SB-1034, As Passed Senate, December 6, 2018

SUBSTITUTE FOR

SENATE BILL NO. 1034

A bill to amend 1893 PA 206, entitled

"The general property tax act,"

by amending section 7jj (MCL 211.7jj[1]), as amended by 2018 PA

117.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 7jj. (1) Except as otherwise limited in this subsection,

qualified forest property is exempt from the tax levied by a local

school district for school operating purposes to the extent

provided under section 1211 of the revised school code, 1976 PA

451, MCL 380.1211, according to the provisions of this section.

Buildings, structures, or land improvements located on qualified

forest property are not eligible for the exemption under this

section. The amount of qualified forest property in this state that

is eligible for the exemption under this section is limited as

follows:

(a) In the fiscal year ending September 30, 2008, 300,000

acres.

(b) In the fiscal year ending September 30, 2009, 600,000

acres.

(d) In the fiscal year ending September 30, 2011 and each

fiscal year thereafter through the fiscal year ending September 30,

2018, 1,200,000 acres.

(e) In the fiscal year ending September 30, 2019 and each

fiscal year thereafter, 2,500,000 acres. Beginning in the fiscal

year ending September 30, 2013 and each fiscal year thereafter,

real property eligible for exemption under this section as

qualified forest property as a result of the withdrawal of 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, as provided in section 51108(5) of the natural resources

and environmental protection act, 1994 PA 451, MCL 324.51108, or as

a result of the property's eligibility for exempt status under this

section as provided for in section 8(2) of the transitional

qualified forest property specific tax act, 2016 PA 260, MCL

211.1098, shall not be credited against the ~~1,200,000~~ number of

acres of property that are eligible for exemption as qualified

forest property under ~~this section.~~subdivision (d) or this

subdivision, as applicable.

(2) If a property owner is interested in obtaining an

exemption for qualified forest property under this section, the

property owner may contact the local conservation district or the

department, and the local conservation district or the department

shall advise the property owner on the exemption process. If

requested by the property owner, the local conservation district or

the department shall provide the property owner with a list of

qualified foresters to prepare a forest management plan. The

department shall maintain a list of qualified foresters throughout

the state and shall make the list available to the conservation

districts and to interested property owners. To claim an exemption

under subsection (1), a property owner shall obtain a forest

management plan from a qualified forester and submit a digital copy

of that forest management plan, an application for exemption as

qualified forest property, and a fee of $50.00 to the department on

a form created by the department by September 1 prior to the tax

year in which the exemption is requested. Before submitting the

application to the department, the property owner is encouraged to

consult with the local conservation district to review the

obligations of the qualified forest program and the obligations of

the property owner's forest management plan. A forest management

plan is not subject to the freedom of information act, 1976 PA 442,

MCL 15.231 to 15.246. The department shall forward a copy of the

application to the local conservation district for review and to

the local tax collecting unit for notification of the application.

(3) A conservation district shall review the application to

determine if the applied-for property meets the minimum

requirements set forth in subsection (17)(k) for enrolling into the

qualified forest program. A conservation district shall respond

within 45 days after the date of its receipt of the application

indicating whether the property in the application is eligible for

enrollment. If the conservation district does not respond within 45

days after its receipt of the application, the property shall be

considered eligible for the exemption under this section.

(4) The department shall review the application, comments from

the conservation district, and the forest management plan to

determine if the property is eligible for the exemption under this

section. The department shall review the forest management plan to

determine if the elements required in subsection (17)(f) 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 section, the department shall approve the application and

shall prepare a qualified forest school tax affidavit, in

recordable form, indicating all of the ~~following:~~information

described in subdivisions (a) to (f). If the application and

supporting documents that are in compliance with this section and

approved by the department extend to multiple parcels owned by the

same person and located in the same local tax collecting unit, the

department may include the following information, required for each

parcel in recordable form, in a single qualified forest school tax

affidavit:

(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 for which the exemption is claimed is qualified forest

property and will be managed according to the approved forest

management plan.

(f) A statement indicating that the property owner holds the

timber rights for the property for which the exemption is claimed.

(5) The department shall send a qualified forest school tax

affidavit prepared under subsection (4) to the property owner for

execution. The 90-day review period by the department may be

extended upon request of the property owner. The property owner

shall execute the qualified forest school tax affidavit and shall

have the executed qualified forest school tax affidavit recorded by

the register of deeds in the county in which the property is

located. The property owner shall provide a copy of the qualified

forest school tax affidavit to the department. The department shall

provide ~~1 copy of the~~ a spreadsheet listing all parcels for which

it has received a qualified forest school tax affidavit to the

conservation district and ~~1 copy~~ to the department of treasury.

These ~~copies~~ spreadsheets may be sent electronically.

(6) 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.

