HOUSE BILL NO. 5744
May 23, 2024, Introduced by Rep. VanWoerkom and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 27 and 34d (MCL 211.27 and 211.34d), as
amended by 2022 PA 240, and by adding section 9q.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 9q. For taxes levied after December 31, 2024, all
2 personal property classified under section 34c as industrial
3 personal property or commercial personal property and constituting
4 a qualified hydrogen fuel pump is exempt from the collection of
5 taxes under this act. As used in this section:
JHM 05933'24 *
 2
1 (a) "Motor vehicle" means that term as defined in section 33
2 of the Michigan vehicle code, 1949 PA 300, MCL 257.33.
3 (b) "Qualified hydrogen fuel pump" means a machine or other
4 device, including, but not limited to, a hydrogen pump, hydrogen
5 dispenser, or combined hydrogen pump and dispenser, located in this
6 state that is used to fill motor vehicles with hydrogen fuel and
7 that meets either the H35 or H70 standard, where H35 indicates a
8 dispensing pressure of 35 Megapascals (MPa) and H70 indicates a
9 dispensing pressure of 70 MPa.
10 Sec. 27. (1) As used in this act, "true cash value" means the
11 usual selling price at the place where the property to which the
12 term is applied is at the time of assessment, being the price that
13 could be obtained for the property at private sale, and not at
14 auction sale except as otherwise provided in this section, or at
15 forced sale. The usual selling price may include sales at public
16 auction held by a nongovernmental agency or person if those sales
17 have become a common method of acquisition in the jurisdiction for
18 the class of property being valued. The usual selling price does
19 not include sales at public auction if the sale is part of a
20 liquidation of the seller's assets in a bankruptcy proceeding or if
21 the seller is unable to use common marketing techniques to obtain
22 the usual selling price for the property. A sale or other
23 disposition by this state or an agency or political subdivision of
24 this state of land acquired for delinquent taxes or an appraisal
25 made in connection with the sale or other disposition or the value
26 attributed to the property of regulated public utilities by a
27 governmental regulatory agency for rate-making purposes is not
28 controlling evidence of true cash value for assessment purposes. In
29 determining the true cash value, the assessor shall also consider
JHM 05933'24 *
 3
1 the advantages and disadvantages of location; quality of soil;
2 zoning; existing use; present economic income of structures,
3 including farm structures; present economic income of land if the
4 land is being farmed or otherwise put to income producing use;
5 quantity and value of standing timber; water power and privileges;
6 minerals, quarries, or other valuable deposits not otherwise exempt
7 under this act known to be available in the land and their value.
8 In determining the true cash value of personal property owned by an
9 electric utility cooperative, the assessor shall consider the
10 number of kilowatt hours of electricity sold per mile of
11 distribution line compared to the average number of kilowatt hours
12 of electricity sold per mile of distribution line for all electric
13 utilities.
14 (2) The assessor shall not consider the increase in true cash
15 value that is a result of expenditures for normal repairs,
16 replacement, and maintenance in determining the true cash value of
17 property for assessment purposes until the property is sold. For
18 the purpose of implementing this subsection, the assessor shall not
19 increase the construction quality classification or reduce the
20 effective age for depreciation purposes, except if the appraisal of
21 the property was erroneous before nonconsideration of the normal
22 repair, replacement, or maintenance, and shall not assign an
23 economic condition factor to the property that differs from the
24 economic condition factor assigned to similar properties as defined
25 by appraisal procedures applied in the jurisdiction. The increase
26 in value attributable to the items included in subdivisions (a) to
27 (q) (r) that is known to the assessor and excluded from true cash
28 value must be indicated on the assessment roll. This subsection
29 applies only to residential property. The following repairs are
JHM 05933'24 *
 4
1 considered normal maintenance if they are not part of a structural
2 addition or completion:
3 (a) Outside painting.
4 (b) Repairing or replacing siding, roof, porches, steps,
5 sidewalks, or drives.
6 (c) Repainting, repairing, or replacing existing masonry.
7 (d) Replacing awnings.
8 (e) Adding or replacing gutters and downspouts.
9 (f) Replacing storm windows or doors.
10 (g) Insulating or weatherstripping.
11 (h) Complete rewiring.
12 (i) Replacing plumbing and light fixtures.
13 (j) Replacing a furnace with a new furnace of the same type or
14 replacing an oil or gas burner.
15 (k) Repairing plaster, inside painting, or other redecorating.
16 (l) New ceiling, wall, or floor surfacing.
17 (m) Removing partitions to enlarge rooms.
18 (n) Replacing an automatic hot water heater.
19 (o) Replacing dated interior woodwork.
