Bill Text: MI SB1097 | 2019-2020 | 100th Legislature | Engrossed
Bill Title: Michigan business tax: credits; time frame for completion of certain multiphase projects; modify. Amends sec. 437 of 2007 PA 36 (MCL 208.1437).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Enrolled - Dead) 2020-12-30 - Pocket Veto 01/05/2021 [SB1097 Detail]
Download: Michigan-2019-SB1097-Engrossed.html
HOUSE Substitute For
SENATE BILL NO. 1097
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 437 (MCL 208.1437), as amended by 2017 PA 217.
the people of the state of michigan enact:
Sec. 437. (1)
Subject to the criteria under this section, a qualified taxpayer that has
unused credits or has a preapproval letter issued after December 31, 2007 and
before January 1, 2014, or a taxpayer that received a preapproval letter prior
to January 1, 2008 under section 38g of former 1975 PA 228 and has not received
a certificate of completion prior to the taxpayer's last tax year, provided
that the project is completed not more than 5 years after the preapproval
letter for the project is issued unless extended under subsection (9) or if it
is a multiphase project not more than 10 years after the preapproval letter, as
amended, if applicable, or as otherwise extended
under subsection (10), for the project is issued, or an assignee
under subsection (20), (21), or (22) may claim a credit that has been approved
under section 38g of former 1975 PA 228 or under subsection (2), (3), or (4)
against the tax imposed by this act equal to either of the following:
(a) For projects approved before April 8, 2008, if the total
of all credits for a project is $1,000,000.00 or less, 10% of the cost of the
qualified taxpayer's eligible investment paid or accrued by the qualified
taxpayer on an eligible property provided that the project does not exceed the
amount stated in the preapproval letter, as amended. For projects approved, or
amended, on and after April 8, 2008, if the total of all eligible investments
for a project are $10,000,000.00 or less, up to 12.5% of the costs of the
qualified taxpayer's eligible investment paid or accrued by the qualified
taxpayer on an eligible property or up to 15% of the costs of the qualified
taxpayer's eligible investment paid or accrued by the qualified taxpayer on an
eligible property if the project is designated as an urban development area
project by the Michigan economic growth authority to the extent that the
project does not exceed the amount stated in the preapproval letter, as
amended, or, until December 31, 2010, up to 20% of the costs of the qualified
taxpayer's eligible investment paid or accrued by the qualified taxpayer on an
eligible property if the project is designated as an urban development area
project by the Michigan economic growth authority. If eligible investment
exceeds the amount of eligible investment in the preapproval letter, as
amended, for that project, the total of all credits for the project shall not
exceed the total of all credits on the certificate of completion.
(b) For projects approved before April 8, 2008, if the total
of all credits for a project is more than $1,000,000.00 but $30,000,000.00 or
less and, except as provided in subsection (6)(b), the project is located in a
qualified local governmental unit, a percentage as determined by the Michigan
economic growth authority not to exceed 10% of the cost of the qualified
taxpayer's eligible investment as determined under subsection (11) paid or
accrued by the qualified taxpayer on an eligible property. For projects
approved, or amended, on and after April 8, 2008 and before January 1, 2010, if
the total of all eligible investments for a project is more than $10,000,000.00
but $300,000,000.00 or less, up to 12.5% of the costs of the qualified
taxpayer's eligible investment as determined under subsection (11) paid or
accrued by the qualified taxpayer on an eligible property that, except as
provided in subsection (6)(b), is located in a qualified local governmental
unit, up to 15% of the cost of the qualified taxpayer's eligible investment as
determined under subsection (11) paid or accrued by the qualified taxpayer on
an eligible property if the project is designated as an urban development area
project by the Michigan economic growth authority, or, until December 31, 2010,
up to 20% of the costs of the qualified taxpayer's eligible investment as
determined under subsection (11) paid or accrued by the qualified taxpayer on
an eligible property if the project is designated as an urban development area
project by the Michigan economic growth authority. For projects approved, or
amended, on and after January 1, 2010, if the total of all eligible investments
for a project is more than $10,000,000.00 but $100,000,000.00 or less, up to
12.5% of the costs of the qualified taxpayer's eligible investment as
determined under subsection (11) paid or accrued by the qualified taxpayer on
an eligible property that, except as provided in subsection (6)(b), is located
in a qualified local governmental unit, up to 15% of the cost of the qualified
taxpayer's eligible investment as determined under subsection (11) paid or accrued
by the qualified taxpayer on an eligible property if the project is designated
as an urban development area project by the Michigan economic growth authority,
or, until December 31, 2010, up to 20% of the costs of the qualified taxpayer's
eligible investment as determined under subsection (11) paid or accrued by the
qualified taxpayer on an eligible property if the project is designated as an
urban development area project by the Michigan economic growth authority. If
eligible investment exceeds the amount of eligible investment in the
preapproval letter, as amended, for that project, the total of all credits for
the project shall not exceed the total of all credits on the certificate of
completion.