(7) To claim an exemption under subsection (1), the owner of

qualified forest property shall provide a copy of the recorded

qualified forest school tax affidavit attesting that the land is

qualified forest property to the local tax collecting unit and

assessor by December 31. ~~An owner may claim an exemption under this~~

~~section for not more than 640 acres or the equivalent of 16 survey~~

~~units consisting of 1/4 of 1/4 of a section of qualified forest~~

~~property in each local tax collecting unit. If an exemption is~~

~~granted under this section for less than 640 acres in a local tax~~

~~collecting unit, an owner of that property may subsequently claim~~

~~an exemption for additional property in that local tax collecting~~

~~unit if that additional property meets the requirements of this~~

~~section.~~

(8) If a copy of the recorded qualified forest school tax

affidavit is provided to the assessor by the owner, the assessor

shall exempt the property from the collection of the tax as

provided in subsection (1) until December 31 of the year in which

the property is no longer qualified forest property.

(9) Beginning in the year that qualified forest property is

first exempt under this section and each year thereafter, the local

tax collecting unit shall collect a fee on each parcel of qualified

forest property exempt under this section located in that local tax

collecting unit. The fee shall be determined by multiplying 2 mills

by the taxable value of that qualified forest property. The fee

shall be collected on the summer tax bill or, if the local tax

collecting unit does not collect summer taxes, on the winter tax

bill at the same time and in the same manner as taxes collected

under this act. Each local tax collecting unit shall disburse the

fee collected under this subsection to the department of treasury

for deposit in the private forestland enhancement fund created in

section 51305 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.51305. If property is no longer exempt as

qualified forest property under this section, the fee under this

subsection shall not be collected on that property. The fee

collected in this subsection shall be subject to the property tax

administration fee established by the local tax collecting unit

under section 44.

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

exempted property is no longer qualified forest property, the owner

shall ~~rescind the exemption for the applicable portion of the~~

~~property by filing~~ notify the department that all or a portion of

the property is no longer qualified forest property. The department

shall notify the county treasurer that a request has been made to

remove the exemption for the applicable portion of the property and

to calculate any recapture tax required under the qualified forest

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

The county treasurer shall bill the landowner for any recapture tax

required under the qualified forest property recapture tax act,

2006 PA 379, MCL 211.1031 to 211.1036. When, as provided in section

5 of the qualified forest property recapture tax act, 2006 PA 379,

MCL 211.1035, the proceeds of the recapture tax are deposited into

the private forestland enhancement fund created in section 51305 of

the natural resources and environmental protection act, 1994 PA

451, MCL 324.51305, the department shall prepare a rescission form

for the applicable portion of the property that is no longer

qualified forest property and shall file the rescission form 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 by the

department. The rescission form shall include a legal description

of the exempted 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.~~If an owner fails to notify the

department that all or a portion of the property is no longer

qualified forest property as required by this subsection, that

owner is subject to a penalty of $5.00 per day for each separate

failure beginning the day immediately 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.

(11) An owner of property that is qualified forest property on

December 31 for which an exemption was not on the tax roll may file

an appeal with the July or December board of review under section

53b in the year the exemption was claimed or the immediately

succeeding year.

(12) If property for which an exemption has been granted under

this section is not qualified forest property, the department shall

notify the local tax collecting unit and the property that had been

subject to that exemption 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.

(13) If all or a portion of property for which an exemption

has been granted under this section is converted by a change in use

and is no longer qualified forest property, ~~an owner~~ or if an owner

of qualified forest property does not wish to keep all or a portion

of the property enrolled in the qualified forest program, the owner

of the property converted by a change in use or to be withdrawn

from the qualified forest program shall ~~immediately~~ notify the

~~local tax collecting unit, the assessor, the~~ department ~~, and the~~

~~department of treasury~~ as provided for in subsection (10) on a form

created by the department. The form shall include a legal

description of the exempted property. A copy of the form shall be

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

exempted property is located. Upon notice that property is no

longer qualified forest property, the local tax collecting unit and

assessor shall immediately rescind the exemption under this section

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

exemption under this section 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 this act or under the qualified forest property

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

~~beginning June 1, 2013 and ending November 30, 2013, owners of~~

~~property exempt as qualified forest property prior to January 1,~~

~~2013 may execute a new qualified forest school tax affidavit under~~

~~this section. If an owner of property exempt as qualified forest~~

~~property elects to execute a new qualified forest school tax~~

~~affidavit under this section, that owner is not required to pay the~~

~~$50.00 fee required under subsection (2). If an owner of qualified~~

~~forest property elects not to execute a new qualified forest school~~

~~tax affidavit under this section, the existing affidavit shall be~~

~~rescinded without penalty and the property shall be placed on the~~

~~tax roll as though the exemption under this section had not been~~

~~granted. If a property owner elects not to execute a qualified~~

~~forest school tax affidavit under this section, the property is not~~

~~subject to the recapture tax provided for under the qualified~~

~~forest property recapture tax act, 2006 PA 379, MCL 211.1031 to~~

~~211.1036.~~

(14) If qualified forest property is exempt under this

section, an owner of that 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 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 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, 2013 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 qualified forest property in each

county.

