February 22, 2005, Introduced by Reps. Amos, Taub and Garfield and referred to the Committee on Commerce.
A bill to provide for the establishment of commercial
rehabilitation districts in certain local governmental units; to
provide for the exemption from certain taxes; to levy and collect a
specific tax upon the owners of certain qualified facilities; to
provide for the disposition of the tax; to reimburse certain
expenses; 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 certain local
governmental officials; and to provide penalties.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"commercial rehabilitation act".
Sec. 2. As used in this act:
(a) "Commercial property" means land improvements classified
by law for general ad valorem tax purposes as real property
including real property assessable as personal property pursuant to
sections 8(d) and 14(6) of the general property tax act, 1893 PA
206, MCL 211.8 and 211.14, the primary purpose and use of which is
the operation of a commercial business enterprise. Commercial
property shall also include facilities related to a commercial
business enterprise under the same ownership at that location,
including, but not limited to, office, engineering, research and
development, warehousing, parts distribution, retail sales, and
other commercial activities. Commercial property also includes a
building or group of contiguous buildings previously used for
industrial purposes that will be converted to the operation of a
commercial business enterprise. Commercial property does not
include any of the following:
(i) Land.
(ii) Property of a public utility.
(b) "Commercial rehabilitation district" or "district" means
an area not less than 75 acres in size of a qualified local
governmental unit established as provided in section 3.
(c) "Commercial rehabilitation exemption certificate" or
"certificate" means the certificate issued under section 6.
(d) "Commercial rehabilitation tax" means the specific tax
levied under this act.
(e) "Commission" means the state tax commission created by
1927 PA 360, MCL 209.101 to 209.107.
(f) "Department" means the department of treasury.
(g) "Qualified facility" means a building or group of
contiguous buildings of commercial property consisting of 1,000,000
or more square feet of space which is 30% or more vacant. A
qualified facility does not include property that is to be used as
a professional sports stadium. A qualified facility does not
include property that is to be used as a casino. As used in this
subdivision, "casino" means a casino or a parking lot, hotel,
motel, or retail store owned or operated by a casino, an affiliate,
or an affiliated company, regulated by this state pursuant to the
Michigan gaming control and revenue act, the Initiated Law of 1996,
MCL 432.201 to 432.226.
(h) "Qualified facility expenses" means roof repair and
replacement, HVAC repair and replacement, including boilers and
chillers, and facade repairs and improvements. Qualified facility
expenses do not include construction of new walls or facilities or
the roof and operating systems required to service new facilities.
(i) "Qualified infrastructure expenses" means roads,
utilities, parking lot repair and replacement, landscaping,
exterior lighting, irrigation, sidewalks, traffic signals, curbs
and gutters, storm drain systems, signage, and similar items.
(j) "Qualified local governmental unit" means a city, village,
or township.
(k) "Rehabilitation" means changes to obsolete property other
than replacement that are required to restore or modify the
property, together with all appurtenances, to an economically
efficient condition. Rehabilitation includes major renovation and
modification including, but not necessarily limited to, the
improvement of floor loads, correction of deficient or excessive
height, new or improved fixed building equipment, including
heating, ventilation, and lighting, reducing multistory facilities
to 1 or 2 stories, improved structural support including
foundations, improved roof structure and cover, floor replacement,
improved wall placement, improved exterior and interior appearance
of buildings, and other physical changes required to restore or
change the obsolete property to an economically efficient
condition. Rehabilitation shall not include improvements
aggregating less than 10% of the true cash value of the property at
commencement of the rehabilitation of the obsolete property.
(l) "Taxable value" means the value determined under section
27a of the general property tax act, 1893 PA 206, MCL 211.27a.
Sec. 3. (1) A qualified local governmental unit, by resolution
of its legislative body, may establish 1 or more qualified
rehabilitation districts that may consist of 1 or more parcels or
tracts of land or a portion of a parcel or tract of land, if at the
time the resolution is adopted, the parcel or tract of land or
portion of a parcel or tract of land within the district is a
qualified facility:
(2) The legislative body of a qualified local governmental
unit may establish a commercial rehabilitation district on its own
initiative or upon a written request filed by the owner or owners
of property comprising at least 50% of all taxable value of the
property located within a proposed commercial rehabilitation
district. The written request must be filed with the clerk of the
qualified local governmental unit.
(3) Before adopting a resolution establishing a commercial
rehabilitation district, the legislative body shall give written
notice by certified mail to the county in which the proposed
district is to be located and the owners of all real property
within the proposed commercial rehabilitation district and shall
afford an opportunity for a hearing on the establishment of the
commercial rehabilitation district at which any of those owners and
any other resident or taxpayer of the qualified local governmental
unit may appear and be heard. The legislative body shall give
public notice of the hearing not less than 10 days or more than 30
days before the date of the hearing.
