Advocacy News – Aug. 21, 2024
In Michigan, property taxes are capped at the rate of inflation or 5%, whichever is lower, a policy the Michigan Chamber helped usher into the state’s constitution to keep the Great Lakes State a prime location to live, work and play.
What happened: A recent Michigan Court of Appeals (COA) decision, Kniers Power Martin and Smith LLC v. The City of Bay City, held up a decision previously determined by the Michigan Tax Tribunal, that allowed Bay City to assess a property’s value at a rate higher than 5% because the property received a new roof.
Why it matters: Currently in statute, replacement construction is not considered in the evaluation of a property. However, the COA ruling determined a new roof should be considered new construction as defined by state law, which is defined as “property not in existence” during the previous year’s tax day.
What we’re saying: The MI Chamber believes is this a confusing precedent to set if new construction is necessary for properties. Michigan’s statute allows replacement construction, which is defined as construction after a natural disaster or accident that is equal in value to the property it replaced. However, there are far more scenarios where replacement construction is needed for the safety and security of a property that should not be at the detriment of or deterrent for a taxpayer.
Please provide any feedback you may have on the decision to Leah Robinson.