HB-4028, As Passed Senate, Nov 19, 2002
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4028
A bill to establish procedures for municipalities to
designate individual lots or structures as blighting; to purchase
or condemn blighting property; to transfer blighting property for
development; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1. The powers granted in this act relating to the
2 designation and transfer for development of blighting property
3 constitute the performance by this state or a political
4 subdivision of this state of essential public purposes and
5 functions.
6 Sec. 2. As used in this act:
7 (a) "Attractive nuisance" means a condition on property that
8 children are reasonably likely to come in contact with or be
9 exposed to and that involves an unreasonable risk of death or
10 serious bodily harm to children.
1 (b) "Blighting property", subject to subdivision (c), means
2 property that is likely to have a negative financial impact on
3 the value of surrounding property or on the increase in value of
4 surrounding property and that meets any of the following
5 criteria:
6 (i) The property has been declared a public nuisance in
7 accordance with a local housing, building, plumbing, fire, or
8 other related code or ordinance.
9 (ii) The property is an attractive nuisance because of
10 physical condition, use, or occupancy. A structure or lot is not
11 blighting property under this subparagraph because of an activity
12 that is inherent to the functioning of a lawful business.
13 (iii) The property is a fire hazard or is otherwise dangerous
14 to the safety of persons or property.
15 (iv) The property has had the utilities, plumbing, heating,
16 or sewerage permanently disconnected, destroyed, removed, or
17 rendered ineffective so that the property is unfit for its
18 intended use.
19 (v) A portion of a building or structure located on the
20 property has been damaged by any event so that the structural
21 strength or stability of the building or structure is appreciably
22 less than it was before the event and does not meet the minimum
23 requirements of the housing law of Michigan, 1917 PA 167,
24 MCL 125.401 to 125.543, or a building code of the city, village,
25 or township in which the building or structure is located for a
26 new building or structure.
27 (vi) A building or structure or part of a building or
1 structure located on the property is likely to fall, become
2 detached or dislodged, or collapse and injure persons or damage
3 property.
4 (vii) A building or structure located on the property used or
5 intended to be used as a dwelling, including the adjoining
6 grounds, because of dilapidation, decay, damage, or faulty
7 construction; accumulation of trash or debris; an infestation of
8 rodents or other vermin; or any other reason, is unsanitary or
9 unfit for human habitation, is in a condition that a local health
10 officer determines is likely to cause sickness or disease, or is
11 likely to injure the health, safety, or general welfare of people
12 living in the dwelling.
13 (c) "Blighting property" does not include any of the
14 following:
15 (i) Structures or lots, whether improved or unimproved, that
16 are inherent to the functioning of a farm or farm operation as
17 those terms are defined in section 2 of the Michigan right to
18 farm act, 1981 PA 93, MCL 286.472.
19 (ii) Structures or lots, whether improved or unimproved, that
20 are industrial properties in an area zoned industrial and that
21 are current on tax obligations.
22 (iii) Track belonging to a railroad company, right-of-way
23 belonging to a railroad company, rolling stock belonging to a
24 railroad company, or any other property necessarily used in
25 operating a railroad in this state belonging to a railroad
26 company.
27 (iv) A single family dwelling for which the owner claims a
1 homestead exemption under section 7cc of the general property tax
2 act, 1893 PA 206, MCL 211.7cc.
3 (d) "Dwelling" means any house, building, structure, tent,
4 shelter, trailer, or vehicle, or portion thereof, which is
5 occupied in whole or in part as the home, residence, or living or
6 sleeping place of 1 or more human beings, either permanently or
7 transiently. Dwelling does not include railroad rolling stock on
8 tracks or rights-of-way.
9 (e) "Fire hazard" means that term as defined in section 1 of
10 the fire prevention code, 1941 PA 207, MCL 29.1.
11 (f) "Municipality" means a city, village, or township in this
12 state or a county described in section 3(1)(b).
13 (g) "Person" means an individual, partnership, association,
14 trust, or corporation, or any other legal entity.
