HB-5557, As Passed House, December 13, 2012HB-5557, As Passed Senate, December 13, 2012

HOUSE BILL No. 5557

April 24, 2012, Introduced by Rep. O'Brien and referred to the Committee on Tax Policy.

A bill to amend 1975 PA 197, entitled

"An act to provide for the establishment of a downtown development

authority; to prescribe its powers and duties; to correct and

prevent deterioration in business districts; to encourage historic

preservation; to authorize the acquisition and disposal of

interests in real and personal property; to authorize the creation

and implementation of development plans in the districts; to

promote the economic growth of the districts; to create a board; to

prescribe its powers and duties; to authorize the levy and

collection of taxes; to authorize the issuance of bonds and other

evidences of indebtedness; to authorize the use of tax increment

financing; to reimburse downtown development authorities for

certain losses of tax increment revenues; and to prescribe the

powers and duties of certain state officials,"

by amending section 13c (MCL 125.1663c), as amended by 2009 PA 213.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 13c. (1) If the amount of tax increment revenues lost as

a result of the personal property tax exemptions provided by

section 1211(4) of the revised school code, 1976 PA 451, MCL

380.1211, section 3 of the state education tax act, 1993 PA 331,

MCL 211.903, section 14(4) of 1974 PA 198, MCL 207.564, and section

9k of the general property tax act, 1893 PA 206, MCL 211.9k, will

reduce the allowable school tax capture received in a fiscal year,

then, notwithstanding any other provision of this act, the

authority, with approval of the department of treasury under

subsection (3), may request the local tax collecting treasurer to

retain and pay to the authority taxes levied under the state

education tax act, 1993 PA 331, MCL 211.901 to 211.906, to be used

for the following:

(a) To repay an eligible advance.

(b) To repay an eligible obligation.

(2) Not later than June 15, 2008, not later than September 30,

2009, and not later than June 1 of each subsequent year, except for

2011, not later than June 15, an authority eligible under

subsection (1) to have taxes levied under the state education tax

act, 1993 PA 331, MCL 211.901 to 211.906, retained and paid to the

authority under this section, shall apply for approval with the

department of treasury. The application for approval shall include

the following information:

(a) The property tax millage rates expected to be levied by

local school districts within the jurisdictional area of the

authority for school operating purposes for that fiscal year.

(b) The tax increment revenues estimated to be received by the

authority for that fiscal year based upon actual property tax

levies of all taxing jurisdictions within the jurisdictional area

of the authority.

would have received for that fiscal year if the personal property

tax exemptions described in subsection (1) were not in effect.

(d) A list of eligible obligations, eligible advances, and

other protected obligations, the payments due on each of those in

that fiscal year, and the total amount of all the payments due on

all of those in that fiscal year.

(e) The amount of money, other than tax increment revenues,

estimated to be received in that fiscal year by the authority that

is primarily pledged to, and to be used for, the payment of an

eligible obligation, the repayment of an eligible advance, or the

payment of an other protected obligation. That amount shall not

include excess tax increment revenues of the authority that are

permitted by law to be retained by the authority for purposes that

further the development program. However, that amount shall include

money to be obtained from sources authorized by law, which law is

enacted on or after December 1, 1993, for use by the municipality

or authority to finance a development plan.

(f) The amount of a distribution received pursuant to this act

for a fiscal year in excess of or less than the distribution that

would have been required if calculated upon actual tax increment

revenues received for that fiscal year.

(3) Not later than August 15, 2008; for 2009, ~~only,~~ not later

than ~~30 days after the effective date of the amendatory act that~~

~~amended this sentence;~~ February 3, 2010; for 2011 only, not later

than 30 days after the effective date of the amendatory act that

amended this sentence; and not later than August 15 of for 2010,

2012, and each subsequent year, based on the calculations under

subsection (5), the department of treasury shall approve, modify,

or deny the application for approval to have taxes levied under the

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

retained and paid to the authority under this section. If the

application for approval contains the information required under

subsection (2)(a) through (f) and appears to be in substantial

compliance with the provisions of this section, then the department

of treasury shall approve the application. If the application is

denied by the department of treasury, then the department of

treasury shall provide the opportunity for a representative of the

authority to discuss the denial within 21 days after the denial

occurs and shall sustain or modify its decision within 30 days

after receiving information from the authority. If the application

for approval is approved or modified by the department of treasury,

the local tax collecting treasurer shall retain and pay to the

authority the amount described in subsection (5) as approved by the

department. If the department of treasury denies the authority's

application for approval, the local tax collecting treasurer shall

not retain or pay to the authority the taxes levied under the state

education tax act, 1993 PA 331, MCL 211.901 to 211.906. An approval

by the department does not prohibit a subsequent audit of taxes

retained in accordance with the procedures currently authorized by

law.

(4) Each year the legislature shall appropriate and distribute

an amount sufficient to pay each authority the following:

(a) If the amount to be retained and paid under subsection (3)

is less than the amount calculated under subsection (5), the

difference between those amounts.

(b) If the application for approval is denied by the

department of treasury, an amount verified by the department equal

to the amount calculated under subsection (5).

(5) Subject to subsection (6), the aggregate amount under this

section shall be the sum of the amounts determined under

subdivisions (a) and (b) minus the amount determined under

subdivision (c), as follows:

(a) The amount by which the tax increment revenues the

authority would have received and retained for the fiscal year,

excluding taxes exempt under section 7ff of the general property

tax act, 1893 PA 206, MCL 211.7ff, if the personal property tax

exemptions described in subsection (1) were not in effect, exceed

the tax increment revenues the authority actually received for the

fiscal year.

(b) A shortfall required to be reported under subsection

(2)(f) that had not previously increased a distribution.

(2)(f) that had not previously decreased a distribution.

(6) A distribution or taxes retained under this section

replacing tax increment revenues pledged by an authority or a

municipality are subject to any lien of the pledge described in

subsection (1), whether or not there has been physical delivery of

the distribution.

(7) Obligations for which distributions are made under this

section are not a debt or liability of this state; do not create or

constitute an indebtedness, liability, or obligation of this state;

and are not and do not constitute a pledge of the faith and credit

of this state.

(8) Not later than September 15 of each year, the authority

shall provide a copy of the application for approval approved by

the department of treasury to the local tax collecting treasurer

and provide the amount of the taxes retained and paid to the

authority under subsection (5).

(9) Calculations of amounts retained and paid and

appropriations to be distributed under this section shall be made

on the basis of each development area of the authority.

(10) The state tax commission may provide that the

reimbursement calculations under this section and the calculation

of allowable capture of school taxes shall be made for each

calendar year's tax increment revenues using a 12-month debt

payment period used by the authority and approved by the state tax

commission.

(11) It is the intent of the legislature that, to the extent

that the total amount of taxes levied under the state education tax

act, 1993 PA 331, MCL 211.901 to 211.906, that are allowed to be

retained under this section and section 11b of the local

development financing act, 1986 PA 281, MCL 125.2161b, section 15a

of the brownfield redevelopment financing act, 1996 PA 381, MCL

125.2665a, and section 12b of the tax increment financing act, 1980

PA 450, MCL 125.1812b, exceeds the difference of the total school

aid fund revenue for the tax year minus the estimated amount of

revenue the school aid fund would have received for the tax year

had the tax exemptions described in subsection (1) and the earmark