New Legislation Would Dramatically Change Property Taxation System
Legislation introduced in September in both the Michigan House of Representatives (House Bill 4977) and Michigan Senate (Senate Bill 511) would change Michigan’s property assessment system from its current value-in-exchange based system (where property is valued based on its usual selling price), to a value-in-use system. The Apartment Association of Michigan and many other real estate and business organizations are opposed to this change for a number of reasons. First, a value-in-use system would be subjective in nature, versus the current value-in-exchange system which is objective. Second, valuing property based on use would violate the Michigan Constitution, which requires that true cash values be uniformly set. Third, a value-in-use system would result in double taxation because Michigan already taxes the use of property and the income that results from the use of property via its corporate income tax, individual income tax, sales tax and use tax. As of this writing, HB 4977 was awaiting a hearing in the House Tax Policy Committee and SB 511 was awaiting a hearing in the Senate Committee on Finance.
Special thanks to Stewart Mandell of Honigman for his assistance in the evaluation and explanation of this legislation.
Rental Property Associations Team Up On Important Supreme Court Case
The Apartment Association of Michigan and two other rental property owner associations have joined together to file an amicus brief in an important case before the Michigan Supreme Court. The case arose out of a fatal vehicular accident where an individual was killed when her car struck a horse that had escaped from a farm. The estate of the deceased driver sued the resident of the farm, as well as the property owners, who did not live at the farm or have possession or control of the horse. The estate alleged negligence, common law nuisance, and violation of the Equine Activity Liability Act. The property owners prevailed in the trial court, but upon appeal the Court of Appeals reversed part of the decision relating to liability for a public nuisance. If the Court of Appeals decision stands, it would greatly expand nuisance law, from what is presently a remedy against the individual who created the nuisance. For apartment owners, this could mean being held responsible for a nuisance created by the tenant of a property.