SENATE BILL NO. 1223

November 10, 2022, Introduced by Senator SCHMIDT and referred to the Committee on Economic and Small Business Development.

"State convention facility development act,"

by amending sections 3, 9, 10, 11, 12, and 20 (MCL 207.623, 207.629, 207.630, 207.631, 207.632, and 207.640), sections 3, 9, and 12 as amended by 2009 PA 61, section 10 as amended by 2020 PA 205, section 11 as amended by 2002 PA 237, and section 20 as amended by 2008 PA 553.

the people of the state of michigan enact:

Sec. 3. As used in this act:

(a) "Accommodations" means the room or other space provided to transient guests for dwelling, lodging, or sleeping, including furnishings and other accessories, in a facility that is not a campground, hospital, nursing home, emergency shelter, or community mental health or community substance abuse treatment facility. Accommodations do not include food or beverages.

(b) "Commissioner" means the state treasurer.

(c) "Convention facility" means 1 or more facilities owned or leased by a local governmental unit or metropolitan authority created under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379, that are any combination of a convention hall, auditorium, meeting rooms, and exhibition areas that are separate and distinct and contiguous to each other, and related adjacent public areas generally available to members of the public for lease on a short-term basis for holding conventions, meetings, exhibits, and similar events and the necessary site or sites, together with appurtenant properties necessary and convenient for use in connection with the facility. Convention facility includes a qualified convention facility as defined under section 5 of the regional convention facility authority act, 2008 PA 554, MCL 141.1355.

(d) "Convention hotel" means a facility used in the business of providing accommodations that has more than 80 rooms for providing accommodations to transient guests and that complies with all of the following:

(i) Located Is located within a county having a population according to the most recent decennial census of 700,000 or more.

(ii) Located Is located within a county that is 1 or more of the following:

(A) A county that has a convention facility with 350,000 square feet or more of total exhibit space.

(B) A county that has 2,000 or more rooms to provide accommodations for transient guests.

(e) "Local governmental unit" means a county, township, city, village, or a metropolitan authority formed under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379.

(f) "Person" means a natural person, partnership, limited partnership, fiduciary, association, corporation, limited liability company, or other entity.

(g) "Public-private arrangement" means a public-private arrangement authorized under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379.

(h) (g) "Room charge" means the charge imposed for the use or occupancy of accommodations, excluding charges for food, beverages, telephone services, the use tax imposed under the use tax act, 1937 PA 94, MCL 205.91 to 205.111, or like services paid in connection with the charge. Room charge does not include reimbursement of the assessment imposed by the community convention or tourism marketing act, 1980 PA 395, MCL 141.871 to 141.880, the convention and tourism marketing act, 1980 PA 383, MCL 141.881 to 141.889, or this act.

(i) (h) "Transient guest" means a natural person staying less than 30 consecutive days.

Sec. 9. (1) Except as provided in subsection (5) or (6), on or before the thirtieth day of each month, the state treasurer shall make a distribution from the convention facility development fund to a qualified local governmental unit. The distribution shall be an amount equal to the sum of the collections from the excise tax levied for accommodations under this act for the previous month from the convention hotels in the county in which the convention facility is or is to be located and in any county in which convention hotels are located that is contiguous to the county in which the convention facility is located, or is to be located, the additional tax imposed under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, for the previous month received in the fund, and any distribution received under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475, and from the 21st century jobs trust fund under section 8(4). However, distributions for any state fiscal year to any qualified local governmental unit under this section shall not exceed an amount equal to the amount pledged, assigned, or dedicated by the qualified local governmental unit pursuant to section 11 for the payment during that state fiscal year of bonds, obligations, or other evidences of indebtedness incurred for the purposes specified in pursuant to this act or the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379, plus operating deficit cost expenditures and other expenditures authorized under section 10, other than payments under a public-private arrangement, plus any amount necessary to maintain a fully funded debt reserve or other reserves intended to secure the principal and interest on the bonds, obligations, or other evidences of indebtedness as contained in the resolution or ordinance authorizing their issuance.