15 (h) "Public nuisance" means an unreasonable interference with
16 a common right enjoyed by the general public involving conduct
17 that significantly interferes, or that is known or should have
18 been known to significantly interfere, with the public's health,
19 safety, peace, comfort, or convenience, including conduct
20 prescribed by law.
21 (i) "Taxing jurisdiction" means a jurisdiction, including,
22 but not limited to, this state, an agency of this state, a state
23 authority, an intergovernmental authority of this state, a school
24 district, or a municipality, that levies taxes under the general
25 property tax act, 1893 PA 206, MCL 211.1 to 211.157.
26 Sec. 3. (1) Except as provided in subsection (3), a city,
27 village, or township may do 1 of the following:
1 (a) Designate a structure or lot within its jurisdiction as
2 blighting property and acquire title to the blighting property by
3 purchase, gift, exchange, or condemnation under the procedures
4 set forth in sections 4 through 7, except that a township may
5 take these actions within a village only upon adoption by a
6 village of a resolution under subdivision (c).
7 (b) Upon entering into a written agreement with the county
8 within which the city, village, or township is located, adopt a
9 resolution transferring the authority provided in subdivision (a)
10 to that county. The written agreement shall be entered into with
11 the county executive of a county that elects a county executive
12 or with the county board of commissioners of any other county.
13 (c) In the case of a village, adopt a resolution transferring
14 the authority provided in subdivision (a) to the township within
15 which the village is located.
16 (2) Except as provided in subsection (3), upon adoption by a
17 city, village, or township of a resolution under
18 subsection (1)(b), a county may designate a structure or lot as
19 blighting property and acquire fee simple title in the blighting
20 property by purchase, gift, exchange, or condemnation under the
21 procedures set forth in sections 4 through 7.
22 (3) A municipality shall not designate a property as
23 blighting property if the property has been forfeited to a county
24 treasurer under section 78g of the general property tax act, 1893
25 PA 206, MCL 211.78g, and remains subject to foreclosure under
26 section 78k of the general property tax act, 1893 PA 206,
27 MCL 211.78k.
House Bill No. 4028 as amended November 20, 2002
1 (4) A municipality shall not designate a property as
2 blighting property based solely on the presence of native grasses
3 or plants indigenous to Michigan that are planted or maintained
4 as part of a garden or designated wildlife area or for
5 landscaping, erosion control, or weed control purposes.
6 Sec. 4. (1) A municipality that proposes to designate a
7 property as blighting property under section 3 shall hold a
8 hearing on the designation. The hearing shall take place not
9 less than <<42>> days, and not more than <<119>> days, after the
10 municipality provides written notice of the hearing and the
11 proposed designation as required by this section. A municipality
12 may hold the hearing more than <<119>> days after it provides written
13 notice only if an extension is requested by a person with a legal
14 interest in the property that is contesting the blighting
15 designation.
16 (2) The written notice provided under this section shall
17 explain, in plain English, that the property is subject to
18 designation as blighting property, and shall include all of the
19 following:
20 (a) The time, date, and location of the hearing.
21 (b) A description, including the street address, of the
22 property subject to designation as blighting property.
23 (c) An explanation of the reasons the municipality considers
24 the property to be blighting property.
25 (d) The name, address, and telephone number of the person to
26 whom communications about the hearing may be addressed.
27 (e) Names, addresses, and telephone numbers of public and
1 private agencies or other resources that may be available to
2 assist an occupant of the property to avoid the designation of
3 the property as blighting property or to obtain comparable safe,
4 decent, and quality affordable housing.
5 (f) A description of the improvements that should be made to
6 the property before the hearing to avoid designation of the
7 property as blighting.
8 (3) The municipality shall perform a thorough title search to
9 identify all persons with a legal interest in the property. The
10 municipality shall take the following steps to provide notice to
11 any person with a legal interest in the property:
12 (a) Determine the address reasonably calculated to apprise
13 those persons with a legal interest in the property of the
14 pendency of the hearing under this section and send notice of the
15 hearing to each person with a legal interest in the property by
16 certified mail, return receipt requested, not less than 42 days
17 before the hearing.