(2) If the cost of a project will be $2,000,000.00 or less, a
qualified taxpayer shall apply to the Michigan economic growth authority for
approval of the project under this subsection. An application under this
subsection shall state whether the project is a multiphase project. Subject to
the limitation provided under subsection (31), the chairperson of the Michigan
economic growth authority or his or her designee is authorized to approve an
application or project under this subsection. Only the chairperson of the
Michigan economic growth authority is authorized to deny an application or
project under this subsection. A project shall be approved or denied not more
than 45 days after receipt of the application. If the chairperson of the
Michigan economic growth authority or his or her designee does not approve or
deny the application within 45 days after the application is received by the
Michigan economic growth authority, the application is considered approved as
written. If the chairperson of the Michigan economic growth authority or his or
her designee approves a project under this subsection, the chairperson of the
Michigan economic growth authority or his or her designee shall issue a
preapproval letter that states that the taxpayer is a qualified taxpayer; the
maximum total eligible investment for the project on which credits may be
claimed and the maximum total of all credits for the project when the project
is completed and a certificate of completion is issued; and the project number
assigned by the Michigan economic growth authority. If a project is denied
under this subsection, a taxpayer is not prohibited from subsequently applying
under this subsection for the same project or for another project. The Michigan
economic growth authority shall develop and implement the use of the
application form to be used for projects under this subsection.
(3) If the cost of a project will be for more than
$2,000,000.00 but $10,000,000.00 or less, a qualified taxpayer shall apply to
the Michigan economic growth authority for approval of the project under this
subsection. An application under this subsection shall state whether the
project is a multiphase project. Subject to the limitation provided under
subsection (31), the chairperson of the Michigan economic growth authority or
his or her designee is authorized to approve an application or project under
this subsection. Only the chairperson of the Michigan economic growth authority
is authorized to deny an application or project under this subsection. A
project shall be approved or denied not more than 45 days after receipt of the
application. If the chairperson of the Michigan economic growth authority or
his or her designee does not approve or deny an application within 45 days
after the application is received by the Michigan economic growth authority,
the application is considered approved as written. The criteria in subsection
(7) shall be used when approving projects under this subsection. When approving
projects under this subsection, priority shall be given to projects on a
facility. The total of all credits for an approved project under this
subsection shall not exceed the amounts authorized under subsection (1)(a). A
taxpayer may apply under this subsection instead of subsection (4) for approval
of a project that will be for more than $10,000,000.00, but the total of all
credits for that project shall not exceed the amounts authorized under
subsection (1)(a). If the chairperson of the Michigan economic growth authority
or his or her designee approves a project under this subsection, the
chairperson of the Michigan economic growth authority or his or her designee
shall issue a preapproval letter that states that the taxpayer is a qualified
taxpayer; the maximum total eligible investment for the project on which
credits may be claimed and the maximum total of all credits for the project
when the project is completed and a certificate of completion is issued; and
the project number assigned by the Michigan economic growth authority. If a
project is denied under this subsection, a taxpayer is not prohibited from subsequently
applying under this subsection or subsection (4) for the same project or for
another project.
(4) If the cost of a project will be for more than
$10,000,000.00 and, except as provided in subsection (6)(b), the project is
located in a qualified local governmental unit, a qualified taxpayer shall
apply to the Michigan economic growth authority for approval of the project. An
application under this subsection shall state whether the project is a
multiphase project. The Michigan economic growth authority shall approve or
deny the project not more than 65 days after receipt of the application. A
project under this subsection shall not be approved without the concurrence of
the state treasurer. If the Michigan economic growth authority does not approve
or deny the application within 65 days after it receives the application, the
Michigan economic growth authority shall send the application to the state
treasurer. The state treasurer shall approve or deny the application within 5
days after receipt of the application. If the state treasurer does not deny the
application within 5 days after receipt of the application, the application is
considered approved. The Michigan economic growth authority shall approve a
limited number of projects under this subsection during each calendar year as
provided in subsection (6). The Michigan economic growth authority shall use
the criteria in subsection (7) when approving projects under this subsection,
when determining the total amount of eligible investment, and when determining
the percentage of eligible investment for the project to be used to calculate a
credit. The total of all credits for an approved project under this subsection
shall not exceed the amount designated in the preapproval letter, as amended,
for that project. If the Michigan economic growth authority approves a project
under this subsection, the Michigan economic growth authority shall issue a
preapproval letter that states that the taxpayer is a qualified taxpayer; the
percentage of eligible investment for the project determined by the Michigan
economic growth authority for purposes of subsection (1)(b); the maximum total
eligible investment for the project on which credits may be claimed and the
maximum total of all credits for the project when the project is completed and
a certificate of completion is issued; and the project number assigned by the
Michigan economic growth authority. The Michigan economic growth authority
shall send a copy of the preapproval letter to the department. If a project is
denied under this subsection, a taxpayer is not prohibited from subsequently
applying under this subsection or subsection (3) for the same project or for
another project.
(5) If the project is on property that is functionally
obsolete, the taxpayer shall include with the application an affidavit signed
by a level 3 or level 4 assessor, that states that it is the assessor's expert
opinion that the property is functionally obsolete and the underlying basis for
that opinion.
(6) The Michigan economic growth authority may approve not
more than 20 projects each calendar year through December 31, 2009, not more
than 19 projects for the 2010 calendar year, and, except as otherwise provided
under subdivision (d), not more than 17 projects for each calendar year after
December 31, 2010 under subsection (4), and the following limitations apply:
(a) Of the projects allowed under this subsection, the total
of all credits for each project may be more than $10,000,000.00 but
$30,000,000.00 or less for only 1 project before December 31, 2009.
