Road and Infrastructure Funding Proposals. Over the last three years, Governor Synder and the Legislature have been working on solutions to find more funding for roads. It is estimated that Michigan needs to spend at least $1.2 billion to maintain our existing infrastructure, annually, for the next 10 years. The Michigan Realtors® have been at the forefront of the debate during key moments. We fought to make sure that an expansion of the sales tax base to include industry related services as a means for funding road improvements was not seriously considered. Such a huge tax mandate on the transaction would be disastrous for commercial real estate transactions and industry practitioners. A very complex, bipartisan ballot proposal emerged on the last day of session in 2014 that has more of a nexus of funding tied to a direct, new gas tax focused more on usage of the roads. If it passes, we will have a higher state sales tax rate of 7%. If it fails, the Legislature will be back at the drawing board, potentially causing some to want to reopen a debate on how expansive our business taxes are, or rather, how much more expansive they should be. We are monitoring closely.
Main Street Fairness Act. On the last session day of 2014, legislation passed requiring online retailers selling to Michigan consumers to collect Michigan Sales Tax as of October 1st. This was part of a bipartisan legislative package examining long-term changes to the tax code while promoting policy reforms to fund road improvements. Backed heavily by the Michigan Retailers Association, this initiative aims to protect brick and mortar store front job providers across Michigan, creating parity in the collection of sales tax revenue between online and traditional retailers.
Detroit Stormwater Tax. The Detroit Water and Sewerage Department (DWSD) has begun to impose a storm water ‘drainage fee’ on commercial land serviced by its sewer system. The fee can range from $20.82 per month for open land with no impervious surfaces to $607.14 per acre per month for land at least 75% covered by impervious surface. DWSD claims that it had the authority to impose this storm water drainage fee for many years but admits that it has failed to do so for many of its commercial customers. For such customers, it is also demanding payments of the fees for the past six years. An owner of one acre of land that is at least 75% impervious surface will have storm water drainage liability of $43,714 for the last six years and $7,286 per year going forward. This issue emerged because City of Detroit Departments have been looking at areas where they could have been collecting taxes and fees but have failed to do so. Michigan commercial Realtors® have been investigating this in partnership with the Detroit Regional Chamber of Commerce.
Big Box Retailer Use Taxation. Last session, legislation was introduced that would create a new method for valuing property under the General Property Tax Act, allowing an assessor to take into account business activity on the property along with the value of the real estate. The concept stems from recent decisions by the Michigan Tax Tribunal, where the tribunal lowered assessments on some big box stores based on comparable sales that included vacant stores out of the area. The bill sponsors believed that this is an unfair loophole that is being exploited, costing some local governmental units substantial revenue. The Michigan Realtors® defeated the legislation, in concert with our locally affiliated Commercial Alliance of Realtors® and Commercial Board of Realtors® last session during the 2013 Michigan Commercial Realtors® Public Policy Day in Lansing. Our simple message was that real property and business taxes already do and should continue to exist separately. Due to our very restrictive term limits, a new group of legislators, some now serving in prominent leadership positions, have expressed interest in working on this issue given local government experience. We are meeting with these legislators in partnership with the Michigan Chamber of Commerce to express deep concern.
State Land Management. Some northern Michigan Senators are looking to establish more legislative jurisdiction over state owned land. This summer, they will be taking comment on legislation that would reform the transaction process through the Department of Natural Resources and its land management program. Realtors® have sighted a desire to more efficiently reform the land transaction process related to purchases, sales, and exchanges of state land. Local government is always concerned with timeliness of state payments in lieu of taxes and further approval of state land purchases in areas that already have a significant concentration of public land. The public deserves better access and use of state lands. The Michigan Realtors® have established a taskforce to help examine the legislation and aide the Senators advance improvements and transparency in the land management program while realizing more private property ownership opportunity.
Property Tax Records. Access to property tax information is important to the health of Michigan’s real estate market. Realtors® work marketing commercial property to grow economic opportunity and jobs in our state. As a part of these transactions, timely disclosure of this vital public information about a property is important. Potential private property owners need access to this public information to promote quality decision making. Currently, there does not exist a statewide definition of the quality of this information that the government should be providing, or the cost or manner in which it should be accessed. Michigan Realtors® are working on legislation to modernize high cost schemes based on 1895 legislative statue of this sensitive public data. We continue to advance discussion on the need for consistency in the quality and accessibility of this information.
Information compiled by MI REALTORS West Michigan Public Policy Director, Doug Merriam, dmerriam@mirealtors.com
