HB-4263, As Passed Senate, November 6, 2003                                 

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4263

                                                                             A bill to amend 1961 PA 120, entitled                                             

"An act to authorize the development or redevelopment of                    

principal shopping districts and business improvement districts;            

to permit the creation of certain boards; to provide for the                

operation of principal shopping districts and business                      

improvement districts; to provide for the creation, operation,              

and dissolution of business improvement zones; and to authorize             

the collection of revenue and the bonding of certain cities for             

the development or redevelopment projects,"                                 

by amending the title and sections 1, 2, 4, 5, and 6 (MCL                   

125.981, 125.982, 125.984, 125.985, and 125.986), the title as              

amended by 2001 PA 260, sections 1, 2, and 5 as amended by 2001             

PA 261, section 4 as amended by 1999 PA 49, and section 6 as                

amended by 1992 PA 146.                                                     

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1                                 TITLE                                         

2                                                                                An act to authorize the development or redevelopment of                            

3   principal shopping districts and business improvement districts;            

4   to permit the creation of certain boards; to provide for the                

1   operation of principal shopping districts and business                      

2   improvement districts; to provide for the creation, operation,              

3   and dissolution of business improvement zones; and to authorize             

4   the collection of revenue and the bonding of certain  cities

5   local governmental units for the development or redevelopment               

6   projects.                                                                   

7       Sec. 1.  (1) As used in this chapter:                                       

8       (a) "Assessable property" means real property in a district                 

9   area other than all of the following:                                       

10                                                                               (i) Property classified as residential real property under                          

11  section 34c of the general property tax act, 1893 PA 206, MCL               

12  211.34c.                                                                    

13      (ii) Property owned by the federal, a state, or a local unit                 

14  of government where property is exempt from the collection of               

15  taxes under the general property tax act, 1893 PA 206, MCL 211.1            

16  to 211.157.                                                                 

17      (iii) One or more classes of property owners whose property                  

18  meets all of the following conditions:                                      

19      (A) Is exempt from the collection of taxes under the general                

20  property tax act, 1893 PA 206, MCL 211.1 to 211.157, other than             

21  property identified in subparagraph (ii).                                    

22      (B) As a class has been determined by the legislative body                  

23  of the  city local governmental unit not to be benefited by a              

24  project for which special assessments are to be levied.                     

25      (b) "Business improvement district" means 1 or more portions                

26  of a  city local governmental unit or combination of contiguous            

27  portions of 2 or more  cities local governmental units that are            

1   predominantly commercial or industrial in use.                              

2       (c) "District" means a business improvement district or a                   

3   principal shopping district.                                                

4       (d) "Highways" means public streets, highways, and alleys.                  

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

6   township.

7   (f)  (e)  "Principal shopping district" means a portion of a                

8   city local governmental unit designated by the governing body             

9   of the  city local governmental unit that is predominantly                 

10  commercial and that contains at least 10 retail businesses.                 

11  (g) "Urban township" means a township that is an urban                      

12  township as defined in section 2 of the local development                   

13  financing act, 1986 PA 281, MCL 125.2152, and is a township                 

14  located in a county with a population of more than 750,000.

15      (2) A  city local governmental unit with a master plan for                 

16  the physical development of the  city local governmental unit

17  that includes an urban design plan designating a principal                  

18  shopping district or includes the development or redevelopment of           

19  a principal shopping district, or 1 or more  cities local                  

20  governmental units that establish a business improvement district           

21  by resolution, may do 1 or more of the following:                           

22      (a)  Open Subject, where necessary, to approval of the                     

23  governmental entity that has jurisdiction over the highway, open,           

24  widen, extend, realign, pave, maintain, or otherwise improve                

25  highways and construct, reconstruct, maintain, or relocate                  

26  pedestrian walkways.                                                        

27      (b)  Prohibit Subject, where necessary, to approval of the                 

1   governmental entity that has jurisdiction over the highway,                 

2   prohibit or regulate vehicular traffic where necessary to carry             

3   out the purposes of the development or redevelopment project.               

