February 10, 2005, Introduced by Senators GILBERT, CROPSEY, JELINEK, VAN WOERKOM and GOSCHKA and referred to the Committee on Agriculture, Forestry and Tourism.
A bill to amend 1994 PA 451, entitled
"Natural resources and environmental protection act,"
(MCL 324.101 to 324.90106) by amending the part heading of part 361
and by adding part 363.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
PART 361 FARMLAND AND OPEN SPACE PRESERVATION - DEVELOPMENT RIGHTS
AGREEMENTS AND EASEMENTS
PART 363 FARMLAND PRESERVATION - AGRICULTURAL DISTRICTS
Sec. 36301. As used in this part:
(a) "Agricultural district" means an area of farmland
designated in an agricultural district contract.
(b) "Agricultural district contract" or "contract" means a
contract under this part between the state land use agency and the
owner of farmland.
(c) "Agricultural use" means that term as defined in section
36101. Agricultural use does not include a residence other than a
residence for migratory laborers.
(d) "Comprehensive land use plan" means a land use plan
adopted by a local unit of government that contains an agricultural
preservation component consisting of all of the following:
(i) A future land use map of the local unit of government
indicating areas intended for agricultural and farmland
preservation.
(ii) A description of the strategies intended to be used to
preserve the agricultural land and farmland in the local unit of
government.
(iii) A description of the reasons why agricultural lands and
farmland should be preserved in the local unit of government.
(iv) A description of how and why the specific agricultural
lands and farmland was selected for preservation.
(v) A description of any joint planning plans or agreements
under the joint municipal planning act, 2003 PA 226, MCL 125.131 to
125.141.
(e) "Conservation easement" means either of the following:
(i) A permanent agricultural conservation easement or
development rights easement under part 361, as those terms are
defined in section 36101.
(ii) An agricultural conservation easement under part 362, as
that term is defined in section 36201.
(f) "Development" means that term as defined in section 36101.
(g) "Farmland" means, except as provided in subparagraph (v)
or farmland subject to a development rights agreement under part
361, 1 or more of the following:
(i) A farm of 40 or more acres in 1 ownership, with 51% or more
of the land area devoted to an agricultural use.
(ii) A farm of 5 acres or more in 1 ownership, but less than 40
acres, with 51% or more of the land area devoted to an agricultural
use, that has produced a gross annual income from agriculture of
$200.00 per year or more per acre of cleared and tillable land. A
farm described in this subparagraph enrolled in a federal acreage
set aside program or a federal conservation reserve program is
considered to have produced a gross annual income from agriculture
of $200.00 per year or more per acre of cleared and tillable land.
(iii) A farm designated by the department of agriculture as a
specialty farm in 1 ownership that has produced a gross annual
income from an agricultural use of $2,000.00 or more. Specialty
farms include, but are not limited to, greenhouses; equine breeding
and grazing; the breeding and grazing of cervidae, pheasants, and
other game animals; bees and bee products; mushrooms; aquaculture;
and other similar uses and activities.
(iv) Parcels of land in 1 ownership that are not contiguous but
which constitute an integral part of a farming operation being
conducted on land otherwise qualifying as farmland.
(v) Farmland does not include property exempt under section
7cc of the general property tax act, 1893 PA 206, MCL 211.7cc, and
surrounding property sufficient to equal the minimum lot size if
the local governing body has implemented a minimum lot size by
zoning ordinance.
(h) "General property tax act" means the general property tax
act, 1893 PA 206, MCL 211.1 to 211.157.
(i) "Local governing body" means 1 of the following:
(i) With respect to farmland that is located in a city or
village, the legislative body of the city or village.
(ii) With respect to farmland that is not located in a city or
village but that is located in a township having a zoning ordinance
in effect as provided by law, the township board.
(iii) With respect to farmland that is not described in
subparagraph (i) or (ii), the county board of commissioners.
(j) "Local unit of government" means a county, city, village,
or township.
(k) "Migratory laborer" means that term as defined in section
12401 of the public health code, 1978 PA 368, MCL 333.12401.
