For years the League has been working on a tax reduction loophole that was created due to the 2002 Michigan Supreme Court case of WPW Acquisition Company v. City of Troy. After Proposal A created the term taxable value, the Legislature passed legislation that allowed for an increase and decrease of certain commercial property’s taxable value based on their occupancy. This was meant to allow the taxable value of income producing property to reflect the ebb and flow of the economy.

Under that system, the City of Troy granted a reduction to WPW Acquisition Company due to a reduced occupancy. However, when the City increased their taxable value when they were more fully occupied, WPW Acquisition Company sued the City, claiming they could not increase their taxable value above 5% or the rate of inflation, whichever is less, due to Proposal A. The Supreme Court addressed the question of increases in occupancy and agreed with WPW. However, the reduction issue due to occupancy was never in question, so a legal loophole, creating tax inequity, was born.

Yesterday morning the House Tax Policy Committee heard testimony on Senate Bill 114, a bill introduced by Senator Vince Gregory (D-Southfield) that amends the General Property Tax Act. The Act’s definition of “losses” includes an adjustment in value, if any, due to a decrease in the property’s occupancy rate, to the extent provided by law. The definition of “additions” includes an increase in value attributable to the property’s occupancy rate if a loss had been previously allowed because of a decrease in occupancy rate, or if the value of new construction was reduced because of a below- market occupancy rate.

The bill would limit the use of occupancy rates in the determination of losses to the period before December 31, 2013. The use of occupancy rates in the determination of additions would be limited to the period before December 31, 2001.

Earlier this week the House Oversight Committee heard testimony on House Bills 5193 and 5194, bills that amend the Open Meetings Act (OMA) as well as general testimony on changes to the OMA.

House Bill 5193 prohibits a local unit from going into closed session in connection with anticipated litigation. House Bill 5194 indicates that if a public body reenacts a disputed decision in cases where an action has been initiated to invalidate a decision of a public body then that reenactment is not a defense to a criminal action.

The League testified in opposition to the legislation. In particular the changes to HB 5193 are confusing and unnecessary. We further indicated a desire to amend the statute to allow reasonable (as opposed to actual) attorney fees and to allow the discussion of the sale of property (in addition to purchase and lease of property) in closed session. I was joined by Lori Grigg-Bluhm, Troy City Attorney and President of the Michigan Association of Municipal Attorneys, to discuss these changes.

The committee did not vote on the legislation.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

Yesterday the House Tax Policy Committee reported House Bills 5265, 5266 and 5267, bills that would reduce the state income tax. House Bills 5265-6 would reduce the income tax from 4.25 percent to 4.05 percent. House Bill 5267 would allow additional reductions of 0.1 percent if general fund revenue increased by $300 million or more in the preceding fiscal year.

The League opposes this legislation as we opposed similar legislation in the Senate several weeks ago. There need to be a comprehensive discussion about reinvesting in communities and infrastructure before passing income tax relief.

You can view the League’s letter of opposition here: Tax relief package letter to cmte 2_14

The legislation now goes to the full House for consideration.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

HB 4487, a bill to allow Downtown Development Authority funds to be used for creating and operating a marketing program for local agricultural (think local farmer’s markets), passed out of the full House of Representatives yesterday.  The DDA act does not currently prohibit this type of activity but the sponsor (Rep. Stacey Erwin Oakes, D-Saginaw ) wanted to make it clear that it is allowable.  An additional hope of the bill sponsor is that this legislation would bring to light the ability of DDAs to do this and thus they would begin partnering (or create) with their local farmer’s market in an effort to make it more vibrant.  The MEDC is supportive of this effort to create strong farmer’s markets.

Nikki Brown is a legislative associate for the League handling economic development and land use issues.  She can be reached at nbrown@mml.org or 517-908-0305.  

This week the House Local Government Committee heard testimony on House Bill 5160, a bill that would allow a local unit of government the option of contracting with the county treasurer to administer tax collection.

The bill allows an agreement to let the county collect taxes, and the agreement would have to be approved by the governing body of the city, village or township.

We anticipate a vote on this legislation next week.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org