18 (b) Send a representative to the property to ascertain
19 personally whether or not the property is occupied. If the
20 property appears to be occupied, the municipality shall do all of
21 the following not less than 42 days before the hearing:
22 (i) Make reasonable efforts in good faith personally to serve
23 upon a person occupying the property a copy of the written notice
24 described in subsection (2).
25 (ii) If a person occupying the property is personally served,
26 orally inform the occupant of both of the following:
27 (A) That the property may be designated as blighting
House Bill No. 4028 as amended November 20, 2002
1 property.
2 (B) Public and private agencies or other resources that may
3 be available to assist the occupant to avoid the designation of
4 the property as blighting property or to obtain comparable safe,
5 decent, and quality affordable housing.
6 (iii) If the occupant indicates that he or she has a health
7 problem that affects his or her ability to make improvements that
8 will cause the property no longer to meet the definition of
9 blighting property or if it should be apparent to the
10 representative of the municipality that the occupant has such a
11 health problem, place the occupant with an appropriate public or
12 private agency to assist the occupant with that health problem.
13 (iv) If the occupant << to avoid the
designation of the property as blighting property. appears to lack
the ability to
14 understand the advice given or is
unwilling to cooperate, provide
15 the occupant with the names and telephone
numbers of public and
16 private agencies that may be able to
assist the occupant. >>
17 (v) If an authorized representative of the municipality is
18 not able personally to meet with the occupant, place the written
19 notice at a conspicuous location on the property.
20 (c) Correct any deficiency that the municipality may know of
21 in the provision of the notice required by this section as soon
22 as practicable before designating the property as blighting
23 property.
24 (d) If the municipality is unable to ascertain the address
25 reasonably calculated to apprise all persons with a legal
26 interest in the property of the pendency of the hearing, or is
27 unable to deliver notice to any occupant of the property, service
1 of the notice shall be made by publication. The notice shall be
2 published for 3 successive weeks, once each week, in a newspaper
3 published and circulated in the county in which the property is
4 located, if there is one. If no paper is published in that
5 county, publication shall be made in a newspaper published and
6 circulated in an adjoining county.
7 (4) Any notice provided under this section shall include an
8 explanation of any tax benefits or other incentives offered by
9 the municipality that may encourage the transfer of the blighting
10 property.
11 Sec. 5. (1) Upon the mailing of the notice under section 4,
12 the representative of the municipality responsible for the
13 mailing of the notice shall file proof of the notice provided
14 with the register of deeds of the county within which the
15 property subject to designation as blighting property is
16 located. The proof of notice shall be in the form of an
17 affidavit and shall include all of the following:
18 (a) A description of the content of the notice provided.
19 (b) The name or names of the person or persons to whom the
20 notice was addressed.
21 (c) A statement that the property is subject to designation
22 as blighting property and subsequent transfer or condemnation.
23 (2) An affidavit recorded under subsection (1) creates a
24 rebuttable presumption in the courts of this state that any
25 person obtaining a legal interest in property subject to
26 designation as blighting property following the recording of the
1 affidavit by the representative of the municipality was properly
2 notified that the property was subject to designation as
3 blighting property and of the consequences of that designation,
4 including, but not limited to, the condemnation of the property
5 or the transfer of the property to the municipality or another
6 person.
7 (3) If a representative of a municipality records an
8 affidavit under subsection (1) and the municipality subsequently
9 does not designate the property as blighting property, the
10 municipality shall record as soon as practicable notice properly
11 certified by a representative of the municipality and in the form
12 of an affidavit that the property was not designated as blighting
13 property and that the municipality no longer seeks to designate
14 the property as blighting property.
15 Sec. 6. (1) A person with a legal interest in the property
16 may contest the proposed designation of any property as blighting
17 property at the hearing held by the municipality under section 4
18 by doing 1 of the following:
19 (a) Appear at the hearing and show cause why the property
20 should not be designated as blighting property.
21 (b) If incarcerated, impaired, or otherwise unable to attend
22 a public hearing, submit a written presentation to show cause why
23 the property should not be designated as blighting property.
