SB-1589, As Passed Senate, December 19, 2008

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1589

A bill to amend 1867 PA 35, entitled

"An act to provide for the formation of street railway companies,

defining their powers and duties and authorizing the construction,

use, maintenance and ownership of street railways for the

transportation of passengers, and for accumulating, storing,

manufacturing, conducting, using, selling, furnishing and supplying

electricity and electric power, by such companies,"

by amending the title and section 23 (MCL 472.23); and to repeal

acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to provide for the formation of nonprofit street

railway companies, defining their powers and duties and authorizing

the construction, use, maintenance and ownership of street railways

for the transportation of passengers, and for accumulating,

storing, manufacturing, conducting, using, selling, furnishing and

supplying electricity and electric power, by such companies; to

prescribe powers and duties of certain state and local agencies and

officials; to provide remedies and penalties; to provide for the

establishment of a transit development finance zone; and to

authorize the use of tax increment financing.

Sec. 23. ~~If the directors of any company formed under this act~~

~~shall declare or pay any dividend when the company is insolvent, or~~

~~the payment of which would render it insolvent, or which would~~

~~diminish the amount of its capital stock, they and all stockholders~~

~~who shall knowingly accept or receive such dividend, shall be~~

~~jointly and severally individually liable for all the debts of such~~

~~company then existing and for all that shall be thereafter~~

~~contracted, while they shall respectively continue stockholders or~~

~~in office.~~

(1) At the request of a street railway, and with the consent

of the department, a city, village, or township in which a street

railway system is located may establish a transit operations

finance zone for a street railway system if the city, village, or

township and the department determine that it is necessary for the

best interests of the public to promote and finance transit

operations in a zone. A parcel shall not be included in more than 1

zone created under this section.

(2) The boundaries of a zone shall be established by the city,

village, or township and may include parcels that are in whole or

in part up to 1/4 mile in distance from the street railway system.

Before establishing a zone, the city, village, or township shall

consult with the street railway, the department, affected taxing

jurisdictions, and any other person or entity that the city,

village, or township considers necessary. The city, village, or

township may conduct a planning study and may designate a zone

before implementation of street railway system service within the

zone.

(3) If the city, village, or township and the department

determine that it is necessary for the best interests of the public

to promote and finance transit operations in a zone under

subsection (1), the city, village, or township shall enter into an

agreement with the street railway and the department for the

creation of a zone. The agreement shall include, but not be limited

to, all of the following:

(a) The geographic boundaries of the zone, including both of

the following:

(i) The designation of boundaries of the zone in relation to

highways, streets, streams, lakes, other bodies of water, or

otherwise.

(ii) The location and extent of existing streets and other

public facilities within the zone, designating the location,

character, and extent of the categories of public and private land

uses then existing in the zone, including residential,

recreational, commercial, industrial, educational, and other uses,

and including a legal description of the zone.

(b) A tax increment financing plan for the zone as provided

under subsection (4).

parties under the agreement to help establish the zone.

(d) The requirement that amendments to the agreement must be

approved by the city, village, or township, the department, and the

street railway.

(e) Any other material that the city, village, or township,

the department, or the street railway consider necessary or

appropriate.

(4) A tax increment financing plan for a zone established

under this section shall include a description of the tax increment

financing procedure, the distribution of tax increment financing

revenue to the street railway, and a statement of the estimated

impact of tax increment financing on the assessed value of property

in each taxing jurisdiction in the zone. The plan may exclude from

captured assessed value growth in property value resulting solely

from inflation and, if so, shall include the method for excluding

that growth. The plan shall require that tax increment revenue

received by a street railway under the plan be used only for the

expenses of operating the street railway system. If the street

railway subject to an agreement designating a zone under this

section ceases to operate a street railway system in the city,

village, or township that established the zone, the plan shall

terminate and the zone shall be abolished. The plan shall restrict

the revenue distributed to a street railway for any tax year to the

lesser of 25% of any operating deficit of the street railway for

the prior fiscal year or $4,000,000.00. Before including a tax

increment financing plan in an agreement, the city, village, or

township shall provide taxing jurisdictions in the zone levying

taxes subject to capture under the plan an opportunity to meet with

the city, village, or township. The city, village, or township

shall fully inform the taxing jurisdictions of the fiscal and

economic implications of the plan and the taxing jurisdictions may

present recommendations to the city, village, or township on the

tax increment financing plan.