(b) Of the projects allowed under this subsection, up to 3
projects may be approved for projects that are not in a qualified local
governmental unit if the property is a facility for which eligible activities
are identified in a brownfield plan or, for 1 of the 3 projects, if the
property is not a facility but is functionally obsolete or blighted, property
identified in a brownfield plan. For purposes of this subdivision, a facility
includes a building or complex of buildings that was used by a state or federal
agency and that is no longer being used for the purpose for which it was used
by the state or federal agency.
(c) The project allowed under subdivision (a) may also
qualify under subdivision (b).
(d) If the Michigan economic growth authority determines that
there are previously issued credits authorized under section 434(6) available,
the Michigan economic growth authority may approve 2 additional projects for
each calendar year after December 31, 2010. As used in this subdivision,
"previously issued credits" means the total amount of credits
authorized by the Michigan economic growth authority for a taxpayer under
section 434(6) that meets all of the following:
(i) The taxpayer did not
use any or a portion of the credits authorized under the written agreement
under section 434(6).
(ii) The authority determined at a meeting upon a vote of the
majority of the members present that the credits previously authorized satisfy
subparagraph (i).
(7) The Michigan
economic growth authority shall review all applications for projects under
subsection (4) and, if an application is approved, shall determine the maximum
total of all credits for that project. Before approving a project for which the
total of all credits will be more than $10,000,000.00 but $30,000,000.00 or
less only, the Michigan economic growth authority shall determine that the
project would not occur in this state without the tax credit offered under
subsection (4). The Michigan economic growth authority shall consider the
following criteria to the extent reasonably applicable to the type of project
proposed when approving a project under subsection (4), and the chairperson of
the Michigan economic growth authority or his or her designee shall consider
the following criteria to the extent reasonably applicable to the type of
project proposed when approving a project under subsection (2) or (3) or when
considering an amendment to a project under subsection (9):
(a) The overall benefit
to the public.
(b) The extent of reuse of
vacant buildings and redevelopment of blighted property.
(c) Creation of jobs.
(d) Whether the eligible
property is in an area of high unemployment.
(e) The level and extent
of contamination alleviated by the qualified taxpayer's eligible activities to the
extent known to the qualified taxpayer.
(f) The level of private
sector contribution.
(g) The cost gap that
exists between the site and a similar greenfield site as determined by the
Michigan economic growth authority.
(h) If the qualified
taxpayer is moving from another location in this state, whether the move will
create a brownfield.
(i) Whether the project
is financially and economically sound.
(j) Any other criteria
that the Michigan economic growth authority or the chairperson of the Michigan
economic growth authority, as applicable, considers appropriate for the
determination of eligibility under subsection (3) or (4).
(8) A qualified taxpayer
may apply for projects under this section for eligible investment on more than
1 eligible property in a tax year. Each project approved and each project for
which a certificate of completion is issued under this section shall be for
eligible investment on 1 eligible property.
(9) If, after a
taxpayer's project has been approved and the taxpayer has received a
preapproval letter but before the taxpayer has made an eligible investment,
other than soft costs, at the property, the taxpayer determines that the
project cannot be completed as preapproved, the taxpayer may petition the
Michigan economic growth authority to amend the project and the preapproval
letter to increase the maximum total eligible investment for the project on
which credits may be claimed and the maximum total of all credits for the
project. A taxpayer may petition the Michigan economic growth authority to make
any other amendments to the project or preapproval letter at any time before a
certificate of completion is issued. Amendments to the project or preapproval
letter may include, but are not limited to, extending the duration of time provided
to complete the project, as long as that extension does not exceed 10 years
from the date of the preapproval letter or as otherwise
extended under subsection (10). However, if a project was approved prior
to December 31, 2008 for 20% of the qualified taxpayer's eligible investment
and a total of less than $2,000,000.00 for all credits for that project and
that project has received a funding reservation for an allocation of the
federal low-income housing tax credit administered by the Michigan state housing
development authority of more than $1,100,000.00, then that project may be
amended to extend the duration of time provided to complete the project to the
placed-in-service date of the carryover allocation agreement for the federal
low-income housing tax credit.
