HOUSE BILL No. 5207


     September 30, 1997, Introduced by Reps. Gustafson and Perricone and referred to the Committee on Tax Policy.


        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, "cash value" means the

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

 3    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 person when

 8    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 auction  where  IF

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


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 1    bankruptcy proceeding or  where  IF 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 purposes shall not be considered controlling evi-

 9    dence of true cash value for assessment purposes.  In determining

10    the value, the assessor shall also consider the advantages and

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

12    present economic income of structures, including farm structures;

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

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

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

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

17    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



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 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 repairs  shall be  ARE 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, and drives.

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

13         (d) Replacement of awnings.

14         (e) Adding or replacing gutters and downspouts.

15         (f) Replacing storm windows or doors.

16         (g) Insulation or weatherstripping.

17         (h) Complete rewiring.

18         (i) Replacing plumbing and light fixtures.

19         (j) New furnace replacing a furnace of the same type or

20    replacing oil or gas burner.

21         (k) Plaster repairs, inside painting, or other

22    redecorating.

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

24         (m) Removing partitions to enlarge rooms.

25         (n) Replacing automatic hot water heater.

26         (o) Replacing dated interior woodwork.





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 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 determining assessments or

 5    in making sales ratio studies for the purpose of assessing or

 6    equalizing assessments shall exclude from the sales data the fol-

 7    lowing amounts allowed by subdivisions (a), (b), and (c) to the

 8    extent that the amounts are included in the real property pur-

 9    chase price and are so identified in the real estate sales data

10    or certified to the assessor as provided in subdivision (d):

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

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

13         (b) Amounts attributable to personal property that were

14    included in the purchase price of the property in the last con-

15    veyance of the property.

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

17    last conveyance of the property.  The legislature may require

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

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

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

21    lost revenue.

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

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

24    in which the property is located 2 copies of the purchase agree-

25    ment or of an affidavit that  shall identify  IDENTIFIES the

26    amount, if any, for each item listed in subdivisions (a) to (c).

27    One copy shall be forwarded by the assessor to the county



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 1    equalization department.  The affidavit shall be prescribed by

 2    the state tax commission.

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

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

 5    usual economic return realized from the lease or rental of prop-

 6    erty negotiated under current, contemporary conditions between

 7    parties equally knowledgeable and familiar with real estate

 8    values.  The actual income generated by the lease or rental of

 9    property is not the controlling indicator of its cash value in

10    all cases.  This subsection does not apply to property subject to

11    a lease entered into before January 1, 1984 for which the terms

12    of the lease governing the rental rate or tax liability have not

13    been renegotiated after December 31, 1983.  This subsection does

14    not apply to a nonprofit housing cooperative subject to regula-

15    tory agreements between the state or federal government entered

16    into before January 1, 1984.  As used in this subsection,

17    "nonprofit cooperative housing corporation" means a nonprofit

18    cooperative housing corporation that is engaged in providing

19    housing services to its stockholders and members and that does

20    not pay dividends or interest upon stock or membership investment

21    but that does distribute all earnings to its stockholders or

22    members.

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

24    a transfer of property is not the presumptive true cash value of

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

26    transferred property, an assessing officer shall assess that

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



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 1    property of that same classification in the assessing

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

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

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

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

 6         (6) THE ASSESSOR SHALL DETERMINE THE TRUE CASH VALUE OF

 7    PROPERTY SUBJECT TO A FARMLAND DEVELOPMENT RIGHTS AGREEMENT UNDER

 8    PART 361 (FARMLAND AND OPEN SPACE PRESERVATION) OF THE NATURAL

 9    RESOURCES AND ENVIRONMENTAL PROTECTION ACT, 1994 PA 451, MCL

10    324.36101 TO 324.36117, IN THE SAME MANNER AND USING THE SAME

11    FACTORS AS FOR PROPERTY CLASSIFIED AS AGRICULTURAL UNDER

12    SECTION 34C REGARDLESS OF WHETHER THE SUBJECT PROPERTY IS CLASSI-

13    FIED AS AGRICULTURAL OR DEVELOPMENTAL UNDER SECTION 34C.































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