SB-0651, As Passed House, June 8, 2016

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 651

A bill to provide for exemption of certain property from

certain taxes; to levy and collect a specific tax upon the owners

of certain property; to provide for the disposition of the tax; to

prescribe the powers and duties of certain local government

officials; and to provide penalties.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"transitional qualified forest property specific tax act".

Sec. 2. As used in this act:

(a) "Commission" means the state tax commission created by

1927 PA 360, MCL 209.101 to 209.107.

(b) "Conservation district" means that term as defined in

section 7jj of the general property tax act, 1893 PA 206, MCL

211.7jj[1].

in section 7jj of the general property tax act, 1893 PA 206, MCL

211.7jj[1].

(d) "Department" means the department of agriculture and rural

development.

(e) "Forest management plan" means that term as defined in

section 7jj of the general property tax act, 1893 PA 206, MCL

211.7jj[1].

(f) "Forest practice" means that term as defined in section

7jj of the general property tax act, 1893 PA 206, MCL 211.7jj[1].

(g) "Harvest" means that term as defined in section 7jj of the

general property tax act, 1893 PA 206, MCL 211.7jj[1].

(h) "Taxable value" means the taxable value as determined

under section 27a of the general property tax act, 1893 PA 206, MCL

211.27a.

(i) "Transitional qualified forest property" means forestland

that meets all of the following:

(i) The forestland is classified as commercial forest under

part 511 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.51101 to 324.51120.

(ii) The forestland meets the definition of qualified forest

property under section 7jj of the general property tax act, 1893 PA

206, MCL 211.7jj[1].

(iii) The owner of the forestland has applied to and that

application has been approved by the department under section 4.

(j) "Transitional qualified forest property specific tax"

means the specific tax levied under section 6.

Sec. 3. For taxes levied after December 31, 2015, subject to

section 4, transitional qualified forest property is exempt from ad

valorem property taxes collected under the general property tax

act, 1893 PA 206, MCL 211.1 to 211.155, as provided under section

7vv of the general property tax act, 1893 PA 206, MCL 211.7vv, for

a period not to exceed 5 years.

Sec. 4. (1) An owner of forestland that withdraws commercial

forestland under section 51108(5) of the natural resources and

environmental protection act, 1994 PA 451, MCL 324.51108, may apply

to the department to have that forestland determined to be

transitional qualified forest property. The application process

shall include an application from the owner of the forestland on a

form created by the department, a forest management plan, and a fee

of $50.00. The applicant shall file the application not later than

September 1 prior to the tax year in which transitional qualified

forest property will be taxed under this act.

(2) The department shall review the application and forest

management plan and determine whether the forestland is

transitional qualified forest property under this act. The

department shall review the forest management plan to determine if

the elements required in section 7jj(17)(f) of the general property

tax act, 1893 PA 206, MCL 211.7jj[1], are in the plan. Within 90

days of its receipt of the application, forest management plan, and

fee, the department shall review the application and if the

application and supporting documents are not in compliance, the

department shall deny the application and notify the property owner

of that denial. If the application and supporting documents are in

compliance with the requirements of this act, the department shall

approve the application and shall prepare a transitional qualified

forest property affidavit, in recordable form, indicating all of

the following:

(a) The name of the property owner.

(b) The tax parcel identification number of the property.

(d) The year the application was submitted for the exemption.

(e) A statement that the property owner is attesting that the

property is transitional qualified forest property and will be

managed according to the approved forest management plan.

(3) The department shall send a transitional qualified forest

property affidavit prepared under subsection (2) and a commercial

forest withdrawal certificate to the property owner. The property

owner shall execute the transitional qualified forest property

affidavit and the commercial forest withdrawal certificate and

return both to the department.

(4) If the application is denied, the property owner has 30

days from the date of notification of the denial by the department

to initiate an appeal of that denial. An appeal of the denial shall

be by certified letter to the director of the department.

(5) An owner may claim an exemption under this section for not

more than 160 acres maximum of transitional qualified forest

property per township. If an exemption is granted under this act

for less than 160 acres in a township, an owner of that property

may subsequently claim an exemption for additional property until

the 160-acre maximum in that township is reached if that additional

Senate Bill No. 651 as amended June 7, 2016

property otherwise meets the requirements of this act.

(6) [Upon receipt of] a copy of the recorded

transitional qualified forest property affidavit and a copy of the

recorded commercial forest withdrawal certificate [by]

the assessor, the assessor shall exempt the property from the

collection of the tax as provided in section 3 until December 31 of

the year in which the property is no longer transitional qualified

forest property.