(10) A project may be a
multiphase project. If a project is a multiphase project, when each component
of the multiphase project is completed, the taxpayer shall submit documentation
that the component is complete, an accounting of the cost of the component, and
the eligible investment for the component of each taxpayer eligible for a
credit for the project of which the component is a part to the Michigan
economic growth authority or the designee of the Michigan economic growth
authority, who shall verify that the component is complete. When the completion
of the component is verified, a component completion certificate shall be
issued to the qualified taxpayer which shall state that the taxpayer is a
qualified taxpayer, the credit amount for the component, the qualified
taxpayer's federal employer identification number or the Michigan treasury
number assigned to the taxpayer, and the project number. The taxpayer may
assign all or part of the credit for a multiphase project as provided in this
section after a component completion certificate for a component is issued. The
qualified taxpayer may transfer ownership of or lease the completed component
and assign a proportionate share of the credit for the entire project to the
qualified taxpayer that is the new owner or lessee. A multiphase project shall
not be divided into more than 10 components. A component is considered to be
completed when a temporary or final certificate of
occupancy has been issued by the local municipality in which the project is located
for all of the buildings or facilities that comprise the completed component
and a component completion certificate is issued or the chairperson of the
Michigan economic growth authority or his or her designee, for projects
approved under subsection (2) or (3), or the Michigan economic growth
authority, for projects approved under subsection (4), verifies that the
component is complete. A credit assigned based on a multiphase project shall be
claimed by the assignee in the tax year in which the assignment is made. The
total of all credits for a multiphase project shall not exceed the amount
stated in the preapproval letter, as amended, for the project under subsection
(1). If Except as
otherwise provided under this subsection, if all components of a multiphase
project are not completed by 10 years after the date on which the preapproval
letter, as amended, if applicable, for the project was issued, the qualified
taxpayer that received the preapproval letter for the project shall pay to the
state treasurer, as a penalty, an amount equal to the sum of all credits
claimed and assigned for all components of the multiphase project and no
credits based on that multiphase project shall be claimed after that date by
the qualified taxpayer or any assignee of the qualified taxpayer. A qualified taxpayer that was approved for a credit based on a
multiphase project by Resolution 2008-178 adopted by the Michigan economic
growth authority and issued a preapproval letter on March 14, 2011 has until
September 14, 2022 to complete that project and claim the credit without
penalty. A qualified taxpayer that was approved for a credit based on a
multiphase project by Resolution 2020-046 adopted by the Michigan economic
growth authority and issued a preapproval letter on June 10, 2011 has until
September 14, 2023 to complete that project and claim the credit without
penalty. The penalty under this subsection is subject to interest on the
amount of the credit claimed or assigned determined individually for each
component at the rate in section 23(2) of 1941 PA 122, MCL 205.23, beginning on
the date that the credit for that component was claimed or assigned. As used in
this subsection, "proportionate share" means the same percentage of
the total of all credits for the project that the qualified investment for the
completed component is of the total qualified investment stated in the
preapproval letter, as amended, for the entire project.
(11) When a project
under this section is completed, the taxpayer shall submit documentation that
the project is completed, an accounting of the cost of the project, the
eligible investment of each taxpayer if there is more than 1 taxpayer eligible
for a credit for the project, and, if the taxpayer is not the owner or lessee
of the eligible property on which the eligible investment was made at the time
the project is completed, that the taxpayer was the owner or lessee of, or was
a party to an agreement to purchase or lease, that eligible property when all
eligible investment of the taxpayer was made. The chairperson of the Michigan
economic growth authority or his or her designee, for projects approved under
subsection (2) or (3), or the Michigan economic growth authority, for projects
approved under subsection (4), shall verify that the project is completed. The
Michigan economic growth authority shall conduct an on-site inspection as part
of the verification process for projects approved under subsection (4). When
the completion of the project is verified, a certificate of completion shall be
issued to each qualified taxpayer that has made eligible investment on that
eligible property. The certificate of completion shall state the total amount
of all credits for the project and that total shall not exceed the maximum
total of all credits listed in the preapproval letter for the project under
subsection (2), (3), or (4) as applicable and as amended under subsection (9)
and shall state all of the following:
(a) That the taxpayer is
a qualified taxpayer.
(b) The total cost of
the project and the eligible investment of each qualified taxpayer.
(c) Each qualified
taxpayer's credit amount.
(d) The qualified
taxpayer's federal employer identification number or the Michigan treasury
number assigned to the taxpayer.
(e) The project number.
(f) For a project
approved under subsection (4) for which the total of all credits is more than
$10,000,000.00 but $30,000,000.00 or less, the total of all credits and the
schedule on which the annual credit amount shall be claimed by the qualified
taxpayer.
(g) For a multiphase
project under subsection (10), the amount of each credit assigned and the
amount of all credits claimed in each tax year before the year in which the
project is completed.
(12) Except as otherwise
provided in this section, qualified taxpayers shall claim credits under this
section in the tax year in which the certificate of completion is issued. For a
project approved under subsection (4) for which the total of all credits is
more than $10,000,000.00 but $30,000,000.00 or less, the qualified taxpayer
shall claim 10% of its approved credit each year for 10 years. A credit
assigned based on a multiphase project shall be claimed in the year in which
the credit is assigned.
(13) The cost of
eligible investment for leased machinery, equipment, or fixtures is the cost of
that property had the property been purchased minus the lessor's estimate, made
at the time the lease is entered into, of the market value the property will
have at the end of the lease. A credit for property described in this
subsection is allowed only if the cost of that property had the property been
purchased and the lessor's estimate of the market value at the end of the lease
are provided to the Michigan economic growth authority.
(14) Credits claimed by
a lessee of eligible property are subject to the total of all credits
limitation under this section.
(15) Each qualified
taxpayer and assignee under subsection (20), (21), or (22) that claims a credit
under this section shall attach a copy of the certificate of completion and, if
the credit was assigned, a copy of the assignment form provided for under this
section to the annual return filed under this act on which the credit under
this section is claimed. An assignee of a credit based on a multiphase project
shall attach a copy of the assignment form provided for under this section and
the component completion certificate provided for in subsection (10) to the
annual return filed under this act on which the credit is claimed but is not
required to file a copy of a certificate of completion.
