Property tax: exemptions; property tax exemption for certain nonprofit housing property; modify. Amends sec. 7kk of 1893 PA 206 (MCL 211.7kk).
Summary
Senate Bill 442 would amend Michigan’s General Property Tax Act to modify the property tax exemption for certain nonprofit housing property. The bill focuses on property owned by charitable nonprofit housing organizations that are building or renovating homes for eventual transfer to an income-eligible household. It updates the exemption process so that, beginning after December 31, 2014, qualifying organizations may apply directly to the State Tax Commission for the exemption, rather than relying only on a local governing body resolution process.
The bill also changes and clarifies several eligibility and timing rules. It extends the exemption period for certain residential building lots to up to five years and for other eligible nonprofit housing property to up to three years, subject to earlier termination if the property is occupied by an income-eligible person or transferred by the nonprofit. It revises the definition of the intended beneficiary from “low-income person” to “income-eligible person,” and raises the income threshold from 80% to 120% of statewide median gross income, while keeping the property limited to homes intended as a principal residence and generally capped at single-family homes, duplexes, or small multiunit buildings.
In practical terms, the bill would alter state tax law by expanding and refining the property tax exemption available to nonprofit housing developers. It would affect local tax collecting units, assessors, the State Tax Commission, and charitable housing organizations by changing the application process, notice requirements, and duration of the exemption. It also preserves a reduction rule so that any exemption granted after 2014 is shortened by the number of years the property was previously exempt under the earlier local-resolution process.
The general sentiment reflected by the bill text is supportive of nonprofit affordable housing development, with the measure structured to ease tax burdens during construction and renovation. Because no committee transcripts or votes were provided, there is no recorded debate or formal voting history here to indicate broader legislative sentiment. The bill’s design suggests an intent to encourage housing nonprofits by making the exemption more accessible and by broadening the pool of households that can qualify for the eventual transfer of the property.
The main points of contention likely center on the expanded income eligibility threshold and the shift from local discretion to a state-administered application process. Local taxing units may be concerned about reduced property tax revenue and diminished local control, while nonprofit housing advocates would likely favor the broader eligibility and longer exemption periods. The bill also raises interpretive questions about the new “income-eligible person” standard and how charitable organizations set program criteria within the expanded 120% median-income cap.
Impact
The bill would amend MCL 211.7kk in the General Property Tax Act to revise the property tax exemption for eligible nonprofit housing property. It changes the administration of the exemption by allowing charitable nonprofit housing organizations to apply to the State Tax Commission, updates notice and approval procedures, extends exemption durations for certain property types, and broadens the income eligibility definition for intended homebuyers. These changes would affect local tax collecting units, assessors, taxing jurisdictions, the State Tax Commission, and nonprofit housing developers.
Sentiment
No committee transcripts or votes were provided, so there is no direct record of debate or roll-call sentiment. Based on the bill text, the measure appears generally favorable to charitable housing organizations and affordable housing development, since it expands access to a tax exemption and lengthens the time property can remain exempt while under construction or renovation. Any opposition would likely come from local taxing units concerned about lost tax revenue and reduced local control.
Contention
The likely areas of contention are the expansion of eligibility from 80% to 120% of statewide median gross income, the shift from a local resolution-based exemption to a State Tax Commission application process, and the potential revenue impact on local taxing units. Supporters would likely emphasize the bill’s role in promoting nonprofit housing development and homeownership opportunities for income-eligible households, while critics may argue that the broader definition of eligible households and longer exemption periods could reduce local property tax collections and weaken local oversight.