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State Payment of Property Taxes for Senior Citizen and Disabled Housing Facilities

Table of Contents:

Finance and Accounting Division

State Tax Commission

WHAT'S NEW:  The Department of Treasury will be implementing PA 8 of 2010 for tax year 2010. This replaces PA 585 of 2008. For existing facilities a payment in lieu of taxes will be the amount of taxes paid for the 2008 tax year, excluding millage rates of up to 18 mills for school operating, hold harmless rates and 6 mills for State Education Tax. These taxes are to be excluded from billing. This becomes a fixed payment. Once the payment amount is determined, no further forms or tax bills need to be submitted annually to the State of Michigan for reimbursement unless changes occur with the property. Special assessments should continue to be the responsibility of the facility and locals need to notify the owners of that responsibility. These properties are tax exempt; therefore, administration fees should not be charged.

Public Act 8 of 2010 was signed by the governor on March 8, 2010 effective as of December 31, 2009. An owner of property may claim an exemption under Section 211.7d by filing form 4719, Request for Senior Citizen &/or Disabled Housing Tax Exemption, with the local assessor before December 31 of a given year. This form is only needed for new exemption requests not facilities that are already in the program.

GENERAL INFORMATION:

The Department of Treasury, Finance and Accounting Division is responsible for payment in lieu of taxes for senior citizen and/or disabled housing facilities under Section 211.7d of the Michigan Compiled Laws. There are currently about 175 senior citizen and disabled housing facilities that have their local municipality reimbursed under this exemption for their property taxes as a payment in lieu of taxes under this law. A facility is determined by the local assessor to be eligible for this exemption under the law. The facility and the Michigan Department of Treasury are notified in writing by the assessor of the facilities approval or disapproval of being eligible for the exemption.

Only facilities that have been approved by the local assessor and Department of Treasury as being eligible for the exemption may have a payment in lieu of tax submitted for payment. The state will only pay real and personal property taxes, not millage rates of up to 18 mills for school operating, hold harmless rates, 6 mills for State Education Tax, administrative fees, special assessments or penalty and interest fees. This becomes a fixed payment. Once the payment amount is determined, no further forms or tax bills need to be submitted annually to the State of Michigan for reimbursement unless changes occur with the property. Special assessments should continue to be the responsibility of the facility and locals need to notify the owners of that responsibility. These properties are tax exempt; therefore, administration fees should not be charged.

Submission of the first payment in lieu of tax is dependent upon when the facility applies for the exemption. The 4719, Request for New Senior Citizen &/or Disabled Housing Tax Exemption begins December 31 of the year in which the exemption is approved. The facility has to have been occupied on December 31 of the year for which an exemption is being approved. If ownership of a previously exempt Senior or Disabled Housing facility changes to a type that now qualifies for the program, the taxable value of that property stays at the 2008 amount.

For example, the facility is constructed and has the first resident move in on March 15, 2010 or ownership changes to a type that now qualifies for the program. The owner would need to submit a form 4719, Request for New Senior Citizen &/or Disabled Housing Tax Exemption, to the local assessor by December 31, 2010 or any time before this day, exemptions begin December 31 of the year the exemption is approved. The first payment in lieu of tax to be considered for payment by the State would be the 4736 form and tax statement due from the local treasurer by December 1, 2011 to the State of Michigan. The State continues payment in lieu of taxes as long as eligibility requirements are met.

REQUIREMENTS: M.C.L. 211.7d has enabled the State of Michigan to pay the property taxes as a payment in lieu of taxes of senior citizen and disabled housing facilities that satisfy the following criteria:

  • The housing must be owned and operated by a non-profit corporation or association, by a limited dividend housing corporation incorporated under the laws of this state, not otherwise tax-exempt;
  • The housing must be occupied solely (with the exception of a caretaker) by the elderly 62 years of age, as defined in Section 202 of the title II of the housing act of 1959, or the disabled, as defined in Section 811 of subtitle B of title VIII of the Cranston-Gonzalez national affordable housing act;
  • For nonprofit corporations, the housing must have been qualified, built or financed under Section 202, 236 or 811 of the National Housing Act.
  • For limited dividend housing corporations, that will rehabilitate and own a housing facility or project previously qualified, built or financed under section 202, 236 or 811 of the National Housing Act.
  • "Housing" means new or rehabilitated structures with 8 or more residential units in 1 or more structures. This includes personal property used in connection with the facility.

