April 19, 2016, Introduced by Reps. Maturen, Chatfield, Aaron Miller, McBroom, Kivela, Dianda, Poleski, Townsend, Heise, Hovey-Wright, Howell, Pagan, LaVoy, Byrd, Robinson, Webber, Brett Roberts, Hoadley, Crawford, Franz, Inman, Moss, Price, Howrylak, Pagel, Schor, Wittenberg and Kosowski and referred to the Committee on Tax Policy.
A bill to amend 1973 PA 186, entitled
"Tax tribunal act,"
by amending section 3 (MCL 205.703), as amended by 2008 PA 125, and
by adding section 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. As used in this act:
(a) "Agency" means a board, official, or administrative agency
empowered to make a decision, finding, ruling, assessment,
determination, or order that is subject to review under the
jurisdiction of the tribunal or that has collected a tax for which
a refund is claimed.
(b) "Chairperson" means the chairperson of the tribunal.
(c) "Entire tribunal" means the hearing division of the
tribunal other than the residential property and small claims
division created in section 61.
(d) (c)
"Mediation" means a
voluntary process in which a
mediator facilitates communication between parties, assists in
identifying issues, and helps explore solutions to promote a
mutually acceptable settlement.
(e) (d)
"Mediator" means a
neutral third party who is
certified by the tribunal under section 47 as a mediator in a
proceeding before the tribunal or as a facilitator in the court of
claims, and who is agreed to by the parties.
(f) (e)
"Proceeding" means an
appeal taken under this act.
(g) (f)
"Property tax laws" does
not include the drain code of
1956, 1956 PA 40, MCL 280.1 to 280.630.
(h) (g)
"Tribunal" means the tax
tribunal created under
section 21.
Sec. 38. (1) Subject to subsection (2), in an assessment
dispute before the entire tribunal as to the true cash value of
real or personal property, the tribunal shall make an independent
determination of and separately state its findings of fact and
conclusions of law as to all of the following, in the following
order:
(a) The specific market in which the property subject to
assessment competes, the supply and demand for the property, the
demand for potential uses of the property, and the economic
viability of the property at the specific location within the
specific market in which it competes.
(b) The reasonably probable use to which the property subject
to assessment can be put in the immediate future and the present
use of the property that results in the highest and best use,
subject to all of the following:
(i) The tribunal shall determine the use that is physically
possible.
(ii) The tribunal shall determine the use that is legally
permissible under applicable land use legislation, regulations,
easements, ordinances, or other encumbrances existing on the tax
day.
(iii) The tribunal shall determine the use that is financially
feasible. For purposes of this subparagraph, a use is financially
feasible if it will produce income from or value to the property
after considering all risks and costs necessary to create and
maintain the use. In determining financial feasibility, the
tribunal shall determine the value of the land in the market area,
the value of all improvements to the land, the cost to convert or
renovate the land, and existing improvements to support the use.
(iv) The tribunal shall determine the maximally productive use
that meets the requirements of subparagraphs (i) to (iii) and
results in the highest value that can be appropriately supported.
(c) The calculation of a replacement or reproduction
construction cost for property that has the same highest and best
use and the same utility, features, and age as the property subject
to assessment.
(d) The comparable properties in the specific market in which
the property subject to assessment competes that have the same
highest and best use as the property subject to assessment. In
determining comparable properties, the tribunal shall do all of the
following:
(i) Determine that the information for each property
considered to be comparable has been verified and accurately and
completely discloses all private restrictions and covenants on the
use of the property, the impact of those private restrictions and
covenants, the terms of the sale, the method of financing, and
market information.
(ii) Exclude property considered to be comparable with a use
that is different from the highest and best use of the property
subject to assessment.
(iii) Exclude property considered to be comparable if the sale
or rental of the property occurred under economic conditions
substantially different from the highest and best use of the
property subject to assessment unless there is substantial evidence
that the economic conditions are common at the location of the
property subject to assessment.
(iv) Exclude property considered to be comparable that was
vacant at the time of sale unless there is substantial evidence to
support all of the following:
(A) The cause of the vacancy is typical for marketing
properties of the same class.
(B) The time of the vacancy is within the marketing exposure
time period typical for properties of the same class.
(C) The vacancy does not reflect a use different from the
highest and best use of the property subject to assessment.
(D) The vacancy is not the result of economic or market
conditions that are different from the property subject to
assessment.
(v) Exclude property considered to be comparable if use of the
property was made subject to a private restriction or covenant in
connection with the sale or rental of the property that operates to
prohibit or limit the current and lawful use of improved property
by the subsequent transferee, unless all of the following
conditions are met:
(A) The private restriction or covenant assists in the
economic development of the property and provides a continuing
benefit to the property.
(B) The private restriction or covenant was imposed for
purposes of developing the property and was not imposed for any of
the following purposes:
(I) To reduce the value of the property.
(II) To reduce taxes levied on the property.
(III) To exclude competitors of the grantor from the market.
(C) The private restriction or covenant does not materially
increase the likelihood of vacancy or inactivity on the property.
(e) The basis for both of the following:
(i) Selecting the most relevant units and basis for comparison
consistent with the treatment in the market of comparable property.
(ii) Adjusting the comparable properties for differences in
location, age, size, physical condition and characteristics,
function, rental terms, financing and other income use, economic
characteristics, legal characteristics, and other components that
influence the value.
(f) The method of valuation, subject to all of the following:
(i) In determining the method of valuation, the tribunal shall
use, weigh, and reconcile all of the following:
(A) The method of valuation used by the assessor.
(B) All of the following methods of valuation:
(I) Comparable sales.
(II) Capitalization of income.
(III) Cost less depreciation.
(ii) In using, weighing, and reconciling the methods of
valuation under subparagraph (i), the tribunal shall state whether
the information supporting each method of valuation is accurate and
reliable and shall require additional information necessary to
determine a value that is credible and not speculative.
(iii) The tribunal shall not disregard any method of valuation
identified in subparagraph (i) absent a reasonable justification
supported by substantial evidence or a stipulation that complies
with the requirements of subsection (2)(a).
(2) The tribunal's determinations under subsection (1) are
subject to all of the following:
(a) The tribunal may consider the parties' stipulation to a
determination under subsection (1) only if the parties further
provide a stipulated explanation of the evidentiary basis for that
determination that comports with the evidentiary basis required for
an independent tribunal determination under subsection (1).
(b) For each finding of fact under subsection (1), the
tribunal shall separately identify supporting evidence that is
substantial and reliable and has been verified.
(c) If the evidence on the record does not constitute
substantial evidence, the tribunal shall require additional
evidence sufficient to support a conclusion that the tribunal has
reached an independent determination.
(d) All of the tribunal's determinations under subsection (1)
shall be made in accordance with generally accepted appraisal
principles, including the "Uniform Standards of Professional
Appraisal Practice" promulgated by the Appraisal Foundation.
(3) As used in this section:
(a) "Private restriction or covenant" means a requirement,
provision, or statement in a deed, lease, or contract that
restrains or limits the use of the property or requires a use of
the property.
(b) "Tax day" means that term as provided in section 2 of the
general property tax act, 1893 PA 206, MCL 211.2.
(c) "True cash value" means that term as defined in section 27
of the general property tax act, 1893 PA 206, MCL 211.27.