HOUSE BILL No. 6026 September 15, 1998, Introduced by Rep. Profit and referred to the Committee on Tax Policy. A bill to amend 1893 PA 206, entitled "The general property tax act," by amending section 27 (MCL 211.27), as amended by 1994 PA 415. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 27. (1) As used in this act, "cash value" means the 2 usual selling price at the place where the property to which the 3 term is applied is at the time of assessment AND FOR THE EXISTING 4 USE OF THE PROPERTY AT THE TIME OF THE ASSESSMENT, being the 5 price that could be obtained for the property at private sale, 6 and not at auction sale except as otherwise provided in this sec- 7 tion, or at forced sale. The usual selling price may include 8 sales at public auction held by a nongovernmental agency or 9 person when those sales have become a common method of 10 acquisition in the jurisdiction for the class of property being 11 valued. The usual selling price does not include sales at public 06760'98 FDD 2 1 auctionwhereIF the sale is part of a liquidation of the 2 seller's assets in a bankruptcy proceeding orwhereIF the 3 seller is unable to use common marketing techniques to obtain the 4 usual selling price for the property. A sale or other disposi- 5 tion by the state or an agency or political subdivision of the 6 state of land acquired for delinquent taxes or an appraisal made 7 in connection with the sale or other disposition or the value 8 attributed to the property of regulated public utilities by a 9 governmental regulatory agency for rate-making purposesshall10 IS notbe consideredcontrolling evidence of true cash value 11 for assessment purposes. In determining the value, the assessor 12 shall also consider the advantages and disadvantages of location; 13 quality of soil; zoning; existing use; present economic income of 14 structures, including farm structures; present economic income of 15 land if the land is being farmed or otherwise put to income 16 producing use; quantity and value of standing timber; water power 17 and privileges; and mines, minerals, quarries, or other valuable 18 deposits known to be available in the land and their value. IN 19 DETERMINING THE VALUE, THE ASSESSOR SHALL CONSIDER ONLY THE 20 EXISTING USE OF THE PROPERTY AT THE TIME OF THE DETERMINATION 21 WITHOUT REGARD TO THE HIGHEST AND BEST USE OF THE PROPERTY. 22 (2) The assessor shall not consider the increase in true 23 cash value that is a result of expenditures for normal repairs, 24 replacement, and maintenance in determining the true cash value 25 of property for assessment purposes until the property is sold. 26 For the purpose of implementing this subsection, the assessor 27 shall not increase the construction quality classification or 06760'98 3 1 reduce the effective age for depreciation purposes, except if the 2 appraisal of the property was erroneous before nonconsideration 3 of the normal repair, replacement, or maintenance, and shall not 4 assign an economic condition factor to the property that differs 5 from the economic condition factor assigned to similar properties 6 as defined by appraisal procedures applied in the jurisdiction. 7 The increase in value attributable to the items included in sub- 8 divisions (a) to (o) that is known to the assessor and excluded 9 from true cash value shall be indicated on the assessment roll. 10 This subsection applies only to residential property. The fol- 11 lowing repairsshall beARE considered normal maintenance if 12 they are not part of a structural addition or completion: 13 (a) Outside painting. 14 (b) Repairing or replacing siding, roof, porches, steps, 15 sidewalks, and drives. 16 (c) Repainting, repairing, or replacing existing masonry. 17 (d) Replacement of awnings. 18 (e) Adding or replacing gutters and downspouts. 19 (f) Replacing storm windows or doors. 20 (g) Insulation or weatherstripping. 21 (h) Complete rewiring. 22 (i) Replacing plumbing and light fixtures. 23 (j) New furnace replacing a furnace of the same type or 24 replacing oil or gas burner. 25 (k) Plaster repairs, inside painting, or other 26 redecorating. 06760'98 4 1 (l) New ceiling, wall, or floor surfacing. 2 (m) Removing partitions to enlarge rooms. 3 (n) Replacing automatic hot water heater. 4 (o) Replacing dated interior woodwork. 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, for the purpose of determining assessments or 9 in making sales ratio studies for the purpose of assessing or 10 equalizing assessments shall exclude from the sales data the fol- 11 lowing amounts allowed by subdivisions (a), (b), and (c) to the 12 extent that the amounts are included in the real property pur- 13 chase price and are so identified in the real estate sales data 14 or certified to the assessor as provided in subdivision (d): 15 (a) Amounts paid for obtaining financing of the purchase 16 price 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 con- 19 veyance of the property. 20 (c) Amounts paid for surveying the property pursuant to the 21 last conveyance of the property. The legislature may require 22 local units of government, including school districts, to submit 23 reports of revenue lost under subdivisions (a) and (b) and this 24 subdivision so that the state may reimburse those units for that 25 lost revenue. 26 (d) The purchaser of real property, including a purchaser by 27 land contract, may file with the assessor of the city or township 06760'98 5 1 in which the property is located 2 copies of the purchase 2 agreement or of an affidavit thatshall identifyIDENTIFIES the 3 amount, if any, for each item listed in subdivisions (a) to (c). 4 One copy shall be forwarded by the assessor to the county equali- 5 zation department. The affidavit shall be prescribed by the 6 state tax commission. 7 (4) As used in subsection (1), "present economic income" 8 means for leased or rented property the ordinary, general, and 9 usual economic return realized from the lease or rental of prop- 10 erty negotiated under current, contemporary conditions between 11 parties equally knowledgeable and familiar with real estate 12 values. The actual income generated by the lease or rental of 13 property is not the controlling indicator of its cash value in 14 all cases. This subsection does not apply to property subject to 15 a lease entered into before January 1, 1984 for which the terms 16 of the lease governing the rental rate or tax liability have not 17 been renegotiated after December 31, 1983. This subsection does 18 not apply to a nonprofit housing cooperative subject to regula- 19 tory agreements between the state or federal government entered 20 into before January 1, 1984. As used in this subsection, 21 "nonprofit cooperative housing corporation" means a nonprofit 22 cooperative housing corporation that is engaged in providing 23 housing services to its stockholders and members and that does 24 not pay dividends or interest upon stock or membership investment 25 but that does distribute all earnings to its stockholders or 26 members. 06760'98 6 1 (5) Beginning December 31, 1994, the purchase price paid in 2 a transfer of property is not the presumptive true cash value of 3 the property transferred. In determining the true cash value of 4 transferred property, an assessing officer shall assess that 5 property using the same valuation method used to value all other 6 property of that same classification in the assessing 7 jurisdiction. As used in this subsection, "purchase price" means 8 the total consideration agreed to in an arms-length transaction 9 and not at a forced sale paid by the purchaser of the property, 10 stated in dollars, whether or not paid in dollars. 06760'98 Final page. FDD