April 25, 2006, Introduced by Rep. Farhat and referred to the Committee on Commerce.
A bill to amend 2000 PA 146, entitled
"Obsolete property rehabilitation act,"
by amending sections 2, 3, 4, 5, 6, 7, 8, 9, 12, 13, 14, 15, and 17
(MCL 125.2782, 125.2783, 125.2784, 125.2785, 125.2786, 125.2787,
125.2788, 125.2789, 125.2792, 125.2793, 125.2794, 125.2795, and
125.2797), section 2 as amended by 2006 PA 70.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Commercial housing property" means that portion of real
property not occupied by an owner of that real property that is
classified as residential real property under section 34c of the
general property tax act, 1893 PA 206, MCL 211.34c, is a multiple-
unit dwelling, or is a dwelling unit in a multiple-purpose
structure, used for residential purposes. Commercial housing
property also includes a building or group of contiguous buildings
previously used for industrial purposes that will be converted to a
multiple-unit dwelling or dwelling unit in a multiple-purpose
structure, used for residential purposes.
(b) "Commercial property" means land improvements classified
by law for general ad valorem tax purposes as real property
including buildings and improvements assessable as real 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 or a multiple-unit
dwelling or a dwelling unit in a multiple-purpose structure, used
for residential purposes. Commercial property does not include any
of the following:
(i) Land.
(ii) Property of a public utility.
(c) "Commission" means the state tax commission created by
1927 PA 360, MCL 209.101 to 209.107.
(d) "Department" means the department of treasury.
(e) "Facility", except as otherwise provided in this act,
means a building or group of contiguous buildings.
(f) "Functionally obsolete" means that term as defined in
section 2 of the brownfield redevelopment financing act, 1996 PA
381, MCL 125.2652.
(g) "Local governmental unit" means a city, village, township,
or a qualified local governmental unit.
(h) (g)
"Obsolete properties tax" means the
specific tax
levied under this act.
(i) (h)
"Obsolete property" means commercial
property or
commercial housing property, that is 1 or more of the following:
(i) Blighted, as that term is defined in section 2 of the
brownfield redevelopment financing act, 1996 PA 381, MCL 125.2652.
(ii) A facility as that term is defined under section 20101 of
the natural resources and environmental protection act, 1994 PA
451, MCL 324.20101.
(iii) Functionally obsolete.
(j) (i)
"Obsolete property rehabilitation
district" means an
area
of a qualified local governmental unit
established as
provided in section 3. Only those properties within the district
meeting the definition of "obsolete property" are eligible for an
exemption certificate issued pursuant to section 6.
(k) (j)
"Obsolete property rehabilitation exemption
certificate" or "certificate" means the certificate issued pursuant
to section 6.
(l) (k)
"Qualified local governmental unit" means
1 or more
of the following:
(i) A city with a median family income of 150% or less of the
statewide median family income as reported in the 1990 federal
decennial census that meets 1 or more of the following criteria:
(A) Contains or has within its borders an eligible distressed
area as that term is defined in section 11(u)(ii) and (iii) of the
state housing development authority act of 1966, 1966 PA 346, MCL
125.1411.
(B) Is contiguous to a city with a population of 500,000 or
more.
(C) Has a population of 10,000 or more that is located outside
of an urbanized area as delineated by the United States bureau of
the census.
(D) Is the central city of a metropolitan area designated by
the United States office of management and budget.
(E) Has a population of 100,000 or more that is located in a
county with a population of 2,000,000 or more according to the 1990
federal decennial census.
(ii) A township with a median family income of 150% or less of
the statewide median family income as reported in the 1990 federal
decennial census that meets 1 or more of the following criteria:
(A) Is contiguous to a city with a population of 500,000 or
more.
(B) All of the following:
(I) Contains or has within its borders an eligible distressed
area as that term is defined in section 11(u)(ii) of the state
housing development authority act of 1966, 1966 PA 346, MCL
125.1411.
(II) Has a population of 10,000 or more.
(iii) A village with a population of 500 or more as reported in
the 1990 federal decennial census located in an area designated as
a rural enterprise community before 1998 under title XIII of the
omnibus budget reconciliation act of 1993, Public Law 103-66, 107
Stat. 416.
(iv) A city that meets all of the following criteria:
(A) Has a population of more than 20,000 or less than 5,000
and is located in a county with a population of 2,000,000 or more
according to the 1990 federal decennial census.
(B) As of January 1, 2000, has an overall increase in the
state equalized valuation of real and personal property of less
than 65% of the statewide average increase since 1972 as determined
for the designation of eligible distressed areas under section
11(u)(ii)(B) of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1411.