4       (c)  Regulate Subject, where necessary, to approval of the                 

5   governmental entity that has jurisdiction over the highway,                 

6   regulate or prohibit vehicular parking on highways.                         

7       (d) Acquire, own, maintain, demolish, develop, improve, or                  

8   operate properties, off-street parking lots, or structures.                 

9       (e) Contract for the operation or maintenance by others of                  

10  city  off-street parking lots or structures owned by the local             

11  governmental unit, or appoint agents for the operation or                   

12  maintenance.                                                                

13      (f) Construct, maintain, and operate malls with bus stops,                  

14  information centers, and other buildings that will serve the                

15  public interest.                                                            

16      (g) Acquire by purchase, gift, or condemnation and own,                     

17  maintain, or operate real or personal property necessary to                 

18  implement this section.                                                     

19      (h) Promote economic activity in the district by undertakings               

20  including, but not limited to, conducting market research and               

21  public relations campaigns, developing, coordinating, and                   

22  conducting retail and institutional promotions, and sponsoring              

23  special events and related activities.  A business may prohibit             

24  the use of its name or logo in a public relations campaign,                 

25  promotion, or special event or related activity for the                     

26  district.                                                                   

27      (i) Provide for or contract with other public or private                    

1   entities for the administration, maintenance, security,                     

2   operation, and provision of services that the board determines              

3   are a benefit to a district within the  city local governmental            

4   unit.                                                                       

5       (3) A  city local governmental unit that provides for                      

6   ongoing activities under subsection (2)(h) or (i) shall also                

7   provide for the creation of a board for the management of those             

8   activities.                                                                 

9       (4) One member of the board of the principal shopping                       

10  district shall be from the adjacent residential area, 1 member              

11  shall be a representative of  city government the local                    

12  governmental unit, and a majority of the members shall be                   

13  nominees of individual businesses located within the principal              

14  shopping district.  The board shall be appointed by the chief               

15  executive officer of the  city local governmental unit with the            

16  concurrence of the legislative body of the  city local                     

17  governmental unit.  However, if all of the following requirements           

18  are met, a business may appoint a member of the board of a                  

19  principal shopping district, which member shall be counted toward           

20  the majority of members required to be nominees of businesses               

21  located within the principal shopping district:                             

22      (a) The business is located within the principal shopping                   

23  district.                                                                   

24      (b) The principal shopping district was designated by the                   

25  governing body of a  city local governmental unit after July 14,           

26  1992.                                                                       

27      (c) The business is located within a special assessment                     

1   district established under section 5.                                       

2       (d) The special assessment district is divided into special                 

3   assessment rate zones reflecting varying levels of special                  

4   benefits.                                                                   

5       (e) The business is located in the special assessment rate                  

6   zone with the highest special assessment rates.                             

7       (f) The square footage of the business is greater than 5.0%                 

8   of the total square footage of all businesses in that special               

9   assessment rate zone.                                                       

10      (5) If the boundaries of the principal shopping district are                

11  the same as those of a downtown district designated under 1975 PA           

12  197, MCL 125.1651 to 125.1681, the governing body may provide               

13  that the members of the board of the downtown development                   

14  authority, which manages the downtown district, shall compose the           

15  board of the principal shopping district, in which case                     

16  subsection (4) does not apply.                                              

17      (6) The members of the board of a business improvement                      

18  district shall be determined by the  city local governmental               

19  unit as provided in this subsection.  The board of a business               

20  improvement district shall consist of all of the following:                 

21      (a) One representative of the  city local governmental unit

22  appointed by the chief executive officer of the  city local                

23  governmental unit with the concurrence of the legislative body of           

24  the  city local governmental unit in which the business                    

25  improvement district is located.  If the business improvement               

26  district is located in more than 1  city local governmental                

27  unit, then 1 representative from each  city local governmental             

1   unit in which the business improvement district is located shall            

2   serve on the board as provided in this subdivision.                         

