SB-0885, As Passed Senate, December 1, 2007

SUBSTITUTE FOR

SENATE BILL NO. 885

     A bill to amend 1996 PA 376, entitled

"Michigan renaissance zone act,"

by amending sections 8d, 8e, 9, and 10 (MCL 125.2688d, 125.2688e,

125.2689, and 125.2690), section 8d as amended by 2006 PA 93,

section 8e as added by 2006 PA 270, and section 10 as amended by

2005 PA 164.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 8d. (1) The board of the Michigan strategic fund

described in section 4 of the Michigan strategic fund act, 1984 PA

270, MCL 125.2004, may designate not more than 25 tool and die

renaissance recovery zones within this state in 1 or more cities,

villages, or townships if that city, village, or township or

combination of cities, villages, or townships consents to the

creation of a recovery zone within their boundaries. A recovery

zone shall have a duration of renaissance zone status for a period

of not less than 5 years and not more than 15 years as determined

by the board of the Michigan strategic fund. If the Michigan

strategic fund determines that the duration of renaissance zone

status for a recovery zone is less than 15 years, then the Michigan

strategic fund, with the consent of the city, village, or township

or combination of cities, villages, or townships in which the

qualified tool and die business is located, may extend the duration

of renaissance zone status for the recovery zone for 1 or more

periods that when combined do not exceed 15 years. Not less than 1

of the recovery zones shall consist of 1 or more qualified tool and

die businesses that have a North American industrial classification

system (NAICS) of 332997.

     (2) The board of the Michigan strategic fund may designate a

recovery zone within this state if the recovery zone consists of

not less than 4 and not more than 20 qualified tool and die

businesses at the time of designation. If the board of the Michigan

strategic fund designated 1 or more recovery zones that contain

less than 20 qualified tool and die businesses before December 19,

2005, the board of the Michigan strategic fund may add additional

qualified tool and die businesses to that recovery zone subject to

the limitations contained in this subsection. A recovery zone shall

consist of only qualified tool and die business property. The board

of the Michigan strategic fund may combine existing recovery zones

that are comprised solely of tool and die businesses that are

parties to the same qualified collaborative agreement. Where 2 or

more recovery zones have been combined, the board of the Michigan

strategic fund may continue to designate additional recovery zones,

provided that no more than 25 tool and die recovery zones exist at

1 time.

     (3) The board of the Michigan strategic fund may revoke the

designation of all or a portion of a recovery zone with respect to

1 or more qualified tool and die businesses if those qualified tool

and die businesses fail or cease to participate in or comply with a

qualified collaborative agreement. A qualified tool and die

business may enter into another qualified collaborative agreement

once it is designated part of a recovery zone.

     (4) One or more qualified tool and die businesses subject to a

qualified collaborative agreement may merge into another group of

qualified tool and die businesses subject to a different qualified

collaborative agreement upon application to and approval by the

Michigan strategic fund.

     (5) A qualified tool and die business in a recovery zone may

have a different period of renaissance zone status than other

qualified tool and die businesses in the same recovery zone.

     (6) The board of the Michigan strategic fund may modify an

existing recovery zone to add 1 or more qualified tool and die

businesses with the consent of all other qualified tool and die

businesses that are participating in the recovery zone.

     (7) The board of the Michigan strategic fund may modify an

existing recovery zone to add additional property under the same

terms and conditions as the existing recovery zone if all of the

following are met:

     (a) The additional real property is contiguous to existing

qualified tool and die business property and will become qualified

tool and die business property once it is brought into operation as

determined by the board of the Michigan strategic fund.

     (b) The city, village, or township in which the qualified tool

and die business is located consents to the modification.

(8) (7) As used in this section:

     (a) "Qualified collaborative agreement" means an agreement

that demonstrates synergistic opportunities, including, but not

limited to, all of the following:

     (i) Sales and marketing efforts.

     (ii) Development of standardized processes.

     (iii) Development of tooling standards.

     (iv) Standardized project management methods.

     (v) Improved ability for specialized or small niche shops to

develop expertise and compete successfully on larger programs.

