New legislation changes property funding usage

October 10, 2011
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Fall has brought with it a bumper crop of new legislation that property owners and developers need to know about.

From private transfer fees to mining to county road funding, the new laws cover a wide range of funding and usage issues. They include:

  • Creation of the Fair and Open Competition in Governmental Construction Act. Known as PA 98 of 2011, this act requires governmental units to be neutral when it comes to collective bargaining agreements. Under the new law, they can neither require, encourage, prohibit nor discourage almost all parties involved in the construction process — from bidders to subcontractors — from complying with or entering into a union agreement. Governmental units may also not tie tax abatements or credits for a construction program by including specific language in a construction contract.

  • Changes to the Michigan Zoning Enabling Act. PA 97 of 2011 would allow the production of 100,000 gallons of ethanol on farms as a “permitted use” without requiring a special-use permit under local zoning ordinances. The farm must comply with all setback requirements and other criteria for the production and use of bio-fuel.

  • Prohibition of private transfer fees or covenants. These covenants required a percentage of future sales of the property to be paid to a private entity. Under PA 34 and PA 35 of 2011, transfer fee covenants are prohibited from “running with the title” to a piece of property, which protects subsequent purchasers from being affected by them.

  • Incentives to repay agricultural liens. Under PA 79 of 2011, farmers and other landowners who have received tax benefits under Development Rights Agreements through the state’s Farmland and Open Space Protection Program have until March 31, 2012, to repay liens at a discounted rate.

  • Restrictions against prohibiting mining operations. PA 113 of 2011 overturns the recent Michigan Supreme Court decision of Kyser v. Kasson Township, which lowered the standard for prohibiting mining operations in a zoning ordinance to simple “reasonableness.” The act returns the requirements to those set out in the earlier case, Silva v. Ada Township, which prevent municipalities from prohibiting mining through zoning ordinances unless “very serious consequences” would result.

  • Use of the county road fund. County treasurers are now allowed to use monies raised through property taxes for the county road fund. Prior to PA 119 of 2011, county treasurers were prohibited in moving funds raised through real or personal property taxes from the general fund to the county road fund for the purpose of improving roads.

  • Changes to how the state pays for certain payments in lieu of taxes. Prior to PA 117 and PA 118 of 2011, the state had several options from which to draw the payments in lieu of taxes it would make to local units of governments for property purchased through the Michigan Natural Resources Trust Fund. The state could use monies from the School Aid Fund, certain Department of Natural Resources restricted revenue sources and the general fund.  Now all payments in lieu of taxes for property purchased through the Natural Resources Trust Fund must be made from the Natural Resources Trust Fund.

  • Requirements related to summer property taxes. All township treasurers’ offices must remain open on the last day that summer property taxes are due in order to accept payments. PA 126 of 2011 also clarifies that interest will be added to taxes collected after Sept. 14 or the next business day.

Metta Dwyer is an attorney at Warner Norcross & Judd LLP who concentrates her practice in real estate law. She can be reached at

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