(16) Except as otherwise
provided in this subsection or subsection (10), (18), (20), (21), or (22), a
credit under this section shall be claimed in the tax year in which the
certificate of completion is issued to the qualified taxpayer. For a project
described in subsection (11)(f) for which a schedule for claiming annual credit
amounts is designated on the certificate of completion by the Michigan economic
growth authority, the annual credit amount shall be claimed in the tax year
specified on the certificate of completion.
(17) Except as otherwise
provided under this subsection, the credits approved under this section shall
be calculated after application of all other credits allowed under this act.
The credits under this section shall be calculated before the calculation of
the credits under sections 413, 423, 431, and 450.
(18) Except as otherwise
provided under this subsection, if the credit allowed under this section for
the tax year and any unused carryforward of the credit allowed under this
section exceed the qualified taxpayer's or assignee's tax liability for the tax
year, that portion that exceeds the tax liability for the tax year shall not be
refunded but may be carried forward to offset tax liability in subsequent tax
years for 10 years or until used up, whichever occurs first. Except as
otherwise provided in this subsection, the maximum time allowed under the
carryforward provisions under this subsection begins with the tax year in which
the certificate of completion is issued to the qualified taxpayer. If the
qualified taxpayer assigns all or any portion of its credit approved under this
section, the maximum time allowed under the carryforward provisions for an
assignee begins to run with the tax year in which the assignment is made and
the assignee first claims a credit, which shall be the same tax year. The
maximum time allowed under the carryforward provisions for an annual credit
amount for a credit allowed under subsection (4) begins to run in the tax year
for which the annual credit amount is designated on the certificate of
completion issued under this section. A credit carryforward available under
section 38g of former 1975 PA 228 that is unused at the end of the last tax
year may be claimed against the tax imposed under this act for the years the
carryforward would have been available under former 1975 PA 228. Beginning on
and after April 8, 2008, if the credit allowed under this section for the tax
year exceeds the qualified taxpayer's tax liability for the tax year, the
qualified taxpayer may elect to have the excess refunded at a rate equal to 85%
of that portion of the credit that exceeds the tax liability of the qualified
taxpayer for the tax year and forgo the remaining 15% of the credit and any
carryforward.
(19) If a project or
credit under this section is for the addition of personal property, if the cost
of that personal property is used to calculate a credit under this section, and
if the personal property is disposed of or transferred from the eligible
property to any other location, the qualified taxpayer that disposed of that
property, or transferred the personal property shall add the same percentage as
determined under subsection (1) of the federal basis of the personal property
used for determining gain or loss as of the date of the disposition or transfer
to the qualified taxpayer's tax liability under this act after application of
all credits under this act for the tax year in which the disposition or
transfer occurs. If a qualified taxpayer has an unused carryforward of a credit
under this section, the amount otherwise added under this subsection to the
qualified taxpayer's tax liability may instead be used to reduce the qualified
taxpayer's carryforward under subsection (18).
(20) For credits under
this section for projects for which a certificate of completion is issued
before January 1, 2006 and except as otherwise provided in this subsection, if
a qualified taxpayer pays or accrues eligible investment on or to an eligible
property that is leased for a minimum term of 10 years or sold to another
taxpayer for use in a business activity, the qualified taxpayer may assign all
or a portion of the credit under this section based on that eligible investment
to the lessee or purchaser of that eligible property. A credit assignment under
this subsection shall only be made to a taxpayer that when the assignment is
complete will be a qualified taxpayer. All credit assignments under this
subsection are irrevocable and, except for a credit based on a multiphase
project, shall be made in the tax year in which the certificate of completion
is issued, unless the assignee is an unknown lessee. If a qualified taxpayer
wishes to assign all or a portion of its credit to a lessee but the lessee is
unknown in the tax year in which the certificate of completion is issued, the
qualified taxpayer may delay claiming and assigning the credit until the first
tax year in which the lessee is known. A qualified taxpayer may claim a portion
of a credit and assign the remaining credit amount. Except as otherwise
provided in this subsection, if the qualified taxpayer both claims and assigns
portions of the credit, the qualified taxpayer shall claim the portion it
claims in the tax year in which the certificate of completion is issued or, for
a credit assigned and claimed for a multiphase project before a certificate of
completion is issued, the taxpayer shall claim the credit in the year in which
the credit is assigned. If a qualified taxpayer assigns all or a portion of the
credit and the eligible property is leased to more than 1 taxpayer, the
qualified taxpayer shall determine the amount of credit assigned to each
lessee. A lessee shall not subsequently assign a credit or any portion of a
credit assigned under this subsection. A purchaser may subsequently assign a
credit or any portion of a credit assigned to the purchaser under this
subsection to a lessee of the eligible property. The credit assignment under
this subsection shall be made on a form prescribed by the Michigan economic
growth authority. The qualified taxpayer shall send a copy of the completed
assignment form to the Michigan economic growth authority in the tax year in
which the assignment is made. The assignee shall attach a copy of the completed
assignment form to its annual return required to be filed under this act, for
the tax year in which the assignment is made and the assignee first claims a
credit, which shall be the same tax year. In addition to all other procedures
under this subsection, the following apply if the total of all credits for a
project is more than $10,000,000.00 but $30,000,000.00 or less:
(a) The credit shall be
assigned based on the schedule contained in the certificate of completion.