3       (b) Other members of the board shall be nominees of the                     

4   businesses and property owners located within the business                  

5   improvement district.  If a class of business or property owners,           

6   as identified in the resolution described in subsection (8), is             

7   projected to pay more than 50% of the special assessment levied             

8   that benefits property in a business improvement district for the           

9   benefit of the business improvement district, the majority of the           

10  members of the board of the business improvement district shall             

11  be nominees of the business or property owners in that class.               

12      (7) A  city local governmental unit may create 1 or more                   

13  business improvement districts.                                             

14      (8) If 1 or more  cities local governmental units establish                

15  a business improvement district by resolution under subsection              

16  (2), the resolution shall identify all of the following:                    

17      (a) The geographic boundaries of the business improvement                   

18  district.                                                                   

19      (b) The number of board members in that business improvement                

20  district.                                                                   

21      (c) The different classes of property owners in the business                

22  improvement district.                                                       

23      (d) The class of business or property owners, if any, who are               

24  projected to pay more than 50% of the special assessment levied             

25  that benefits property in that business improvement district.               

26      Sec. 2.  (1) The cost of the whole or any part of a principal               

27  shopping district project or business improvement district                  

1   project as authorized in this chapter may be financed by 1 or               

2   more of the following methods:                                              

3       (a) Grants and gifts to the  city local governmental unit or               

4   district.                                                                   

5       (b)  City Local governmental unit funds.                                   

6       (c) The issuance of general obligation bonds of the  city

7   local governmental unit subject to the revised municipal finance            

8   act, 2001 PA 34, MCL 141.2101 to 141.2821.                                  

9       (d) The issuance of revenue bonds by the  city local                       

10  governmental unit under the revenue bond act of 1933, 1933 PA 94,           

11  MCL 141.101 to 141.140, or under any other applicable revenue               

12  bond act.  The issuance of the bonds shall be limited to the part           

13  or parts of the district project that are public improvements.              

14      (e) The levying of special assessments against land or                      

15  interests in land, or both.                                                 

16      (f) Any other source.                                                       

17      (2) Beginning January 1, 2000, the proceeds of a bond, note,                

18  or other obligation issued to finance a project authorized under            

19  this chapter shall be used for capital expenditures, costs of a             

20  reserve fund securing the bonds, notes, or other obligations, and           

21  costs of issuing the bonds, notes, or other obligations.  The               

22  proceeds of the bonds, notes, or other obligations shall not be             

23  used for operational expenses of a district.                                

24      Sec. 4.  The development or redevelopment of a district,                    

25  including the various phases of the development or redevelopment,           

26  is 1 project and, in the discretion of the governing body of the            

27  city local governmental unit, may be financed as a single                 

1   improvement.                                                                

2       Sec. 5.  (1) If a  city local governmental unit elects to                  

3   levy special assessments to defray all or part of the cost of the           

4   district project, then the special assessments shall be levied              

5   pursuant to applicable statutory or charter provisions or, if               

6   there are no applicable statutory or charter provisions, pursuant           

7   to statutory or charter provisions applicable to  city local               

8   governmental unit street improvements.  If a  city local                   

9   governmental unit charter does not authorize special assessments            

10  for the purposes set forth in this chapter, the charter                     

11  provisions authorizing special assessments for street                       

12  improvements are made applicable to the purposes set forth in               

13  this chapter, without amendment to the charter.  The total amount           

14  assessed for district purposes may be made payable in not more              

15  than 20 annual installments as determined by the governing body             

16  of the  city local governmental unit, the first installment to             

17  be payable in not more than 18 months after the date of the                 

18  confirmation of the special assessment roll.                                

19      (2) A special assessment shall be levied against assessable                 

20  property on the basis of the special benefits to that parcel from           

21  the total project.  There is a rebuttable presumption that a                

22  district project specially benefits all assessable property                 

23  located within the district.                                                

24      (3) This subsection applies to a principal shopping district                

25  only if the principal shopping district is designated by the                

26  governing body of a  city local governmental unit after July 14,           

27  1992.  The special assessments annually levied on a parcel under            

1   this chapter shall not exceed the product of $10,000.00 and the             

2   number of businesses on that parcel.  A business located on a               

3   single parcel shall not be responsible for a special assessment             

4   in excess of $10,000.00 annually.  When the special assessment              

5   district is created, a lessor of a parcel subject to a special              

6   assessment may unilaterally revise an existing lease to a                   

7   business located on that parcel to recover from that business all           

8   or part of the special assessment, as is proportionate                      

9   considering the portion of the parcel occupied by the business.             