(5) Before entering into an agreement for the creation of a

zone under this section, the city, village, or township shall

conduct a public hearing on the proposed agreement. Notice of the

public hearing shall be published twice in a newspaper of general

circulation in the city, village, or township, not less than 20 or

more than 40 days before the date of the hearing. The notice shall

state the date, time, and place of the hearing and shall describe

the proposed boundaries of the zone. A citizen, taxpayer, or

property owner of the city, village, or township, or an official

from a taxing jurisdiction within the zone has the right to be

heard on the agreement and the proposed boundaries of the zone. The

agreement shall not include in the zone land not included in the

description contained in the notice of public hearing, but the

agreement may exclude described land from the zone in the final

determination of the boundaries of the zone. A city, village, or

township shall not execute an agreement for the creation of a zone

under this section unless the city, village, or township finds that

it is necessary for the best interests of the public to promote and

finance transit operations in a zone.

(6) An agreement designating a zone and establishing its

boundaries under this section and any amendments to the agreement

shall be filed by the city, village, or township with the secretary

of state.

(7) The municipal and county treasurers shall transmit tax

increment revenues to the treasurer for the city, village, or

township in which the street railway system is located for

distribution to the street railway according to the tax increment

financing plan and the agreement. The street railway shall expend

the tax increment revenues only under the terms of the tax

increment financing plan and the agreement under this section.

Unused funds shall revert proportionately to the respective taxing

jurisdictions. Tax increment revenues shall not be used to

circumvent existing property tax limitations. The city, village, or

township and the department may abolish the zone if the city,

village, or township and the department find that the purposes for

which the zone was established are accomplished. Annually, the

city, village, or township, with assistance from the street

railway, shall submit to the department and the state tax

commission a report on the status of the tax increment financing

revenue. The report shall include all of the following:

(a) The amount and source of tax increment revenue received by

the street railway.

(b) The amount and purpose of expenditures from tax increment

revenue.

(d) The captured assessed value retained within the zone.

(e) A description of operating expenditures of the street

railway.

(8) The state tax commission may institute proceedings to

compel enforcement of this section. The state tax commission may

promulgate rules necessary for the administration of this section

under the administrative procedures act of 1969, 1969 PA 306, MCL

24.201 to 24.328.

(9) As used in this section:

(a) "Assessed value" means the taxable value as determined

under section 27a of the general property tax act, 1893 PA 206, MCL

211.27a.

(b) "Captured assessed value" means the amount in any 1 year

by which the current assessed value of a zone, including the

assessed value of property for which specific local taxes are paid

in lieu of property taxes, exceeds the initial assessed value. The

state tax commission shall prescribe the method for calculating

captured assessed value.

the taxable property within the boundaries of a zone at the time

the tax increment financing plan is approved, as shown by the most

recent equalized assessment roll of the city, village, or township

at the time an agreement is approved under this section. Property

exempt from taxation at the time of the determination of the

initial assessed value shall be included as zero. For the purpose

of determining initial assessed value, property for which a

specific local tax is paid in lieu of a property tax shall not be

considered to be property that is exempt from taxation.

(d) "Parcel" means an identifiable unit of land that is

treated as separate for valuation or zoning purposes.

