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. 6922

October 18, 1996

FARMLAND AND OPEN SPACE PRESERVATION:

Imposing a special assessment for water service improvements on a dwelling located on farmland subject to a recorded farmlands development rights agreement.

A special assessment for water service improvements may not be imposed by a governmental agency on a dwelling located on farmland subject to a recorded farmlands development rights agreement.

Honorable Lynn F. Owen

State Representative

The Capitol

Lansing, MI 48913

You have asked if a special assessment for water service improvements may be imposed by a governmental agency on a dwelling located on farmland subject to a recorded farmlands development rights agreement.

In 1974, the Legislature enacted the Farmland and Open Space Preservation Act, 1974 PA 116. The purpose of that act was to encourage owners of farmland to not develop their lands by reducing the financial pressures that could induce them to sell their lands to developers. Oesterle v City of Mason, 204 Mich App 435, 437; 516 NW2d 85 (1994). Under sections 2(4), 3, 4 and 5 of that act, the owner of land and the state could execute and record a farmland developments rights agreement that limits the development of the farmland for a term of years.

Section 9 of the Farmland and Open Space Preservation Act, dealing with imposing special assessments on land subject to a farmlands development rights agreement, provided, in pertinent part:

A city, village, township, county, or other governmental agency may not impose special assessments for sanitary sewers, water, lights, or nonfarm drainage on land for which a development rights agreement or easement has been recorded except as to a dwelling or a nonfarm structure located on the land unless the assessments were imposed prior to the recording of the development rights agreement or easement. [Emphases added.]

In Village of Peck v Hoist, 153 Mich App 787, 790-791; 396 NW2d 536 (1986), the defendants claimed that their dwelling was exempt from a sewer assessment under section 9 of the Farmland and Open Space Preservation Act because it was located on land subject to a development rights agreement. The Court of Appeals rejected that claim as follows:

The Farmland and Open Space Preservation Act was enacted as a result of a concern over the decrease in the amount of undeveloped land used for farming operations due to high taxes and low profit margins. Prior to the enactment, farmlands were subject to the general property tax, under which their tax liability was based on a percentage of the market value of the property, including an assessment on all buildings and improvements, regardless of the use of the land. The act provides a tax incentive to owners of farmland by lowering the tax rate on the value of their undeveloped land, while continuing to assess the value of improvements in accordance with the general property tax.

To be eligible for this preferred tax treatment, the act requires owners of farmland to apply with the state for a farmland development rights agreement. Under this agreement, development of the land would be limited only to those structures and improvements needed for farm operations.

As part of this preferred tax treatment, the rural landowner is generally exempt by the quoted statute from the imposition of special assessments for sewers, water, lights or nonfarm drainage, except for a dwelling or nonfarm structure located on the land. However, this exemption is applicable "unless the assessments were imposed prior to the recording of the development rights agreement." MCL 554.709; MSA 26.1287(9).

Defendants' interpretation of the act is therefore inconsistent with the underlying legislative intent. Dwellings and nonfarm structures on farmland were never accorded favorable tax treatment and are still assessed in accordance with the general property tax because they are not integral parts of the farming operation. Indeed, because the Legislature did not intend to extend favorable treatment to such improvements, s 9 of the act should be construed as exempting only the undeveloped property for which a development rights agreement or easement has been recorded prior to the imposition of a listed special assessment. [Emphasis added.]

In 1995 PA 59, the Legislature repealed the Farmland and Open Space Preservation Act, 1974 PA 116, and recodified it as Part 361 of the Natural Resources and Environmental Protection Act (NREPA), 1994 PA 451, MCL 324.36101 et seq; MSA 13A.36101 et seq. The language quoted above from section 9 of the Farmland and Open Space Preservation Act, 1974 PA 116, dealing with imposing special assessments, was retained verbatim in section 36108 of Part 361 of the NREPA.

In 1996 PA 233, immediately effective June 5, 1996, the Legislature amended section 36108 of Part 361 of the NREPA. Section 36108(1) now provides, with regard to imposing special assessments on property subject to a farmland development rights agreement, as follows:

A city, village, township, county, or other governmental agency shall not impose special assessments for sanitary sewers, water, lights, or nonfarm drainage on land for which a development rights agreement or easement has been recorded, except for years before 1995 as to a dwelling or a nonfarm structure located on the land, unless the assessments were imposed before the recording of the development rights agreement or easement. [Emphases added.]

In determining legislative intent, a court may refer to the legislative history of the statute in question, including bill analyses prepared for the Legislature. Lutrell v Dep't of Corrections, 421 Mich 93, 103; 365 NW2d 74 (1984).

The changes made by the Legislature in section 36108(1) of Part 361 of the NREPA are explained in House Legislative Analysis, HB 4325, August 13, 1996, as follows:

Special assessments. At present, the act specifies that municipalities "may not" impose special assessments for sanitary sewers, water, lights, or nonfarm drainage on land under a development rights agreement or easement, except on a nonfarm structure located on the land, unless the assessments were imposed before the agreement or easement had been recorded. The bill would clarify that municipalities "shall not" impose such assessments for these purposes on such land, except for years prior to 1995 on a dwelling or nonfarm structure on the land. [Emphasis added.]

This historical analysis demonstrates that, before its amendment by 1996 PA 233, section 36108 of Part 361 of the NREPA, and its predecessor, section 9 of the Farmland and Open Space Preservation Act, 1974 PA 116, permitted a governmental agency to impose a special assessment for water service improvements on any dwelling located on farmland subject to a recorded farmlands development rights agreement. Since its amendment by 1996 PA 233, section 36108(1) no longer permits special assessments on those dwellings "except for years prior to 1995."

It is my opinion, therefore, that a special assessment for water service improvements may not be imposed by a governmental agency on a dwelling located on farmland subject to a recorded farmlands development rights agreement.

Frank J. Kelley

Attorney General