Bill Text: MI HB5554 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Economic development; local development financing; issuance of a refunding obligation; provide for. Amends sec. 2 of 1986 PA 281 (MCL 125.2152).
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2010-03-17 - Referred To Committee On Finance [HB5554 Detail]
Download: Michigan-2009-HB5554-Engrossed.html
HB-5554, As Passed House, March 16, 2010
SUBSTITUTE FOR
HOUSE BILL NO. 5554
A bill to amend 1986 PA 281, entitled
"The local development financing act,"
by amending section 2 (MCL 125.2152), as amended by 2009 PA 162.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Advance" means a transfer of funds made by a municipality
to an authority or to another person on behalf of the authority in
anticipation of repayment by the authority. Evidence of the intent
to repay an advance may include, but is not limited to, an executed
agreement to repay, provisions contained in a tax increment
financing plan approved prior to the advance, or a resolution of
the authority or the municipality.
(b) "Alternative energy technology" means equipment, component
parts, materials, electronic devices, testing equipment, and
related systems that are specifically designed, specifically
fabricated, and used primarily for 1 or more of the following:
(i) The storage, generation, reformation, or distribution of
clean fuels integrated within an alternative energy system or
alternative energy vehicle, not including an anaerobic digester
energy system or a hydroelectric energy system, for use within the
alternative energy system or alternative energy vehicle.
(ii) The process of generating and putting into a usable form
the energy generated by an alternative energy system. Alternative
energy technology does not include those component parts of an
alternative energy system that are required regardless of the
energy source.
(iii) Research and development of an alternative energy vehicle.
(iv) Research, development, and manufacturing of an alternative
energy system.
(v) Research, development, and manufacturing of an anaerobic
digester energy system.
(vi) Research, development, and manufacturing of a
hydroelectric energy system.
(c) "Alternative energy technology business" means a business
engaged in the research, development, or manufacturing of
alternative energy technology.
(d) "Assessed value" means 1 of the following:
(i) For valuations made before January 1, 1995, the state
equalized valuation as determined under the general property tax
act, 1893 PA 206, MCL 211.1 to 211.155.
(ii) For valuations made after December 31, 1994, the taxable
value as determined under section 27a of the general property tax
act, 1893 PA 206, MCL 211.27a.
(e) "Authority" means a local development finance authority
created pursuant to this act.
(f) "Authority district" means an area or areas within which
an authority exercises its powers.
(g) "Board" means the governing body of an authority.
(h) "Business development area" means an area designated as a
certified industrial park under this act prior to the effective
date of the amendatory act that added this subdivision, or an area
designated in the tax increment financing plan that meets all of
the following requirements:
(i) The area is zoned to allow its use for eligible property.
(ii) The area has a site plan or plat approved by the city,
village, or township in which the area is located.
(i) "Business incubator" means real and personal property that
meets all of the following requirements:
(i) Is located in a certified technology park or a certified
alternative energy park.
(ii) Is subject to an agreement under section 12a or 12c.
(iii) Is developed for the primary purpose of attracting 1 or
more owners or tenants who will engage in activities that would
each separately qualify the property as eligible property under
subdivision (s)(iii).
(j) "Captured assessed value" means the amount in any 1 year
by which the current assessed value of the eligible property
identified in the tax increment financing plan or, for a certified
technology park, the real and personal property included in the tax
increment financing plan, including the current assessed value of
property for which specific local taxes are paid in lieu of
property taxes as determined pursuant to subdivision (ff), exceeds
the initial assessed value. The state tax commission shall
prescribe the method for calculating captured assessed value.
(k) "Certified alternative energy park" means that portion of
an authority district designated by a written agreement entered
into pursuant to section 12c between the authority, the
municipality or municipalities, and the Michigan economic
development corporation.
(l) "Certified business park" means a business development area
that has been designated by the Michigan economic development
corporation as meeting criteria established by the Michigan
economic development corporation. The criteria shall establish
standards for business development areas including, but not limited
to, use, types of building materials, landscaping, setbacks,
parking, storage areas, and management.
(m) "Certified technology park" means that portion of the
authority district designated by a written agreement entered into
pursuant to section 12a between the authority, the municipality,
and the Michigan economic development corporation.
(n) "Chief executive officer" means the mayor or city manager
of a city, the president of a village, or, for other local units of
government or school districts, the person charged by law with the
supervision of the functions of the local unit of government or
school district.
(o) "Development plan" means that information and those
requirements for a development set forth in section 15.
(p) "Development program" means the implementation of a
development plan.
(q) "Eligible advance" means an advance made before August 19,
1993.
