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SB-0802, As Passed Senate, January 25, 2006

SUBSTITUTE FOR

SENATE BILL NO. 802

A bill to amend 1995 PA 24, entitled

"Michigan economic growth authority act,"

by amending sections 3 and 8 (MCL 207.803 and 207.808), section 3

as amended by 2004 PA 398 and section 8 as amended by 2005 PA 185.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 3. As used in this act:

(a) "Affiliated business" means a business that is 100% owned

and controlled by an associated business.

(b) "Associated business" means a business ~~which~~ that owns

at least 50% of and controls, directly or indirectly, an authorized

business.

(i) A single eligible business with a unique federal employer

identification number, which has met the requirements of section 8

and with which the authority has entered into a written agreement

for a tax credit under section 9.

(ii) A single eligible business with a unique federal employer

identification number, which has met the requirements of section 8,

except as provided in this subparagraph, and with which the

authority has entered into a written agreement for a tax credit

under section 9. An eligible business is not required to create

qualified new jobs or maintain retained jobs if qualified new jobs

are created or retained jobs are maintained by an associated or

affiliated business.

(iii) A single eligible business with a unique federal employer

identification number, which has met the requirements of section 8,

except as provided in this subparagraph, and with which the

authority has entered into a written agreement for a tax credit

under section 9. An eligible business is not required to create

qualified new jobs or maintain retained jobs if qualified new jobs

are created or retained jobs are maintained by a subsidiary

business ~~which~~ that withholds income and social security taxes,

or an employee leasing company or professional employer

organization that has entered into a contractual service agreement

with the authorized business in which the employee leasing company

or professional employer organization withholds income and social

security taxes on behalf of the authorized business.

(d) "Authority" means the Michigan economic growth authority

created under section 4.

(e) "Business" means proprietorship, joint venture,

partnership, limited liability partnership, trust, business trust,

syndicate, association, joint stock company, corporation,

cooperative, limited liability company, or any other organization.

(f) "Distressed business" means a business that meets all of

the following as verified by the Michigan economic growth

authority:

(i) Four years immediately preceding the application to the

authority under this act, the business had 150 or more full-time

jobs in this state.

(ii) Within the immediately preceding 4 years, there has been a

reduction of not less than 30% of the number of full-time jobs in

this state during any consecutive 3-year period. The highest number

of full-time jobs within the consecutive 3-year period shall be

used in order to determine the percentage reduction of full-time

jobs in this subparagraph.

(iii) Is not a seasonal employer as defined in section 27 of the

Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.27.

(g) "Eligible business" means a distressed business or

business that proposes to maintain retained jobs after December 31,

1999 or to create qualified new jobs in this state after April 18,

1995 in manufacturing, mining, research and development, wholesale

and trade, or office operations or a business that is a qualified

high-technology business. An eligible business does not include

retail establishments, professional sports stadiums, or that

portion of an eligible business used exclusively for retail sales.

Professional sports stadium does not include a sports stadium in

existence on June 6, 2000 that is not used by a professional sports

team on the date that an application related to that professional

sports stadium is filed under section 8.

(h) "Facility" means a site or sites within this state in

which an authorized business or subsidiary businesses maintains

retained jobs or creates qualified new jobs. ~~A facility does not~~

~~include a site that was a vaccine laboratory owned by this state on~~

~~April 1, 1995~~.

(i) "Full-time job" means a job performed by an individual who

is employed by an authorized business or an employee leasing

company or professional employer organization on behalf of the

authorized business, or by another person as provided in section

8(1)(c), for consideration for 35 hours or more each week and for

which the authorized business or an employee leasing company or

professional employer organization on behalf of the authorized

business, or by another person as provided in section 8(1)(c),

withholds income and social security taxes.

(j) "Local governmental unit" means a county, city, village,

or township in this state.

(k) "High-technology activity" means 1 or more of the

following:

(i) Advanced computing, which is any technology used in the

design and development of any of the following:

(A) Computer hardware and software.

(B) Data communications.

(ii) Advanced materials, which are materials with engineered

properties created through the development of specialized process

and synthesis technology.

(iii) Biotechnology, which is any technology that uses living

organisms, cells, macromolecules, microorganisms, or substances

from living organisms to make or modify a product, improve plants

or animals, or develop microorganisms for useful purposes.

Biotechnology does not include human cloning as defined in section

16274 of the public health code, 1978 PA 368, MCL 333.16274, or

stem cell research with embryonic tissue.

(iv) Electronic device technology, which is any technology that

involves microelectronics, semiconductors, electronic equipment,

and instrumentation, radio frequency, microwave, and millimeter

electronics, and optical and optic-electrical devices, or data and

digital communications and imaging devices.

(v) Engineering or laboratory testing related to the

development of a product.

(vi) Technology that assists in the assessment or prevention of

threats or damage to human health or the environment, including,

but not limited to, environmental cleanup technology, pollution

prevention technology, or development of alternative energy

sources.

(vii) Medical device technology, which is any technology that

involves medical equipment or products other than a pharmaceutical

product that has therapeutic or diagnostic value and is regulated.

(viii) Product research and development.

