April 18, 2006, Introduced by Rep. Byrnes and referred to the Committee on Tax Policy.
A bill to amend 1994 PA 451, entitled
"Natural resources and environmental protection act,"
(MCL 324.101 to 324.90106) by adding part 363.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
PART 363 FARMLAND PRESERVATION - AGRICULTURAL SECURITY DISTRICTS
Sec. 36301. As used in this part:
(a) "Agricultural security district" means an area within a
local unit designated as an agricultural security district by a
resolution adopted by the local governing body under section 36302.
(b) "Agricultural security district contract" or "contract"
means a contract under section 36304 between the local governing
body and the owner of eligible farmland.
(c) "Agricultural use" means that term as defined in section
36101.
(d) "Conservation easement" means either of the following:
(i) A perpetual agricultural conservation easement or
development rights easement under part 361, as those terms are
defined in section 36101.
(ii) A perpetual agricultural conservation easement under part
362, as that term is defined in section 36201.
(e) "Development" means that term as defined in section 36101.
(f) "Eligible farmland" means real property that meets all of
the following conditions:
(i) Is subject to a conservation easement.
(ii) Is qualified agricultural property.
(iii) Is actively involved in agricultural use.
(iv) Is located in an agricultural security district.
(g) "General property tax act" means the general property tax
act, 1893 PA 206, MCL 211.1 to 211.157.
(h) "Local governing body" means the legislative body of the
local unit.
(i) "Local unit" means 1 of the following:
(i) With respect to eligible farmland that is located in a city
or village, the city or village.
(ii) With respect to eligible farmland that is not located in a
city or village, the township where the eligible farmland is
located.
(j) "Owner" means a person having a freehold estate in real
property coupled with possession and enjoyment. If real property is
subject to a land contract, owner means the vendee in agreement
with the vendor.
(k) "Person" means that term as defined in section 36101.
(l) "Prohibited use" means a use that is not consistent with an
agricultural use for eligible farmland.
(m) "Qualified agricultural property" means that term as
defined in section 7dd of the general property tax act, 1893 PA
206, MCL 211.7dd.
Sec. 36302. (1) A local unit may, by resolution adopted by the
local governing body, create 1 or more agricultural security
districts within the local unit. Before acting on the resolution,
the clerk of the local unit shall notify in writing the assessor
for the local unit in which the proposed agricultural security
district is located and the legislative body of each taxing unit
that levies ad valorem property taxes in the proposed agricultural
security district. The local governing body shall afford the
assessor and a representative of the affected taxing units an
opportunity for a hearing.
(2) A copy of the resolution shall be filed with the state tax
commission. A resolution is not effective unless approved by the
state tax commission as provided in subsection (3).
(3) Not more than 60 days after receipt of a copy of the
resolution adopted under subsection (1), the state tax commission
shall approve or disapprove the resolution. The state treasurer,
with the written concurrence of the director of the department of
agriculture, shall advise the state tax commission as to whether
creation of the agricultural security district will prevent the
development of qualified agricultural property in this state.
Sec. 36303. (1) Eligible farmland for which the owner and the
local unit enter into an agricultural security district contract
under section 36304 is exempt from the collection of taxes under
the general property tax act.
(2) The exemption under this section is effective on the
December 31 immediately succeeding the execution of the
agricultural security district contract. A copy of the contract
shall be filed with the state tax commission.
Sec. 36304. (1) An owner of eligible farmland may apply for an
agricultural security district contract by filing a signed
application with the local governing body. The owner shall apply on
a form prescribed by the state tax commission.
(2) The application shall contain all of the following:
(a) The terms, restrictions, and conditions governing the
agricultural security district as set forth in this part.
(b) Information reasonably necessary to identify the eligible
farmland to be included in the agricultural security district
contract, including both of the following:
(i) A land survey or a legal description of the eligible
farmland.
(ii) A map showing the significant natural features and all
structures and physical improvements located on the land.
(c) A description of structures to be covered by the
agricultural security district contract and information reasonably
necessary to determine that those structures are devoted to an
agricultural use.
(3) The local unit may charge an applicant a reasonable fee
not exceeding the cost of processing an application. If the local
unit charges such a fee, the application is not complete unless it
is accompanied by the fee.
(4) The clerk of the local governing body shall record the
date of receipt on the application.
(5) Within 42 days after receiving the application, the local
governing body shall hold a hearing on the application pursuant to
the open meetings act, 1976 PA 267, MCL 15.261 to 15.275, and do 1
of the following:
(a) Approve the application if all the land proposed for
inclusion in the agricultural security district is eligible
farmland and all of the structures proposed for inclusion are
devoted to an agricultural use. If action is not taken by the local
governing body by the date required by this subsection, the local
governing body shall be considered to have approved the application
on that date. The clerk of the local governing body shall promptly
record the local governing body's approval and the date of the
approval on the application, sign the application, and comply with
section 36305. When the application is signed by the clerk, the
application constitutes the legally binding agricultural security
district contract.
(b) Reject the application if any of the land proposed for
inclusion in the agricultural security district is not eligible
farmland or any of the structures proposed for inclusion are not
devoted to an agricultural use. The clerk of the local governing
body shall promptly record the local governing body's rejection,
the date of the rejection, and the reasons for the rejection on the
application, sign the application, and return the application to
the owner.
Sec. 36305. Upon approval of an application under section
36304, the clerk of the local governing body shall record the
agricultural security district contract with the register of deeds
of the county in which the eligible farmland is located and shall
notify the applicant, the local unit's assessor, the state tax
commission, and the department of treasury.
Sec. 36306. An agricultural security district contract is a
covenant that runs with the eligible farmland. An owner of eligible
farmland in an agricultural security district may voluntarily
convey any interest in the land without penalty, but the use of the
eligible farmland by the successor in title remains subject to the
agricultural security district contract. The seller shall notify
the local unit's assessing office, the state tax commission, and
the local governing body of the change in ownership.
Sec. 36307. (1) If an agricultural security district contract
is approved under section 36304, the owner shall annually submit an
affidavit to the assessor for the local unit attesting that the
property subject to the contract meets all requirements of eligible
farmland. The affidavit shall be in a form prescribed by the state
tax commission.
(2) If property subject to an agricultural security district
contract no longer meets the requirements of eligible farmland, the
owner shall immediately notify the assessor for the local unit of
the property's ineligibility for the exemption under this part.
Sec. 36308. (1) If eligible farmland or structures covered by
an agricultural security district contract are developed for or
converted to a use that is a prohibited use, both of the following
apply:
(a) The agricultural security district contract is terminated
with respect to the eligible farmland and structures.
(b) A lien arises against the property formerly subject to the
agricultural security district contract. The amount of the lien
shall be the amount of the taxes that would have been collected
under the general property tax act if the eligible farmland and
structures had not been exempt under this part, together with all
interest, penalties, and fees calculated from the date that the
taxes would have been imposed if the eligible farmland and
structures had not been exempt under this part.
(2) The assessor for the local unit shall notify the owner of
the eligible farmland of the amount of the lien, including
interest, penalties, and fees. If the lien amount is paid within 30
days after the owner is notified, the lien shall not be recorded.
Otherwise, the assessor for the local unit shall promptly record
the lien and the eligible farmland is subject to forfeiture,
foreclosure, and sale under the general property tax act.