HB-5989, As Passed Senate, December 2, 2010

HOUSE BILL No. 5989

March 24, 2010, Introduced by Reps. Haines, Byrnes, Liss, Wayne Schmidt, Stanley, Constan, Robert Jones, Tyler, Haveman, Lori and Proos and referred to the Committee on Intergovernmental and Regional Affairs.

A bill to amend 1986 PA 281, entitled

"The local development financing act,"

by amending section 2 (MCL 125.2152), as amended by 2009 PA 162.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2. As used in this act:

(a) "Advance" means a transfer of funds made by a municipality

to an authority or to another person on behalf of the authority in

anticipation of repayment by the authority. Evidence of the intent

to repay an advance may include, but is not limited to, an executed

agreement to repay, provisions contained in a tax increment

financing plan approved prior to the advance, or a resolution of

the authority or the municipality.

(b) "Alternative energy technology" means equipment, component

parts, materials, electronic devices, testing equipment, and

related systems that are specifically designed, specifically

fabricated, and used primarily for 1 or more of the following:

(i) The storage, generation, reformation, or distribution of

clean fuels integrated within an alternative energy system or

alternative energy vehicle, not including an anaerobic digester

energy system or a hydroelectric energy system, for use within the

alternative energy system or alternative energy vehicle.

(ii) The process of generating and putting into a usable form

the energy generated by an alternative energy system. Alternative

energy technology does not include those component parts of an

alternative energy system that are required regardless of the

energy source.

(iii) Research and development of an alternative energy vehicle.

(iv) Research, development, and manufacturing of an alternative

energy system.

(v) Research, development, and manufacturing of an anaerobic

digester energy system.

(vi) Research, development, and manufacturing of a

hydroelectric energy system.

engaged in the research, development, or manufacturing of

alternative energy technology.

(d) "Assessed value" means 1 of the following:

(i) For valuations made before January 1, 1995, the state

equalized valuation as determined under the general property tax

act, 1893 PA 206, MCL 211.1 to 211.155.

(ii) For valuations made after December 31, 1994, the taxable

value as determined under section 27a of the general property tax

act, 1893 PA 206, MCL 211.27a.

(e) "Authority" means a local development finance authority

created pursuant to this act.

(f) "Authority district" means an area or areas within which

an authority exercises its powers.

(g) "Board" means the governing body of an authority.

(h) "Business development area" means an area designated as a

certified industrial park under this act prior to ~~the effective~~

~~date of the amendatory act that added this subdivision~~ June 29,

2000, or an area designated in the tax increment financing plan

that meets all of the following requirements:

(i) The area is zoned to allow its use for eligible property.

(ii) The area has a site plan or plat approved by the city,

village, or township in which the area is located.

(i) "Business incubator" means real and personal property that

meets all of the following requirements:

(i) Is located in a certified technology park or a certified

alternative energy park.

(ii) Is subject to an agreement under section 12a or 12c.

(iii) Is developed for the primary purpose of attracting 1 or

more owners or tenants who will engage in activities that would

each separately qualify the property as eligible property under

subdivision (s)(iii).

(j) "Captured assessed value" means the amount in any 1 year

by which the current assessed value of the eligible property

identified in the tax increment financing plan or, for a certified

technology park, the real and personal property included in the tax

increment financing plan, including the current assessed value of

property for which specific local taxes are paid in lieu of

property taxes as determined pursuant to subdivision (ff), exceeds

the initial assessed value. The state tax commission shall

prescribe the method for calculating captured assessed value.

(k) "Certified alternative energy park" means that portion of

an authority district designated by a written agreement entered

into pursuant to section 12c between the authority, the

municipality or municipalities, and the Michigan economic

development corporation.

(l) "Certified business park" means a business development area

that has been designated by the Michigan economic development

corporation as meeting criteria established by the Michigan

economic development corporation. The criteria shall establish

standards for business development areas including, but not limited

to, use, types of building materials, landscaping, setbacks,

parking, storage areas, and management.

(m) "Certified technology park" means that portion of the

authority district designated by a written agreement entered into

pursuant to section 12a between the authority, the municipality,

and the Michigan economic development corporation.

(n) "Chief executive officer" means the mayor or city manager

of a city, the president of a village, or, for other local units of

government or school districts, the person charged by law with the

supervision of the functions of the local unit of government or

school district.

(o) "Development plan" means that information and those

requirements for a development set forth in section 15.

(p) "Development program" means the implementation of a

development plan.

(q) "Eligible advance" means an advance made before August 19,

1993.