(b) The number of acres of agricultural use property that is

combined with productive forest under subsection (17)(k)(iii).

each year.

(d) The number of forest management plans completed by

conservation districts and the total number of forest management

plans submitted for approval each year.

(15) While qualified forest property is exempt under this

section, the owner 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 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 eligible for the exemption under this section, the

department shall notify the local tax collecting unit that the

property is not eligible for the exemption under this section, and

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

exemption under this section 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.

(16) Notwithstanding any provision in this section to the

contrary, property is exempt from the tax levied by a local school

district for school operating purposes as provided in subsection

(1) if all of the following conditions are met:

(a) The property was subject to the transitional qualified

forest property specific tax under the transitional qualified

forest property specific tax act, 2016 PA 260, MCL 211.1091 to

211.1101, for a period of 5 years as determined by the department

under section 8 of the transitional qualified forest property

specific tax act, 2016 PA 260, MCL 211.1098.

(b) Pursuant to section 8 of the transitional qualified forest

property specific tax act, 2016 PA 260, MCL 211.1098, the

department has determined that the property is still eligible for

the exemption under this section.

executes a recordable qualified forest school tax affidavit, has

the executed qualified forest school tax affidavit recorded by the

and provides copies of the executed qualified forest school tax

affidavit to other interested parties as required by the

department.

(17) As used in this section:

(a) "Agricultural use property" means real property devoted

primarily to agricultural use as that term is defined in section

36101 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.36101.

(b) ~~"Approved~~ Except as otherwise provided in section 9308(2)

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.9308, "approved forest management plan" means a forest

management plan developed by a qualified forester. An owner of

property shall submit a forest management plan to the department

for approval as prescribed in subsection (2). The forest management

plan shall include a statement signed by the owner that he or she

agrees to comply with all terms and conditions contained in the

approved forest management plan. If a forest management plan and

application are submitted to the department, the department shall

review and either approve or disapprove the owner's application

within 90 days after submission. Approval of the plan shall be

based solely on compliance with the elements required in

subdivision (f). Denial of the plan shall be based solely on

noncompliance with the requirements listed in subdivision (f). If

the department disapproves a forest management plan, the department

shall indicate the changes necessary to qualify the forest

management plan for approval on subsequent review. An owner may

submit amendments to his or her forestry plan to the department.

The department may reject amendments that delay a harvest date

repeatedly or indefinitely. A forest management plan submitted for

approval shall be for a maximum of 20 years. To continue receiving

an exemption under this section, an owner of property shall submit

a digital copy of any succeeding proposed forest management plan to

the department for approval together with a fee of $50.00. The

first amendment to the plan is not subject to a fee. Additional

amendments may be subject to a fee of $50.00.

organized under part 93 of the natural resources and environmental

protection act, 1994 PA 451, MCL 324.9301 to 324.9313.

(d) "Converted by a change in use" means both of the following

definitions in subparagraphs (i) and (ii), subject to subparagraph

(iii):

(i) That term as defined in section 2 of the qualified forest

property recapture tax act, 2006 PA 379, MCL 211.1032.

(ii) That due to a change in use of either productive forest

property or agricultural use property, the property is no longer

eligible for exemption as qualified forest property under

subdivision (k)(iii).

(iii) Property is not converted by a change of use under

subparagraph (i) or (ii) by the construction of a residence and

related structures on not more than 1 acre of the property if the

requirements of subdivision (k) are met as to the remainder of the

property. For purposes of this subparagraph, the remainder of the

property is that portion of it exclusive of 1 acre on which the

residence and related structures are located, which is not eligible

for the exemption under this section.

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

development.

(f) "Forest management plan" means a written plan prepared and

signed by a qualified forester that prescribes measures to optimize

production, utilization, ~~and~~ regeneration, and harvest of ~~forest~~

~~resources.~~ timber. The forest management plan shall include a

schedule and timetables for the various silvicultural practices

used on forestlands, which shall be a maximum of 20 years in

length. A forest management plan shall include all of the

following:

(i) The name and address of each owner of the property.

(ii) The legal description and parcel identification number of

the property or of the parcel on which the property is located.

(iii) A statement of the owner's forest management objectives.

(iv) A map, diagram, or aerial photograph that identifies both

forested and unforested areas of the property, using conventional

map symbols indicating the species, size, and stocking rate and

other major features of the property, including the location of any

buildings. The location and use of any buildings may be established

on a map created by a qualified forester and does not require a

survey by a registered surveyor.