(l) "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.
(m) "Permitted use" means any use expressly authorized within
an agricultural district contract that is consistent with the
farming operation. Storage, retail or wholesale marketing, or
processing of agricultural products is a permitted use in a farming
operation if more than 50% of the stored, processed, or
merchandised products are produced by the farm operator for at
least 3 of the immediately preceding 5 years. The state land use
agency shall determine whether a use is a permitted use pursuant to
section 36104a.
(n) "Person" means that term as defined in section 36101.
(o) "Prohibited use" means a use that is not consistent with
an agricultural use for farmland.
(p) "Property taxes" means that term as defined in section
36101.
(q) "Qualified agricultural property" means that term as
defined in section 7dd of the general property tax act, 1893 PA
206, MCL 211.7dd.
(r) "Qualified local unit" means a local governing body that
adopts a resolution to participate under this act and is located in
a county or township that has created or updated a comprehensive
land use plan within the immediately preceding 5 years that is
consistent with this part as determined by the state land use
agency.
(s) "State income tax act" means the income tax act of 1967,
1967 PA 281, MCL 206.1 to 206.532, and in effect during the
particular year of the reference to the act.
(t) "State land use agency" means the department of
agriculture.
(u) "True cash value" means that term as defined in section 27
of the general property tax act, 1893 PA 206, MCL 211.27.
Sec. 36303. (1) An owner of farmland who desires to establish
an agricultural district consisting of that farmland may apply by
filing a signed application with the qualified local governing body
in which the farmland is located. The owner shall apply on a form
prescribed by the state land use agency.
(2) The application shall contain all of the following:
(a) The terms, restrictions, and conditions governing the
agricultural district as set forth in this part.
(b) Information reasonably necessary to classify as farmland
the land to be covered by the agricultural district contract,
including both of the following:
(i) A land survey or a legal description of the land.
(ii) A map showing the significant natural features and all
structures and physical improvements located on the land.
(3) The qualified local unit may charge an applicant a
reasonable assessment not exceeding the cost of processing an
application. If the qualified local unit charges such an
assessment, the application is not complete unless it is
accompanied by the assessment.
(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 do 1 of the following:
(a) Approve the application if all the land proposed for
inclusion in the agricultural district is farmland, the farmland is
located in a qualified local unit, 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.
(b) Reject the application if the land proposed for inclusion
in the agricultural district is not farmland, the farmland is not
located in a qualified local unit, 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.
(6) Within 28 days after rejection of an application by the
local governing body, the owner may appeal the rejection by filing
the rejected application with the state land use agency. Within 42
days after receiving the rejected application, the state land use
agency shall do 1 of the following:
(a) Approve the application if all the land proposed for
inclusion in the agricultural district is farmland, the farmland is
located in a qualified local unit, and all the structures proposed
for inclusion are devoted to an agricultural use. An authorized
employee of the state land use agency shall record the approval and
the date of the approval on the application.
(b) Reject the application if the land proposed for inclusion
in the agricultural district is not farmland, the farmland is not
located in a qualified local unit, or any of the structures
proposed for inclusion are not devoted to an agricultural use. An
authorized employee of the state land use agency shall record its
rejection, the date of the rejection, and the reasons for rejection
on the application, sign the application, and return the
application to the owner.
Sec. 36305. (1) The state land use agency may execute an
agricultural district contract on behalf of the state.
(2) The provisions of an agricultural district contract shall
be consistent with the purposes of this part and shall not permit
an action which will materially impair the character of the
farmland involved.
(3) If the application is approved by the state land use
agency, the state land use agency shall prepare an agricultural
district contract that includes all of the following provisions:
(a) A structure shall not be built on the land except for use
consistent with farm operations, which includes a residence for an
individual essential to the operation of the farm under section
36310(5), or lines for utility transmission or distribution
purposes or with the approval of the local governing body and the
state land use agency.
(b) That land improvements shall not be made except for use
consistent with farm operations or with the approval of the local
governing body and the state land use agency.