(r) "Eligible obligation" means an obligation issued or
incurred by an authority or by a municipality on behalf of an
authority before August 19, 1993 and its subsequent refunding by a
qualified refunding obligation. Eligible obligation includes an
authority's written agreement entered into before August 19, 1993
to pay an obligation issued after August 18, 1993 and before
December 31, 1996 by another entity on behalf of the authority.
(s) "Eligible property" means land improvements, buildings,
structures, and other real property, and machinery, equipment,
furniture, and fixtures, or any part or accessory thereof whether
completed or in the process of construction comprising an
integrated whole, located within an authority district, of which
the primary purpose and use is or will be 1 of the following:
(i) The manufacture of goods or materials or the processing of
goods or materials by physical or chemical change.
(ii) Agricultural processing.
(iii) A high technology activity.
(iv) The production of energy by the processing of goods or
materials by physical or chemical change by a small power
production facility as defined by the federal energy regulatory
commission pursuant to the public utility regulatory policies act
of 1978, Public Law 95-617, which facility is fueled primarily by
biomass or wood waste. This act does not affect a person's rights
or liabilities under law with respect to groundwater contamination
described in this subparagraph. This subparagraph applies only if
all of the following requirements are met:
(A) Tax increment revenues captured from the eligible property
will be used to finance, or will be pledged for debt service on tax
increment bonds used to finance, a public facility in or near the
authority district designed to reduce, eliminate, or prevent the
spread of identified soil and groundwater contamination, pursuant
to law.
(B) The board of the authority exercising powers within the
authority district where the eligible property is located adopted
an initial tax increment financing plan between January 1, 1991 and
May 1, 1991.
(C) The municipality that created the authority establishes a
special assessment district whereby not less than 50% of the
operating expenses of the public facility described in this
subparagraph will be paid for by special assessments. Not less than
50% of the amount specially assessed against all parcels in the
special assessment district shall be assessed against parcels owned
by parties potentially responsible for the identified groundwater
contamination pursuant to law.
(v) A business incubator.
(vi) An alternative energy technology business.
(t) "Fiscal year" means the fiscal year of the authority.
(u) "Governing body" means the elected body having legislative
powers of a municipality creating an authority under this act.
(v) "High technology activity" means that term as defined in
section 3 of the Michigan economic growth authority act, 1995 PA
24, MCL 207.803.
(w) "Initial assessed value" means the assessed value of the
eligible property identified in the tax increment financing plan
or, for a certified technology park, the assessed value of any real
and personal property included in the tax increment financing plan,
at the time the resolution establishing the tax increment financing
plan is approved as shown by the most recent assessment roll for
which equalization has been completed at the time the resolution is
adopted or, for property that becomes eligible property in other
than a certified technology park after the date the plan is
approved, at the time the property becomes eligible property.
Property exempt from taxation at the time of the determination of
the initial assessed value shall be included as zero. Property for
which a specific local tax is paid in lieu of property tax shall
not be considered exempt from taxation. The initial assessed value
of property for which a specific local tax was paid in lieu of
property tax shall be determined as provided in subdivision (ff).
(x) "Michigan economic development corporation" means the
public body corporate created under section 28 of article VII of
the state constitution of 1963 and the urban cooperation act of
1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual
interlocal agreement effective April 5, 1999 between local
participating economic development corporations formed under the
economic development corporations act, 1974 PA 338, MCL 125.1601 to
125.1636, and the Michigan strategic fund. If the Michigan economic
development corporation is unable for any reason to perform its
duties under this act, those duties may be exercised by the
Michigan strategic fund.
(y) "Michigan strategic fund" means the Michigan strategic
fund as described in the Michigan strategic fund act, 1984 PA 270,
MCL 125.2001 to 125.2094.
(z) "Municipality" means a city, village, or urban township.
However, for purposes of creating and operating a certified
alternative energy park, municipality includes townships that are
not urban townships.
(aa) "Obligation" means a written promise to pay, whether
evidenced by a contract, agreement, lease, sublease, bond, or note,
or a requirement to pay imposed by law. An obligation does not
include a payment required solely because of default upon an
obligation, employee salaries, or consideration paid for the use of
municipal offices. An obligation does not include those bonds that
have been economically defeased by refunding bonds issued under
this act. Obligation includes, but is not limited to, the
following:
(i) A requirement to pay proceeds derived from ad valorem
property taxes or taxes levied in lieu of ad valorem property
taxes.
(ii) A management contract or a contract for professional
services.