(ix) Advanced vehicles technology that is any technology that

involves electric vehicles, hybrid vehicles, or alternative fuel

vehicles, or components used in the construction of electric

vehicles, hybrid vehicles, or alternative fuel vehicles. For

purposes of this act:

(A) "Electric vehicle" means a road vehicle that draws

propulsion energy only from an on-board source of electrical

energy.

(B) "Hybrid vehicle" means a road vehicle that can draw

propulsion energy from both a consumable fuel and a rechargeable

energy storage system.

(x) Tool and die manufacturing.

(xi) Competitive edge technology as defined in section 88a of

the Michigan strategic fund act, 1984 PA 270, MCL 125.2088a.

(l) "New capital investment" means 1 or more of the following:

(i) New construction. As used in this subparagraph:

(A) "New construction" means property not in existence on the

date the authorized business enters into a written agreement with

the authority and not replacement construction. New construction

includes the physical addition of equipment or furnishings, subject

to section 27(2)(a) to (o) of the general property tax act, 1893 PA

206, MCL 211.27.

(B) "Replacement construction" means that term as defined in

section 34d(1)(b)(v) of the general property tax act, 1893 PA 206,

MCL 211.34d.

(ii) The purchase of new personal property. As used in this

subparagraph, "new personal property" means personal property that

is not subject to or that is exempt from the collection of taxes

under the general property tax act, 1893 PA 206, MCL 211.1 to

211.157, on the date the authorized business enters into a written

agreement with the authority.

(m) "Qualified high-technology business" means a business that

is either of the following:

(i) A business with not less than 25% of the total operating

expenses of the business used for research and development in the

tax year in which the business files an application under this act

as determined under generally accepted accounting principles and

verified by the authority.

(ii) A business whose primary business activity is high-

technology activity.

(n) "Qualified new job" means 1 of the following:

(i) A full-time job created by an authorized business at a

facility that is in excess of the number of full-time jobs the

authorized business maintained in this state prior to the expansion

or location, as determined by the authority.

(ii) For jobs created after July 1, 2000, a full-time job at a

facility created by an eligible business that is in excess of the

lowest number of full-time jobs maintained by that eligible

business in this state in the immediately preceding 120 days before

the eligible business became an authorized business, as determined

by the authority.

(iii) For a distressed business, a full-time job at a facility

that is in excess of the number of full-time jobs maintained by

that eligible business in this state on the date the eligible

business became an authorized business.

(o) "Retained jobs" means the number of full-time jobs at a

facility of an authorized business maintained in this state on a

Senate Bill No. 802 as amended January 25, 2006

specific date as that date and number of jobs is determined by the

authority.

(p) "Rural business" means an eligible business located in a

county with a population of ~~80,000~~ 90,000 or less.

(q) "Subsidiary business" means a business that is directly or

indirectly controlled or at least 80% owned by an authorized

business.

(r) "Written agreement" means a written agreement made

pursuant to section 8.

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 50>> qualified new jobs at the facility if

expanding in this state.

(ii) A minimum of <<~~150~~ 100>> 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.

Senate Bill No. 802 as amended January 25, 2006

(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 50>> qualified new jobs at the facility if

expanding in this state.

(ii) A minimum of <<~~150~~ 100>> 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.

provided in this subdivision, 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. After

an eligible business has entered into a written agreement as

provided in subsection (2), the authority may adjust the number of

full-time jobs required to be maintained by the authorized business

under this subdivision, in order to adjust for decreases in full-

time jobs in the authorized business in this state due to the

divestiture of operations, provided a single other person continues

to maintain those full-time jobs in this state. The authority shall

not approve a reduction in the number of full-time jobs to be

maintained unless the authority has determined that it can monitor

the maintenance of the full-time jobs in this state by the other

person, and the authorized business agrees in writing that the

continued maintenance of the full-time jobs in this state by the

other person, as determined by the authority, is a condition of

receiving tax credits under the written agreement. A full-time job

maintained by another person under this subdivision, that otherwise

meets the requirements of section 3(i), shall be considered a full-

time job, notwithstanding the requirement that a full-time job be

performed by an individual employed by an authorized business, or

an employee leasing company or professional employer organization

on behalf of an authorized business.

(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%~~ 300% 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.

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.

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

Senate Bill No. 802 as amended January 25, 2006

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 or contracted for not later than

December 31, ~~2006~~ 2007.

(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

Senate Bill No. 802 as amended January 25, 2006

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~~ 2007>>. Of the written agreements

entered into under this subparagraph, the authority may enter into

<<1 2>> written <<~~agreement~~ agreements>> under this subparagraph that

<<is are>> 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.

(v) Maintains 175 retained jobs and makes new capital

investment at a facility in a county with a population of not less

than 7,500, but not greater than 8,000.

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

maintains at least 675 retained jobs at a facility, agrees to

create 400 new jobs, and agrees to make a new capital investment of

at least $45,000,000.00 to be completed or contracted for not later

than December 31, 2007. 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)(h) if the authority considers it in

the public interest.

(6) The authority shall not execute more than 25 35 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 35 new

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

year only the difference between 25 35 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 10 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.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 93rd Legislature are

enacted into law:

(a) Senate Bill No. 434.

(b) Senate Bill No. 579.

(d) Senate Bill No. 900.