24 (2) If a person with a legal interest in the property
25 demonstrates at the hearing that improvements to the property
26 have been made or are actively being made that will cause the
27 property no longer to meet the definition of blighting property,
House Bill No. 4028 as amended November 20, 2002
1 the municipality shall delay the designation of the property as
2 blighting for <<91>> days. If at the end of that <<91>> days the
3 municipality finds that the property no longer meets the
4 definition of blighting property, the municipality shall issue a
5 certificate stating that the property is not blighting property.
6 (3) If after the notice and hearing required by this act the
7 municipality determines that the property is blighting property,
8 the municipality shall designate the property as blighting
9 property and provide public notice of the designation.
10 (4) A municipality may at any time suspend proceedings
11 leading to the designation of property as blighting property if a
12 person with a legal interest in the property enters into an
13 agreement with the municipality establishing an improvement plan
14 for the property and a schedule for completion of the
15 improvements.
16 (5) A person with a legal interest in property that a
17 municipality has designated as blighting property may appeal that
18 decision to the circuit court in the jurisdiction within which
19 the property is located within 28 days of the designation. The
20 circuit court shall review the municipal decision using the
21 standard of review for administrative decisions that is set forth
22 in section 28 of article VI of the state constitution of 1963.
23 (6) If a person with a legal interest in a property that a
24 municipality designates as blighting appeals the municipal
25 decision and the decision is reversed by a court of appropriate
26 jurisdiction and the court determines that the municipality was
27 acting arbitrarily or in bad faith, the court may award the
House Bill No. 4028 as amended on November 20, 2002
1 successful appellant the costs, including, but not limited to,
2 attorney fees, actually and reasonably incurred by the person in
3 making the appeal.
4 Sec. 7. (1) A municipality may offer to purchase property
5 designated as blighting property under this act at the fair
6 market value or to acquire the property by donation or exchange.
7 If the offer is rejected, the municipality may institute
8 proceedings under the power of eminent domain under the laws of
9 this state or provisions of any local charter relative to
10 condemnation.
11 (2) Except as otherwise provided in subsection (3), within
12 <<119>> days after a municipality acquires title to a blighting
13 property or a condemnation award for the blighting property is
14 ordered under the uniform condemnation procedures act, 1980
15 PA 87, MCL 213.5 to 213.75, whichever is later, the municipality
16 shall either transfer the property for development or have
17 adopted a written development plan for the property.
18 (3) A municipality that under subsection (2) transfers title
19 to a blighting property that is classified as residential may
20 transfer the property for affordable low income housing to a
21 person that has experience with and is able to demonstrate
22 financial capacity developing affordable low income housing. A
23 municipality that does not transfer title to a blighting property
24 that is classified as residential under subsection (2) shall
25 develop the property in accordance with the written development
26 plan adopted under subsection (2).
27 (4) If a municipality fails to comply with subsection (2) or
1 (3), a person whose legal interest in the property was conveyed
2 by sale, donation, exchange, or condemnation as provided for
3 under subsection (1) may bring an action in the circuit court to
4 compel the municipality to convey that legal interest back to
5 that person. Upon a finding that the person bringing the action
6 has a plan likely to result in the development of that property
7 consistent with applicable law and that the municipality has not
8 complied with subsection (2) or (3), the court shall enter an
9 order restoring the person's legal interest in the property. An
10 order entered under this subsection shall require all of the
11 following:
12 (a) That all amounts paid in consideration for the property,
13 including any taxes extinguished under section 8, be repaid and,
14 if applicable, distributed to the appropriate taxing
15 jurisdiction.
16 (b) That all costs incurred by the municipality for
17 demolition, environmental response activities, title clearance,
18 and site preparation be repaid.
19 (c) That the court retain jurisdiction to determine if the
20 development plan presented by the petitioner is implemented.