(c) A landowner may grant easements for utilities and access
under this part that do not substantially hinder farm operations.
(d) That public access is not permitted on the land unless
agreed to by the owner.
(e) That the owner of record at the time of early withdrawal
or expiration is responsible for the early withdrawal assessment or
expiration assessment.
(f) Any other condition and restriction on the land as agreed
to by the parties that is considered necessary to preserve the land
or appropriate portions of it as farmland.
(4) The agricultural district contract shall be forwarded to
the applicant for execution. An application that is approved by the
local governing body by November 1 shall take effect for the
current tax year.
(5) If the owner executes the agricultural district contract,
the owner shall return it to the state land use agency for
execution on behalf of the state. The state land use agency shall
record the executed agricultural district contract with the
register of deeds of the county in which the land is situated and
shall notify the applicant, the local governing body and its
assessing office, all reviewing agencies, and the department of
treasury.
Sec. 36306. (1) The execution and acceptance of an
agricultural district contract by the state land use agency and the
owner contractually binds the owner to keep the farmland in an
agricultural use for the term specified in the agricultural
district contract. An agricultural district contract shall be for
an initial term of not less than 20 years.
(2) Except as otherwise provided in this part, the state or
local governing body shall not sell, transfer, convey, relinquish,
vacate, or otherwise dispose of an agricultural district contract
except with the agreement of the owner.
(3) An agricultural district contract does not supersede any
prior lien, lease, or interest that is properly recorded with the
county register of deeds.
(4) A lien created under this part in favor of the state or a
local governing body is subordinate to a lien of a mortgage that is
recorded in the office of the register of deeds before the
recording of the lien of this state or local governing body.
Sec. 36307. (1) All participants owning land under an
agricultural district contract shall notify, on a form provided by
the state land use agency for informational purposes only, the
state or the local governing body holding the agricultural district
contract, 6 months before the natural termination date of the
agricultural district contract, of the owners' intentions regarding
whether the contract should be extended or allowed to expire.
(2) The state land use agency shall notify the landowner via
first-class mail at least 10 years before the expiration of an
agricultural district contract that a lien may be placed at the
time of expiration of the agricultural district contract on the
farmland if the landowner does not extend the agricultural district
contract and shall indicate to the landowner the option of not
claiming credits during all or a portion of the next 10 years.
Sec. 36308. Special assessments on farmland in an agricultural
district are subject to section 36108.
Sec. 36309. (1) For tax years that begin after December 31,
2005, an owner of farmland subject to an agricultural district
contract who is required or eligible to file a return as an
individual or a claimant under the state income tax act may claim a
credit against the state income tax liability for the amount that
represents the difference between the property taxes on the
farmland used in the farming operation, subject to the agricultural
district contract and $5.00 per acre for each acre subject to the
agricultural district contract. For the purposes of this section,
all of the following apply:
(a) A partner in a partnership is considered an owner of
farmland and related buildings owned by the partnership and covered
by an agricultural district contract. A partner is considered to
pay a proportion of the property taxes on that property equal to
the partner's share of ownership of capital or distributive share
of ordinary income as reported by the partnership to the internal
revenue service or, if the partnership is not required to report
that information to the internal revenue service, as provided in
the partnership agreement or, if there is no written partnership
agreement, a statement signed by all the partners. A partner
claiming a credit under this section based upon the partnership
agreement or a statement shall file a copy of the agreement or
statement with his or her income tax return. If the agreement or
statement is not filed, the department of treasury shall deny the
credit. All partners in a partnership claiming the credit allowed
under this section shall compute the credit using the same basis
for the apportionment of the property taxes.
(b) A shareholder of a corporation that has filed a proper
election under subchapter S of chapter 1 of subtitle A of the
internal revenue code of 1986, 26 USC 1361 to 1379, is considered
an owner of farmland and related buildings covered by an
agricultural district contract that are owned by the corporation. A
shareholder is considered to pay a proportion of the property taxes
on that property equal to the shareholder's percentage of stock
ownership for the tax year as reported by the corporation to the
internal revenue service.
