Legislative Analysis
Phone: (517) 373-8080
LAND TAX EQUITY ACT
http://www.house.mi.gov/hfa
House Bills 4966 (H-2) as amended Analysis available at
House Bills 4969 and 4970 as reported from committee http://www.legislature.mi.gov
Sponsor: Rep. Stephanie A. Young
House Bill 4967 as amended House Bill 4968 as reported
Sponsor: Rep. Karen Whitsett Sponsor: Rep. Alabas Farhat
Committee: Tax Policy
Revised 10-13-23
SUMMARY:
House Bills 4966 to 4970 would create the Land Tax Equity Act and make complementary
changes to the General Property Tax Act, the Neighborhood Enterprise Zone Act, the Income
Tax Act, and the Tax Reverted Clean Title Act.
House Bill 4966 would create the Land Tax Equity Act, which would allow a qualified city
and certain local units of government to authorize a land value tax (LVT). The LVT would
allow the city and local units of government to designate qualified taxes to be replaced by an
equivalent land tax rate levied on all parcels of land not specifically exempted by the bill.
Qualified city would mean a city with a population of at least 500,000 (i.e., Detroit)
that has adopted a resolution authorizing the levy of an LVT as described below.
(Similarly, qualified local unit of government would mean a local unit of government
that has adopted such a resolution.)
Local unit of government would mean a school district, community college district,
library, authority, charter authority, or other type of local governmental unit that is not
a city and that meets all of the following:
• It is created by or authorized to be created by state law.
• It is authorized to levy ad valorem taxes for operating purposes.
• It has geographic boundaries coterminous with or totally within the geographic
boundaries of a qualified city.
Qualified tax would mean that portion, which could not be less than 50%, of a city’s
or local unit of government’s authorized ad valorem millage that is designated under
the bill as eligible to be converted to an equivalent land tax rate for levy as an LVT.
Authorized ad valorem millage would mean the rate of ad valorem millage that a city
or local unit of government is authorized to levy for operating purposes under law or
charter after any reduction caused by the application of section 34d of the General
Property Tax Act. 1
1
http://legislature.mi.gov/doc.aspx?mcl-211-34d
House Fiscal Agency Page 1 of 15
 Operating purposes would mean either of the following, as applicable:
• Municipal purposes for which a city is authorized under section 3 of the Home
Rule City Act 2 to lay and collect taxes under the city’s charter.
• Purposes for which ad valorem property taxes are levied by a local unit of
government, other than the levy of ad valorem property taxes to provide school
districts revenue that is deposited in a building and site fund and other than to
pay principal and interest due on a bond or note if and to the extent the ad
valorem taxes levied for these purposes are in addition to charter or statutory
limitations, as authorized by the Revised Municipal Finance Act.
Equivalent land tax rate would mean, for a city or local unit of government that has
adopted a resolution authorizing an LVT, the percentage that, when multiplied by the
taxable value of all land in the city or local unit of government for the first year in
which the rate is imposed, would generate revenue equal to the revenue that would
have been generated by the qualified tax for the first year in which an LVT is imposed.
It would be calculated to reflect all of the following:
• Tax increment revenues.
• Any reimbursements to a land bank fast track authority required by the bill to
be annually distributed from the receipts of an LVT.
• An adjustment to compensate for the effect of any credits allowed by the bill
on the revenue of a qualified city.
Tax increment revenues would mean all of the following, as applicable:
• For a downtown development authority, that term as defined in section 201(cc)
of the Recodified Tax Increment Financing Act. 3
• For a tax increment finance authority, that term as defined in section 301(aa)
of the Recodified Tax Increment Financing Act. 4
• For a local development finance authority, that term as defined in section
402(jj) of the Recodified Tax Increment Financing Act. 5
• For a corridor improvement authority, that term as defined in section 603(g) of
the Recodified Tax Increment Financing Act. 6
• For a brownfield redevelopment authority, that term as defined in section 2(tt)
of the Brownfield Redevelopment Financing Act. 7
Land would mean real property other than buildings and fixtures or other
improvements on the real property, and appurtenances to the real property.