(b) If the qualified
taxpayer assigns all or a portion of the credit amount, the qualified taxpayer
shall assign the annual credit amount for each tax year separately.
(c) More than 1 annual
credit amount may be assigned to any 1 assignee and the qualified taxpayer may
assign all or a portion of each annual credit amount to any assignee.
(d) The qualified
taxpayer shall not assign more than the annual credit amount for each tax year.
(21) Except as otherwise
provided in this subsection, for projects for which a certificate of completion
is issued before January 1, 2006, and except as otherwise provided in this
subsection, if a qualified taxpayer is a partnership, limited liability
company, or subchapter S corporation, the qualified taxpayer may assign all or
a portion of a credit under this section to its partners, members, or
shareholders, based on their proportionate share of ownership of the
partnership, limited liability company, or subchapter S corporation or based on
an alternative method approved by the Michigan economic growth authority. A
credit assignment under this subsection is irrevocable and, except for a credit
assignment based on a multiphase project, shall be made in the tax year in
which a certificate of completion is issued. A qualified taxpayer may claim a
portion of a credit and assign the remaining credit amount. Except as otherwise
provided in this subsection, if the qualified taxpayer both claims and assigns
portions of the credit, the qualified taxpayer shall claim the portion it
claims in the tax year in which a certificate of completion is issued or for a
credit assigned and claimed for a multiphase project, before the component
completion certificate is issued, the taxpayer shall claim the credit in the
year in which the credit is assigned. A partner, member, or shareholder that is
an assignee shall not subsequently assign a credit or any portion of a credit
assigned under this subsection. The credit assignment under this subsection
shall be made on a form prescribed by the Michigan economic growth authority.
The qualified taxpayer shall send a copy of the completed assignment form to
the Michigan economic growth authority in the tax year in which the assignment
is made. A partner, member, or shareholder who is an assignee shall attach a
copy of the completed assignment form to its annual return required under this
act, for the tax year in which the assignment is made and the assignee first
claims a credit, which shall be the same tax year. A credit assignment based on
a credit for a component of a multiphase project that is completed before
January 1, 2006 shall be made under this subsection. In addition to all other
procedures under this subsection, the following apply if the total of all
credits for a project is more than $10,000,000.00 but $30,000,000.00 or less:
(a) The credit shall be
assigned based on the schedule contained in the certificate of completion.
(b) If the qualified
taxpayer assigns all or a portion of the credit amount, the qualified taxpayer
shall assign the annual credit amount for each tax year separately.
(c) More than 1 annual
credit amount may be assigned to any 1 assignee and the qualified taxpayer may
assign all or a portion of each annual credit amount to any assignee.
(d) The qualified
taxpayer shall not assign more than the annual credit amount for each tax year.
(22) For projects
approved under this section or section 38g of former 1975 PA 228 for which a
certificate of completion is issued on and after January 1, 2006, a qualified
taxpayer may assign all or a portion of a credit allowed under this section or
section 38g(2), (3), or (33) of former 1975 PA 228 under this subsection. A
credit assignment under this subsection is irrevocable and, except for a credit
assignment based on a multiphase project, shall be made in the tax year in
which a certificate of completion is issued unless the assignee is an unknown
lessee. If a qualified taxpayer wishes to assign all or a portion of its credit
to a lessee but the lessee is unknown in the tax year in which the certificate
of completion is issued, the qualified taxpayer may delay claiming and
assigning the credit until the first tax year in which the lessee is known. A
qualified taxpayer may claim a portion of a credit and assign the remaining
credit amount. If the qualified taxpayer both claims and assigns portions of
the credit, the qualified taxpayer shall claim the portion it claims in the tax
year in which a certificate of completion is issued pursuant to this section or
section 38g of former 1975 PA 228. An assignee may subsequently assign a credit
or any portion of a credit assigned under this subsection to 1 or more
assignees. The credit assignment or a subsequent reassignment under this subsection
shall be made on a form prescribed by the Michigan economic growth authority.
The Michigan economic growth authority or its designee shall review and issue a
completed assignment or reassignment certificate to the assignee or reassignee.
An assignee or subsequent reassignee shall attach a copy of the completed
assignment certificate to its annual return required under this act, for the
tax year in which the assignment or reassignment is made and the assignee or
reassignee first claims a credit, which shall be the same tax year. A credit
assignment based on a credit for a component of a multiphase project that is
completed before January 1, 2006 shall be made under section 38g(18) of former
1975 PA 228. A credit assignment based on a credit for a component of a
multiphase project that is completed on or after January 1, 2006 may be made
under this section. In addition to all other procedures and requirements under
this section, the following apply if the total of all credits for a project is
more than $10,000,000.00 but $30,000,000.00 or less:
(a) The credit shall be
assigned based on the schedule contained in the certificate of completion.
(b) If the qualified
taxpayer assigns all or a portion of the credit amount, the qualified taxpayer
shall assign the annual credit amount for each tax year separately.
(c) More than 1 annual
credit amount may be assigned to any 1 assignee, and the qualified taxpayer may
assign all or a portion of each annual credit amount to any assignee.