(c) If an individual in possession of property for life under
a life estate with remainder to another person or holding property
under a life lease enters into a written agreement with the person
holding the remainder interest in that land and the written
agreement apportions the property taxes in the same manner as
revenue and expenses, the life lease or life estate holder and the
person holding the remainder interest may claim the credit under
this act as it is apportioned to them under the written agreement
upon filing a copy of the written agreement with the return.
(d) If a trust holds farmland covered by an agricultural
district contract and an individual is treated under subpart E of
subchapter J of chapter 1 of subtitle A of the internal revenue
code of 1986, 26 USC 671 to 679, as the owner of that portion of
the trust that includes the farmland and related buildings, that
individual is considered the owner of that property.
(e) An individual who is the sole beneficiary of a trust that
is the result of the death of that individual's spouse is
considered the owner of farmland covered by an agricultural
district contract and held by the trust if the trust conforms to
all of the following:
(i) One hundred percent of the trust income is distributed to
the beneficiary in the tax year in which the trust receives the
income.
(ii) The trust terms do not provide that any portion of the
trust is to be paid, set aside, or otherwise used in a manner that
would qualify for the deduction allowed by section 642(c) of the
internal revenue code of 1986.
(f) A member in a limited liability company is considered an
owner of farmland covered by an agricultural district contract that
are owned by the limited liability company. A member is considered
to pay a proportion of the property taxes on that property equal to
the member's share of ownership or distributive share of ordinary
income as reported by the limited liability company to the internal
revenue service.
(2) For tax years that begin after December 31, 2005, an owner
of farmland subject to 1 or more agricultural district contracts to
whom subsection (1) does not apply may claim a credit under the
single business tax act, 1975 PA 228, MCL 208.1 to 208.145, for the
amount that represents the difference between the property taxes on
the land subject to the agricultural district contract and $5.00
per acre for each acre subject to the agricultural district
contract. A participant is not eligible to claim a credit and
refund against the state single business tax unless the participant
demonstrates that the participant's agricultural gross receipts of
the farming operation exceed 5 times the property taxes on the land
for each of 3 out of the 5 tax years immediately preceding the year
in which the credit is claimed. A participant may compare, during
the contract period, the average of the most recent 3 years of
agricultural gross receipts to property taxes in the first year
that the owner is subject to an agricultural district contract in
calculating the gross receipts qualification. Once an election is
made by the participant to compute the benefit in this manner, all
future calculations shall be made in the same manner.
(3) If the farmland covered by an agricultural district
contract are owned by more than 1 owner, each owner is allowed to
claim a credit under this section based upon that owner's share of
the property tax payable on the farmland. The department of
treasury shall consider the property tax equally apportioned among
the owners unless a written agreement signed by all the owners is
filed with the return, which agreement apportions the property
taxes in the same manner as all other items of revenue and expense.
If the property taxes are considered equally apportioned, a husband
and wife shall be considered 1 owner, and a person with respect to
whom a deduction under section 151 of the internal revenue code of
1986 is allowable to another owner of the property shall not be
considered an owner.
(4) A beneficiary of an estate or trust to which subsection
(1) does not apply is entitled to the same percentage of the credit
provided in this section as that person's percentage of all other
distributions by the estate or trust.
(5) If the allowable amount of the credit claimed exceeds the
state income tax or the state single business tax otherwise due for
the tax year or if there is no state income tax or the state single
business tax due for the tax year, the amount of the claim not used
as an offset against the state income tax or the state single
business tax, after examination and review, shall be approved for
payment to the claimant pursuant to 1941 PA 122, MCL 205.1 to
205.31. The total credit allowable under this part and chapter 9 of
the income tax act of 1967, 1967 PA 281, MCL 206.501 to 206.532, or
the single business tax act, 1975 PA 228, MCL 208.1 to 208.145,
shall not exceed the total property tax due and payable by the
claimant in that year. The amount the credit exceeds the property
tax due and payable shall be deducted from the credit claimed under
this part.