(m) (l) "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, adding additional stories to a facility or
adding additional space on the same floor level not to exceed 100%
of the existing floor space on that floor level, 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.
(n) (m)
"Rehabilitated facility" means a
commercial property
or commercial housing property that has undergone rehabilitation or
is in the process of being rehabilitated, including rehabilitation
that changes the intended use of the building. A rehabilitated
facility does not include property that is to be used as a
professional sports stadium. A rehabilitated 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.
(o) (n)
"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
obsolete property 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 either of the following:
(a) Obsolete property in an area characterized by obsolete
commercial property or commercial housing property.
(b) Commercial property that is obsolete property that was
owned
by a qualified local governmental unit on the
effective
date
of this act June 6, 2000, and subsequently conveyed to a
private owner.
(2)
The legislative body of a qualified local governmental
unit may establish an obsolete property 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 obsolete property
rehabilitation district. The written request must be filed with the
clerk
of the qualified local governmental unit.
(3) Before adopting a resolution establishing an obsolete
property rehabilitation district, the legislative body shall give
written notice by certified mail to the owners of all real property
within the proposed obsolete property rehabilitation district and
shall afford an opportunity for a hearing on the establishment of
the obsolete property 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 an obsolete property
rehabilitation district, shall set forth a finding and
determination that the district meets the requirements set forth in
subsection (1).
Sec. 4. (1) If an obsolete property rehabilitation district is
established under section 3, the owner of obsolete property may
file an application for an obsolete property rehabilitation
exemption
certificate with the clerk of the
qualified local
governmental unit that established the obsolete property
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 obsolete
facility and a general description of the proposed use of the
rehabilitated 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 rehabilitated
facility, a time schedule for undertaking and completing the
rehabilitation of the 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
facility, including expected construction employment, and
information relating to the requirements in section 8.
(2) Upon receipt of an application for an obsolete property
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 obsolete 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 obsolete 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 obsolete property
rehabilitation district.
(3) Upon receipt of an application for an obsolete property
rehabilitation exemption certificate for a facility located on
property
that was owned by a qualified local governmental unit on
the
effective date of this act June
6, 2000, and subsequently
conveyed
to a private owner, the clerk of the
qualified local
governmental unit, in addition to the other requirements of this
section, shall request the assessor of the local tax collecting
unit in which the facility is located to determine the taxable
value of the property. This determination shall be made prior to
the hearing on the application for an obsolete property
rehabilitation exemption certificate held pursuant to subsection
(2).
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 an obsolete property 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 an obsolete property
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
obsolete 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 obsolete property,
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 obsolete property
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 obsolete property
rehabilitation exemption certificate to the applicant and the
assessor of the local tax collecting unit in which the obsolete
property is located.
Sec. 7. (1) A rehabilitated facility for which an obsolete
property 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
obsolete property 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, an
obsolete property 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 12 years. If the number of years determined is less than
12, 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 12 years
after the completion of the rehabilitated 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 rehabilitated 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 12 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 obsolete property 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 an obsolete property
exemption certificate unless the applicant complies with all of the
following requirements:
(a) The commencement of the rehabilitation of the facility
does not occur before the establishment of the obsolete property
rehabilitation district.
(b) The application relates to a rehabilitation program that
when completed constitutes a rehabilitated facility within the
meaning of this act and that shall be situated within an obsolete
property
rehabilitation district established in a qualified local
governmental unit eligible under this act to establish such a
district.
(c) Completion of the rehabilitated 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 facility is situated.
(d) The applicant states, in writing, that the rehabilitation
of the 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 facility.
Sec.
9. The assessor of each qualified local governmental
unit in which there is a rehabilitated facility with respect to
which 1 or more obsolete property 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 rehabilitated 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.
12. The legislative body of the qualified local
governmental unit may, by resolution, revoke the obsolete property
rehabilitation exemption certificate of a facility if it finds that
the completion of rehabilitation of the 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 obsolete property exemption certificate has not
proceeded in good faith with the operation of the rehabilitated
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. An obsolete property rehabilitation exemption
certificate may be transferred and assigned by the holder of the
certificate
to a new owner of the rehabilitated 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 an obsolete property
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 obsolete property rehabilitation tax is based, a current
estimate of the number of jobs retained or created by the
exemption, and a current estimate of the number of new residents
occupying commercial housing property units covered 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 obsolete property 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. 17. (1) Within 60 days after the granting of an obsolete
property rehabilitation exemption certificate under section 6 for a
rehabilitated 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 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.