2
http://legislature.mi.gov/doc.aspx?mcl-117-3
3
http://legislature.mi.gov/doc.aspx?mcl-125-4201
4
http://legislature.mi.gov/doc.aspx?mcl-125-4301
5
http://legislature.mi.gov/doc.aspx?mcl-125-4402
6
http://legislature.mi.gov/doc.aspx?mcl-125-4603
7
http://legislature.mi.gov/doc.aspx?mcl-125-2652
House Fiscal Agency HBs 4966 to 4970 as amended Page 2 of 15
 Authorizing and creating an LVT
Under the bill, a city could authorize an LVT upon the written request of the chief executive
officer of the city to the city’s governing body. The chief executive officer’s recommendation
would have to include all of the following:
• The qualified city’s authorized ad valorem millage that may be qualified taxes and
eligible to be converted to an equivalent land tax rate and exempted from collection.
• The year in which the recommended LVT would commence.
• If desired by the chief executive officer, the recommendation to adopt the system of
credits allowed under the bill and any recommended modifications to those credits.
Chief executive officer would mean the mayor of a city that has a separately elected
mayor form of government. (If a city does not have a chief executive officer, the city’s
governing body could take actions assigned to a chief executive officer by the bill.)
After receiving the written request, the city’s governing body could authorize an LVT by
adopting a resolution that is consistent with the request and provides for all of the following:
• A number of mills of the city’s authorized ad valorem millage that may be designated
as the portion eligible to be converted to the equivalent land tax rate of the city, which
millage would be the qualified taxes of the city that are exempted from collection as ad
valorem taxes under HB 4967 upon approval of the voters of an LVT.
• The projected millage of the equivalent land tax rate that will be levied on land in the
first year the LVT is imposed.
• The first year in which the LVT would be imposed if approved by the voters.
• The phase-in period and percentages for the equivalent land tax rate during the phase-
in period, if one has been recommended by the chief executive officer.
• If the chief executive officer of a city has made a recommendation to adopt a system
of credits under the bill, and the governing body determines to do so, the approval of
the system of credits and of any modifications allowed under the bill and recommended
by the chief executive officer.
A local unit of government could authorize an LVT by adopting a resolution consistent with
the requirements described above, except that it could not adopt a system of credits under the
bill.
After the adoption of a resolution as described above, the city or local unit of government
would have to submit the question of levying an LVT to voters at the first regular election date,
after September 1, 2024, established under the Michigan Election Law8 in an election
conducted under the provisions of that law. At a minimum, the question would have to include
the following:
• An identification of the qualified city or qualified local unit of government.
• The level of the qualified city’s or qualified local unit’s authorized ad valorem millage
that, on voter approval of an LVT, will be qualified taxes exempted from collection as
an ad valorem levy.
• The first year in which the LVT would be imposed if approved by the voters and any
phase-in period.
8
http://legislature.mi.gov/doc.aspx?mcl-168-641
House Fiscal Agency HBs 4966 to 4970 as amended Page 3 of 15
 • Based on the most recently established taxable valuations and the amount of qualified
taxes to be exempted from collection as an ad valorem levy, the estimated equivalent
land tax rate that would be levied on land.
• A description of the base on which the LVT would be imposed if approved by the
voters.
If the question is approved, the qualified city or qualified local unit of government would
certify its ad valorem tax millage levy and designate the portion of the certified mills to be
qualified taxes at the levels established in the resolution and approved by the voters. From the
qualified taxes, the city or local governmental unit would establish and designate the portion
of the equivalent land tax rate for the tax year that would be imposed as an LVT. This amount
would have to equal the equivalent land tax rate for the city or local unit of government.
Once approved by the voters, a qualified city or local unit of government would levy an LVT
at the portion of the equivalent land tax rate established under the process described above on
each parcel of land located in the city or local unit not exempted under the bill.
Any specific tax imposed under law that is based on or calculated using certified millage levies
would be calculated using the entire millage certified annually by a qualified city or local unit
of government, including the mills designated to be qualified taxes.
After the designation of certified mills as qualified taxes, a qualified city’s chief executive
officer would determine the equivalent land tax rate and the portion of the rate that will be
levied as an LVT for the year. The executive officer would have to transmit a statement with
these amounts, the calculation of the equivalent land tax rate, and the authorized ad valorem
millage rate of the city that will be exempt from collection under HB 4967 to the city’s
governing body and the State Tax Commission (STC). In a qualified local unit of government,
these actions could be performed by the unit’s governing body or delegated to an official or
administrative officer of the local unit.