(6) For purposes of audit, review, determination, appeals,
hearings, notices, assessments, and administration relating to the
credit program provided by this section, the state income tax act
or single business tax act, 1975 PA 228, MCL 208.1 to 208.145,
applies according to which tax the credit is claimed against. If an
individual is allowed to claim a credit under subsection (1) based
upon property owned or held by a partnership, S corporation, or
trust, the department of treasury may require that the individual
furnish to the department a copy of a tax return, or portion of a
tax return, and supporting schedules that the partnership, S
corporation, or trust files under the internal revenue code.
(7) The department of treasury shall account separately for
payments under this part and not combine them with other credit
programs. A payment made to a claimant for a credit claimed under
this part shall be issued by 1 or more warrants made out to the
claimant.
(8) This state shall reimburse the state school aid fund
established by section 11 of article IX of the state constitution
of 1963 for all revenues lost as the result of the tax credits paid
under this act.
Sec. 36310. (1) Land subject to an agricultural district
contract may be sold or transferred without penalty under section
36311, if the use of the land by the successor in title complies
with the provisions contained in the agricultural district
contract. The seller shall notify the governmental authority having
jurisdiction over the agricultural district contract of the change
in ownership. If land subject to an agricultural district contract
is sold or transferred, the successor in title shall file the
affidavit provided in section 27a(7)(n) of the general property tax
act, 1893 PA 206, MCL 211.27a, in a timely manner or shall be
considered to be in violation of the contract.
(2) If the owner of land subject to an agricultural district
contract dies or becomes totally and permanently disabled or when
an individual essential to the operation of the farm dies or
becomes totally and permanently disabled, the land may be
relinquished from the contract under this part and is subject to a
lien pursuant to section 36311(11). A request for relinquishment
under this section shall be made within 3 years from the date of
death or disability. A request for relinquishment under this
subsection shall be made only by the owner in case of a disability
or, in case of death, the person who becomes the owner through
survivorship or inheritance.
(3) If an owner of land subject to an agricultural district
contract becomes totally and permanently disabled or dies, land
containing structures that were present before the recording of the
development rights agreement may be relinquished from the contract,
upon request of the disabled contract holder or upon request of the
person who becomes an owner through survivorship or inheritance,
and upon approval of the local governing body and the state land
use agency. Not more than 2 acres may be relinquished under this
subsection unless additional land area is needed to encompass all
of the buildings located on the parcel, in which case not more than
5 acres may be relinquished. If the parcel proposed to be
relinquished is less in area than the minimum parcel size required
by local zoning, the parcel may not be relinquished unless a
variance is obtained from the local zoning board of appeals to
allow for the smaller parcel size. The portion of the farmland
relinquished from the agricultural district contract under this
subsection is subject to a lien pursuant to section 36311(10).
(4) The land described in an agricultural district contract
may be divided into smaller parcels of land, each of which shall be
covered by a separate agricultural district contract and each of
which shall be eligible for subsequent renewal. The separate
agricultural district contracts shall contain the same terms and
conditions as the original agricultural district contract. The
smaller parcels created by the division must meet the minimum
requirements for being enrolled under this part or be 40 acres or
more in size. Farmland may be divided once under this subsection
without fee by the state land use agency. The state land use agency
may charge a reasonable fee not greater than the state land use
agency's actual cost of dividing the agreement for all subsequent
divisions of that farmland. When a division of an agricultural
district contract is made under this subsection and is executed and
recorded, the state land use agency shall notify the applicant, the
local governing body and its assessing office, and the department
of treasury.
(5) As used in this section, "individual essential to the
operation of the farm" means a co-owner, partner, shareholder, farm
manager, or family member, who, to a material extent, cultivates,
operates, or manages farmland under this part. An individual is
considered involved to a material extent if that individual does 1
or more of the following:
(a) Has a financial interest equal to or greater than 1/2 the
cost of producing the crops, livestock, or products and inspects
and advises and consults with the owner on production activities.