     (b) "Qualified tool and die business" means a business entity

that meets all of the following:

     (i) Has a North American industrial classification system

(NAICS) of 332997, 333511, 333512, 333513, 333514, or 333515; or

has a North American industrial classification system (NAICS) of

337215 and operates a facility within an existing renaissance zone,

which facility is adjacent to real property not located in a

renaissance zone and is located within 1/4 mile of a Michigan

technical education center.

     (ii) Has entered into a qualified collaboration agreement as

approved by the Michigan strategic fund consisting of not fewer

than 4 or more than 20 other business entities at the time of

designation that have a North American industrial classification

system (NAICS) of 332997, 333511, 333512, 333513, 333514, or

333515.

     (iii) Has fewer than 75 full-time employees.

     (c) "Qualified tool and die business property" means 1 or more

of the following:

     (i) Property owned by 1 or more qualified tool and die

businesses and used by those qualified tool and die businesses

primarily for tool and die business operations. Qualified tool and

die business property is used primarily for tool and die business

operations if the qualified tool and die businesses that own the

qualified tool and die business property generate 75% or more of

the qualified tool and die businesses' gross revenue from tool and

die operations that take place on the qualified tool and die

business property at the time of designation.

     (ii) Property leased by 1 or more qualified tool and die

business for which the qualified tool and die business is liable

for ad valorem property taxes and which is used by those qualified

tool and die businesses primarily for tool and die business

operations. Qualified tool and die business property is used

primarily for tool and die business operations if the qualified

tool and die businesses that lease the qualified tool and die

business property generate 75% or more of the qualified tool and

die businesses' gross revenue from tool and die operations that

take place on the qualified tool and die business property at the

time of designation. The qualified tool and die business shall

Senate Bill No. 885 as amended November 29, 2007

furnish proof of its ad valorem property tax liability to the

department of treasury.

     Sec. 8e. (1) The board, upon recommendation of the board of

the Michigan strategic fund defined in section 4 of the Michigan

strategic fund act, 1984 PA 270, MCL 125.2004, and upon

recommendation of the commission of agriculture if the renewable

energy facility uses agricultural <<Crops>> or residues, <<or processed

products from agricultural crops>> as its primary raw material source,

may designate

not more than 10 additional renaissance zones for renewable energy

facilities within this state in 1 or more cities, villages, or

townships if that city, village, or township or combination of

cities, villages, or townships consents to the creation of a

renaissance zone for a renewable energy facility within their

boundaries.

     (2) Each renaissance zone designated for a renewable energy

facility under this section shall be 1 continuous distinct

geographic area.

     (3) The board may revoke the designation of all or a portion

of a renaissance zone for a renewable energy facility if the board

determines that the renewable energy facility does 1 or more of the

following in a renaissance zone designated under this section:

     (a) Fails to commence operation.

     (b) Ceases operation.

     (c) Fails to commence construction or renovation within 1 year

from the date the renaissance zone for the renewable energy

facility is designated.

     (4) When designating a renaissance zone for a renewable energy

facility, the board shall consider all of the following:

     (a) The economic impact on local suppliers who supply raw

materials, goods, and services to the renewable energy facility.

     (b) The creation of jobs relative to the employment base of

the community rather than the static number of jobs created.

     (c) The viability of the project.

     (d) The economic impact on the community in which the

renewable energy facility is located.

     (e) All other things being equal, giving preference to a

business entity already located in this state.

     (f) Whether the renewable energy facility can be located in an

existing renaissance zone designated under section 8 or 8a.

     (5) Beginning on the effective date of the amendatory act that

added this subsection July 7, 2006, the board shall require a

development agreement between the Michigan strategic fund and the

renewable energy facility.

     (6) Until the maximum number of additional renaissance zones

for renewable energy facilities described in subsection (1) is met,

if the board designates a renaissance zone under this section,

section 8c, or section 8f for a facility that is a forest products

processing facility or an agricultural processing facility and that

also meets the definition of a renewable energy facility, then the

board shall only designate that renaissance zone as a renaissance

zone for a renewable energy facility under this section.

