HOUSE BILL No. 5386


     November 1, 2001, Introduced by Reps. Kowall, Middaugh and Bishop and referred to the Committee on Tax Policy.


        A bill to amend 1974 PA 198, entitled

   "An act to provide for the establishment of plant rehabilitation
   districts and industrial development districts in local govern-
   mental units; to provide for the exemption from certain taxes; to
   levy and collect a specific tax upon the owners of certain facil-
   ities; to provide for the disposition of the tax; to provide for
   the obtaining and transferring of an exemption certificate and to
   prescribe the contents of those certificates; to prescribe the
   powers and duties of the state tax commission and certain offi-
   cers of local governmental units; and to provide penalties,"

   by amending section 2 (MCL 207.552), as amended by 2000 PA 247.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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           Sec. 2.  (1) "Commission" means the state tax commission

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      created by 1927 PA 360, MCL 209.101 to 209.107.

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           (2) "Facility" means either a replacement facility, a new

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      facility, or, if applicable by its usage, a speculative

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      building.

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           (3) "Replacement facility" means 1 of the following:




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           (a) In the case of a replacement or restoration that occurs

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      on the same or contiguous land as that which is replaced or

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      restored, industrial property that is or is to be acquired, con-

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      structed, altered, or installed for the purpose of replacement or

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      restoration of obsolete industrial property together with any

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      part of the old altered property that remains for use as indus-

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      trial property after the replacement, restoration, or

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      alteration.

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           (b) In the case of construction on vacant noncontiguous

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      land, property that is or will be used as industrial property

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      that is or is to be acquired, constructed, transferred, or

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      installed for the purpose of being substituted for obsolete

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      industrial property if the obsolete industrial property is situa-

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      ted in a plant rehabilitation district in the same city, village,

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      or township as the land on which the facility is or is to be con-

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      structed and includes the obsolete industrial property itself

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      until the time as the substituted facility is completed.

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           (4) "New facility" means new industrial property other than

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      a replacement facility to be built in a plant rehabilitation dis-

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      trict or industrial development district.

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           (5) "Local governmental unit" means a city, village, or

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      township.

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           (6) "Industrial property" means land improvements, build-

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      ings, structures, and other real property, and machinery, equip-

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

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      completed or in the process of construction comprising an

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      integrated whole, the primary purpose and use of which is the



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      engaging in a high-technology activity, the manufacture of goods

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      or materials, or the processing of goods and materials by physi-

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      cal or chemical change; property acquired, constructed, altered,

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      or installed due to the passage of proposal A in 1976; the opera-

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      tion of a hydro-electric dam by a private company other than a

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      public utility; or agricultural processing facilities.

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      Industrial property includes facilities related to a manufactur-

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      ing operation under the same ownership, including, but not

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      limited to, office, engineering, research and development, ware-

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      housing, or parts distribution facilities.  Industrial property

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      also includes research and development laboratories of companies

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      other than those companies that manufacture the products devel-

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      oped from their research activities and research development lab-

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      oratories of a manufacturing company that are unrelated to the

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      products of the company.  For applications approved by the legis-

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      lative body of a local governmental unit  between  AFTER June 30,

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      1999,  and June 30, 2002,  industrial property also includes an

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      electric generating plant that is not owned by a local unit of

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      government.  Industrial property also includes convention and

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      trade centers over 250,000 square feet in size.  Industrial prop-

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      erty may be owned or leased.  However, in the case of leased

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      property, the lessee is liable for payment of ad valorem property

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      taxes and shall furnish proof of that liability.  Industrial

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      property does not include any of the following:

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           (a) Land.

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           (b) Property of a public utility other than an electric

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      generating plant that is not owned by a local unit of government



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      and for which an application was approved by the legislative body

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      of a local governmental unit  between  AFTER June 30, 1999.  and

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      June 30, 2002.

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           (c) Inventory.

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           (7) "Obsolete industrial property" means industrial property

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      the condition of which is substantially less than an economically

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      efficient functional condition.

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           (8) "Economically efficient functional condition" means a

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      state or condition of property the desirability and usefulness of

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      which is not impaired due to changes in design, construction,

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      technology, or improved production processes, or from external

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      influencing factors which make the property less desirable and

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      valuable for continued use.

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           (9) "Research and development laboratories" means building

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      and structures, including the machinery, equipment, furniture,

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      and fixtures located in the building or structure, used or to be

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      used for research or experimental purposes that would be consid-

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      ered qualified research as that term is used in section 30 of the

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      internal revenue code, except that qualified research also

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      includes qualified research funded by grant, contract, or other-

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      wise by another person or governmental entity.

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           (10) "Manufacture of goods or materials" or "processing of

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      goods or materials" means any type of operation that would be

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      conducted by an entity included in the classifications provided

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      by sector 31-33 -- manufacturing, of the North American industry

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      classification system -- United States, 1997, published by the





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      office of management and budget, regardless of whether the entity

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      conducting that operation is included in that manual.

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

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

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      PA 24, MCL 207.803.














































   04870'01          Final page.                            JLB