(iii) A payment required on a contract, agreement, bond, or note
if the requirement to make or assume the payment arose before
August 19, 1993.
(iv) A requirement to pay or reimburse a person for the cost of
insurance for, or to maintain, property subject to a lease, land
contract, purchase agreement, or other agreement.
(v) A letter of credit, paying agent, transfer agent, bond
registrar, or trustee fee associated with a contract, agreement,
bond, or note.
(bb) "On behalf of an authority", in relation to an eligible
advance made by a municipality or an eligible obligation or other
protected obligation issued or incurred by a municipality, means in
anticipation that an authority would transfer tax increment
revenues or reimburse the municipality from tax increment revenues
in an amount sufficient to fully make payment required by the
eligible advance made by a municipality, or eligible obligation or
other protected obligation issued or incurred by the municipality,
if the anticipation of the transfer or receipt of tax increment
revenues from the authority is pursuant to or evidenced by 1 or
more of the following:
(i) A reimbursement agreement between the municipality and an
authority it established.
(ii) A requirement imposed by law that the authority transfer
tax increment revenues to the municipality.
(iii) A resolution of the authority agreeing to make payments to
the incorporating unit.
(iv) Provisions in a tax increment financing plan describing
the project for which the obligation was incurred.
(cc) "Other protected obligation" means:
(i) A qualified refunding obligation issued to refund an
obligation described in subparagraph (ii) or (iii), an obligation that
is not a qualified refunding obligation that is issued to refund an
eligible obligation, or a qualified refunding obligation issued to
refund an obligation described in this subparagraph.
(ii) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority after August 19, 1993, but
before December 31, 1994, to finance a project described in a tax
increment finance plan approved by the municipality in accordance
with this act before August 19, 1993, for which a contract for
final design is entered into by the municipality or authority
before March 1, 1994.
(iii) An obligation incurred by an authority or municipality
after August 19, 1993, to reimburse a party to a development
agreement entered into by a municipality or authority before August
19, 1993, for a project described in a tax increment financing plan
approved in accordance with this act before August 19, 1993, and
undertaken and installed by that party in accordance with the
development agreement.
(iv) An ongoing management or professional services contract
with the governing body of a county that was entered into before
March 1, 1994 and that was preceded by a series of limited term
management or professional services contracts with the governing
body of the county, the last of which was entered into before
August 19, 1993.
(dd) "Public facility" means 1 or more of the following:
(i) A street, road, bridge, storm water or sanitary sewer,
sewage treatment facility, facility designed to reduce, eliminate,
or prevent the spread of identified soil or groundwater
contamination, drainage system, retention basin, pretreatment
facility, waterway, waterline, water storage facility, rail line,
electric, gas, telephone or other communications, or any other type
of utility line or pipeline, or other similar or related structure
or improvement, together with necessary easements for the structure
or improvement. Except for rail lines, utility lines, or pipelines,
the structures or improvements described in this subparagraph shall
be either owned or used by a public agency, functionally connected
to similar or supporting facilities owned or used by a public
agency, or designed and dedicated to use by, for the benefit of, or
for the protection of the health, welfare, or safety of the public
generally, whether or not used by a single business entity. Any
road, street, or bridge shall be continuously open to public
access. A public facility shall be located on public property or in
a public, utility, or transportation easement or right-of-way.
(ii) The acquisition and disposal of land that is proposed or
intended to be used in the development of eligible property or an
interest in that land, demolition of structures, site preparation,
and relocation costs.
(iii) All administrative and real and personal property
acquisition and disposal costs related to a public facility
described in subparagraphs (i) and (iv), including, but not limited
to, architect's, engineer's, legal, and accounting fees as
permitted by the district's development plan.
(iv) An improvement to a facility used by the public or a
public facility as those terms are defined in section 1 of 1966 PA
1, MCL 125.1351, which improvement is made to comply with the
barrier free design requirements of the state construction code
promulgated under the Stille-DeRossett-Hale single state
construction code act, 1972 PA 230, MCL 125.1501 to 125.1531.
(v) All of the following costs approved by the Michigan
economic development corporation:
(A) Operational costs and the costs related to the
acquisition, improvement, preparation, demolition, disposal,
construction, reconstruction, remediation, rehabilitation,
restoration, preservation, maintenance, repair, furnishing, and
equipping of land and other assets that are or may become eligible
for depreciation under the internal revenue code of 1986 for a
business incubator located in a certified technology park or
certified alternative energy park.