(e) "Specific local tax" means a tax levied under 1974 PA 198,

1976 PA 430, MCL 207.551 to 207.572, the commercial redevelopment

act, 1978 PA 255, MCL 207.651 to 207.668, the technology park

development act, 1984 PA 385, MCL 207.701 to 207.718, the

commercial rehabilitation act, 2005 PA 210, MCL 207.841 to 207.856,

the neighborhood enterprise zone act, 1992 PA 147, MCL 207.771 to

207.786, the obsolete property rehabilitation act, 2000 PA 146, MCL

125.2781 to 125.2797, or 1953 PA 189, MCL 211.181 to 211.182. The

initial assessed value or current assessed value of property

subject to a specific local tax shall be the quotient of the

specific local tax paid divided by the ad valorem millage rate. The

state tax commission shall prescribe the method for calculating the

initial assessed value and current assessed value of property for

which a specific local tax was paid in lieu of a property tax.

(f) "Tax increment revenues" means the amount of ad valorem

property taxes and specific local taxes attributable to the

application of the levy of all taxing jurisdictions upon the

captured assessed value of real and personal property in the zone.

Tax increment revenues do not include any of the following:

(i) Taxes under the state education tax act, 1993 PA 331, MCL

211.901 to 211.906.

(ii) Taxes levied by local or intermediate school districts.

(iii) Taxes levied by a library established by 1901 LA 359.

(iv) Ad valorem property taxes attributable either to a portion

of the captured assessed value shared with taxing jurisdictions

within the jurisdictional area of the authority or to a portion of

value of property that may be excluded from captured assessed value

or specific local taxes attributable to the ad valorem property

taxes.

(v) Ad valorem property taxes excluded by the tax increment

financing plan of the authority from the determination of the

amount of tax increment revenues to be transmitted to the authority

or specific local taxes attributable to the ad valorem property

taxes.

(vi) Ad valorem property taxes exempted from capture under this

section or specific local taxes attributable to the ad valorem

property taxes.

(vii) Ad valorem property taxes specifically levied for the

payment of principal and interest of obligations approved by the

electors or obligations pledging the unlimited taxing power of the

local governmental unit or specific taxes attributable to those ad

valorem property taxes.

(viii) Ad valorem taxes captured on property in a zone by any of

the following authorities if the taxes were captured on the date

that the property became subject to a tax increment financing plan

under this section by any of the following authorities:

(A) A downtown development authority created under 1975 PA

197, MCL 125.1651 to 125.1681.

(B) A water resource improvement tax increment finance

authority created under the water resource tax increment finance

authority act, 2008 PA 94, MCL 125.1771 to 125.1794.

finance authority act, 1980 PA 450, MCL 125.1801 to 125.1830.

(D) A local development finance authority created under the

local development finance authority act, 1986 PA 281, MCL 125.2151

to 125.2174.

(E) A brownfield redevelopment finance authority created under

the brownfield redevelopment financing act, 1996 PA 381, MCL

126.2651 to 125.2672.

(F) A historical neighborhood tax increment finance authority

created under the historical neighborhood tax increment finance

authority act, 2004 PA 530, MCL 125.2841 to 12.2866.

(G) A corridor improvement authority created under the

corridor improvement authority act, 2005 PA 280, MCL 125.2871 to

125.2899.

(H) A neighborhood improvement authority created under the

neighborhood improvement authority act, 2007 PA 61, MCL 125.2911 to

125.2932.

(g) "Zone" means a transit operations finance zone established

under this section.

Enacting section 1. Sections 2, 4, 6, 8, 10, 12, 14, 16, 18,

20, 22, 24, 25, 28, 29, 30, 31, 31a, 32, 34, 35, and 36 of 1867 PA

35, MCL 472.2, 472.4, 472.6, 472.8, 472.10, 472.12, 472.14, 472.16,

472.18, 472.20, 472.22, 472.24, 472.25, 472.28, 472.29, 472.30,

472.31, 472.31a, 472.32, 472.34, 472.35, and 472.36, are repealed.

Enacting section 2. This amendatory act does not take effect

unless all of the following bills of the 94th Legislature are

enacted into law:

(a) House Bill No. 6542.

(b) House Bill No. 6543.

(d) House Bill No. 6625.