SB-0798, As Passed Senate, October 11, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 798

 

 

October 5, 2005, Introduced by Senators McMANUS, TOY and ALLEN and referred to the Committee on Commerce and Labor.

 

 

 

     A bill to amend 1995 PA 24, entitled

 

"Michigan economic growth authority act,"

 

by amending section 8 (MCL 207.808), as amended by 2004 PA 398.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 8. (1) After receipt of an application, the authority may

 

enter into an agreement with an eligible business for a tax credit

 

under section 9 if the authority determines that all of the

 

following are met:

 

     (a) Except as provided in subsection (5), the eligible

 

business creates 1 or more of the following within 12 months of the

 

expansion or location as determined by the authority:

 

     (i) A minimum of 75 qualified new jobs at the facility if

 

expanding in this state.

 


     (ii) A minimum of 150 qualified new jobs at the facility if

 

locating in this state.

 

     (iii) A minimum of 25 qualified new jobs at the facility if the

 

facility is located in a neighborhood enterprise zone as determined

 

under the neighborhood enterprise zone act, 1992 PA 147, MCL

 

207.771 to 207.786, is located in a renaissance zone under the

 

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

 

125.2696, or is located in a federally designated empowerment zone,

 

rural enterprise community, or enterprise community.

 

     (iv) A minimum of 5 qualified new jobs at the facility if the

 

eligible business is a qualified high-technology business.

 

     (v) A minimum of 5 qualified new jobs at the facility if the

 

eligible business is a rural business.

 

     (b) Except as provided in subsection (5), the eligible

 

business agrees to maintain 1 or more of the following for each

 

year that a credit is authorized under this act:

 

     (i) A minimum of 75 qualified new jobs at the facility if

 

expanding in this state.

 

     (ii) A minimum of 150 qualified new jobs at the facility if

 

locating in this state.

 

     (iii) A minimum of 25 qualified new jobs at the facility if the

 

facility is located in a neighborhood enterprise zone as determined

 

under the neighborhood enterprise zone act, 1992 PA 147, MCL

 

207.771 to 207.786, is located in a renaissance zone under the

 

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

 

125.2696, or is located in a federally designated empowerment zone,

 

rural enterprise community, or enterprise community.

 


     (iv) If the eligible business is a qualified high-technology

 

business, all of the following apply:

 

     (A) A minimum of 5 qualified new jobs at the facility.

 

     (B) A minimum of 25 qualified new jobs at the facility within

 

5 years after the date of the expansion or location as determined

 

by the authority and a minimum of 25 qualified new jobs at the

 

facility each year thereafter for which a credit is authorized

 

under this act.

 

     (v) If the eligible business is a rural business, all of the

 

following apply:

 

     (A) A minimum of 5 qualified new jobs at the facility.

 

     (B) A minimum of 25 qualified new jobs at the facility within

 

5 years after the date of the expansion or location as determined

 

by the authority.

 

     (c) Except as provided in subsection (5), in addition to the

 

jobs specified in subdivision (b), the eligible business, if

 

already located within this state, agrees to maintain a number of

 

full-time jobs equal to or greater than the number of full-time

 

jobs it maintained in this state prior to the expansion, as

 

determined by the authority.

 

     (d) Except as otherwise provided in this subdivision, the

 

average wage paid for all retained jobs and qualified new jobs is

 

equal to or greater than 150% of the federal minimum wage. However,

 

if the eligible business is a qualified high-technology business,

 

then the average wage paid for all qualified new jobs is equal to

 

or greater than 400% of the federal minimum wage.

 

     (e) Except for a qualified high-technology business, the

 


expansion, retention, or location of the eligible business will not

 

occur in this state without the tax credits offered under this act.

 

     (f) Except for an eligible business described in subsection

 

(5)(b)(ii), the local governmental unit in which the eligible

 

business will expand, be located, or maintain retained jobs, or a

 

local economic development corporation or similar entity, will make

 

a staff, financial, or economic commitment to the eligible business

 

for the expansion, retention, or location.

 

     (g) The financial statements of the eligible business

 

indicated that it is financially sound or has submitted a chapter

 

11 plan of reorganization to the bankruptcy court and that its

 

plans for the expansion, retention, or location are economically

 

sound.

 

     (h) Except for an eligible business described in subsection

 

(5)(c), the eligible business has not begun construction of the

 

facility.

 

     (i) The expansion, retention, or location of the eligible

 

business will benefit the people of this state by increasing

 

opportunities for employment and by strengthening the economy of

 

this state.

 

     (j) The tax credits offered under this act are an incentive to

 

expand, retain, or locate the eligible business in Michigan and

 

address the competitive disadvantages with sites outside this

 

state.

 

     (k) A cost/benefit analysis reveals that authorizing the

 

eligible business to receive tax credits under this act will result

 

in an overall positive fiscal impact to the state.

 


     (l) If feasible, as determined by the authority, in locating

 

the facility, the authorized business reuses or redevelops property

 

that was previously used for an industrial or commercial purpose.

 

     (m) If the eligible business is a qualified high-technology

 

business described in section 3(m)(i), the eligible business agrees

 

that not less than 25% of the total operating expenses of the

 

business will be maintained for research and development for the

 

first 3 years of the written agreement.

 

     (2) If the authority determines that the requirements of

 

subsection (1) or (5) have been met, the authority shall determine

 

the amount and duration of tax credits to be authorized under

 

section 9, and shall enter into a written agreement as provided in

 

this section. The duration of the tax credits shall not exceed 20

 

years or for an authorized business that is a distressed business,

 

3 years. In determining the amount and duration of tax credits

 

authorized, the authority shall consider the following factors:

 

     (a) The number of qualified new jobs to be created or retained

 

jobs to be maintained.