(B) Costs related to the acquisition, improvement,
preparation, demolition, disposal, construction, reconstruction,
remediation, rehabilitation, restoration, preservation,
maintenance, repair, furnishing, and equipping of land and other
assets that, if privately owned, would be eligible for depreciation
under the internal revenue code of 1986 for laboratory facilities,
research and development facilities, conference facilities,
teleconference facilities, testing, training facilities, and
quality control facilities that are or that support eligible
property under subdivision (s)(iii), that are owned by a public
entity, and that are located within a certified technology park.
(C) Costs related to the acquisition, improvement,
preparation, demolition, disposal, construction, reconstruction,
remediation, rehabilitation, restoration, preservation,
maintenance, repair, furnishing, and equipping of land and other
assets that, if privately owned, would be eligible for depreciation
under the internal revenue code of 1986 for facilities that are or
that will support eligible property under subdivision (s)(vi), that
have been or will be owned by a public entity at the time such
costs are incurred, that are located within a certified alternative
energy park, and that have been or will be conveyed, by gift or
sale, by such public entity to an alternative energy technology
business.
(vi) Operating and planning costs included in a plan pursuant
to section 12(1)(f), including costs of marketing property within
the district and attracting development of eligible property within
the district.
(ee) "Qualified refunding obligation" means an obligation
issued or incurred by an authority or by a municipality on behalf
of
an authority to refund an obligation if the 1 or more of the
following apply:
(i) The refunding obligation meets both of the following:
(A) (i) The
net present value of the principal and interest to
be paid on the refunding obligation, including the cost of
issuance, will be less than the net present value of the principal
and interest to be paid on the obligation being refunded, as
calculated using a method approved by the department of treasury.
(B) (ii) The
net present value of the sum of the tax increment
revenues described in subdivision (hh)(ii) and the distributions
House Bill No. 5554 (H-1) as amended March 16, 2010
under section 11a to repay the refunding obligation will not be
greater than the net present value of the sum of the tax increment
revenues described in subdivision (hh)(ii) and the distributions
under section 11a to repay the obligation being refunded, as
calculated using a method approved by the department of treasury.
(ii) The refunding obligation is issued to refund an other
protected obligation or an eligible obligation and that refunding
obligation is issued before December 31, 2012. [A refunding obligation
issued under this subparagraph is a qualified refunding obligation only to the extent of the principal and interest outstanding on the obligation being refunded at the time the refunding obligation is issued.]
(ff) "Specific local taxes" means a tax levied under 1974 PA
198, MCL 207.551 to 207.572, the obsolete property rehabilitation
act, 2000 PA 146, MCL 125.2781 to 125.2797, the commercial
redevelopment act, 1978 PA 255, MCL 207.651 to 207.668, the
enterprise zone act, 1985 PA 224, MCL 125.2101 to 125.2123, 1953 PA
189, MCL 211.181 to 211.182, and the technology park development
act, 1984 PA 385, MCL 207.701 to 207.718. The initial assessed
value or current assessed value of property subject to a specific
local tax is the quotient of the specific local tax paid divided by
the ad valorem millage rate. However, after 1993, the state tax
commission shall prescribe the method for calculating the initial
assessed value and current assessed value of property for which a
specific local tax was paid in lieu of a property tax.
(gg) "State fiscal year" means the annual period commencing
October 1 of each year.
(hh) "Tax increment revenues" means the amount of ad valorem
property taxes and specific local taxes attributable to the
application of the levy of all taxing jurisdictions upon the
captured assessed value of eligible property within the district
or, for purposes of a certified technology park or a certified
alternative energy park, real or personal property that is located
within the certified technology park and included within the tax
increment financing plan, subject to the following requirements:
(i) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of all taxing jurisdictions, other than the state pursuant to
the state education tax act, 1993 PA 331, MCL 211.901 to 211.906,
and local or intermediate school districts, upon the captured
assessed value of real and personal property in the development
area for any purpose authorized by this act.
(ii) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state pursuant to the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, and local or intermediate school
districts upon the captured assessed value of real and personal
property in the development area in an amount equal to the amount
necessary, without regard to subparagraph (i), for the following
purposes:
(A) To repay eligible advances, eligible obligations, and
other protected obligations.
(B) To fund or to repay an advance or obligation issued by or
on behalf of an authority to fund the cost of public facilities
related to or for the benefit of eligible property located within a
certified technology park or a certified alternative energy park to
the extent the public facilities have been included in an agreement
under section 12a(3), not to exceed 50%, as determined by the state
treasurer, of the amounts levied by the state pursuant to the state
education tax act, 1993 PA 331, MCL 211.901 to 211.906, and local
and intermediate school districts for a period not to exceed 15
years, as determined by the state treasurer, if the state treasurer
determines that the capture under this subparagraph is necessary to
reduce unemployment, promote economic growth, and increase capital
investment in the municipality.