21 Sec. 8. (1) To encourage the donation or transfer of
22 property designated as blighting property under this act, the
23 municipality may accept from all persons with a legal interest in
24 the blighting property a deed conveying those persons' interests
25 in the blighting property in lieu of foreclosure of the blighting
26 property for delinquent property taxes. A municipality shall not
27 offer or accept a deed in lieu of foreclosure if either of the
House Bill No. 4028 as amended November 20, 2002
1 following applies:
2 (a) The blighting property has been forfeited to a county
3 treasurer under section 78g of the general property tax act, 1893
4 PA 206, MCL 211.78g, and remains subject to foreclosure under
5 section 78k of the general property tax act, 1893 PA 206,
6 MCL 211.78k.
7 (b) The blighting property has been foreclosed under section
8 78k of the general property tax act, 1893 PA 206, MCL 211.78k,
9 and has not been transferred by the foreclosing governmental unit
10 under section 78m of the general property tax act, 1893 PA 206,
11 MCL 211.78m.
12 (2) If, under subsection (1), the municipality accepts a deed
13 in lieu of foreclosure, all of the following shall occur:
14 (a) Any unpaid taxes levied under the general property tax
15 act, 1893 PA 206, MCL 211.1 to 211.157, are extinguished.
16 (b) All liens against the property, except future
17 installments of special assessments and liens recorded by this
18 state pursuant to the natural resources and environmental
19 protection act, 1994 PA 451, MCL 324.101 to 324.90106, are
20 extinguished.
21 (c) All existing recorded and unrecorded interests in that
22 property are extinguished, except a visible or recorded easement
23 or right-of-way, private deed restriction, or restriction imposed
24 under the natural resources and environmental protection act,
25 1994 PA 451, MCL 324.101 to 324.90106.
26 (3) Not less than <<28>> days prior to acceptance of a deed in
27 lieu of foreclosure under this section, a municipality shall
1 inform each taxing jurisdiction that has levied taxes on the
2 blighting property under the general property tax act, 1893
3 PA 206, MCL 211.1 to 211.157. Each taxing jurisdiction shall be
4 afforded the opportunity to inform the municipality of the
5 revenue impact of the issuance of a deed in lieu of foreclosure
6 and to show cause why the municipality should not accept a deed
7 in lieu of foreclosure.
8 (4) A municipality shall record any deed in lieu of
9 foreclosure in the office of the register of deeds in the county
10 within which the property is located and pay any applicable
11 recording costs.
12 (5) A municipality shall forward a copy of a deed in lieu of
13 foreclosure recorded under subsection (4) to the treasurer of the
14 city, village, or township, and to the treasurer of the county,
15 within which the property is located.
16 (6) To encourage the donation or transfer of blighting
17 property, a municipality may forgive fines levied by the
18 municipality against the property or fines relating to the
19 property levied against a person with a legal interest in the
20 property.
21 Sec. 9. (1) For reasonable and valuable consideration, a
22 municipality may transfer for development property designated as
23 blighting property and acquired under this act. A municipality
24 may transfer the blighting property after the transferee presents
25 all of the following:
26 (a) A development plan for the property.
27 (b) Guarantees of the transferee's financial ability to
1 implement the development plan for the blighting property.
2 (2) If property obtained by a municipality under this act is
3 subsequently sold by the municipality for an amount in excess of
4 any costs incurred by the municipality relating to demolition,
5 renovation, improvements, or infrastructure development, the
6 excess amount shall be returned on a pro rata basis to any taxing
7 jurisdiction affected by the extinguishment of taxes under
8 section 8 as a result of the designation of the property as
9 blighting property to the extent necessary to offset the
10 extinguishment of taxes under section 8. Upon the request of any
11 taxing jurisdiction in which the blighting property is located,
12 the municipality shall provide to the requesting taxing
13 jurisdiction cost information regarding any subsequent sale or
14 transfer by the municipality of the blighting property.
15 Sec. 10. The powers granted in this act are in addition to
16 powers granted to municipalities under the statutes and local
17 charters. Nothing contained in this act shall be construed to
18 amend or repeal any of the provisions of 1933 (Ex Sess) PA 18,
19 MCL 125.651 to 125.709c, or of 1945 PA 344, MCL 125.71 to
20 125.84.
21 Enacting section 1. This act is repealed 5 years after the
22 effective date of this act.