 34C REGARDLESS OF WHETHER THE 13 SUBJECT PROPERTY IS CLASSIFIED AS AGRICULTURAL REAL PROPERTY OR 14 DEVELOPMENTAL REAL PROPERTY UNDER SECTION 34C. 00344'99 Final page. FDD