Bill Text: MI SB1096 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Property tax; assessments; valuation of wind energy systems; clarify. Amends sec. 27 of 1893 PA 206 (MCL 211.27).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-12-06 - Referred To Committee Of The Whole [SB1096 Detail]

Download: Michigan-2017-SB1096-Introduced.html

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SENATE BILL No. 1096

 

 

September 5, 2018, Introduced by Senator GREEN and referred to the Committee on Finance.

 

 

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending section 27 (MCL 211.27), as amended by 2013 PA 162.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

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

 

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

 

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

 

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

 

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

 

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

 

auction held by a nongovernmental agency or person if those sales

 

have become a common method of acquisition in the jurisdiction for

 

the class of property being valued. The usual selling price does

 

not include sales at public auction if the sale is part of a

 

liquidation of the seller's assets in a bankruptcy proceeding or if

the seller is unable to use common marketing techniques to obtain

 

the usual selling price for the property. A sale or other

 

disposition by this state or an agency or political subdivision of

 

this state of land acquired for delinquent taxes or an appraisal

 

made in connection with the sale or other disposition or the value

 

attributed to the property of regulated public utilities by a

 

governmental regulatory agency for rate-making purposes is not

 

controlling evidence of true cash value for assessment purposes. In

 

determining the true cash value, the assessor shall also consider

 

the advantages and disadvantages of location; quality of soil;

 

zoning; existing use; present economic income of structures,

 

including farm structures; present economic income of land if the

 

land is being farmed or otherwise put to income producing use;

 

quantity and value of standing timber; water power and privileges;

 

minerals, quarries, or other valuable deposits not otherwise exempt

 

under this act known to be available in the land and their value.

 

In determining the true cash value of personal property owned by an

 

electric utility cooperative, the assessor shall consider the

 

number of kilowatt hours of electricity sold per mile of

 

distribution line compared to the average number of kilowatt hours

 

of electricity sold per mile of distribution line for all electric

 

utilities.

 

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

 

value that is a result of expenditures for normal repairs,

 

replacement, and maintenance in determining the true cash value of

 

property for assessment purposes until the property is sold. For

 

the purpose of implementing this subsection, the assessor shall not

increase the construction quality classification or reduce the

 

effective age for depreciation purposes, except if the appraisal of

 

the property was erroneous before nonconsideration of the normal

 

repair, replacement, or maintenance, and shall not assign an

 

economic condition factor to the property that differs from the

 

economic condition factor assigned to similar properties as defined

 

by appraisal procedures applied in the jurisdiction. The increase

 

in value attributable to the items included in subdivisions (a) to

 

(o) that is known to the assessor and excluded from true cash value

 

shall be indicated on the assessment roll. This subsection applies

 

only to residential property. The following repairs are considered

 

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

 

completion:

 

     (a) Outside painting.

 

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

 

sidewalks, or drives.

 

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

 

     (d) Replacing awnings.

 

     (e) Adding or replacing gutters and downspouts.

 

     (f) Replacing storm windows or doors.

 

     (g) Insulating or weatherstripping.

 

     (h) Complete rewiring.

 

     (i) Replacing plumbing and light fixtures.

 

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

 

replacing an oil or gas burner.

 

     (k) Repairing plaster, inside painting, or other redecorating.

 

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

     (m) Removing partitions to enlarge rooms.

 

     (n) Replacing an automatic hot water heater.

 

     (o) Replacing dated interior woodwork.

 

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

 

department, or the state tax commission before utilizing real

 

estate sales data on real property purchases, including purchases

 

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

 

studies to assess property or equalize assessments shall exclude

 

from the sales data the following amounts allowed by subdivisions

 

(a), (b), and (c) to the extent that the amounts are included in

 

the real property purchase price and are so identified in the real

 

estate sales data or certified to the assessor as provided in

 

subdivision (d):

 

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

 

of the property or the last conveyance of the property.

 

     (b) Amounts attributable to personal property that were

 

included in the purchase price of the property in the last

 

conveyance of the property.

 

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

 

last conveyance of the property. The legislature may require local

 

units of government, including school districts, to submit reports

 

of revenue lost under subdivisions (a) and (b) and this subdivision

 

so that the state may reimburse those units for that lost revenue.

 

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

 

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

 

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

 

or of an affidavit that identifies the amount, if any, for each

item listed in subdivisions (a) to (c). One copy shall be forwarded

 

by the assessor to the county equalization department. The

 

affidavit shall be prescribed by the state tax commission.

 

     (4) In finalizing sales studies for property classified as

 

agricultural real property under section 34c, an assessor and

 

equalization director shall determine if an affidavit for the

 

property has been filed under section 27a(7)(n). 27a(7)(o). If an

 

affidavit has not been filed, the property shall be reviewed to

 

determine if classification as agricultural real property under

 

section 34c is correct or should be changed. The assessor for the

 

local tax collecting unit in which the property is located shall

 

contact the property owner to determine why the property owner did

 

not file an affidavit under section 27a(7)(n). 27a(7)(o). Unless

 

there are convincing facts to the contrary, the sale of property

 

classified as agricultural real property under section 34c for

 

which an affidavit under section 27a(7)(n) 27a(7)(o) has not been

 

filed shall not be included in a sales study.

 

     (5) As used in subsection (1), "present economic income" means

 

for leased or rented property the ordinary, general, and usual

 

economic return realized from the lease or rental of property

 

negotiated under current, contemporary conditions between parties

 

equally knowledgeable and familiar with real estate values. The

 

actual income generated by the lease or rental of property is not

 

the controlling indicator of its true cash value in all cases. This

 

subsection does not apply to property subject to a lease entered

 

into before January 1, 1984 for which the terms of the lease

 

governing the rental rate or tax liability have not been

renegotiated after December 31, 1983. This subsection does not

 

apply to a nonprofit housing cooperative subject to regulatory

 

agreements between the state or federal government entered into

 

before January 1, 1984. As used in this subsection, "nonprofit

 

cooperative housing corporation" means a nonprofit cooperative

 

housing corporation that is engaged in providing housing services

 

to its stockholders and members and that does not pay dividends or

 

interest upon stock or membership investment but that does

 

distribute all earnings to its stockholders or members.