(r) "Eligible obligation" means an obligation issued or

incurred by an authority or by a municipality on behalf of an

authority before August 19, 1993 and its subsequent refunding by a

qualified refunding obligation. Eligible obligation includes an

authority's written agreement entered into before August 19, 1993

to pay an obligation issued after August 18, 1993 and before

December 31, 1996 by another entity on behalf of the authority.

(s) "Eligible property" means land improvements, buildings,

structures, and other real property, and machinery, equipment,

furniture, and fixtures, or any part or accessory thereof whether

completed or in the process of construction comprising an

integrated whole, located within an authority district, of which

the primary purpose and use is or will be 1 of the following:

(i) The manufacture of goods or materials or the processing of

goods or materials by physical or chemical change.

(ii) Agricultural processing.

(iii) A high technology activity.

(iv) The production of energy by the processing of goods or

materials by physical or chemical change by a small power

production facility as defined by the federal energy regulatory

commission pursuant to the public utility regulatory policies act

of 1978, Public Law 95-617, which facility is fueled primarily by

biomass or wood waste. This act does not affect a person's rights

or liabilities under law with respect to groundwater contamination

described in this subparagraph. This subparagraph applies only if

all of the following requirements are met:

(A) Tax increment revenues captured from the eligible property

will be used to finance, or will be pledged for debt service on tax

increment bonds used to finance, a public facility in or near the

authority district designed to reduce, eliminate, or prevent the

spread of identified soil and groundwater contamination, pursuant

to law.

(B) The board of the authority exercising powers within the

authority district where the eligible property is located adopted

an initial tax increment financing plan between January 1, 1991 and

May 1, 1991.

special assessment district whereby not less than 50% of the

operating expenses of the public facility described in this

subparagraph will be paid for by special assessments. Not less than

50% of the amount specially assessed against all parcels in the

special assessment district shall be assessed against parcels owned

by parties potentially responsible for the identified groundwater

contamination pursuant to law.

(v) A business incubator.

(vi) An alternative energy technology business.

(vii) A transit-oriented facility.

(viii) A transit-oriented development.

(t) "Fiscal year" means the fiscal year of the authority.

(u) "Governing body" means the elected body having legislative

powers of a municipality creating an authority under this act.

(v) "High-technology activity" means that term as defined in

section 3 of the Michigan economic growth authority act, 1995 PA

24, MCL 207.803.

(w) "Initial assessed value" means the assessed value of the

eligible property identified in the tax increment financing plan

or, for a certified technology park, the assessed value of any real

and personal property included in the tax increment financing plan,

at the time the resolution establishing the tax increment financing

plan is approved as shown by the most recent assessment roll for

which equalization has been completed at the time the resolution is

adopted or, for property that becomes eligible property in other

than a certified technology park after the date the plan is

approved, at the time the property becomes eligible property.

Property exempt from taxation at the time of the determination of

the initial assessed value shall be included as zero. Property for

which a specific local tax is paid in lieu of property tax shall

not be considered exempt from taxation. The initial assessed value

of property for which a specific local tax was paid in lieu of

property tax shall be determined as provided in subdivision (ff).

(x) "Michigan economic development corporation" means the

public body corporate created under section 28 of article VII of

the state constitution of 1963 and the urban cooperation act of

1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual

interlocal agreement effective April 5, 1999 between local

participating economic development corporations formed under the

economic development corporations act, 1974 PA 338, MCL 125.1601 to

125.1636, and the Michigan strategic fund. If the Michigan economic

development corporation is unable for any reason to perform its

duties under this act, those duties may be exercised by the

Michigan strategic fund.

(y) "Michigan strategic fund" means the Michigan strategic

fund as described in the Michigan strategic fund act, 1984 PA 270,

MCL 125.2001 to 125.2094.

(z) "Municipality" means a city, village, or urban township.

However, for purposes of creating and operating a certified

alternative energy park, municipality includes townships that are

not urban townships.

(aa) "Obligation" means a written promise to pay, whether

evidenced by a contract, agreement, lease, sublease, bond, or note,

or a requirement to pay imposed by law. An obligation does not

include a payment required solely because of default upon an

obligation, employee salaries, or consideration paid for the use of

municipal offices. An obligation does not include those bonds that

have been economically defeased by refunding bonds issued under

this act. Obligation includes, but is not limited to, the

following:

(i) A requirement to pay proceeds derived from ad valorem

property taxes or taxes levied in lieu of ad valorem property

taxes.

(ii) A management contract or a contract for professional

services.