(23) A qualified
taxpayer or assignee under subsection (20), (21), or (22) shall not claim a
credit under subsection (1)(a) or (b) based on eligible investment on which a
credit claimed under section 38d of former 1975 PA 228 was based.
(24) When reviewing an
application for a project for designation as an urban development area project,
the Michigan economic growth authority for projects approved under subsection
(4) or the chairperson of the Michigan economic growth authority or his or her
designee for projects approved under subsections (2) and (3) shall consider all
of the following criteria:
(a) If the project
increases the density of the area by promoting multistory development.
(b) If the project
promotes mixed-use development and walkable communities.
(c) If the project
promotes sustainable redevelopment.
(d) If the project
addresses areawide redevelopment and includes multiple parcels of property.
(e) If the project
addresses underserved markets of commerce.
(f) Any other criteria
determined by the Michigan economic growth authority or the chairperson of the
Michigan economic growth authority.
(25) An eligible
taxpayer that claims a credit under this section is not prohibited from
claiming a credit under section 431. However, the eligible taxpayer shall not
claim a credit under this section and section 431 based on the same costs.
(26) Eligible investment
attributable or related to the operation of a professional sports stadium, and
eligible investment that is associated or affiliated with the operation of a
professional sports stadium, including, but not limited to, the operation of a
parking lot or retail store, shall not be used as a basis for a credit under
this section. Professional sports stadium does not include a professional
sports stadium that will no longer be used by a professional sports team on and
after the date that an application related to that professional sports stadium
is filed under this section.
(27) Eligible investment
attributable or related to the operation of a casino, and eligible investment
that is associated or affiliated with the operation of a casino, including, but
not limited to, the operation of a parking lot, hotel, motel, or retail store,
shall not be used as a basis for a credit under this section. As used in this
subsection, "casino" means a casino regulated by this state pursuant
to the Michigan gaming control and revenue act, 1996 IL 1, MCL 432.201 to
432.226.
(28) Eligible investment
attributable or related to the construction of a new landfill or the expansion
of an existing landfill regulated under part 115 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.11501 to 324.11554, shall
not be used as a basis for a credit under this section.
(29) The Michigan
economic growth authority annually shall prepare and submit to the house of
representatives and senate committees responsible for tax policy and economic
development issues a report on the credits under subsections (2), (3), and (4).
The report shall include, but is not limited to, all of the following:
(a) A listing of the
projects under subsections (2), (3), and (4) that were approved in the calendar
year.
(b) The total amount of
eligible investment for projects approved under subsections (2), (3), and (4)
in the calendar year.
(30) For purposes of
this section, taxpayer includes a person subject to the tax imposed under
chapters 2A and 2B.
(31) For the 2008
calendar year, the total of all credits for all projects approved under
subsection (2) or (3) shall not exceed $63,000,000.00. For each calendar year
after 2008, the total of all credits for all projects approved under subsection
(2) or (3) shall not exceed $40,000,000.00. If the Michigan economic growth
authority approves a total of all credits for all projects under subsection (2)
or (3) of less than $40,000,000.00 in a calendar year, the Michigan economic
growth authority may carry forward for 1 year only the difference between
$40,000,000.00 and the total of all credits for all projects under this
subsection approved in the immediately preceding calendar year.
(32) As used in this
section:
(a) "Annual credit
amount" means the maximum amount that a qualified taxpayer is eligible to
claim each tax year for a project for which the total of all credits is more
than $10,000,000.00 but $30,000,000.00 or less, as approved under subsection
(4).
(b)
"Authority" means a brownfield redevelopment authority created under
the brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672.125.2670.
(c)
"Blighted", "brownfield plan", "eligible
activities", "facility", "functionally obsolete",
"qualified local governmental unit", and "response
activity" mean those terms as defined in the brownfield redevelopment
financing act, 1996 PA 381, MCL 125.2651 to 125.2672.125.2670.
(d) "Eligible
investment" or "eligible investments" means, when made after the
approval date of the brownfield plan but in any event no earlier than 90 days
prior to the date of the preapproval letter, any demolition, construction,
restoration, alteration, renovation, or improvement of buildings or site
improvements on eligible property and the addition of machinery, equipment, and
fixtures to eligible property after the date that eligible activities on that
eligible property have started pursuant to a brownfield plan under the
brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672, 125.2670, if
the costs of the eligible investment are not otherwise reimbursed to the
taxpayer or paid for on behalf of the taxpayer from any source other than the
taxpayer. The addition of leased machinery, equipment, or fixtures to eligible
property by a lessee of the machinery, equipment, or fixtures is eligible
investment if the lease of the machinery, equipment, or fixtures has a minimum
term of 10 years or is for the expected useful life of the machinery,
equipment, or fixtures, and if the owner of the machinery, equipment, or
fixtures is not the qualified taxpayer with regard to that machinery,
equipment, or fixtures. For projects approved after April 8, 2008, eligible
investment does not include certain soft costs of the eligible investment as
determined by the Michigan economic growth authority, including, but not
limited to, developer fees, appraisals, performance bonds, closing costs, bank
fees, loan fees, risk contingencies, financing costs, permanent or construction
period interest, legal expenses, leasing or sales commissions, marketing costs,
professional fees, shared savings, taxes, title insurance, bank inspection
fees, insurance, and project management fees. Notwithstanding the foregoing,
eligible investment does include architectural, engineering, surveying, and
similar professional fees.