(4) The legislative body of the qualified local governmental
unit, in its resolution establishing a commercial rehabilitation
district, shall set forth a finding and determination that the
district meets the requirements set forth in subsection (1) and
shall provide a copy of the resolution by certified mail to the
county in which the district is located.
(5) Within 28 days after receiving a copy of the resolution
establishing a commercial rehabilitation district, the county may
reject the establishment or the district by 1 of the following:
(a) If the county has an elected county executive, by written
notification to the qualified local governmental unit.
(b) If the county does not have an elected county executive,
by a resolution of the county board of commissioners provided to
the qualified local governmental unit.
Sec. 4. (1) If a commercial rehabilitation district is
established under section 3, the owner of a qualified facility may
file an application for a commercial rehabilitation exemption
certificate with the clerk of the qualified local governmental unit
that established the commercial rehabilitation district. The
application shall be filed in the manner and form prescribed by the
commission. The application shall contain or be accompanied by a
general description of the qualified facility and a general
description of the proposed use of the qualified facility, the
general nature and extent of the rehabilitation to be undertaken, a
descriptive list of the fixed building equipment that will be a
part of the qualified facility, a time schedule for undertaking and
completing the rehabilitation of the qualified facility, a
statement of the economic advantages expected from the exemption,
including the number of jobs to be retained or created as a result
of rehabilitating the qualified facility, including expected
construction employment, and information relating to the
requirements in section 8.
(2) Upon receipt of an application for a commercial
rehabilitation exemption certificate, the clerk of the qualified
local governmental unit shall notify in writing the assessor of the
local tax collecting unit in which the qualified facility is
located, and the legislative body of each taxing unit that levies
ad valorem property taxes in the qualified local governmental unit
in which the qualified facility is located. Before acting upon the
application, the legislative body of the qualified local
governmental unit shall hold a public hearing on the application
and give public notice to the applicant, the assessor, a
representative of the affected taxing units, and the general
public. The hearing on each application shall be held separately
from the hearing on the establishment of the commercial
rehabilitation district.
Sec. 5. The legislative body of the qualified local
governmental unit, not more than 60 days after receipt of the
application by the clerk, shall by resolution either approve or
disapprove the application for a commercial rehabilitation
exemption certificate in accordance with section 8 and the other
provisions of this act. The clerk shall retain the original of the
application and resolution. If approved, the clerk shall forward a
copy of the application and resolution to the commission. If
disapproved, the reasons shall be set forth in writing in the
resolution, and the clerk shall send, by certified mail, a copy of
the resolution to the applicant and to the assessor. A resolution
is not effective unless approved by the commission as provided in
section 6.
Sec. 6. (1) Not more than 60 days after receipt of a copy of
the application and resolution adopted under section 5, the
commission shall approve or disapprove the resolution.
(2) Following approval of the application by the legislative
body of the qualified local governmental unit and the commission,
the commission shall issue to the applicant a commercial
rehabilitation exemption certificate in the form the commission
determines, which shall contain all of the following:
(a) A legal description of the real property on which the
qualified facility is located.
(b) A statement that unless revoked as provided in this act
the certificate shall remain in force for the period stated in the
certificate.
(c) A statement of the taxable value of the qualified
facility, separately stated for real and personal property, for the
tax year immediately preceding the effective date of the
certificate after deducting the taxable value of the land and
personal property other than personal property assessed pursuant to
sections 8(d) and 14(6) of the general property tax act, 1893 PA
206, MCL 211.8 and 211.14.
(d) A statement of the period of time authorized by the
legislative body of the qualified local governmental unit within
which the rehabilitation shall be completed.
(e) If the period of time authorized by the legislative body
of the qualified local governmental unit pursuant to subdivision
(d) is less than 12 years, the exemption certificate shall contain
the factors, criteria, and objectives, as determined by the
resolution of the qualified local governmental unit, necessary for
extending the period of time, if any.
(3) The effective date of the certificate is the December 31
immediately following the date of issuance of the certificate.
(4) The commission shall file with the clerk of the qualified
local governmental unit a copy of the commercial rehabilitation
exemption certificate, and the commission shall maintain a record
of all certificates filed. The commission shall also send, by
certified mail, a copy of the commercial rehabilitation exemption
certificate to the applicant and the assessor of the local tax
collecting unit in which the qualified facility is located.