 

     (6) Except as otherwise provided in subsection (7), the

 

purchase price paid in a transfer of property is not the

 

presumptive true cash value of the property transferred. In

 

determining the true cash value of transferred property, an

 

assessing officer shall assess that property using the same

 

valuation method used to value all other property of that same

 

classification in the assessing jurisdiction. As used in this

 

subsection and subsection (7), "purchase price" means the total

 

consideration agreed to in an arms-length transaction and not at a

 

forced sale paid by the purchaser of the property, stated in

 

dollars, whether or not paid in dollars.

 

     (7) The purchase price paid in a transfer of eligible

 

nonprofit housing property from a charitable nonprofit housing

 

organization to a low-income person that occurs after December 31,

 

2010 is the presumptive true cash value of the eligible nonprofit

 

housing property transferred. In the year immediately succeeding

 

the year in which the transfer of eligible nonprofit housing

 

property occurs and each year thereafter, the taxable value of the

eligible nonprofit housing property shall be adjusted as provided

 

under section 27a. As used in this subsection:

 

     (a) "Charitable nonprofit housing organization" means a

 

charitable nonprofit organization the primary purpose of which is

 

the construction or renovation of residential housing for

 

conveyance to a low-income person.

 

     (b) "Eligible nonprofit housing property" means property owned

 

by a charitable nonprofit housing organization, the ownership of

 

which the charitable nonprofit housing organization intends to

 

transfer to a low-income person after construction or renovation of

 

the property is completed.

 

     (c) "Family income" and "statewide median gross income" mean

 

those terms as defined in section 11 of the state housing

 

development authority act of 1966, 1966 PA 346, MCL 125.1411.

 

     (d) "Low-income person" means a person with a family income of

 

not more than 60% of the statewide median gross income who is

 

eligible to participate in the charitable nonprofit housing

 

organization's program based on criteria established by the

 

charitable nonprofit housing organization.

 

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

 

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

 

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

 

using generally accepted accounting principles in a manner

 

consistent with the established depreciation method used by the

 

person submitting that statement. The net book value of a standard

 

tool for federal income tax purposes is not the presumptive true

 

cash value of that standard tool. As used in this subsection,

"standard tool" means that term as defined in section 9b.

 

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

 

the true cash value of a wind energy system is the sum of its

 

original (historical) installed cost multiplied by the applicable

 

multiplier, plus the value of any applicable easements, rights-of-

 

way, or leasehold interests prorated per megawatt for each wind

 

turbine, but not less than $29,067.00 per megawatt. As used in this

 

subsection:

 

     (a) "Applicable multiplier" means 1 of the following:

 

     (i) For each wind energy system reported, a multiplier set

 

forth in a table of multipliers adopted by the state tax commission

 

on or before November 30, 2018 based on the following assumptions:

 

     (A) The average service life of a wind energy system is at

 

least 30 years.

 

     (B) The appropriate multiplier for the year immediately

 

succeeding completed installation of a wind energy system is 1.0;

 

for each year that passes thereafter, the appropriate reduction of

 

the multiplier must not exceed 0.04; and, no matter how many years

 

pass after installation, the multiplier must be at least 0.4 until

 

the wind energy system is physically removed.

 

     (C) No adjustments to multipliers are to be made for tax or

 

other governmental incentives.

 

     (ii) If the state tax commission fails to adopt the multiplier

 

table described in subparagraph (i) on or before November 30, 2018,

 

for each wind energy system reported, a multiplier set forth in a

 

table that the state tax commission shall adopt on or before

 

December 31, 2018 based on the following assumptions:

     (A) The average service life of a wind energy system is at

 

least 30 years.

 

     (B) The appropriate multiplier for the year immediately

 

succeeding completed installation of a wind energy system is 1.0;

 

for each year that passes thereafter, the appropriate reduction of

 

the multiplier is 0.04; and, once the multiplier for a wind energy

 

system is reduced to 0.4, it remains 0.4 for all subsequent years

 

until the wind energy system is physically removed.

 

     (C) No adjustments to multipliers are to be made for tax or

 

other governmental incentives.

 

     (b) "Original (historical) installed cost" means the original

 

cost new of all site improvements in the year incurred reported in

 

accordance with the asset recording methods required under

 

generally accepted accounting principles, including, but not

 

limited to, those costs described in subparagraphs (i) and (ii),

 

and subject to subparagraph (iii), as follows:

 

     (i) Direct costs, including, but not limited to, costs of

 

installation, equipment, materials, and labor; costs of the rotor,

 

drive train, tower, controls, electric interface, and tower

 

foundation; costs of all land improvements other than buildings,

 

including, but not limited to, roads and fences; costs of computer

 

equipment and communication facilities; and the contractor's profit

 

required to construct the wind energy system.

 

     (ii) Indirect costs, including, but not limited to,

 

administrative costs, overhead, freight, wind studies, and

 

professional fees; financing costs, including interest paid on

 

construction loans; taxes, including sales tax; and the builder's

or developer's all-risk insurance during construction.

 

     (iii) Costs under this subdivision shall be determined without

 

adjustment for purchase-method, fresh-start, or push-down

 

accounting and without reduction for the value of any tax or other

 

governmental incentives.

 

     (c) "Wind energy system" means that term as defined in section

 

8(l).