(v) A description of all stands or management units and forest

~~practice,~~ practices, including harvesting, thinning, and

reforestation, that will be undertaken, specifying the approximate

period of time before each is completed.

(vi) A description of soil conservation practices that may be

necessary to control any soil erosion that may result from the

forest practice described pursuant to subparagraph (v).

(vii) A description of activities that may be undertaken for

the management of forest resources other than trees, including

wildlife habitat, watersheds, and aesthetic features.

(g) "Forest practice" means any action intended to improve

forestland or forest resources and includes, but is not limited to,

any of the following:

(i) The improvement of species of forest trees.

(ii) Reforestation.

(iii) The harvesting of species of forest trees.

(iv) Road construction associated with the improvement or

harvesting of forest tree species or reforestation.

(v) Use of chemicals or fertilizers for the purpose of growing

or managing species of forest trees.

(vi) Applicable silvicultural practices.

(h) "Forest products" includes, but is not limited to, timber

and pulpwood-related products.

(i) "Harvest" means the point at which timber that has been

cut, severed, or removed for purposes of sale ~~or use~~ is first

measured in the ordinary course of business as determined by

reference to common practice in the timber industry. The term does

not include the cutting, severance, or removal of timber for

firewood, fence posts, or other personal use.

(j) ~~"Productive~~ Subject to subparagraph (v), "productive

forest" means real property capable of growing not less than 20

cubic feet of wood per acre per year. ~~However, if~~ The term includes

real property on which there is a tree density that meets at least

one of subparagraphs (i) to (iv), as follows:

(i) At least 200 seedlings per acre.

(ii) At least 100 saplings per acre 2 to 5 inches in diameter

measured 4.5 feet from level ground.

(iii) At least 3 cords per acre of either of the following

types of poletimber:

(A) Conifer species 5 to 9 inches in diameter measured 4.5

feet from level ground.

(B) All other species 5 to 11 inches in diameter measured 4.5

feet from level ground.

(iv) At least 1,300 board feet per acre of either of the

following types of sawtimber:

(A) Conifer species at least 9 inches in diameter measured 4.5

feet from level ground.

(B) All other species at least 11 inches in diameter measured

4.5 feet from level ground.

(v) If property has been considered productive forest, an act

of God that negatively affects that property shall not result in

that property not being considered productive forest.

(k) "Qualified forest property" means a parcel of real

property that meets all of the following conditions as determined

by the department: ~~of agriculture and rural development:~~

(i) Is not less than 20 contiguous acres in size. For parcels

less than 40 acres, not less than 80% shall be stocked with

productive forest capable of producing forest products. For parcels

40 acres or more, not less than 50% shall be stocked with

productive forest capable of producing forest products. These

stocking density requirements apply on a per-parcel basis only and

cannot be met on a basis that averages stocking density across

multiple parcels. Contiguity is not broken by a road, a right-of-

way, or property purchased or taken under condemnation proceedings

by a public utility for power transmission lines if the 2 parcels

separated by the purchased or condemned property were a single

parcel prior to the sale or condemnation.

(ii) Is subject to an approved forest management plan.

(iii) If a parcel contains both productive forest and

agricultural use property, the combined acreage of the productive

forest and the agricultural use property meets all of the following

requirements:

(A) The parcel is not less than 20 contiguous acres. If a

parcel is less than 40 acres, not less than 80% shall be the

combined productive forest and agricultural use property. If the

parcel is 40 acres or more, not less than 50% shall be the combined

productive forest and agricultural use property.

(B) The acreage of agricultural use property on the parcel

shall be determined by the assessor in the local tax collecting

unit in which the parcel is located. The property owner shall

request the determination. The assessor shall report the acreage of

the agricultural use property in a form prescribed by the state tax

commission to the property owner and the department within 30 days

after the date of the request for the determination. An owner that

disagrees with an assessor's determination of the acreage of

agricultural use property on the parcel may appeal that

determination to the board of review under section 53b. If the

property owner converts all or part of the agricultural use

property to forest property by planting trees or other means, the

property owner shall notify the department and the assessor of the

conversion and the forest management plan shall be modified to

reflect the change in use.

(l) "Qualified forester" means an individual who meets 1 or

more of the following requirements and has registered with the

department of agriculture and rural development under section 51306

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.51306:

(i) Is a forester certified by the Society of American

Foresters.

(ii) Is a forest stewardship plan writer.

(iii) Is a technical service provider as registered by the

United States Department of Agriculture for forest management plan

development.

(iv) Is a registered forester.

(v) Is a member of the Association of Consulting Foresters.

(m) "Registered forester" means an individual registered under

part 535 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.53501 to 324.53519.