(2) Notwithstanding the distributions provided by subsection (1), if a local governmental unit becomes a qualified local governmental unit entitled to receive distributions from the tax imposed under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, or from the tax imposed by this act in counties in which the convention facility is located or in a county in which a convention hotel is located that is contiguous to the county in which the convention facility is located, and from any distribution under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475, no other qualified local governmental unit is entitled to distributions pursuant to this section for which that qualified local governmental unit has previously become entitled, until such time as that qualified local governmental unit ownership or leasehold interest described in subsection (3) is transferred to another local governmental unit. If that transfer renders the transferee a qualified local governmental unit, the transferee shall, is, immediately upon that transfer, be entitled to the distributions to a qualified local governmental unit provided in subsection (1) and the priority provided to a qualified local governmental unit in this subsection, notwithstanding that the amount of the distributions may increase as a result of that transfer. A transfer under this subsection includes a transfer that occurs on a transfer date under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379.

(3) Notwithstanding the provisions of subsection (2), if the transfer and lease of a qualified convention facility to an authority is disapproved and the authority is dissolved under section 19(1) of the regional convention facility authority act, 2008 PA 554, MCL 141.1369, then a distribution from the convention facility development fund of proceeds received under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475, shall be made to a building authority for a county having a population of not less than 1,000,000 and not more than 1,500,000 according to the most recent federal decennial census for the purpose of developing, leasing, or operating a convention facility as defined in this act and no other qualified local governmental unit is entitled to any distribution of proceeds received under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475.

(4) As used in this act, "qualified local governmental unit" means, except as otherwise provided in this subsection, a city, village, township, county, or authority that is located in, or includes within its territory or jurisdiction, a county in which convention hotels are located and that either is the owner or lessee of a convention facility with 350,000 square feet or more of total exhibit space on July 30, 1985 or, if such a convention facility does not exist, will be the owner or lessee of a convention facility with 350,000 square feet or more of total exhibit space through the application of distributions under this section to the purchase or lease of a convention facility. Qualified local governmental unit includes a metropolitan authority that leases, develops, operates, and maintains a qualified convention facility under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379. If the transfer and lease of a qualified convention facility to an authority is disapproved and the authority is dissolved under section 19(1) of the regional convention facility authority act, 2008 PA 554, MCL 141.1369, then for purposes of any distribution from the convention facility development of proceeds under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475, qualified local governmental unit means a building authority for a county having a population of not less than 1,000,000 and not more than 1,500,000 according to the most recent federal decennial census.

(5) Before the 2015-2016 fiscal year, collections from the excise tax levied for accommodations under this act and collections from the tax imposed under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, shall not be paid to a qualified local governmental unit for the repayment of bonds, obligations, or other evidences of indebtedness incurred after 2007.

(6) Beginning in fiscal year 2015-2016, and each fiscal year thereafter, if a transfer and a lease of a qualified convention facility is disapproved and an authority is dissolved under section 19(1) of the regional convention facility authority act, 2008 PA 554, MCL 141.1369, then the collections from the excise tax levied for accommodations under this act shall be distributed to each county in which it was levied based on the amount collected in that county. However, if an excise tax for accommodations is levied in a qualified city at a rate greater than the rate levied in that portion of the county in which the qualified city is not located, the qualified city shall receive the collections of the excise tax for accommodations in an amount equal to the difference between the rate levied in the qualified city and the rate levied in that portion of the county in which the qualified city is not located. The funds described in this subsection are not available for a distribution of subsection (1). As used in this subsection, "qualified city" means that term as defined in section 5 of the regional convention facility authority act, 2008 PA 554, MCL 141.1355.

(7) If a building authority becomes a qualified local governmental unit under subsection (4), collections from distributions under section 5(b)(iii) of the health and safety fund act, 1987 PA 264, MCL 141.475, shall be paid by the state treasurer on or before the thirtieth day of each month to that building authority.

Sec. 10. (1) Any money remaining in the convention facility development fund that is not used for the bonds, obligations, or other evidences of indebtedness or other purposes as described in after distributions under subsection (5) and section 9 shall be distributed pursuant to subsection (2).

(2) Money in the convention facility development fund shall be distributed as provided in subsection (4) in the following order of priority in the following amounts:

(a) For each of the following fiscal years, the following amounts shall be distributed to a metropolitan authority created under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379, for the operational deficit costs of a qualified convention facility operated by the authority under that act for purposes authorized under that act:

(i) $5,000,000.00 for the fiscal year ending September 30, 2020.

(ii) $7,000,000.00 for the fiscal year ending September 30, 2020 for the impact on operational costs resulting from the COVID-19 virus and related measures to protect public safety.

(iii) $8,000,000.00 for the fiscal year ending September 30, 2021.

(iv) $8,000,000.00 for the fiscal year ending September 30, 2022.

(v) $7,000,000.00 for the fiscal year ending September 30, 2023.

(vi) $6,000,000.00 for the fiscal year ending September 30, 2024.