4719, Request for New Senior Citizen &/or Disabled Housing Tax Exemption (completed by owner)

DOCUMENTATION FOR SUBMISSION:

Owners should submit the following documents to the local assessor to assist them in making a determination of eligibility. After the local assessor has determined eligibility under the law and informed the owners and Treasury of determination, copies of the documentation should be forwarded to the Department of Treasury:

  • A copy of the owner's Articles of Incorporation, showing nonprofit status or limited dividend housing corporation;
  • A copy of the HUD Mortgage, or other documentation, showing that the facility was, built, financed, or qualified for financing under Section 202, 236 or 811;
  • Documentation showing that the facility contains at least eight units;
  • A copy of the Occupancy Permit, along with a statement giving the date the first resident actually moved into the facility;
  • Documentation showing new or rehabilitated structures.
  • General information regarding the facility, including its name, address and phone number and the name, address and phone number of its management company.

PAYMENT IN LIEU OF TAX STATEMENT:

If approved, the procedure for submitting payment in lieu of tax statements to the Department of Treasury for payment is as follows for the first year the facility is approved. The payment remains at the first year's amount and no further forms or tax bills need to be submitted annually to the State of Michigan for reimbursement unless the facility no longer qualifies under the law:

4736, Payment in Lieu of Taxes for Senior Citizen & Disabled Housing (completed by treasurer) form 4736 is due only the first year payment is being requested. Payment will be made by December 15 of each year.

  1. Local treasurer completes form 4736, Payment in Lieu of Taxes for Senior Citizen & Disabled Housing. A breakdown of millage rates must be supplied. Please note that millage rates of up to 18 mills for school operating, hold harmless rates and 6 mills for State Education Tax should not be billed or assessed, these taxes are excluded from billing. (Refer to MCL 211.7d section (3 B)). Fees excluded from State of Michigan reimbursement: special assessments, penalties, interest, administrative, or other fees. Forms and tax statements are due December 1. These properties are exempt therefore administration fee should not be charged.
  2. For new exemption requests; the taxable value of the property should be the value on the assessment roll in the year in which a claim for exemption is made. For new construction, the property's taxable value on the assessment roll in the year in which construction is completed and a certificate of occupancy issued.
  3. The local treasurer will send the completed form with original signatures and copies of the real and/or personal payment in lieu of tax statement to the Department of Treasury address listed below. Millage rates must be included on the statement or they may not be paid timely; millage rates can be on a separate sheet, if necessary.

Treasurers: For Facilities already in program as of the signing of legislation of the March 8, 2010, form 4736 is due only the first year payment is being requested. The payment remains at the 2008 amount and no further forms or tax bills need to be submitted annually to the State of Michigan for reimbursement unless the facility no longer qualifies under the law.

For this first year's payment, payable December 15, 2010, we ask that Treasurers complete a form 4736 for each facility in its jurisdiction by June 15, 2010 and submit to Treasury. The form should include the taxes paid on that property for the 2008 tax year, including copies of the 2008 tax bills. Millage rates of up to 18 mills for school operating, hold harmless rates and 6 mills for State Education Tax should not be billed or assessed; these taxes are excluded from billing. (Refer to MCL 211.7d section (3 A)). Fees excluded from State of Michigan reimbursement: special assessments, penalties, interest, administrative, or other fees. These properties are exempt therefore administration fee should not be charged. Special assessments should continue to be the responsibility of the facility and locals need to notify the owners of that responsibility. This will give Treasury time to review the payments that locals believe are due and make corrections where needed.

Updating Vendor File payment information:

In order to follow the law, Treasury is requesting locals to establish a mail code in the Payment Express system with Department of Technology, Management & Budget for depositing via Electronic Funds Transfer of the PILT payment.

To update your address, go to www.michigan.gov/cpexpress and create a new account or login with your password. If an account has already been created and you do not know the password, you will have to fax or mail a letter to DTMB Vendor Registration, using the contact information below. The letter should tell them you wish to re-set the password and give them the correct address to send the password reset to. In this letter you need to include your tax id number, and make sure the letter is signed and dated.

If you do not have internet access, fax or mail a letter to DTMB Vendor Registration, using the contact information below. The letter should tell them you wish to update your address. In this letter you need to include your tax id number, and make sure the letter is signed and dated.

DTMB Vendor Registration
PO Box 30026, Lansing MI 48909
Phone: 1-888-734-9749
Fax: 517-373-0297

PROPERTY TAX CREDIT FOR RESIDENCE:

Since the State of Michigan is making payments in lieu of taxes on the facility, its residents are not eligible for a Property Tax Credit when filing their state income tax return.

All requests to be considered for eligibility into this program should be mailed to:

Michigan Department of Treasury
Finance and Accounting Division
430 W. Allegan Street
Lansing, MI 48922
(517) 373-3165

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