(iii) A payment required on a contract, agreement, bond, or note

if the requirement to make or assume the payment arose before

August 19, 1993.

(iv) A requirement to pay or reimburse a person for the cost of

insurance for, or to maintain, property subject to a lease, land

contract, purchase agreement, or other agreement.

(v) A letter of credit, paying agent, transfer agent, bond

registrar, or trustee fee associated with a contract, agreement,

bond, or note.

(bb) "On behalf of an authority", in relation to an eligible

advance made by a municipality or an eligible obligation or other

protected obligation issued or incurred by a municipality, means in

anticipation that an authority would transfer tax increment

revenues or reimburse the municipality from tax increment revenues

in an amount sufficient to fully make payment required by the

eligible advance made by a municipality, or eligible obligation or

other protected obligation issued or incurred by the municipality,

if the anticipation of the transfer or receipt of tax increment

revenues from the authority is pursuant to or evidenced by 1 or

more of the following:

(i) A reimbursement agreement between the municipality and an

authority it established.

(ii) A requirement imposed by law that the authority transfer

tax increment revenues to the municipality.

(iii) A resolution of the authority agreeing to make payments to

the incorporating unit.

(iv) Provisions in a tax increment financing plan describing

the project for which the obligation was incurred.

(cc) "Other protected obligation" means:

(i) A qualified refunding obligation issued to refund an

obligation described in subparagraph (ii) or (iii), an obligation that

is not a qualified refunding obligation that is issued to refund an

eligible obligation, or a qualified refunding obligation issued to

refund an obligation described in this subparagraph.

(ii) An obligation issued or incurred by an authority or by a

municipality on behalf of an authority after August 19, 1993, but

before December 31, 1994, to finance a project described in a tax

increment finance plan approved by the municipality in accordance

with this act before August 19, 1993, for which a contract for

final design is entered into by the municipality or authority

before March 1, 1994.

(iii) An obligation incurred by an authority or municipality

after August 19, 1993, to reimburse a party to a development

agreement entered into by a municipality or authority before August

19, 1993, for a project described in a tax increment financing plan

approved in accordance with this act before August 19, 1993, and

undertaken and installed by that party in accordance with the

development agreement.

(iv) An ongoing management or professional services contract

with the governing body of a county that was entered into before

March 1, 1994 and that was preceded by a series of limited term

management or professional services contracts with the governing

body of the county, the last of which was entered into before

August 19, 1993.

(dd) "Public facility" means 1 or more of the following:

(i) A street, road, bridge, storm water or sanitary sewer,

sewage treatment facility, facility designed to reduce, eliminate,

or prevent the spread of identified soil or groundwater

contamination, drainage system, retention basin, pretreatment

facility, waterway, waterline, water storage facility, rail line,

electric, gas, telephone or other communications, or any other type

of utility line or pipeline, transit-oriented facility, transit-

oriented development, or other similar or related structure or

improvement, together with necessary easements for the structure or

improvement. Except for rail lines, utility lines, or pipelines,

the structures or improvements described in this subparagraph shall

be either owned or used by a public agency, functionally connected

to similar or supporting facilities owned or used by a public

agency, or designed and dedicated to use by, for the benefit of, or

for the protection of the health, welfare, or safety of the public

generally, whether or not used by a single business entity. Any

road, street, or bridge shall be continuously open to public

access. A public facility shall be located on public property or in

a public, utility, or transportation easement or right-of-way.

(ii) The acquisition and disposal of land that is proposed or

intended to be used in the development of eligible property or an

interest in that land, demolition of structures, site preparation,

and relocation costs.

(iii) All administrative and real and personal property

acquisition and disposal costs related to a public facility

described in subparagraphs (i) and (iv), including, but not limited

to, architect's, engineer's, legal, and accounting fees as

permitted by the district's development plan.

(iv) An improvement to a facility used by the public or a

public facility as those terms are defined in section 1 of 1966 PA

1, MCL 125.1351, which improvement is made to comply with the

barrier free design requirements of the state construction code

promulgated under the Stille-DeRossett-Hale single state

construction code act, 1972 PA 230, MCL 125.1501 to 125.1531.

(v) All of the following costs approved by the Michigan

economic development corporation:

(A) Operational costs and the costs related to the

acquisition, improvement, preparation, demolition, disposal,

construction, reconstruction, remediation, rehabilitation,

restoration, preservation, maintenance, repair, furnishing, and

equipping of land and other assets that are or may become eligible

for depreciation under the internal revenue code of 1986 for a

business incubator located in a certified technology park or

certified alternative energy park.