Sec. 7. (1) A qualified facility for which a commercial
rehabilitation exemption certificate is in effect, but not the land
on which the rehabilitated facility is located, or personal
property other than personal property assessed pursuant to sections
8(d) and 14(6) of the general property tax act, 1893 PA 206, MCL
211.8 and 211.14, for the period on and after the effective date of
the certificate and continuing so long as the commercial
rehabilitation exemption certificate is in force, is exempt from ad
valorem property taxes collected under the general property tax
act, 1893 PA 206, MCL 211.1 to 211.157.
(2) Unless earlier revoked as provided in section 12, a
commercial rehabilitation exemption certificate shall remain in
force and effect for a period to be determined by the legislative
body of the qualified local governmental unit. The certificate may
be issued for a period of at least 1 year, but not to exceed 10
years. If the number of years determined is less than 10, the
certificate may be subject to review by the legislative body of the
qualified local governmental unit and the certificate may be
extended. The total amount of time determined for the certificate
including any extensions shall not exceed 10 years after the
completion of the qualified facility. The certificate shall
commence with its effective date and end on the December 31
immediately following the last day of the number of years
determined. The date of issuance of a certificate of occupancy, if
required by appropriate authority, shall be the date of completion
of the qualified facility.
(3) If the number of years determined by the legislative body
of the qualified local governmental unit for the period a
certificate remains in force is less than 10 years, the review of
the certificate for the purpose of determining an extension shall
be based upon factors, criteria, and objectives that shall be
placed in writing, determined and approved at the time the
certificate is approved by resolution of the legislative body of
the qualified local governmental unit and sent, by certified mail,
to the applicant, the assessor of the local tax collecting unit in
which the qualified facility is located, and the commission.
Sec. 8. (1) If the taxable value of the property proposed to
be exempt pursuant to an application under consideration,
considered together with the aggregate taxable value of property
exempt under certificates previously granted and currently in force
under this act or under 1974 PA 198, MCL 207.551 to 207.572,
exceeds 5% of the taxable value of the qualified local governmental
unit, the legislative body of the qualified local governmental unit
shall make a separate finding and shall include a statement in its
resolution approving the application that exceeding that amount
shall not have the effect of substantially impeding the operation
of the qualified local governmental unit or impairing the financial
soundness of an affected taxing unit.
(2) The legislative body of the qualified local governmental
unit shall not approve an application for a commercial
rehabilitation exemption certificate unless the applicant complies
with all of the following requirements:
(a) The commencement of the rehabilitation of the qualified
facility does not occur before the establishment of the commercial
rehabilitation district.
(b) The application relates to a rehabilitation program that
when completed constitutes a qualified facility within the meaning
of this act and that shall be situated within a commercial
rehabilitation district established in a qualified local
governmental unit eligible under this act.
(c) Completion of the qualified facility is calculated to, and
will at the time of issuance of the certificate have the reasonable
likelihood to, increase commercial activity, create employment,
retain employment, prevent a loss of employment, revitalize urban
areas, or increase the number of residents in the community in
which the qualified facility is situated.
(d) The applicant states, in writing, that the rehabilitation
of the qualified facility would not be undertaken without the
applicant's receipt of the exemption certificate.
(e) The applicant is not delinquent in the payment of any
taxes related to the qualified facility.
Sec. 9. The assessor of each qualified local governmental unit
in which there is a qualified facility with respect to which 1 or
more commercial rehabilitation exemption certificates have been
issued and are in force shall determine annually as of December 31
the value and taxable value, both for real and personal property,
of each qualified facility separately, having the benefit of a
certificate and upon receipt of notice of the filing of an
application for the issuance of a certificate, shall determine and
furnish to the local legislative body the value and the taxable
value of the property to which the application pertains and other
information as may be necessary to permit the local legislative
body to make the determinations required by section 8(2).
Sec. 10. (1) There is levied upon every owner of a qualified
facility to which a commercial rehabilitation exemption certificate
is issued a specific tax to be known as the commercial
rehabilitation tax.
(2) The amount of the commercial rehabilitation tax, in each
year, shall be determined by multiplying the total mills levied as
ad valorem taxes for that year by all taxing units within which the
qualified facility is located by the taxable value of the real and
personal property of the qualified facility after deducting the
taxable valuation of the land and of personal property other than
personal property assessed pursuant to sections 8(d) and 14(6) of
the general property tax act, 1893 PA 206, MCL 211.8 and 211.14.
(3) The commercial rehabilitation tax is an annual tax,
payable at the same times, in the same installments, and to the
same officer or officers as taxes imposed under the general
property tax act, 1893 PA 206, MCL 211.1 to 211.157, are payable.
Except as otherwise provided in this section, the officer or
officers shall disburse the commercial rehabilitation tax payments
received by the officer or officers each year as follows:
(a) Fifty percent to and among this state, cities, school
districts, counties, and authorities, at the same times and in the
same proportions as required by law for the disbursement of taxes
collected under the general property tax act, 1893 PA 206, MCL
211.1 to 211.157.
