Bills, bills, bills
MAR's public policy team looks at future action

The budget issue finally began settling out as June began, and real estate appears to be off the radar screen as a revenue source for the ailing state budget. More good news: The crisis has finally stopped worsening, and we’ve got a glimmer of hope to be back to the budgetary “good old days” somewhat sooner than later, at least in terms of Lansing’s timing.

DLEG budgets

House Bill 5521 has moved through most of the legislative process with language on guidelines for the Department of Labor and Economic Growth as it regulate to our industry. Under amendments sponsored by Sen. Valde Garcia (R-Howell), DLEG shall report to the legislature on the time it takes to approve class curriculum for continuing education credit, post the approved courses (when and where they’re offered) on the department Web site and allow con ed sponsors to transmit information. These are further stepping stones the department is taking that will, in time, provide for the kind of responsive interaction we have all envisioned for our industry’s future.

Homestead rate on construction

Rep. Joe Hune (R-Fowlerville) has worked hard to enact legislation that would allow newly built homes to be constructed and sold under the “principal residence” rate of six mills, making new housing in Michigan more affordable and granting the correct tax status to the majority of homeowners buying new builds.
His bill, HB 5538, passed the house at the end of May, although along partisan lines. In a happy coincidence, the Michigan Association of Homebuilders had their “Capitol Day” when the vote was taken, and the votes were there. As a matter of fact, the bill was amended on the House floor to tax only the land at six mills until the deed changes hands.

Nice job, homebuilders!

We’ll be fighting alongside them in the Senate, where budget challenges are expected to steepen the incline of what will be an uphill climb past the governor’s desk.

Accepting bonds

We had a much warmer reception for a related bill sponsored by Sen. Patty Birkholz (R-Saugatuck) clarifying that road commissions shall accept surety bonds for unfinished improvements in new developments. Because Michigan’s construction season is so weather sensitive, this bill will enable REALTORS® and developers to market properties more quickly, rather than potentially having to wait until the roads are completely finished before final approvals allow building and selling to begin.
The bill overwhelmingly passed both chambers of the state legislature and was signed in to law as Public Act 122 on May 28.

Contract zoning

MAR has begun discussion with Rep. Chris Ward (R-Brighton) on a bill that would allow developers to share plans with local governments when applying to rezone a parcel of property. As it stands now, townships are often loathe to grant “upzonings” because, as the rules read, they become a carte blanche property that may not end up developed according to the original plan, or even by the original developer they trusted with the privilege.

Under one possible draft, the township could conditionally approve a submitted plan with a sunset date on the approval that holds the developer to his submitted design.
While “planned unit developments” already purport to fulfill this mission, too many developers believe that approach will become a painful process of concessions extracted by the local government to obtain the necessary approvals. All sides of the land use debate support a more workable process to achieve good design and more efficient development where approvals like this can be made.

Refined plat act

Another large-scale agreement among interest groups and the Michigan Land Use Council is that the Land Division Act is far too ponderous a process, filled with local governmental intrigue and political maneuvering, to effectuate good design.
While every group would have its own ideas on how to fix it, Sen. Birkholz is exploring ways to streamline and objectify platting in Michigan. Of course, there are a thousand different opinions as to exactly where the Land Division Act needs amending, so we’ll see how far this worthy endeavor might go.

Commerce centers

In another potential Land Use Council implementation, Sen. Jason Allen (R-Traverse City) has introduced “Commerce Center” legislation that would require the DLEG to study and recommend state regulatory and funding opportunities to assist established communities in attracting business and residential development. Much needs to be defined, but the senator has begun the discussions with SB 1199. Expect some movement on this bill yet this year and, at worst, probable passage in this or the next legislative session.

Redefining homesteads for seniors

The Grosse Pointes were the first communities in Michigan to call attention to the possible market retardation caused by the “pop-up” tax instituted when Michigan’s voters approved Proposal A in 1994. Of course, real estate markets have boomed across the state since skyrocketing property taxes were tamed in that year. Yet, there has always been the lurking suspicion that long-term home ownership might eventually lock seniors into their residences, since their existing home could become the only place they could enjoy protection from ever-growing tax assessments.

Your MAR has taken some heat from our loyal brethren in that beautiful suburb for not doing more to limit all property taxes to 5 percent or the rate of inflation, whoever might buy or sell, whatever the value of the property.

Accordingly, Rep. Ed Gaffney (R-Grosse Pointe) introduced legislation to allow any homebuyer the ability to move anywhere in the same taxing unit to pay the same taxes as before, without a “pop-up.” While more to the point, sadly, the bill is also blatantly unconstitutional as it does not treat all taxpayers equally.

This has been asserted by both the state courts and attorney general opinions in the past. As a matter of fact, this association supported the passage of “supercap” legislation the same year Proposal A was passed, but saw it repealed because of this constitutional restriction.

Still, all is not lost. We are working with Representative Gaffney to take a potentially more constitutional tack of limiting all “pop-ups” for Michigan citizens over the age of 65. In terms of equal treatment, we can all equally grow old and, once getting there, be afforded certain benefits as already allowed under the law countless times over. It is our hope that, rather than freezing citizens into their family residence or forcing them off to Florida, we can allow Michigan retirees to stay in Michigan without eroding their standard of living, even where they have downsized their homes.

Expect to read more soon.

Land Use Academy

Speaking of educating our local communities, don’t miss the opportunity to better your community and improve Michigan’s housing stock by attending the MAR Land Use Academy from July 14 to 15 at the Barothy Lodge near Walhalla.

Space is limited to 50 REALTOR® applicants and tuition will be paid for by MAR. If you would like to learn about good development design and how to get your local government to see the light, give us a call.