(B) Costs related to the acquisition, improvement,

preparation, demolition, disposal, construction, reconstruction,

remediation, rehabilitation, restoration, preservation,

maintenance, repair, furnishing, and equipping of land and other

assets that, if privately owned, would be eligible for depreciation

under the internal revenue code of 1986 for laboratory facilities,

research and development facilities, conference facilities,

teleconference facilities, testing, training facilities, and

quality control facilities that are or that support eligible

property under subdivision (s)(iii), that are owned by a public

entity, and that are located within a certified technology park.

preparation, demolition, disposal, construction, reconstruction,

remediation, rehabilitation, restoration, preservation,

maintenance, repair, furnishing, and equipping of land and other

assets that, if privately owned, would be eligible for depreciation

under the internal revenue code of 1986 for facilities that are or

that will support eligible property under subdivision (s)(vi), that

have been or will be owned by a public entity at the time such

costs are incurred, that are located within a certified alternative

energy park, and that have been or will be conveyed, by gift or

sale, by such public entity to an alternative energy technology

business.

(vi) Operating and planning costs included in a plan pursuant

to section 12(1)(f), including costs of marketing property within

the district and attracting development of eligible property within

the district.

(ee) "Qualified refunding obligation" means an obligation

issued or incurred by an authority or by a municipality on behalf

of an authority to refund an obligation if the refunding obligation

meets both of the following:

(i) The net present value of the principal and interest to be

paid on the refunding obligation, including the cost of issuance,

will be less than the net present value of the principal and

interest to be paid on the obligation being refunded, as calculated

using a method approved by the department of treasury.

(ii) The net present value of the sum of the tax increment

revenues described in subdivision (hh)(ii) and the distributions

under section 11a to repay the refunding obligation will not be

greater than the net present value of the sum of the tax increment

revenues described in subdivision (hh)(ii) and the distributions

under section 11a to repay the obligation being refunded, as

calculated using a method approved by the department of treasury.

(ff) "Specific local taxes" means a tax levied under 1974 PA

198, MCL 207.551 to 207.572, the obsolete property rehabilitation

act, 2000 PA 146, MCL 125.2781 to 125.2797, the commercial

redevelopment act, 1978 PA 255, MCL 207.651 to 207.668, the

enterprise zone act, 1985 PA 224, MCL 125.2101 to 125.2123, 1953 PA

189, MCL 211.181 to 211.182, and the technology park development

act, 1984 PA 385, MCL 207.701 to 207.718. The initial assessed

value or current assessed value of property subject to a specific

local tax is the quotient of the specific local tax paid divided by

the ad valorem millage rate. However, after 1993, the state tax

commission shall prescribe the method for calculating the initial

assessed value and current assessed value of property for which a

specific local tax was paid in lieu of a property tax.

(gg) "State fiscal year" means the annual period commencing

October 1 of each year.

(hh) "Tax increment revenues" means the amount of ad valorem

property taxes and specific local taxes attributable to the

application of the levy of all taxing jurisdictions upon the

captured assessed value of eligible property within the district

or, for purposes of a certified technology park or a certified

alternative energy park, real or personal property that is located

within the certified technology park and included within the tax

increment financing plan, subject to the following requirements:

(i) Tax increment revenues include ad valorem property taxes

and specific local taxes attributable to the application of the

levy of all taxing jurisdictions, other than the state pursuant to

the state education tax act, 1993 PA 331, MCL 211.901 to 211.906,

and local or intermediate school districts, upon the captured

assessed value of real and personal property in the development

area for any purpose authorized by this act.

(ii) Tax increment revenues include ad valorem property taxes

and specific local taxes attributable to the application of the

levy of the state pursuant to the state education tax act, 1993 PA

331, MCL 211.901 to 211.906, and local or intermediate school

districts upon the captured assessed value of real and personal

property in the development area in an amount equal to the amount

necessary, without regard to subparagraph (i), for the following

purposes:

(A) To repay eligible advances, eligible obligations, and

other protected obligations.

(B) To fund or to repay an advance or obligation issued by or

on behalf of an authority to fund the cost of public facilities

related to or for the benefit of eligible property located within a

certified technology park or a certified alternative energy park to

the extent the public facilities have been included in an agreement

under section 12a(3), not to exceed 50%, as determined by the state

treasurer, of the amounts levied by the state pursuant to the state

education tax act, 1993 PA 331, MCL 211.901 to 211.906, and local

and intermediate school districts for a period not to exceed 15

years, as determined by the state treasurer, if the state treasurer

determines that the capture under this subparagraph is necessary to

reduce unemployment, promote economic growth, and increase capital

investment in the municipality.

