The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6687

July 12, 1991

COUNTIES:

Property tax levies on captured assessed value

TAXATION:

Property tax levies on captured assessed value

Voted millages for specific purposes that are levied on the captured assessed value must be transmitted to the authorities created pursuant to 1980 PA 450 and 1975 PA 197.

Honorable Harry Gast

State Senator

The Capitol

Lansing, MI 48913

Dear Senator Gast:

You have requested my opinion regarding the operation of the "captured assessed value" provisions of the Tax Increment Finance Authority Act, 1980 PA 450, MCL 125.1801 et seq; MSA 3.540(201) et seq, and the statute providing for downtown development authorities, 1975 PA 197, MCL 125.1651a; MSA 5.3010(1a). Sections 1(a) and 2 of 1980 PA 450 authorize the creation of tax increment finance authorities. Section 2 of 1975 PA 197 authorizes the creation of downtown development authorities. You ask whether voted millages for specific purposes that are levied on the "captured assessed value" must be kept by the local governmental unit levying the tax or transmitted to the authorities created by 1980 PA 450 and 1975 PA 197. Examples in your letter of request include voter approved millages for drug enforcement, 911 (emergeny phone service) and senior citizen activities.

Section 13(1)(a) of 1980 PA 450 and section 14(1)(a) of 1975 PA 97 both define "captured assessed value." Subject to certain qualifications, "captured assessed value" is the amount by which the current assessed value of property exceeds the assessed value that existed at the time a tax increment financing plan was approved.

In Advisory Opinion on Constitutionality of 1986 PA 281, 430 Mich 93, 101-102; 422 NW2d 186 (1988), a tax increment financing plan was described as follows:

[a] tax increment financing (TIF) plan allows a local government to finance public improvements in a designated area by capturing the property taxes levied on any increase in property values within the area. Under a TIF plan, a base year is established for the project area. In subsequent years, any increase in assessments above the base year level is referred to as the captured value. All, or a portion, of the property taxes levied on the captured value (SEV) is diverted to the area's development plan. [Department of Treasury, Analysis of Tax Increment Financing in Michigan for 1986 (April, 1987), p A-2.]

Tax increment financing "is premised on the theory that, without the redevelopment project, property values would not increase," or "that increases in land values and assessments in the project area are caused by the redevelopment authority's own construction of economic activity in the district." [Footnotes omitted.]

In order to better illustrate your concern, one may consider the following example. Assume that a property with an assessed valuation of $100,000 becomes part of a tax increment finance district in 1988 and that, as of 1991, that property has increased in assessed value to $120,000. The $20,000 increase in assessed value is the "captured assessed value." Under the tax increment finance plan, local millages levied on the first $100,000 of assessed value for that property would be collected and retained by the local taxing authorities in the same manner as taxes on all other properties within the taxing district. The tax imposed upon the $20,000 "captured assessed value" of that same property, however, would be turned over to the tax increment finance authority. Your question is whether the same result must occur when the tax in question is a voter approved millage for a specific purpose.

Section 14(1) of 1980 PA 450 provides:

The amount of tax increment to be transmitted to the authority by the municipal and county treasurers shall be that portion of the tax levy of all taxing bodies paid each year on real and personal property in the development area on the captured assessed value. [Emphasis added.]

Section 15(1) of 1975 PA 197 provides:

The amount of tax increment to be transmitted to the authority by the municipal and county treasurers shall be that portion of the tax levy of all taxing bodies paid each year on real and personal property in the project area on the captured assessed value. [Emphasis added.]

In both instances, the Legislature has plainly commanded that "the tax levy of all taxing bodies" on the "captured assessed value" is to be transmitted to the authority. There are no statutory exceptions for special millage levies approved by the voters for limited purposes. There is simply no basis in the text of the statutory provisions in question to determine that these specially voted millages are exempt from capture under these statutes. If the language of a statute is plain and unambiguous, there is no room for judicial construction. City of Lansing v Township of Lansing, 356 Mich 641, 648-649; 97 NW2d 804 (1959).

In Advisory Opinion on Constitutionality of 1986 PA 281, supra, p 97, the court dealt with the tax increment financing plans authorized by the Local Development Financing Act, 1986 PA 281, MCL 125.2151 et seq; MSA 3.540(351) et seq. In doing so, the court observed that the Legislature had authorized tax increment financing plans in the past in 1980 PA 450 and 1975 PA 97, Id. p 99.

The comparable statutory provision in 1986 PA 281 concerning the millage to be transmitted to the authorities provides:

The amount of tax increment that shall be transmitted to the authority by the city, village, township, school district, and county treasurers shall be that portion of the tax levy of all taxing jurisdictions paid each year on the captured assessed value of each eligible property included in a tax increment financing plan excluding millage specifically levied for the payment of principal and interest of obligations approved by electors or obligations pledging the unlimited taxing power of the local governmental unit. [Citation omitted.] [Emphasis added.]

Advisory Opinion on Constitutionality of 1986 PA 281, supra, p 103.

In this statutory provision, unlike the two quoted above from 1980 PA 450 and 1975 PA 97, the Legislature expressly provided that certain millage levied on the "captured assessed value" would not be transmitted to the local development financing authority. Thus, where the Legislature intended to exclude certain millage levied on the "captured assessed value" from being transmitted to an authority, it expressly provided for the exclusion.

In Advisory Opinion on Constitutionality of 1986 PA 281, supra, pp 111-115, the court concluded that transmitting the millage revenues levied on the "captured assessed value" to the authority was consistent with the first paragraph of Const 1963, art 9, Sec. 6. The court rejected the argument that this was an unlawful diversion of funds from the purposes for which they were approved by the voters and levied by the local governmental units. The court found it was within the power of the Legislature to alter the purposes for which tax revenues are expended and that the Legislature had done so.

It is my opinion, therefore, that voted millages for specific purposes which are levied on the "captured assessed value" must be transmitted to the authorities created pursuant to 1980 PA 450 and 1975 PA 197.

Frank J. Kelley

Attorney General