(b) Works 1,040 hours or more annually in activities connected
with production of the farming operation.
(6) The state land use agency may charge and collect a fee of
$25.00 to process each change of ownership under subsection (1) or
each division under subsection (4). The fee collected under this
subsection shall be used by the state land use agency to administer
this act.
Sec. 36311. (1) An agricultural district contract expires at
the expiration of the term of the contract unless renewed with the
consent of the owner of the land. If the owner of the land has
complied with the requirements of this part regarding agricultural
district contracts, the owner is entitled to automatic renewal of
the farmland covered by the contract upon written request of the
owner. An agricultural district contract may be renewed for a term
of not less than 10 years. If an agricultural district contract is
renewed, the state land use agency shall send a copy of the renewal
contract to the local governing body in which the farmland is
located.
(2) An agricultural district contract or a portion of the
farmland covered by an agricultural district contract may be
relinquished as provided in this section and section 36312.
Farmland may be relinquished by this state before a termination
date contained in the contract under either of the following
circumstances:
(a) If approved by the local governing body and the state land
use agency, land containing structures that were present before the
recording of the agricultural district contract may be relinquished
from the contract. Not more than 2 acres may be relinquished under
this subdivision unless additional land area is needed to encompass
all of the buildings and structures located on the parcel, in which
case not more than 5 acres may be relinquished. If the parcel
proposed to be relinquished is less in area than the minimum parcel
size required by local zoning, the parcel may not be relinquished
unless a variance is obtained from the local zoning board of
appeals to allow for the smaller parcel size.
(b) If approved by the local governing body and the state land
use agency, land may be relinquished from the contract for the
construction of a residence by an individual essential to the
operation of the farm as defined in section 36310. Not more than 2
acres may be relinquished under this subdivision. If the parcel
proposed to be relinquished is less in area than the minimum parcel
size required by local zoning, the parcel may not be relinquished
unless a variance is obtained from the local zoning board of
appeals to allow for the smaller parcel size.
(3) If the request for relinquishment of the agricultural
district contract is approved, the state land use agency shall
prepare an instrument, subject to subsections (4), (5), (6), and
(7), and record it with the register of deeds of the county in
which the land is situated.
(4) If an agricultural district contract or a portion of an
agricultural district contract is to be relinquished pursuant to
subsection (2) or section 36312, the state land use agency shall
record a lien against the property formerly subject to the
agricultural district contract for the total amount of the
allocated tax credit of the last 10 years, including the year of
termination, received by an owner for that property under the
agreement under section 36309, attributable to the property
formerly subject to the agricultural district contract, plus
interest at the rate of 6% per annum simple interest from the time
the credit was received until the lien is placed on the property.
(5) If the property being relinquished from the agricultural
district contract is less than all of the property subject to that
agricultural district contract, the allocated tax credit for the
agricultural district contract shall be multiplied by the
property's share of the taxable value of the contract. As used in
this subsection:
(a) "The allocated tax credit" means the amount obtained by
multiplying the owner's total farmland preservation credit claimed
in that year on all contracts by the quotient of the ad valorem
property tax levied in that year on property subject to the
agricultural district contract that included the property being
relinquished from the contract divided by the total property taxes
levied on property subject to any contract and used in determining
the farmland preservation credit in that year.
(b) "The property's share of the taxable value of the
agreement" means the quotient of the taxable value of the property
being relinquished from the contract divided by the total taxable
value of property subject to the agricultural district contract
that included the property being relinquished from the agricultural
district contract.
(6) Thirty days before the recording of a lien under this
section, the state land use agency shall notify the owner of the
farmland subject to the agricultural district contract of the
amount of the lien, including interest, if any. If the lien amount
is paid before 30 days after the owner is notified, the lien shall
not be recorded. The lien may be paid and discharged at any time
and is payable to the state by the owner of record at the time the
land or any portion of it is sold by the owner of record, or if the
land is converted to a use prohibited by the former agricultural
district contract. The lien shall be discharged upon renewal or
reentry in an agricultural district contract, except that a
subsequent lien shall not be less than the lien discharged.