The portion of the equivalent land tax rate to be imposed as an LVT would apply to the taxable
value of land subject to the tax in the year that it is levied. For the purposes of the bill and
unless an alternative method was prescribed by the STC, the taxable value for the land portion
of a parcel of property in each year would be calculated by multiplying the taxable value of the
entire property by the percentage of the entire state equalized value (SEV), including
improvements, attributable to the land portion of the parcel.
Reverting to ad valorem taxation
Under the bill, the governing body of a qualified city or, upon request of the governing body
of the qualified city, the governing body of a local unit of government could adopt a resolution
for the submission of a question to the voters to approve a reduction of the maximum levy of
the LVT previously approved by voters and reduce the level of ad valorem taxes that may be
designated as qualified taxes.
If the voters approve the question, the reduction in the amount of ad valorem taxes designated
as qualified taxes would be determined using the same conversion rate as was used for the first
year the LVT was levied, and those taxes no longer designated as qualified taxes would be
House Fiscal Agency HBs 4966 to 4970 as amended Page 4 of 15
 reimposed as ad valorem taxes. The reduction would take effect the calendar year following
approval by the voters.
Changing the equivalent land tax rate
The equivalent land tax rate calculated during the initial year would not change in subsequent
years unless the certified mills designated to be qualified taxes increases. In these cases, the
equivalent land tax rate would be calculated based on the revenue the additional mills
designated to be qualified taxes would have generated on the taxable value for the year in which
the equivalent land tax rate would increase.
Levying the LVT
An LVT would be levied under many of the same procedures established by the General
Property Tax Act, unless otherwise provided in the bill. Specifically:
• An LVT would be assessed, levied, collected, and disbursed in the same manner as an
ad valorem tax on real property under the General Property Tax Act.
• An LVT would be annual tax payable at the same times, in the same installments, and
to the same officers as ad valorem taxes imposed under the General Property Tax Act
and the State Education Tax Act.
• An LVT would be subject to the same collection fees, penalties, and interest as taxes
imposed under the General Property Tax Act, including any applicable property tax
administration fee or late penalty charge.
• Property granted a poverty exemption under the General Property Tax Act before April
1 of the year the tax is levied would be exempt from an LVT to the extent and for the
duration provided by the General Property Tax Act unless the qualified city levying an
LVT had adopted the credit allowed for homesteads under the bill (described below).
• Land or real estate that is exempt from the levy of ad valorem taxes and ad valorem
taxes on land or real estate that are exempt from collection under the General Property
Tax Act or another state law (except for the exemption provided by HB 4967) would
be exempt from an LVT.
• An LVT would become a lien on property assessed on the same date as an ad valorem
tax levied under the General Property Tax Act. A lien for an LVT would include any
applicable collection fees, penalties, or interest and would continue until fully paid.
• Any unpaid LVT and any applicable fee or interest would be returned to the county
treasurer as delinquent at the same time as ad valorem taxes on real property under the
General Property Tax Act. Real property subject to a delinquent LVT would be subject
to forfeiture, foreclosure, and sale at the same time and in the same manner as
delinquent real property under the General Property Tax Act.
• A qualified city would be subject to audit under section 10g of the General Property
Tax Act 9 in the same manner as all other assessing districts, and the administration of
an LVT would need to comply with that section. Any aspects of an LVT’s
administration that did not comply with section 10g would be submitted to the STC by
the qualified city for review and approval.
9
http://legislature.mi.gov/doc.aspx?mcl-211-10g
House Fiscal Agency HBs 4966 to 4970 as amended Page 5 of 15
 Disbursement of the LVT
Prior to disbursements to any other taxing units levying a qualified tax, the following
disbursements would have to be made:
• If the LVT revenue includes amounts that would have been tax increment revenues
captured under a plan approved before the electors of the qualified city or local
governmental unit approved the levy of an LVT, the tax increment revenues that those
entities would have been entitled to receive from qualified taxes would have to be
disbursed to them from LVT revenues in a manner consistent with the disbursement