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April 2021

Amending MI Natural Resources and Environmental Protection Act 451, Passage of House Bill 4035 Will Ensure State of Michigan Payments in Lieu of Taxes to Local Governments for State Owned or Controlled Property

Passed unanimously by the Michigan House of Representatives on March 25, 2021, Bill 4035 amends the Natural Resources and Environmental Protection Act 451 (NREPA) as necessary to ensure that certain State of Michigan “payments in lieu of taxes” paid to local governments receive greater priority.. Although the language of House Bill 4035 would not directly affect costs or revenues for affected local governments, passage of the legislation would ensure that NREPA 451 Part 307 – Inland Lake Level structure related special assessment district associated “payments in lieu of taxes” related reimbursements from the state would occur as required by law in the future. Supporters of the legislation, including Michigan Waterfront Alliance, have argued that the root of the problem stems from the fact that special assessment districts under “current payment in lieu of taxes” arrangements are often not prioritized, resulting in revenue appropriation levels that are inadequate to cover state law mandated Michigan Department of Treasury disbursements to local governments. The situation has led to the fact that local governments have often had to sue the State of Michigan in order to receive their respective payments. Under MI NREPA 451, the Michigan Department of Treasury is required by law to pay into the respective treasury of each county where tax-reverted, recreation, forest, or other lands under the control and supervision of the Department of Natural Resources are allocated payments in lieu of taxes in an amount specified in the act. Passage of House Bill 4035 would mandate that MI Department of Treasury disbursements to local governments that occur on or after December 1, 2022 would effectively prioritize payments that have not yet been made.

MI House Bill 4035 unanimously passed in the MI House of Representatives on March 25, 2021, and was reported for consideration by the MI Senate Committee on Natural Resources on April 13, 2021. Michigan Waterfront Alliance is pro-actively working to help ensure that the legislation is passed into law by the Mi State Senate as soon as possible.

To download a copy of MI House Bill 4035, click here