(7) Upon the termination of all or a portion of the
agricultural district contract under subsection (3) or the
expiration of an agricultural district contract under subsection
(1), the state land use agency shall prepare and record a lien, if
any, against the property formerly subject to the agricultural
district contract for the total amount of the allocated tax credit
of the last 10 years, including the year of termination, received
by the owner under section 36309, attributable to the property
formerly subject to the agricultural district contract, plus
interest at the rate of 6% per annum simple interest from the time
the credit was received until the lien is placed on the property.
(8) Upon termination of an agricultural district contract, the
state land use agency shall notify the department of treasury for
their records.
(9) The unappropriated proceeds from lien payments and early
withdrawal assessments made under this part shall be forwarded to
the state treasurer for deposit in the agricultural preservation
fund created in section 36202. Not less than half of the amount
described in this subsection shall be used for the purposes set
forth in section 36202(4)(b) or (c) in the qualified local unit
where the property that was subject to the lien is located.
(10) Upon the relinquishment of all of the farmland under
section 36310(2) or a portion of the farmland under section
36310(3), the state land use agency shall prepare and record a lien
against the property formerly subject to an agricultural district
contract in an amount calculated as follows:
(a) Establishing a term of years by multiplying 10 by a
fraction, the numerator of which is the number of years the
farmland was under the agricultural district contract, including
any extensions, and the denominator of which is the number
representing the term of years of that contract, including any
extensions.
(b) The lien amount equals the total amount of the allocated
tax credit claimed attributable to that agricultural district
contract in the immediately preceding term of years as determined
in subdivision (a).
(11) When a lien is paid under this section, the state land
use agency shall prepare and record a discharge of lien with the
register of deeds in the county in which the land is located. The
discharge of lien shall specifically state that the lien has been
paid in full, that the lien is discharged, that the agricultural
district contract is terminated, and that the state has no further
interest in the land under that contract.
(12) An owner of farmland subject to an agricultural district
contract, upon written request to the state land use agency between
January 1 and April 1, in the tenth and fifteenth years of the
initial term of the contract, may elect to terminate the contract
upon payment of the early withdrawal assessment provided in this
section to the state land use agency. The early withdrawal
assessment is as follows:
(a) In the tenth year, an amount equal to 7% of the true cash
value of the farmland subject to the contract or the tax credits
received during the last 10 years that are attributable to the
agricultural district contract, whichever is greater.
(b) In the fifteenth year, an amount equal to 5% of the true
cash value of the farmland subject to the contract or the tax
credits received during the last 10 years that are attributable to
the agricultural district contract, whichever is greater.
(13) If a request is made under subsection (12), the state
land use agency shall cause to be prepared a certified appraisal to
determine the true cash value of the property. The cost for the
certified appraisal shall be paid by the landowner making the
request for termination from the program.
(14) If, upon expiration of the term of an agricultural
district contract, the farmland becomes subject to an agricultural
conservation easement or purchase of development rights under
section 36111b or 36206 or if an agricultural district contract is
terminated under subsection (12), the farmland is not subject to a
lien under this section.
Sec. 36312. (1) Upon request from a landowner and a local
governing body, the state land use agency shall relinquish farmland
from the agricultural district contract if 1 or both of the
following occur:
(a) The local governing body determines 1 or more of the
following:
(i) That, because of the quality of the farmland, agricultural
production cannot be made economically viable with generally
accepted agricultural and management practices.
(ii) That surrounding conditions impose physical obstacles to
the agricultural operation or prohibit essential agricultural
practices.
(iii) That significant natural physical changes in the farmland
have occurred that are generally irreversible and permanently limit
the productivity of the farmland.
(iv) That a court order restricts the use of the farmland so
that agricultural production cannot be made economically viable.