(e) "Eligible
property", except as otherwise provided under subsection (33), means
property for which eligible activities are identified under a brownfield plan
that was used or is currently used for commercial, industrial, public, or
residential purposes, including personal property located on the property, to
the extent included in the brownfield plan, and that is 1 or more of the
following:
(i) Is in a qualified local governmental unit and is a
facility, functionally obsolete, or blighted and includes parcels that are
adjacent or contiguous to that property if the development of the adjacent and
contiguous parcels is estimated to increase the captured taxable value of that
property.
(ii) Is not in a qualified local governmental unit and is a
facility, and includes parcels that are adjacent or contiguous to that property
if the development of the adjacent and contiguous parcels is estimated to
increase the captured taxable value of that property.
(iii) Is tax reverted property owned or under the control of a
land bank fast track authority.
(f) "Last tax
year" means the taxpayer's tax year under former 1975 PA 228 that begins
after December 31, 2006 and before January 1, 2008.
(g) "Michigan
economic growth authority" means the Michigan economic growth authority
created in the Michigan economic growth authority act, 1995 PA 24, MCL 207.801
to 207.810.
(h) "Multiphase
project" means a project approved under this section that has more than 1
component, each of which can be completed separately.
(i) "Personal
property" means that term as defined in section 8 of the general property
tax act, 1893 PA 206, MCL 211.8, except that personal property does not include
either of the following:
(i) Personal property described in section 8(h), (i), or (j) of
the general property tax act, 1893 PA 206, MCL 211.8.
(ii) Buildings described in section 14(6) of the general
property tax act, 1893 PA 206, MCL 211.14.
(j) "Project"
means the total of all eligible investment on an eligible property or, for
purposes of subsection (6)(b), 1 of the following:
(i) All eligible investment on property not in a qualified
local governmental unit that is a facility.
(ii) All eligible investment on property that is not a facility
but is functionally obsolete or blighted.
(k) "Qualified
local governmental unit" means that term as defined in the obsolete
property rehabilitation act, 2000 PA 146, MCL 125.2781 to 125.2797.
(l) "Qualified taxpayer" means a taxpayer that meets
both of the following criteria:
(i) Owns, leases, or has entered into an agreement to purchase
or lease eligible property.
(ii) Certifies that, except as otherwise provided in this
subparagraph, the department of natural resources and environment has not sued
or issued a unilateral order to the taxpayer pursuant to part 201 of the
natural resources and environmental protection act, 1994 PA 451, MCL 324.20101
to 324.20142, to compel response activity on or to the eligible property, or
expended any state funds for response activity on or to the eligible property
and demanded reimbursement for those expenditures from the qualified taxpayer.
However, if the taxpayer has completed all response activity required by part
201 of the natural resources and environmental protection act, 1994 PA 451, MCL
324.20101 to 324.20142, is in compliance with any deed restriction or
administrative or judicial order related to the required response activity, and
has reimbursed the state for all costs incurred by the state related to the
required response activity, the taxpayer meets the criteria under this
subparagraph.
(m) "Urban
development area project" means a project located on eligible property in
the downtown or traditional central business district of a qualified local
governmental unit or county seat or along a traditional commercial corridor of
a qualified local governmental unit or county seat as determined by the
Michigan economic growth authority or the chairperson of the Michigan economic
growth authority or his or her designee.
(33) For purposes of
subsection (2), eligible property means that term as defined under subsection
(32)(e) except that all of the following apply:
(a) Eligible property
means property identified under a brownfield plan that was used or is currently
used for commercial, industrial, public, or residential purposes and that is 1
of the following:
(i) Property for which eligible activities are identified under
the brownfield plan, is in a qualified local governmental unit, and is a
facility, functionally obsolete, or blighted.
(ii) Property that is not in a qualified local governmental unit
but is within a downtown development district
established under 1975 PA 197, MCL 125.1651 to
125.1681, part 2 of the recodified tax increment
financing act, 2018 PA 57, MCL 125.4201 to 125.4230, and is functionally
obsolete or blighted, and a component of the project on that eligible property
is 1 or more of the following:
(A) Infrastructure
improvements that directly benefit the eligible property.
(B) Demolition of
structures that is not response activity under section 20101 of the natural
resources and environmental protection act, 1994 PA 451, MCL 324.20101.
(C) Lead or asbestos
abatement.
(D) Site preparation
that is not response activity under section 20101 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.20101.
(iii) Property for which eligible activities are identified under
the brownfield plan, is not in a qualified local governmental unit, and is a
facility.
(b) Eligible property
includes parcels that are adjacent or contiguous to the eligible property if
the development of the adjacent or contiguous parcels is estimated to increase
the captured taxable value of the property or tax reverted property owned or
under the control of a land bank fast track authority pursuant to the land bank
fast track act, 2003 PA 258, MCL 124.751 to 124.774.
(c) Eligible property
includes, to the extent included in the brownfield plan, personal property
located on the eligible property.
(d) Eligible property
does not include qualified agricultural property exempt under section 7ee of
the general property tax act, 1893 PA 206, MCL 211.7ee, from the tax levied by
a local school district for school operating purposes to the extent provided
under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211.
