EMINENT DOMAIN: PRINCIPAL RESIDENCE

House Bill 6223

Sponsor:  Rep. Douglas Geiss

Committee:  Urban Policy

Complete to 5-31-10

A SUMMARY OF HOUSE BILL 6223 AS INTRODUCED 5-27-10

The bill would amend the Uniform Condemnation Procedures Act, which deals with the taking of property by eminent domain.  Currently, under the act, if the property being taken is a principal residence -- an owner-occupied residence -- the property owner's compensation must include an additional amount that takes into account the cap on valuations that such properties enjoy for property tax purposes*.  Specifically, the additional amount is determined by subtracting the taxable value of the property from the state equalized value, multiplying that by the appropriate property tax millage rate, and multiplying that by the number of years the owner or owners have owned the residence, up to five years.  (Essentially, this compensates a homeowner for the loss of favorable property tax treatment.)

House Bill 6223 would instead allow in certain cases up to ten years of ownership to be used in calculating the additional amount that would be due to the owner of a principal residence taken under act.  This would only apply if the owner purchases a replacement dwelling to be used as a principal residence that is located in the same city, village, or township as the property being taken.  The new property would have to be purchased within 180 days after title to the first property vests in the agency.

[*Generally speaking, the increase in the assessment of a parcel of real property cannot increase from one year to the next by more than the rate of inflation or five percent, whichever is less.  However, when property is sold or transferred, its valuation returns (or "pops up") to 50 percent of the market value.  At that point, the assessment cap once again begins to apply, this time to the readjusted assessment.   The "taxable value" of a property is the amount on which property taxes are based and reflects the capped value. The "state equalized value" is the value that reflects market value.]

FISCAL IMPACT:

A fiscal analysis is in process.

                                                                                           Legislative Analyst:   Chris Couch 

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.