     (7) As used in this section, "development agreement" means a

written agreement between the Michigan strategic fund and the

renewable energy facility that includes, but is not limited to, all

of the following:

     (a) A requirement that the renewable energy facility comply

with all state and local laws.

     (b) A requirement that the renewable energy facility report

annually to the Michigan strategic fund on all of the following:

     (i) The amount of capital investment made at the facility.

     (ii) The number of individuals employed at the facility at the

beginning and end of the reporting period as well as the number of

individuals transferred to the facility from another facility owned

by the renewable energy facility.

     (iii) The percentage of raw materials purchased in this state.

     (c) Any other conditions or requirements reasonably required

by the Michigan strategic fund.

     Sec. 9. (1) Except as otherwise provided in section 10, an

individual who is a resident of a renaissance zone or a business

that is located and conducts business activity within a renaissance

zone shall receive the exemption, deduction, or credit as provided

in the following for the period provided under section 6(2)(b):

     (a) Section 39b of the single business tax act, Act No. 228 of

the Public Acts of 1975, being section 208.39b of the Michigan

Compiled Laws 1975 PA 228, MCL 208.39b, or section 433 of the

Michigan business tax act, 2007 PA 36, MCL 208.1433.

     (b) Section 31 of the income tax act of 1967, Act No. 281 of

the Public Acts of 1967, being section 206.31 of the Michigan

Compiled Laws 1967 PA 281, MCL 206.31.

     (c) Section 35 of chapter 2 of the city income tax act, Act

No. 284 of the Public Acts of 1964, being section 141.635 of the

Michigan Compiled Laws 1964 PA 284, MCL 141.635.

     (d) Section 5 of the city utility users tax act, Act No. 100

of the Public Acts of 1990, being section 141.1155 of the Michigan

Compiled Laws 1990 PA 100, MCL 141.1155.

     (2) Except as otherwise provided in section 10, property

located in a renaissance zone is exempt from the collection of

taxes under all of the following:

     (a) Section 7ff of the general property tax act, Act No. 206

of the Public Acts of 1893, being section 211.7ff of the Michigan

Compiled Laws 1893 PA 206, MCL 211.7ff.

     (b) Section 11 of Act No. 198 of the Public Acts of 1974,

being section 207.561 of the Michigan Compiled Laws 1974 PA 198,

MCL 207.561.

     (c) Section 12 of the commercial redevelopment act, Act No.

255 of the Public Acts of 1978, being section 207.662 of the

Michigan Compiled Laws 1978 PA 255, MCL 207.662.

     (d) Section 21c of the enterprise zone act, Act No. 224 of the

Public Acts of 1985, being section 125.2121c of the Michigan

Compiled Laws 1985 PA 224, MCL 125.2121c.

     (e) Section 1 of Act No. 189 of the Public Acts of 1953, being

section 211.181 of the Michigan Compiled Laws 1953 PA 189, MCL

211.181.

     (f) Section 12 of the technology park development act, Act No.

385 of the Public Acts of 1984, being section 207.712 of the

Michigan Compiled Laws 1984 PA 385, MCL 207.712.

     (g) Section 51105 of part 511 (commercial forests) of the

natural resources and environmental protection act, Act No. 451 of

the Public Acts of 1994, being section 324.51105 of the Michigan

Compiled Laws 1994 PA 451, MCL 324.51105.

     (h) Section 9 of the neighborhood enterprise zone act, Act No.

147 of the Public Acts of 1992, being section 207.779 of the

Michigan Compiled Laws 1992 PA 147, MCL 207.779.

     (3) During the last 3 years that the taxpayer is eligible for

an exemption, deduction, or credit described in subsections (1) and

(2), the exemption, deduction, or credit shall be reduced by the

following percentages:

     (a) For the tax year that is 2 years before the final year of

designation as a renaissance zone, the percentage shall be 25%.

     (b) For the tax year immediately preceding the final year of

designation as a renaissance zone, the percentage shall be 50%.

     (c) For the tax year that is the final year of designation as

a renaissance zone, the percentage shall be 75%.