(vii) $5,000,000.00 for the fiscal year ending September 30, 2025.

(b) For Except as otherwise provided in this subdivision, for fiscal years beginning after September 30, 2016, an amount equal to the product of the amount of liquor tax distributions of the tax collected under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding fiscal year multiplied by 1.01, not to exceed the total amount of tax collected under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, shall be distributed to counties. For the fiscal years ending September 30, 2023, September 30, 2026, September 30, 2029, September 30, 2032, September 30, 2035, and September 30, 2038, the amount distributed under this subdivision shall equal the amount of the tax collected under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding fiscal year. Distributions to each county under this subdivision shall be calculated as follows:

(i) The amount of money available to be distributed under this subdivision multiplied by the percentage of collections in the immediately preceding state fiscal year under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, from licensees in counties in which convention hotels are not located shall be distributed to each county in which convention hotels are not located in the same proportion that the amount of tax collected pursuant to section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding state fiscal year from licensees in that county bears to the total tax collections from section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding state fiscal year from all counties in which convention hotels are not located.

(ii) The amount of money available to be distributed under this subdivision multiplied by the percentage of collections in the immediately preceding state fiscal year under section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, from licensees in counties in which convention hotels are located shall be distributed to each county in which convention hotels are located in the same proportion that the amount of tax collected pursuant to section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding state fiscal year from licensees in that county bears to the total tax collections from section 1207 of the Michigan liquor control code of 1998, 1998 PA 58, MCL 436.2207, in the immediately preceding state fiscal year from all counties in which convention hotels are located. However, in the calculation of the proportion represented by a county's share of distributions under this subparagraph, the amount of the tax collected from licensees in the qualified local governmental unit that received distributions under section 9 in the 2007-2008 state fiscal year shall not be included.

(c) For each fiscal year beginning with the fiscal year ending on September 30, 2020 through the fiscal year ending on September 30, 2022, 2039, if the revenue in the convention facility development fund exceeds the amount distributed under section 9, subsection (5), and any distributions under subdivisions (a) and (b), up to $5,000,000.00 must be distributed to the operator of a street railway system for the operations of a street railway system as defined in section 507 of the recodified tax increment financing act, 2018 PA 57, MCL 125.4507.

(d) For the fiscal year ending September 30, 2021 only, if the revenue in the convention facility development fund exceeds the amount distributed under section 9, subsection (5), and any distributions under subdivisions (a), (b), and (c), up to $4,000,000.00 must be distributed from the convention facility development fund to the Michigan strategic fund created under the Michigan strategic fund act, 1984 PA 270, MCL 125.2001 to 125.2094, for the purpose of awarding grants to convention centers negatively impacted by the COVID-19 virus and related measures to protect public safety. All the following apply to the grant program described in this subdivision:

(i) The Michigan strategic fund shall develop an application process by December 1, 2020 and award grants under this subdivision no later than May 1, 2021.

(ii) An eligible convention center under this subdivision includes only a publicly owned facility of at least 10,000 square foot that is generally available to members of the public for lease or rental on a short-term basis for holding conventions, meetings, exhibits, and similar events, and that has any combination of convention hall, auditorium, meeting rooms, and exhibition areas that are separate and distinct and contiguous to each other, and that does not receive funding under subdivision (a).

(iii) The Michigan strategic fund cannot award more than $1,000,000.00 to any 1 eligible convention center under this subdivision.

(iv) An eligible convention center receiving funding under this subdivision must report how the grant dollars were spent by September 30, 2021 or return the funds.

(e) Except as provided in subdivision (f), beginning with the fiscal year ending on September 30, 2016, and each fiscal year thereafter other than the fiscal year ending September 30, 2020, if the revenue in the convention facility development fund exceeds the amounts distributed under section 9, subsection (5), and the distributions under subdivisions (a), (b), (c), and (d), the excess must be distributed to a qualified local governmental unit that is a metropolitan authority to be used by that qualified local governmental unit only for capital expenditures, including payments under a public-private arrangement, or the retirement of outstanding bonds, obligations, or other evidences of indebtedness incurred for which distributions under section 9 are pledged and for a qualified governmental unit that is a metropolitan authority.

(f) For the fiscal year ending on September 30, 2021 and the fiscal year ending on September 30, 2022, the amount distributed under subdivision (e) from the convention facility development fund to a qualified local governmental unit that is a metropolitan authority to be used by that qualified local governmental unit only for the retirement of outstanding bonds, obligations, or other evidences of indebtedness incurred must not exceed $5,000,000.00.