 

     (b) The average wage level of the qualified new jobs or

 

retained jobs relative to the average wage paid by private entities

 

in the county in which the facility is located.

 

     (c) The total capital investment or new capital investment the

 

eligible business will make.

 

     (d) The cost differential to the business between expanding,

 

locating, or retaining new jobs in Michigan and a site outside of

 

Michigan.

 

     (e) The potential impact of the expansion, retention, or

 


location on the economy of Michigan.

 

     (f) The cost of the credit under section 9, the staff,

 

financial, or economic assistance provided by the local government

 

unit, or local economic development corporation or similar entity,

 

and the value of assistance otherwise provided by this state.

 

     (3) A written agreement between an eligible business and the

 

authority shall include, but need not be limited to, all of the

 

following:

 

     (a) A description of the business expansion, retention, or

 

location that is the subject of the agreement.

 

     (b) Conditions upon which the authorized business designation

 

is made.

 

     (c) A statement by the eligible business that a violation of

 

the written agreement may result in the revocation of the

 

designation as an authorized business and the loss or reduction of

 

future credits under section 9.

 

     (d) A statement by the eligible business that a

 

misrepresentation in the application may result in the revocation

 

of the designation as an authorized business and the refund of

 

credits received under section 9.

 

     (e) A method for measuring full-time jobs before and after an

 

expansion, retention, or location of an authorized business in this

 

state.

 

     (f) A written certification from the eligible business

 

regarding all of the following:

 

     (i) The eligible business will follow a competitive bid process

 

for the construction, rehabilitation, development, or renovation of

 


the facility, and that this process will be open to all Michigan

 

residents and firms. The eligible business may not discriminate

 

against any contractor on the basis of its affiliation or

 

nonaffiliation with any collective bargaining organization.

 

     (ii) The eligible business will make a good faith effort to

 

employ, if qualified, Michigan residents at the facility.

 

     (iii) The eligible business will make a good faith effort to

 

employ or contract with Michigan residents and firms to construct,

 

rehabilitate, develop, or renovate the facility.

 

     (iv) The eligible business is encouraged to make a good faith

 

effort to utilize Michigan-based suppliers and vendors when

 

purchasing goods and services.

 

     (g) A condition that if the eligible business qualified under 

 

subsection (5)(b)(ii) and met the  subsection (1)(g) requirement by

 

filing a chapter 11 plan of reorganization, the plan must be

 

approved by the bankruptcy court within 2 years of the date of the

 

agreement or the agreement is rescinded.

 

     (4) Upon execution of a written agreement as provided in this

 

section, an eligible business is an authorized business.

 

     (5) After receipt of an application, the authority may enter

 

into a written agreement, which shall include a repayment provision

 

of all or a portion of the credits under section 9 for a violation

 

of the written agreement, with an eligible business that meets 1 or

 

more of the following criteria:

 

     (a) Is located in this state on the date of the application,

 

makes new capital investment of $250,000,000.00 in this state, and

 

maintains 500 retained jobs, as determined by the authority.

 


     (b) Meets  1 or more of the following criteria:

 

     (i) Relocates production of a product to this state after the

 

date of the application, makes capital investment of

 

$500,000,000.00 in this state, and maintains 500 retained jobs, as

 

determined by the authority.

 

     (ii) Maintains 150 retained jobs at a facility, maintains 1,000

 

or more full-time jobs in this state, and makes new capital

 

investment in this state.

 

     (iii) Is located in this state on the date of the application,

 

maintains at least 100 retained jobs at a single facility, and

 

agrees to make new capital investment at that facility equal to the

 

greater of $100,000.00 per retained job maintained at that facility

 

or $10,000,000.00 to be completed not later than December 31, 2006.

 

     (iv) Maintains 300 retained jobs at a facility; is a rural

 

business; the facility is at risk of being closed and if it were to

 

close, the work would go to a location outside this state, as

 

determined by the authority; new management or new ownership is

 

proposed for the facility that is committed to improve the

 

viability of the facility; and the tax credits offered under this

 

act are necessary for the facility to maintain operations. The

 

authority may not enter into a written agreement under this

 

subparagraph after December 31, 2006. Of the written agreements

 

entered into under this subparagraph, the authority may enter into

 

1 written agreement under this subparagraph that is excluded from

 

the requirements of subsection (1)(e), (f), (g), (h), (j), and (k)

 

if the authority considers it in the public interest and if the

 

eligible business would have met the requirements of subsection

 


(1)(e), (i), (j), and (k) within the immediately preceding 6 months

 

from the signing of the written agreement for a tax credit.

 

     (c) Is a distressed business.

 

     (6) The authority shall not execute more than 25 new written

 

agreements each year for eligible businesses that are not qualified

 

high-technology businesses, distressed businesses, or rural

 

businesses. If the authority executes less than 25 new written

 

agreements in a year, the authority may carry forward for 1 year

 

only the difference between 25 and the number of new agreements

 

executed in the immediately preceding year.

 

     (7) The authority shall not execute more than 50 new written

 

agreements each year for eligible businesses that are qualified

 

high-technology businesses or rural business. Only 5 of the 50

 

written agreements for businesses that are qualified high-

 

technology businesses or rural business may be executed each year

 

for qualified rural businesses.

 

     (8) The authority shall not execute more than 20 new written

 

agreements each year for eligible businesses that are distressed

 

businesses. The authority shall not execute more than 5 of the

 

written agreements described in this subsection each year for

 

distressed businesses that had 1,000 or more full-time jobs at a

 

facility 4 years immediately preceding the application to the

 

authority under this act.