20 (p) Installing, replacing, or repairing an alternative energy
21 system, without regard to ownership of the system, with a
22 generating capacity of not more than 150 kilowatts, the annual
23 energy output of which does not exceed the annual energy
24 consumption measured by the utility-provided electrical meter on
25 the system to which it is connected. As used in this subdivision,
26 "alternative energy system" means that term as defined in section 2
27 of the Michigan next energy authority act, 2002 PA 593, MCL
28 207.822.
29 (q) Installing, replacing, or repairing a whole-home
JHM 05933'24 *
 5
1 generator.
2 (r) Installing, replacing, or repairing 1 or more qualified
3 hydrogen fuel pumps. As used in this subdivision, "qualified
4 hydrogen fuel pump" means that term as defined in section 9q.
5 (3) A city or township assessor, a county equalization
6 department, or the state tax commission before utilizing real
7 estate sales data on real property purchases, including purchases
8 by land contract, to determine assessments or in making sales ratio
9 studies to assess property or equalize assessments shall exclude
10 from the sales data the following amounts allowed by subdivisions
11 (a), (b), and (c) to the extent that the amounts are included in
12 the real property purchase price and are so identified in the real
13 estate sales data or certified to the assessor as provided in
14 subdivision (d):
15 (a) Amounts paid for obtaining financing of the purchase price
16 of the property or the last conveyance of the property.
17 (b) Amounts attributable to personal property that were
18 included in the purchase price of the property in the last
19 conveyance of the property.
20 (c) Amounts paid for surveying the property pursuant to the
21 last conveyance of the property. The legislature may require local
22 units of government, including school districts, to submit reports
23 of revenue lost under subdivisions (a) and (b) and this subdivision
24 so that the state may reimburse those units for that lost revenue.
25 (d) The purchaser of real property, including a purchaser by
26 land contract, may file with the assessor of the city or township
27 in which the property is located 2 copies of the purchase agreement
28 or of an affidavit that identifies the amount, if any, for each
29 item listed in subdivisions (a) to (c). The assessor shall forward
JHM 05933'24 *
 6
1 1 copy to the county equalization department. The affidavit must be
2 as prescribed by the state tax commission.
3 (4) In finalizing sales studies for property classified as
4 agricultural real property under section 34c, an assessor and
5 equalization director shall determine if an affidavit for the
6 property has been filed under section 27a(7)(o). If an affidavit
7 has not been filed, the property must be reviewed to determine if
8 classification as agricultural real property under section 34c is
9 correct or should be changed. The assessor for the local tax
10 collecting unit in which the property is located shall contact the
11 property owner to determine why the property owner did not file an
12 affidavit under section 27a(7)(o). Unless there are convincing
13 facts to the contrary, the sale of property classified as
14 agricultural real property under section 34c for which an affidavit
15 under section 27a(7)(o) has not been filed must not be included in
16 a sales study.
17 (5) As used in subsection (1), "present economic income" means
18 for leased or rented property the ordinary, general, and usual
19 economic return realized from the lease or rental of property
20 negotiated under current, contemporary conditions between parties
21 equally knowledgeable and familiar with real estate values. The
22 actual income generated by the lease or rental of property is not
23 the controlling indicator of its true cash value in all cases. This
24 subsection does not apply to property subject to a lease entered
25 into before January 1, 1984 for which the terms of the lease
26 governing the rental rate or tax liability have not been
27 renegotiated after December 31, 1983. This subsection does not
28 apply to a nonprofit housing cooperative subject to regulatory
29 agreements between the state or federal government entered into
JHM 05933'24 *
 7
1 before January 1, 1984. As used in this subsection, "nonprofit
2 cooperative housing corporation" means a nonprofit cooperative
3 housing corporation that is engaged in providing housing services
4 to its stockholders and members and that does not pay dividends or
5 interest upon stock or membership investment but that does
6 distribute all earnings to its stockholders or members.
7 (6) Except as otherwise provided in subsection (7), the
8 purchase price paid in a transfer of property is not the
9 presumptive true cash value of the property transferred. In
10 determining the true cash value of transferred property, an
11 assessing officer shall assess that property using the same
12 valuation method used to value all other property of that same
13 classification in the assessing jurisdiction. As used in this
14 subsection and subsection (7), "purchase price" means the total
15 consideration agreed to in an arms-length transaction and not at a
16 forced sale paid by the purchaser of the property, stated in
17 dollars, whether or not paid in dollars.