(g) For the fiscal year ending on September 30, 2020, if the revenue in the convention facility development fund exceeds the amounts distributed under section 9, subsection (5), and the distributions under subdivisions (a), (b), (c), and (d), the excess must be distributed to a qualified local governmental unit to be reserved for expenditures authorized by the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379. For the fiscal year ending on September 30, 2021 and the fiscal year ending on September 30, 2022, if the revenue in the convention facility development fund exceeds the amounts distributed under section 9 and the distributions under subdivisions (a) to (e), the excess must be distributed to a qualified local governmental unit to be reserved for expenditures authorized by the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379.

(3) A distribution to a county pursuant to this section shall be included for purposes of the calculations required to be made by section 24e of the general property tax act, 1893 PA 206, MCL 211.24e. If the governing body of a taxing unit approves the additional millage rate under section 24e of the general property tax act, 1893 PA 206, MCL 211.24e, which that is due to distributions pursuant to this section, then an amount equal to 50% of the distribution under this section not less than either of the following must be used for substance abuse treatment within the taxing unit:

(a) 40% of the distribution under this section.

(b) The amount used for substance abuse treatment within the taxing unit in the fiscal year ending September 30, 2022.

(4) Each year, from the revenue collected during the previous quarter, after distributing the monthly payments under section 9(1), the state treasurer shall make quarterly distributions under subsections (2) and (5).

(5) For the fiscal year ending September 30, 2020 only, prior to the distributions required under subsection (2), $10,000,000.00 of the money in the convention facility development fund is transferred and must be deposited into the general fund.

Sec. 11. (1) Refunding bonds, obligations, or other evidences of indebtedness described in subsection (2) are issued subject to the revised municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

(2) Pursuant to the revised municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821, a local governmental unit may issue refunding bonds, obligations, or other evidences of indebtedness to refund all or a portion of the bonds, obligations, or other evidences of indebtedness issued for purposes specified in this act. If Except as otherwise provided in section 12(1), if refunding bonds, obligations, or other evidences of indebtedness are issued, an assignment or pledge of distributions of taxes from the convention facility development fund for the payment of principal or interest on the refunded bonds, obligations, or other evidences shall apply, after the issuance of the refunding bonds, only to the refunding bonds, obligations, or other evidences of indebtedness and to any bonds, obligations, or other evidences of indebtedness that were not refunded and to which the assignment or pledge previously applied.

(3) A local governmental unit that refunds bonds, obligations, or other evidences of indebtedness pursuant to subsection (2) may dedicate distributions of taxes from the convention facility development fund to the payment of principal, interest, or credit support fees or other costs of issuance or of the maintenance of any required reserves for general obligation bonds, obligations, or other evidences of indebtedness issued or to be issued for purposes specified in this act but not pursuant to the authority granted in this act or may reimburse itself for such payments from such distributions. However, distributions to a local governmental unit pursuant to this subsection in any state fiscal year shall not exceed the lesser of the following:

(a) Principal, interest, or credit support fees or other costs of issuance or of the maintenance of required reserves payable in the state fiscal year on the bonds, obligations, or other evidences of indebtedness to which the distributions are dedicated.

(b) The difference between the amount that would have been distributed to the local governmental unit had it not issued refunding bonds pursuant to subsection (2) and the amount of distribution of taxes to which an assignment or pledge applies under subsection (2).

(4) After September 30, 1999, taxes shall not be distributed from the convention facility development fund pursuant to subsection (3).