(iii) Tax increment revenues do not include any of the

following:

(A) Ad valorem property taxes or specific local taxes that are

excluded from and not made part of the tax increment financing

plan.

(B) Ad valorem property taxes and specific local taxes

attributable to ad valorem property taxes excluded by the tax

increment financing plan of the authority from the determination of

the amount of tax increment revenues to be transmitted to the

authority.

section 4(3) or specific local taxes attributable to such ad

valorem property taxes.

(D) Ad valorem property taxes specifically levied for the

payment of principal and interest of obligations approved by the

electors or obligations pledging the unlimited taxing power of the

local governmental unit or specific local taxes attributable to

such ad valorem property taxes.

(E) The amount of ad valorem property taxes or specific taxes

captured by a downtown development authority under 1975 PA 197, MCL

125.1651 to 125.1681, tax increment financing authority under the

tax increment finance authority act, 1980 PA 450, MCL 125.1801 to

125.1830, or brownfield redevelopment authority under the

brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651

to 125.2672, if those taxes were captured by these other

authorities on the date that the initial assessed value of a parcel

of property was established under this act.

(iv) The amount of tax increment revenues authorized to be

included under subparagraph (ii), and required to be transmitted to

the authority under section 13(1), from ad valorem property taxes

and specific local taxes attributable to the application of the

levy of the state education tax act, 1993 PA 331, MCL 211.901 to

211.906, or a local school district or an intermediate school

district upon the captured assessed value of real and personal

property in a development area shall be determined separately for

the levy by the state, each school district, and each intermediate

school district as the product of sub-subparagraphs (A) and (B):

(A) The percentage that the total ad valorem taxes and

specific local taxes available for distribution by law to the

state, local school district, or intermediate school district,

respectively, bears to the aggregate amount of ad valorem millage

taxes and specific taxes available for distribution by law to the

state, each local school district, and each intermediate school

district.

(B) The maximum amount of ad valorem property taxes and

specific local taxes considered tax increment revenues under

subparagraph (ii).

(ii) "Transit-oriented development" means infrastructure

improvements that are located within 1/2 mile of a transit station

or transit-oriented facility that promotes transit ridership or

passenger rail use as determined by the board and approved by the

municipality in which it is located.

(jj) "Transit-oriented facility" means a facility that houses

a transit station in a manner that promotes transit ridership or

passenger rail use.

(kk) ~~(ii)~~ "Urban township" means a township that meets 1 or

more of the following:

(i) Meets all of the following requirements:

(A) Has a population of 20,000 or more, or has a population of

10,000 or more but is located in a county with a population of

400,000 or more.

(B) Adopted a master zoning plan before February 1, 1987.

a part of the township.

(ii) Meets all of the following requirements:

(A) Has a population of less than 20,000.

(B) Is located in a county with a population of 250,000 or

more but less than 400,000, and that county is located in a

metropolitan statistical area.

common ownership that is 800 acres or larger and is capable of

being served by a railroad, and located within 3 miles of a limited

access highway.

(D) Establishes an authority before December 31, 1998.

(iii) Meets all of the following requirements:

(A) Has a population of less than 20,000.

(B) Has a state equalized valuation for all real and personal

property located in the township of more than $200,000,000.00.

(D) Is a charter township under the charter township act, 1947

PA 359, MCL 42.1 to 42.34.

(E) Has within its boundaries a combination of parcels under

common ownership that is 800 acres or larger, is immediately

adjacent to a limited access highway, is capable of being served by

a railroad, and is immediately adjacent to an existing sewer line.

(F) Establishes an authority before March 1, 1999.

(iv) Meets all of the following requirements:

(A) Has a population of 13,000 or more.

(B) Is located in a county with a population of 150,000 or

more.

(v) Meets all of the following requirements:

(A) Is located in a county with a population of 1,000,000 or

more.

(B) Has a written agreement with an adjoining township to

develop 1 or more public facilities on contiguous property located

in both townships.

(vi) Meets all of the following requirements:

(A) Has a population of less than 10,000.

(B) Has a state equalized valuation for all real and personal

property located in the township of more than $280,000,000.00.

(D) Has within its boundaries a combination of parcels under

common ownership that is 199 acres or larger, is located within 1

mile of a limited access highway, and is located within 1 mile of

an existing sewer line.

(E) Has rail service.

(F) Establishes an authority before May 7, 2009.

(vii) Has joined an authority under section 3(2) which is

seeking or has entered into an agreement for a certified

alternative energy park.