Sec. 5. The assessor of each local tax collecting unit in

which there is transitional qualified forest property shall

determine annually as of December 31 the value and taxable value of

each parcel of transitional qualified forest property located in

that local tax collecting unit.

Sec. 6. (1) There is levied upon the owner of each parcel or

transitional qualified forest property a specific tax to be known

as the transitional qualified forest property specific tax.

(2) The amount of the transitional qualified forest property

specific tax in each year shall be the greater of an amount equal

to the specific tax calculated under section 51106 of the natural

resources and environmental protection act, 1994 PA 451, MCL

324.51106, for that property or an amount determined as follows:

(a) Multiply the number of mills that would be assessed in the

local tax collecting unit if the property were subject to the

collection of taxes under the general property tax act, 1893 PA

206, MCL 211.1 to 211.155, and if the property was exempt as

provided under section 7jj of the general property tax act, 1893 PA

206, MCL 211.7jj[1], by the transitional qualified forest

property's taxable value.

(b) Multiply the result of the calculation in subdivision (a)

by the following:

(i) For the first year the transitional qualified forest

property is subject to this act, .20.

(ii) For the second year the transitional qualified forest

property is subject to this act, .40.

(iii) For the third year the transitional qualified forest

property is subject to this act, .60.

(iv) For the fourth year the transitional qualified forest

property is subject to this act, .80.

(v) For the fifth year the transitional qualified forest

property is subject to this act, 1.0.

unit in which transitional qualified forest property is located

after the effective date of this act, multiply the number of mills

that were approved that would be assessed if the transitional

qualified forest property were subject to the collection of taxes

under the general property tax act, 1893 PA 206, MCL 211.1 to

211.155, by the transitional qualified forest property's taxable

value. Repeat this calculation for each individual new millage

approved in the local tax collecting unit after the effective date

of this act. As used in this subdivision, "new millage" does not

include the renewal of some or all of a millage in existence on the

effective date of this act.

(d) Add the result of the calculation under subdivision (b)

and the result of all calculations under subdivision (c).

Senate Bill No. 651 as amended June 7, 2016

(3) The transitional qualified forest property specific tax is

an annual tax, payable at the same times, in the same installments,

and to the same collecting officer or officers as taxes collected

under the general property tax act, 1893 PA 206, MCL 211.1 to

211.155.

(4) The collecting officer or officers shall disburse the

transitional qualified forest property specific tax to and among

this state and cities, townships, villages, school districts,

counties, or other taxing units, at the same times and in the same

proportions as required by law for the disbursement of taxes

collected under the general property tax act, 1893 PA 206, MCL

211.1 to 211.155.

(5) The collecting officer or officers shall send a copy of

the amount of disbursement made to each taxing unit under this

section to the department [of treasury] on a form provided by the

department [of treasury].

(6) Beginning in the year that transitional qualified forest

property is subject to tax under this act and each year thereafter,

a fee is imposed on each parcel of transitional qualified forest

property under this act. The fee shall be calculated in the same

manner, collected at the same time and in the same manner, and

disbursed in the same manner as the fee provided for under section

7jj(9) of the general property tax act, 1893 PA 206, MCL

211.7jj[1].

(7) Not more than 90 days after all or a portion of the

exempted property is no longer transitional qualified forest

property, the owner shall rescind the exemption for the applicable

portion of the property by filing with the register of deeds for

the county in which the exempted property is located a rescission

form prescribed by the department. A copy of the rescission form

shall be provided to the assessor. The rescission form shall

include a legal description of the property. An owner who fails to

file a rescission form as required by this subsection is subject to

a penalty of $5.00 per day for each separate failure beginning

after the 90 days have elapsed, up to a maximum of $1,000.00. This

penalty shall be collected under 1941 PA 122, MCL 205.1 to 205.31,

and shall be deposited in the private forestland enhancement fund

created in section 51305 of the natural resources and environmental

protection act, 1994 PA 451, MCL 324.51305.

Sec. 7. Unpaid transitional qualified forest property specific

taxes are subject to forfeiture, foreclosure, and sale in the same

manner and at the same time as taxes returned as delinquent under

the general property tax act, 1893 PA 206, MCL 211.1 to 211.155.

Sec. 8. (1) If forestland that was subject to the transitional

qualified forest property specific tax is not transitional

qualified forest property as determined by the department, the

department shall notify the local tax collecting unit and that

property shall be immediately placed on the tax roll by the local

tax collecting unit if the local tax collecting unit has possession

of the tax roll or by the county treasurer if the county has

possession of the tax roll as though the exemption had not been

granted. A corrected tax bill shall be issued for each tax year

being adjusted by the local tax collecting unit if the local tax

collecting unit has possession of the tax roll or by the county

treasurer if the county has possession of the tax roll.