10      (4) The $10,000.00 maximum amounts in subsection (3) shall be               

11  adjusted each January 1, beginning January 1, 1994, pursuant to             

12  the annual average percentage increase or decrease in the Detroit

13  consumer price index for all items as reported by the United                

14  States department of labor.  The adjustment for each year shall             

15  be made by comparing the Detroit consumer price index for the               

16  12-month period ending the preceding October 31 with the                    

17  corresponding Detroit consumer price index of 1 year earlier.               

18  The percentage increase or decrease shall then be multiplied by             

19  the current amounts under subsection (3) authorized by this                 

20  section.  The product shall be rounded up to the nearest multiple           

21  of 50 cents and shall be the new amount.                                    

22      (5) The  city local governmental unit may issue special                    

23  assessment bonds in anticipation of the collection of the special           

24  assessments for a district project and, by action of its                    

25  governing body, may pledge its full faith and credit for the                

26  prompt payment of the bonds.  Special assessment bonds issued               

27  under this section are subject to the revised municipal finance             

1   act, 2001 PA 34, MCL 141.2101 to 141.2821.  The last maturity on            

2   the bonds shall be not later than 2 years after the due date of             

3   the last installment on the special assessments.  Special                   

4   assessment bonds may be issued pursuant to statutory or charter             

5   provisions applicable to the issuance by the  city local                   

6   governmental unit of special assessment bonds for the improvement           

7   or, if there are no applicable statutory or charter provisions,             

8   pursuant to statutory or charter provisions applicable to the               

9   issuance by the  city local governmental unit of special                   

10  assessment bonds for street improvements.                                   

11      (6) If a district project in a district designated by the                   

12  governing body of a  city local governmental unit after July 14,           

13  1992 is financed by special assessments, the governing body of              

14  the  city local governmental unit shall review the special                 

15  assessments every 5 years, unless special assessment bonds are              

16  outstanding.                                                                

17      (7) Before a  city local governmental unit levies a special                

18  assessment under this chapter that benefits property within a               

19  business improvement district, the business improvement district            

20  board shall develop a marketing and development plan that details           

21  all of the following:                                                       

22      (a) The scope, nature, and duration of the business                         

23  improvement district project or projects.                                   

24      (b) The different classes of property owners who are going to               

25  be assessed and the projected amount of the special assessment on           

26  the different classes.                                                      

27      (8) A  city local governmental unit that levies a special                  

1   assessment under this chapter that benefits property within a               

2   business improvement district is considered to have approved the            

3   marketing and development plan described in subsection (7).                 

4       Sec. 6.  If off-street parking lots or structures are                       

5   essential to the principal shopping district project, if 1 or               

6   more off-street parking lots or structures are already owned by             

7   the  city local governmental unit and were acquired through the            

8   issuance of revenue bonds, and if the remaining parking lots or             

9   structures are to be financed in whole or in part by special                

10  assessments and special assessment bonds, then the  city local             

11  governmental unit, to place all parking lots or structures on the           

12  same basis, may include as a part of the cost of parking lots or            

13  structures for the project the amount necessary to retire all or            

14  any part of the outstanding revenue bonds, inclusive of any                 

15  premium not exceeding 5% necessary to be paid upon the redemption           

16  or purchase of those outstanding bonds.  From the proceeds of the           

17  special assessments or from the sale of bonds issued in                     

18  anticipation of the payment of the special assessments, the                 

19  city local governmental unit shall retire by redemption or                

20  purchase the outstanding revenue bonds.  This section does not              

21  authorize the refunding of noncallable bonds without the consent            

22  of the holders of the bonds.