18 (7) For a transfer of eligible nonprofit housing property from
19 a charitable nonprofit housing organization to a low-income person
20 that occurs after December 31, 2010 through December 30, 2021, the
21 purchase price paid is the presumptive true cash value of the
22 eligible nonprofit housing property transferred. For a transfer of
23 eligible nonprofit housing property from a charitable nonprofit
24 housing organization to a low-income person that occurs on or after
25 December 31, 2021, the loan amount stated in the closing disclosure
26 form for the transfer is the presumptive true cash value of the
27 eligible nonprofit housing property transferred. In the year
28 immediately succeeding the year in which the transfer of eligible
29 nonprofit housing property occurs and each year thereafter, the
JHM 05933'24 *
 8
1 taxable value of the eligible nonprofit housing property must be
2 adjusted as provided under section 27a. As used in this subsection:
3 (a) "Charitable nonprofit housing organization" means a
4 charitable nonprofit organization the primary purpose of which is
5 the construction or renovation of residential housing for
6 conveyance to a low-income person.
7 (b) "Eligible nonprofit housing property" means property owned
8 by a charitable nonprofit housing organization, the ownership of
9 which the charitable nonprofit housing organization intends to
10 transfer to a low-income person after construction or renovation of
11 the property is completed.
12 (c) "Family income" and "statewide median gross income" mean
13 those terms as defined in section 11 of the state housing
14 development authority act of 1966, 1966 PA 346, MCL 125.1411.
15 (d) "Low-income person" means a person with a family income of
16 not more than 80% of the statewide median gross income who is
17 eligible to participate in the charitable nonprofit housing
18 organization's program based on criteria established by the
19 charitable nonprofit housing organization.
20 (8) For purposes of a statement submitted under section 19,
21 the true cash value of a standard tool is the net book value of
22 that standard tool as of December 31 in each tax year as determined
23 using generally accepted accounting principles in a manner
24 consistent with the established depreciation method used by the
25 person submitting that statement. The net book value of a standard
26 tool for federal income tax purposes is not the presumptive true
27 cash value of that standard tool. As used in this subsection,
28 "standard tool" means that term as defined in section 9b.
29 Sec. 34d. (1) As used in this section or section 27a, or
JHM 05933'24 *
 9
1 section 3 or 31 of article IX of the state constitution of 1963:
2 (a) For taxes levied before 1995, "additions" means all
3 increases in value caused by new construction or a physical
4 addition of equipment or furnishings, and the value of property
5 that was exempt from taxes or not included on the assessment unit's
6 immediately preceding year's assessment roll.
7 (b) For taxes levied after 1994, "additions" means, except as
8 provided in subdivision (c), all of the following:
9 (i) Omitted real property. As used in this subparagraph,
10 "omitted real property" means previously existing tangible real
11 property not included in the assessment. Omitted real property does
12 not increase taxable value as an addition unless the assessing
13 jurisdiction has a property record card or other documentation
14 showing that the omitted real property was not previously included
15 in the assessment. The assessing jurisdiction has the burden of
16 proof in establishing whether the omitted real property is included
17 in the assessment. Omitted real property for the current and the 2
18 immediately preceding years, discovered after the assessment roll
19 has been completed, must be added to the tax roll pursuant to the
20 procedures established in section 154. For purposes of determining
21 the taxable value of real property under section 27a, the value of
22 omitted real property is based on the value and the ratio of
23 taxable value to true cash value the omitted real property would
24 have had if the property had not been omitted.
25 (ii) Omitted personal property. As used in this subparagraph,
26 "omitted personal property" means previously existing tangible
27 personal property not included in the assessment. Omitted personal
28 property must be added to the tax roll pursuant to section 154.
29 (iii) New construction. As used in this subparagraph, "new
JHM 05933'24 *
 10
1 construction" means property not in existence on the immediately
2 preceding tax day and not replacement construction. New
3 construction includes the physical addition of equipment or
4 furnishings, subject to the provisions set forth in section
5 27(2)(a) to (q). (r). For purposes of determining the taxable value
6 of property under section 27a, the value of new construction is the
7 true cash value of the new construction multiplied by 0.50.
8 (iv) Previously exempt property. As used in this subparagraph,
9 "previously exempt property" means property that was exempt from ad
10 valorem taxation under this act on the immediately preceding tax
11 day but is subject to ad valorem taxation on the current tax day
12 under this act. For purposes of determining the taxable value of
13 real property under section 27a:
14 (A) The value of property previously exempt under section 7u
15 is the taxable value the entire parcel of property would have had
16 if that property had not been exempt, minus the product of the
17 entire parcel's taxable value in the immediately preceding year and
18 the lesser of 1.05 or the inflation rate.
19 (B) The taxable value of property that is a facility as that
20 ter