     Sec. 10. (1) An individual who is a resident of a renaissance

zone or a business that is located and conducts business activity

within a renaissance zone or a person that owns property located in

a renaissance zone is not eligible for the exemption, deduction, or

credit listed in section 9(1) or (2) for that taxable year if 1 or

more of the following apply:

     (a) The resident, business, or property owner is delinquent on

December 31 of the prior tax year under 1 or more of the following:

     (i) The single business tax act, 1975 PA 228, MCL 208.1 to

208.145, or the Michigan business tax act, 2007 PA 36, MCL 208.1101

to 208.1601.

     (ii) The income tax act of 1967, 1967 PA 281, MCL 206.1 to

206.532.

     (iii) 1974 PA 198, MCL 207.551 to 207.572.

     (iv) The commercial redevelopment act, 1978 PA 255, MCL 207.651

to 207.668.

     (v) The enterprise zone act, 1985 PA 224, MCL 125.2101 to

125.2123.

     (vi) 1953 PA 189, MCL 211.181 to 211.182.

     (vii) The technology park development act, 1984 PA 385, MCL

207.701 to 207.718.

     (viii) Part 511 of the natural resources and environmental

protection act, 1994 PA 451, MCL 324.51101 to 324.51120.

     (ix) The neighborhood enterprise zone act, 1992 PA 147, MCL

207.771 to 207.786.

     (x) The city utility users tax act, 1990 PA 100, MCL 141.1151

to 141.1177.

     (b) The resident, business, or property owner is substantially

delinquent as defined in a written policy by the qualified local

governmental unit in which the renaissance zone is located on

December 31 of the prior tax year under 1 or both of the following:

     (i) The city income tax act, 1964 PA 284, MCL 141.501 to

141.787.

     (ii) Taxes, fees, and special assessments collected under the

general property tax act, 1893 PA 206, MCL 211.1 to 211.157

211.155.

     (c) For residential rental property in a renaissance zone, the

residential rental property is not in substantial compliance with

all applicable state and local zoning, building, and housing laws,

ordinances, or codes and, except as otherwise provided in this

subdivision, the residential rental property owner has not filed an

affidavit before December 31 in the immediately preceding tax year

with the local tax collecting unit in which the residential rental

property is located as required under section 7ff of the general

property tax act, 1893 PA 206, MCL 211.7ff. Beginning December 31,

2004, a residential rental property owner is not required to file

an affidavit if the qualified local governmental unit in which the

residential rental property is located determines that the

residential rental property is in substantial compliance with all

applicable state and local zoning, building, and housing laws,

ordinances, and codes on December 31 of the immediately preceding

tax year.

     (2) An individual who is a resident of a renaissance zone is

eligible for an exemption, deduction, or credit under section 9(1)

and (2) until the department of treasury determines that the

aggregate state and local tax revenue forgone as a result of all

exemptions, deductions, or credits granted under this act to that

individual reaches $10,000,000.00.

     (3) A casino located and conducting business activity within a

renaissance zone is not eligible for the exemption, deduction, or

credit listed in section 9(1) or (2). Real property in a

renaissance zone on which a casino is operated, personal property

of a casino located in a renaissance zone, and all property

associated or affiliated with the operation of a casino is not

eligible for the exemption, deduction, or credit listed in section

9(1) or (2). As used in this subsection, "casino" means a casino or

a parking lot, hotel, motel, or retail store owned or operated by a

casino, an affiliate, or an affiliated company, regulated by this

state pursuant to the Michigan gaming control and revenue act, the

Initiated Law of 1996 1996 IL 1, MCL 432.201 to 432.226.

     (4) For tax years beginning on or after January 1, 1997, an

individual who is a resident of a renaissance zone shall not be

denied the exemption under subsection (1) if the individual failed

to file a return on or before December 31 of the prior tax year

under subsection (1)(a)(ii) and that individual was entitled to a

refund under that act.

     Enacting section 1. This amendatory act does not take effect

unless House Bill No. 5100 of the 94th Legislature is enacted into

law.