(5) If bonds, obligations, or other evidences of indebtedness are to be issued for the purposes set forth in section 8(2), for which all or a portion of the distribution of taxes that the local governmental unit is eligible to receive are pledged or assigned as set forth in subsection (1) or (2), and if as a direct result of the acquiring, constructing, improving, enlarging, renewing, replacing, or in conjunction with these activities, repairing, furnishing, equipping, or leasing of a convention facility financed from the proceeds of the bonds, obligations, or other evidences of indebtedness, it is necessary for the state to expend money from the state trunk line fund from the proceeds of bonds issued by this state payable from deposits into the state trunk line fund, or from direct appropriations for the costs of relocating, constructing, or reconstructing highways, roads, streets, or bridges, and costs ancillary thereto, then before the issuance of the bonds, obligations, or other evidences of indebtedness, the state treasurer shall determine that the total amount of these costs to be paid from the state trunk line fund, from the proceeds of bonds or notes payable from deposits into the state trunk line fund, or from direct appropriations of this state, excluding any of the cost to be reimbursed to this state by the federal government, any local unit of government or authority or agency thereof, or any other person or entity, shall not exceed 25% of the total cost of the relocation, construction, or reconstruction of highways, roads, streets, and bridges, and costs ancillary to those costs, directly resulting from the convention facility project purposes described in section 8(2). For purposes of the validity of the bonds, obligations, or other evidences of indebtedness, the determination of the state treasurer is conclusive as to the matters stated in the determination. If after the determination by the state treasurer the total costs of relocating, constructing, and reconstructing highways, roads, streets, and bridges, and costs ancillary thereto, increase, this state shall not expend from the state trunk line fund, from the proceeds from bonds payable from deposits in the state trunk line fund, or from direct appropriations of this state, any additional funds that cause the total expenditure by this state from these sources, after any reimbursement, to exceed 25% of the total cost, as increased, of the relocation, construction, and reconstruction, including ancillary costs. An expenditure by this state in violation of this subsection does not invalidate or otherwise adversely affect any previously issued bonds, obligations, or other evidences of indebtedness described in this section or any security therefor.

Sec. 12. (1) Subject to approval pursuant to section 11, a A local governmental unit may assign or pledge all or a portion of the distribution of taxes that the local governmental unit is eligible to receive under this act for payment of bonds, obligations, or other evidences of indebtedness, including payments under a public-private arrangement, for the purposes specified in section 8(2). If a local governmental unit assigns , or pledges , or, pursuant to section 11(3), dedicates all or a portion of the distribution of taxes that the local governmental unit is eligible to receive under this act for payment of bonds, obligations, or other evidences of indebtedness, incurred for the purposes specified in this act, including payments under a public-private arrangement, the state treasurer may transmit to the duly appointed trustee or trustees for the bonds, obligations, or other evidences of indebtedness, if any, including a public-private arrangement, the payment of the distribution assigned , or pledged , or dedicated by the local governmental unit. Notwithstanding anything in this act to the contrary, the second sentence of section 11(2) does not apply to bonds issued by a metropolitan authority that becomes a qualified local governmental unit after December 1, 2008.

(2) A local governmental unit that becomes a qualified local governmental unit before May 1, 2008 shall not issue bonds, obligations, or other evidences of indebtedness to which distributions under section 9 are pledged in a principal amount greater than $180,000,000.00. This limit does not apply to refunding bonds, obligations, or other evidences of indebtedness issued pursuant to section 11(2) or to bonds, obligations, or other evidences of indebtedness to which distributions of taxes from the convention facility development fund are dedicated under section 11(3). A metropolitan authority that becomes a qualified local governmental unit after December 1, 2008 shall not may, after the effective date of the amendatory act that added subdivision (f), issue bonds, obligations, or other evidences of indebtedness to which distributions under section 9 are pledged in order to finance a total cost for all projects undertaken by the qualified local governmental unit that exceeds in an aggregate principal amount not to exceed $299,000,000.00. A building authority that becomes a qualified local governmental unit after May 1, 2009 shall not issue bonds, obligations, or other evidences of indebtedness to which distributions under section 9 are pledged in order to finance a total cost for all projects undertaken by the qualified local governmental unit that exceeds $154,000,000.00. The cost of a project in addition to construction and acquisition costs may include an allowance for legal, engineering, architectural, and consulting services. The following shall are not be considered costs of a project and may be financed with the proceeds of bonds, obligations, or other evidences of indebtedness for which section 9 distributions are pledged:subject to the limitations set forth in this subsection:

(a) Interest on revenue obligations issued to finance the project becoming due before the collection of the first revenues available for the payment of those revenue obligations.

(b) A reserve for the payment of principal, interest, and redemption premiums on the revenue obligations of the qualified local governmental unit, and other necessary incidental expenses, including, but not limited to, placement fees, fees or charges for insurance, letters of credit, lines of credit, remarketing agreements, or commitments to purchase obligations issued pursuant to this act.

(d) Any other fees or charges for any other security provided to assure timely payment of the obligations.

(e) Refunding bonds.

(f) Payments under a public-private arrangement.

Sec. 20. The tax imposed by this act shall not be levied after the earlier of December 31, 2039 or 30 days after all bonds, notes, or other obligations issued by a metropolitan authority formed under the regional convention facility authority act, 2008 PA 554, MCL 141.1351 to 141.1379, for purposes authorized under that act are retired.