October 6, 2005, Introduced by Senators ALLEN, BARCIA, BIRKHOLZ, McMANUS, HARDIMAN and GOSCHKA and referred to the Committee on Commerce and Labor.
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), as amended
by 2004 PA 398.
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.
(c) "Authorized business" means 1 of the following:
(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.
(C) Information technologies.
(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
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 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) and as otherwise
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.
(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 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.