STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6008

November 19, 1981

DOWNTOWN DEVELOPMENT:

Tax exemption certificate for commercial housing

TAX EXEMPTION:

Condominiums, parking facilities, marina and health club in housing development

Condominiums or condominium projects do not qualify for a tax exemption certificate under 1976 PA 438.

A noncommercial parking ramp, marina and health club for the use of persons occupying a multifamily housing project and their guests and incidental to the primary purpose of the project for multifamily housing may be included within a tax exemption certificate provided for by 1976 PA 438.

A city, village or township may waive the commercial housing facilities tax on new facilities and such waiver is binding on all other governmental units located within the territory of the city, village or township.

A person holding a certificate of tax exemption granted pursuant to 1976 PA 438 may transfer the certificate to a new owner or lessee subject to the provisions of the act.

Mr. Robert O. Vandermark

Chairman

State Tax Commission

Department of Treasury

Stevens T. Mason Building

Lansing, Michigan

You have requested my opinion on four questions relating to three applications for tax abatement for multifamily housing units under 1976 PA 438, as last amended by 1980 PA 42; MCLA 207.601 et seq; MSA 7.792(1) et seq, located within the City of Detroit, Downtown Development District.

Specifically, you ask:

1976 PA 438, entitled an act 'to provide for the development of commercial housing' exempts, in section 6, qualifying 'new facilities' from ad valorem real and personal property taxes imposed under the General Property Tax Act, 1893 PA 206; MCLA 211.1 et seq; MSA 7.1 et seq, and in its place, imposes a commercial housing facilities tax.

1976 PA 438, supra, Sec. 1(d), defines a 'new facility' as:

Thus, an application for tax abatement may not be granted under 1976 PA 438, supra, unless the application seeks such abatement for 'multifamily housing consisting of 5 or more units.'

Condominiums and condominium projects are governed by 1978 PA 59; MCLA 559.101 et seq; MSA 26.40(101) et seq. Upon filing a master deed for a condominium project, each condominium unit, together with its appurtenant share of the common elements, becomes a sole property independent of the other condominium units for the purposes of ownership, mortgaging, taxation, possession, sale and all types of legal acts. Specifically, that act provides in section 61:

In addition, the Legislature has specifically provided:

Based upon the foregoing, it is clear that condominiums are separately owned, financed, assessed and taxed. They are separate definable residences. The Legislature has expressly indicated that a condominium is a separate single unit of real property which may not be combined with any other units for tax purposes. Thus, a condominium is clearly not 'multifamily housing consisting of 5 or more units.' It is, therefore, my opinion that a project involving or consisting of individual condominiums does not qualify for the tax exemption certificate provided for in 1976 PA 438, supra.

With respect to your second question, 1976 PA 438, Sec. 1(d), supra, provides that in order to qualify for a commercial housing facility exemption certificate, a new facility must have as its primary purpose, multifamily housing. Parking facilities, a boat marina or a health club, taken by themselves, do not qualify as multifamily housing. However, the State Tax Commission must look to the application filed as a whole. If, for example, an application covers a 100 housing unit project which contains related facilities such as a parking ramp, a marina and a health club, the State Tax Commission must decide whether the primary purpose of the property covered by the application is multifamily housing. This is a factual question that must be addressed on a case-by-case basis. If the parking ramp, health club and marina are noncommercial and provided only for the use of the persons occupying the multifamily housing project and their guests and are, therefore, merely incidental to the primary purpose of the multifamily housing project covered by the application, it is my opinion that such incidental facilities would be includable and eligible for the tax abatement provided by 1976 PA 438, supra.

Your third question deals with the waiver by a local unit of government of the commercial housing facilities tax. Section 6(1) of 1976 PA 438, supra, provides that a new facility for which a commercial facilities exemption certificate is in effect, but not the land on which the new facility is located, shall be exempt from ad valorem real and personal property tax. 1976 PA 438, Sec. 6(2), supra, provides for the imposition of a specific tax known as the 'commercial housing facilities tax.' This section also provides that '[the] legislative body of the local governmental unit may waive the payment of the commercial housing facilities tax on new facilities.' 'Local governmental unit' is defined in 1976 PA 438, Sec. 1(c), supra, as 'a city, village or township.'

Thus, it is apparent that the Legislature has provided the local governmental unit in which a facility is located, that is, a city, village or township, with the option of waiving the commercial housing facilities tax. Other taxing units, such as school districts and community college districts, do not have the option of waiving this specific tax.

It is my opinion, therefore, that the local governmental unit in which a new facility is located is authorized to waive the commercial housing facilities tax. This waiver would encompass the entire commercial housing facilities tax and, in effect, would be a waiver for all of the other taxing units located within the area of the affected city, village or township in which the new facility is located.

With respect to your fourth question, 1976 PA 438, Sec. 15; MCLA 207.615; MSA 7.792(15), provides:

When a commercial housing facilities exemption certificate is issued, it is issued in the name of the current owner or lessee of the new facility. If a transfer takes place, the procedures outlined in 1976 PA 438, Sec. 15, supra, must be followed.

It is my opinion, therefore, that if the holder of a certificate wishes to transfer the certificate to a new owner or lessee, the procedures contained in 1976 PA 438, Sec. 15, supra, must be followed.

Frank J. Kelley