(b) Fifty percent to the qualified local governmental unit in
which a qualified facility is located to reimburse qualified
infrastructure expenses and qualified facility expenses.
(4) For intermediate school districts receiving state aid
under sections 56, 62, and 81 of the state school aid act of 1979,
1979 PA 94, MCL 388.1656, 388.1662, and 388.1681, of the amount of
obsolete property tax that would otherwise be disbursed to an
intermediate school district, all or a portion, to be determined on
the basis of the tax rates being utilized to compute the amount of
state aid, shall be paid to the state treasury to the credit of the
state school aid fund established by section 11 of article IX of
the state constitution of 1963.
(5) The amount of commercial rehabilitation tax described in
subsection (2) that would otherwise be disbursed to a local school
district for school operating purposes shall be paid instead to the
state treasury and credited to the state school aid fund
established by section 11 of article IX of the state constitution
of 1963.
(6) The officer or officers shall send a copy of the amount of
disbursement made to each unit under this section to the commission
on a form provided by the commission.
(7) A qualified facility located in a renaissance zone under
the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to
125.2696, is exempt from the commercial rehabilitation tax levied
under this act to the extent and for the duration provided pursuant
to the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to
125.2696, except for that portion of the commercial rehabilitation
tax attributable to a special assessment or a tax described in
section 7ff(2) of the general property tax act, 1893 PA 206, MCL
211.7ff. The commercial rehabilitation tax calculated under this
subsection shall be disbursed proportionately to the taxing unit or
units that levied the special assessment or the tax described in
section 7ff(2) of the general property tax act, 1893 PA 206, MCL
211.7ff.
Sec. 11. The amount of the tax applicable to real property,
until paid, is a lien upon the real property to which the
certificate is applicable. Proceedings upon the lien as provided by
law for the foreclosure in the circuit court of mortgage liens upon
real property may commence only upon the filing by the appropriate
collecting officer of a certificate of nonpayment of the commercial
rehabilitation tax applicable to real property, together with an
affidavit of proof of service of the certificate of nonpayment upon
the owner of the qualified facility by certified mail, with the
register of deeds of the county in which the qualified facility is
situated.
Sec. 12. The legislative body of the qualified local
governmental unit may, by resolution, revoke the commercial
rehabilitation exemption certificate of a facility if it finds that
the completion of rehabilitation of the qualified facility has not
occurred within the time authorized by the legislative body in the
exemption certificate or a duly authorized extension of that time,
or that the holder of the commercial rehabilitation exemption
certificate has not proceeded in good faith with the operation of
the qualified facility in a manner consistent with the purposes of
this act and in the absence of circumstances that are beyond the
control of the holder of the exemption certificate.
Sec. 13. A commercial rehabilitation exemption certificate may
be transferred and assigned by the holder of the certificate to a
new owner of the qualified facility if the qualified local
governmental unit approves the transfer after application by the
new owner.
Sec. 14. Not later than October 15 each year, each qualified
local governmental unit granting a commercial rehabilitation
exemption shall report to the commission on the status of each
exemption. The report must include the current value of the
property to which the exemption pertains, the value on which the
commercial rehabilitation tax is based, and a current estimate of
the number of jobs retained or created by the exemption.
Sec. 15. (1) The department annually shall prepare and submit
to the committees of the house of representatives and senate
responsible for tax policy and economic development issues a report
on the utilization of commercial rehabilitation districts, based on
the information filed with the commission.
(2) After this act has been in effect for 3 years, the
department shall prepare and submit to the committees of the house
of representatives and senate responsible for tax policy and
economic development issues an economic analysis of the costs and
benefits of this act in the 3 qualified local governmental units in
which it has been most heavily utilized.
Sec. 16. A new exemption shall not be granted under this act
after December 31, 2015, but an exemption then in effect shall
continue until the expiration of the exemption certificate.
Sec. 17. (1) Within 60 days after the granting of a commercial
rehabilitation exemption certificate under section 6 for a
qualified facility, the state treasurer may, for a period not to
exceed 6 years, exclude up to 1/2 of the number of mills levied for
school operating purposes under the revised school code, 1976 PA
451, MCL 380.1 to 380.1852, and under the state education tax act,
1993 PA 331, MCL 211.901 to 211.906, from the specific tax
calculation on the qualified facility under section 10(2)(b) if the
state treasurer determines that reducing the number of mills used
to calculate the specific tax under section 10(2)(b) is necessary
to reduce unemployment, promote economic growth, and increase
capital investment in qualified local governmental units.
(2) The state treasurer shall not grant more than 25
exclusions under this section each year.