(b) The local governing body determines that the
relinquishment is in the public interest and that the farmland to
be relinquished meets 1 or more of the following conditions:
(i) The farmland is to be owned, operated, and maintained by a
public body for a public use.
(ii) The farmland had been zoned for the immediately preceding
3 years for a commercial or industrial use.
(iii) The farmland is zoned for commercial or industrial use and
the relinquishment of the farmland will be mitigated by 1 of the
following means:
(A) For every 1 acre of farmland to be relinquished, an
agricultural conservation easement will be acquired over 2 acres of
farmland of comparable or better quality located within the same
local unit of government where the farmland to be relinquished is
located. The agricultural conservation easement shall be held by
the local unit of government where the farmland to be relinquished
is located or, if the local governing body declines to hold the
agricultural conservation easement, by the state land use agency.
(B) If an agricultural conservation easement cannot be
acquired as provided under sub-subparagraph (A), there will be
deposited into the state agricultural preservation fund created in
section 36202 an amount equal to twice the value of the development
rights to the farmland being relinquished, as determined by a
certified appraisal.
(iv) The farmland is to be owned, operated, and maintained by
an organization exempt from taxation under section 501(c)(3) of the
internal revenue code of 1986, 26 USC 501, and the relinquishment
will be beneficial to the local community.
(2) In determining public interest under subsection (1)(b),
the governing body shall consider all of the following:
(a) The long-term effect of the relinquishment upon the
preservation and enhancement of agriculture in the surrounding
area, including any nonfarm encroachment upon other agricultural
operations in the surrounding area.
(b) Any other reasonable and prudent site alternatives to the
farmland to be relinquished.
(c) Any infrastructure changes and costs to the local unit of
government that will result from the development of the farmland to
be relinquished.
(3) If a landowner's relinquishment application under this
section is denied by the local governing body, the landowner may
appeal that denial to the state land use agency. In determining
whether to grant the appeal and approve the relinquishment, the
state land use agency shall follow the criteria established in
subsection (1)(a) or follow the criteria in subsection (1)(b) and
consider the factors described in subsection (2).
(4) The state land use agency shall review an application
approved by the local governing body to verify that the criteria
provided in subsection (1)(a) were met or the criteria in
subsection (1)(b) were met and the factors in subsection (2) were
considered. If the local governing body did not render a
determination in accordance with this subsection, the state land
use agency shall not relinquish the farmland from the development
rights agreement.
(5) A local governing body may elect to waive its right to
make a relinquishment determination under subsection (1)(a) or (b)
by providing written notice of that election to the state land use
agency. The written notice shall grant the state land use agency
sole authority to grant or deny the application as provided in this
section.
(6) A decision by the state land use agency to grant or deny
an application for relinquishment under this section that adversely
affects a land owner or a local governing body is subject to a
contested case hearing as provided under this act and the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328.
(7) As used in this section, "economic viability" means that
the cash flow returning to the farming operation is positive. The
local governing body or state land use agency shall evaluate an
application for relinquishment, and determine the economic
viability of the affected farming operation, by doing all of the
following:
(a) Estimating crop, livestock, or product value of the
farmland using locally accepted production methods and local United
States department of agriculture yield capabilities for the
specific soil types and average price for crop, livestock, or
product over the past 5 years.
(b) Adding average yearly property tax credits afforded by the
agricultural district contract over the immediately preceding 5-
year period.
(c) Subtracting estimated expenses directly attributed to the
production of the crop, livestock, or product, including, but not
limited to, seed, fertilizer, insecticide, building and machinery
repair, drying, trucking, and property taxes.
(d) Subtracting the estimated cost of the operator's labor and
management time at rates established by the United States
department of agriculture for "all labor", Great Lakes area, as
published in the United States department of agriculture labor
reports.
(e) Subtracting typical capital replacement cost per acre of
nonland assets using a useful life depreciation rate for comparable
farming operations.
Sec. 36313. The state land use agency may promulgate rules to
implement this part pursuant to the administrative procedures act
of 1969, 1969 PA 306, MCL 24.201 to 24.328.