(2) If forestland was subject to the transitional qualified

forest property specific tax for a period of 5 years as determined

by the department and the department also determines that the

forestland is still eligible for the exemption under section 7jj of

the general property tax act, 1893 PA 206, MCL 211.7jj[1], then

both of the following apply:

(a) That forestland shall be exempt from the tax levied by a

local school district for school operating purposes as qualified

forest property under section 7jj of the general property tax act,

1893 PA 206, MCL 211.7jj[1], upon completion of the procedures

required by section 7jj(16) of the general property tax act, 1893

PA 206, MCL 211.7jj[1].

(b) The owner of that forestland is not responsible for the

penalty described in section 9 for that forestland.

Sec. 9. If all or a portion of transitional qualified forest

property is converted by a change in use and is no longer

transitional qualified forest property, an owner shall immediately

notify the local tax collecting unit, the assessor, and the

department, on a form created by the department. The form shall

include a legal description of that property. A copy of the form

shall be filed with the register of deeds for the county in which

the property is located. Upon notice that property is no longer

transitional qualified forest property, the local tax collecting

unit and assessor shall immediately rescind the exemption under

this act and shall place the property on the tax roll as though the

exemption under this act had not been granted for the immediately

succeeding tax year and the department of treasury shall

immediately begin collection of any applicable tax and penalty

under the general property tax act, 1893 PA 206, MCL 211.1 to

211.155. The department of treasury shall also begin collection of

an amount equal to the application fee and penalty that would have

been assessed under section 51108 of the natural resources and

environmental protection act, 1994 PA 451, MCL 324.51108, to

withdraw that property from the operation of part 511 of the

natural resources and environmental protection act, 1994 PA 451,

MCL 324.51101 to 324.51120, in the year in which the property is

converted by a change of use, calculated as if the property had not

been withdrawn from the operation of part 511 of the natural

resources and environmental protection act, 1994 PA 451, MCL

324.51101 to 324.51120, and the treasurer shall credit these

proceeds to the private forestland enhancement fund created in

section 51305 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.51305.

Sec. 10. An owner of transitional qualified forest property

shall report to the department on a form prescribed by the

department when a forest practice or timber harvest has occurred on

the transitional qualified forest property during a calendar year.

The report shall indicate the forest practice completed and the

volume and value of timber harvested on that transitional qualified

forest property. One copy of the form shall be forwarded to the

conservation district, and 1 copy shall be retained by the

department for 7 years. If it is determined by the department that

a forest practice or harvest has occurred in a calendar year and no

report was filed, a fine of $500.00 may be collected by the

department. Beginning December 31, 2015 and each year thereafter,

the department shall provide to the standing committees of the

senate and house of representatives with primary jurisdiction over

forestry issues a report that includes all of the following:

(a) The number of acres of transitional qualified forest

property in each county.

(b) The amount of timber produced on transitional qualified

forest property each year.

conservation districts and the total number of forest management

plans submitted for approval each year.

Sec. 11. The owner of transitional qualified forest property

shall retain the current management plan, most recent harvest

records, recorded copy of a receipt of the tax exemption, and a map

that shows the location and size of any buildings and structures on

the property. The owner shall make the documents available to the

department upon request. The department shall maintain a database

listing all transitional qualified forest properties, including the

dates indicated for forest practices and harvests in the forest

management plan, and shall notify the property owner and the

conservation district in any year that forest practices or harvests

are to occur. If an owner does not accomplish forest practices and

harvests within 3 years after the time specified in the current

forest management plan and the plan has not been amended to extend

the date of forest practices and harvests, the property is not

transitional qualified forest property under this act, the

department shall notify the local tax collecting unit that the

property is not transitional qualified forest property, and the

property shall be placed on the tax roll as though the exemption

under this act had not been granted as provided in this section and

shall be subject to repayment as indicated in the qualified forest

property recapture tax act, 2006 PA 379, MCL 211.1031 to 211.1036.

Information in the database specific to an individual property

owner's forest management plan is exempt from disclosure under the

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

However, information in the database in the aggregate, including,

but not limited to, how much timber would be expected to be on the

market each year as a result of enrollees, is not exempt from

disclosure under the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246.

Enacting section 1. This act does not take effect unless all

of the following bills of the 98th Legislature are enacted into

law:

(a) Senate Bill No. 652.

(b) Senate Bill No. 653.