(iii) Tax increment revenues do not include any of the
following:
(A) Ad valorem property taxes or specific local taxes that are
excluded from and not made part of the tax increment financing
plan.
(B) Ad valorem property taxes and specific local taxes
attributable to ad valorem property taxes excluded by the tax
increment financing plan of the authority from the determination of
the amount of tax increment revenues to be transmitted to the
authority.
(C) Ad valorem property taxes exempted from capture under
section 4(3) or specific local taxes attributable to such ad
valorem property taxes.
(D) Ad valorem property taxes specifically levied for the
payment of principal and interest of obligations approved by the
electors or obligations pledging the unlimited taxing power of the
local governmental unit or specific local taxes attributable to
such ad valorem property taxes.
(E) The amount of ad valorem property taxes or specific taxes
captured by a downtown development authority under 1975 PA 197, MCL
125.1651 to 125.1681, tax increment financing authority under the
tax increment finance authority act, 1980 PA 450, MCL 125.1801 to
125.1830, or brownfield redevelopment authority under the
brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651
to 125.2672, if those taxes were captured by these other
authorities on the date that the initial assessed value of a parcel
of property was established under this act.
(iv) The amount of tax increment revenues authorized to be
included under subparagraph (ii), and required to be transmitted to
the authority under section 13(1), from ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state education tax act, 1993 PA 331, MCL 211.901 to
211.906, or a local school district or an intermediate school
district upon the captured assessed value of real and personal
property in a development area shall be determined separately for
the levy by the state, each school district, and each intermediate
school district as the product of sub-subparagraphs (A) and (B):
(A) The percentage that the total ad valorem taxes and
specific local taxes available for distribution by law to the
state, local school district, or intermediate school district,
respectively, bears to the aggregate amount of ad valorem millage
taxes and specific taxes available for distribution by law to the
state, each local school district, and each intermediate school
district.
(B) The maximum amount of ad valorem property taxes and
specific local taxes considered tax increment revenues under
subparagraph (ii).
(ii) "Urban township" means a township that meets 1 or more of
the following:
(i) Meets all of the following requirements:
(A) Has a population of 20,000 or more, or has a population of
10,000 or more but is located in a county with a population of
400,000 or more.
(B) Adopted a master zoning plan before February 1, 1987.
(C) Provides sewer, water, and other public services to all or
a part of the township.
(ii) Meets all of the following requirements:
(A) Has a population of less than 20,000.
(B) Is located in a county with a population of 250,000 or
more but less than 400,000, and that county is located in a
metropolitan statistical area.
(C) Has within its boundaries a parcel of property under
common ownership that is 800 acres or larger and is capable of
being served by a railroad, and located within 3 miles of a limited
access highway.
(D) Establishes an authority before December 31, 1998.
(iii) Meets all of the following requirements:
(A) Has a population of less than 20,000.
(B) Has a state equalized valuation for all real and personal
property located in the township of more than $200,000,000.00.
(C) Adopted a master zoning plan before February 1, 1987.
(D) Is a charter township under the charter township act, 1947
PA 359, MCL 42.1 to 42.34.
(E) Has within its boundaries a combination of parcels under
common ownership that is 800 acres or larger, is immediately
adjacent to a limited access highway, is capable of being served by
a railroad, and is immediately adjacent to an existing sewer line.
(F) Establishes an authority before March 1, 1999.
(iv) Meets all of the following requirements:
(A) Has a population of 13,000 or more.
(B) Is located in a county with a population of 150,000 or
more.
(C) Adopted a master zoning plan before February 1, 1987.
(v) Meets all of the following requirements:
(A) Is located in a county with a population of 1,000,000 or
more.
(B) Has a written agreement with an adjoining township to
develop 1 or more public facilities on contiguous property located
in both townships.
(C) Has a master plan in effect.
(vi) Meets all of the following requirements:
(A) Has a population of less than 10,000.
(B) Has a state equalized valuation for all real and personal
property located in the township of more than $280,000,000.00.
(C) Adopted a master zoning plan before February 1, 1987.
(D) Has within its boundaries a combination of parcels under
common ownership that is 199 acres or larger, is located within 1
mile of a limited access highway, and is located within 1 mile of
an existing sewer line.
(E) Has rail service.
(F) Establishes an authority before May 7, 2009.
(vii) Has joined an authority under section 3(2) which is
seeking or has entered into an agreement for a certified
alternative energy park.
