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SB-0146, As Passed Senate, May 8, 2008

SUBSTITUTE FOR

SENATE BILL NO. 146

(As amended, May 8, 2008)

<<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 governmental units; to provide for the exemption from certain taxes; to levy and collect a specific tax upon the owners of certain facilities; to impose and provide for the disposition of an administrative fee; 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 officers of local governmental units; and to provide penalties," by amending sections 2, 4, 14, and 14a (MCL 207.552, 207.554, 207.564, and 207.564a), section 2 as amended by 2007 PA 146, section 4 as amended by 2004 PA 437, section 14 as amended by 2007 PA 146, and section 14a as amended by 2007 PA 39, and by adding section 17a.>>

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

created by 1927 PA 360, MCL 209.101 to 209.107.

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

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

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

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

the same or contiguous land as that which is replaced or restored,

industrial property that is or is to be acquired, constructed,

altered, or installed for the purpose of replacement or restoration

of obsolete industrial property together with any part of the old

altered property that remains for use as industrial property after

the replacement, restoration, or alteration.

(b) In the case of construction on vacant noncontiguous land,

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

is to be acquired, constructed, transferred, or installed for the

purpose of being substituted for obsolete industrial property if

the obsolete industrial property is situated in a plant

rehabilitation district in the same city, village, or township as

the land on which the facility is or is to be constructed and

includes the obsolete industrial property itself until the time as

the substituted facility is completed.

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

replacement facility to be built in a plant rehabilitation district

or industrial development district.

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

township located in this state.

(6) "Industrial property" means land improvements, buildings,

structures, and other real property, and machinery, equipment,

furniture, and fixtures or any part or accessory whether completed

or in the process of construction comprising an integrated whole,

the primary purpose and use of which is the engaging in a high-

technology activity, operation of a strategic response center,

operation of a motorsports entertainment complex, operation of a

logistical optimization center, operation of qualified commercial

activity, the manufacture of goods or materials, creation or

synthesis of biodiesel fuel, or the processing of goods and

materials by physical or chemical change; property acquired,

constructed, altered, or installed due to the passage of proposal A

in 1976; the operation of a hydro-electric dam by a private company

other than a public utility; or agricultural processing facilities.

Industrial property includes facilities related to a manufacturing

operation under the same ownership, including, but not limited to,

office, engineering, research and development, warehousing, or

parts distribution facilities. Industrial property also includes

research and development laboratories of companies other than those

companies that manufacture the products developed from their

research activities and research development laboratories of a

manufacturing company that are unrelated to the products of the

company. For applications approved by the legislative body of a

local governmental unit between June 30, 1999 and December 31,

2007, industrial property also includes an electric generating

plant that is not owned by a local unit of government, including,

but not limited to, an electric generating plant fueled by biomass.

Industrial property also includes convention and trade centers over

250,000 square feet in size. Industrial property also includes a

federal reserve bank operating under 12 USC 341, located in a city

with a population of 750,000 or more. Industrial property may be

owned or leased. However, in the case of leased property, the

lessee is liable for payment of ad valorem property taxes and shall

furnish proof of that liability. Industrial property does not

include any of the following:

(a) Land.

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

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

and for which an application was approved by the legislative body

of a local governmental unit between June 30, 1999 and December 31,

2007.

(7) "Obsolete industrial property" means industrial property

the condition of which is substantially less than an economically

efficient functional condition.

(8) "Economically efficient functional condition" means a

state or condition of property the desirability and usefulness of

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

technology, or improved production processes, or from external

influencing factors that make the property less desirable and

valuable for continued use.

(9) "Research and development laboratories" means building and

structures, including the machinery, equipment, furniture, and

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

for research or experimental purposes that would be considered

qualified research as that term is used in section 41 of the

internal revenue code, 26 USC 41, except that qualified research

also includes qualified research funded by grant, contract, or

otherwise by another person or governmental entity.

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

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

conducted by an entity included in the classifications provided by

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

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

of management and budget, regardless of whether the entity

conducting that operation is included in that manual.

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

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

24, MCL 207.803.

(12) "Logistical optimization center" means a sorting and

distribution center that supports a private passenger motor vehicle

assembly center and its manufacturing process for the purpose of

optimizing transportation, just-in-time inventory management, and

material handling, and to which all of the following apply:

(a) The sorting and distribution center is within 2 miles of a

private passenger motor vehicle assembly center that, together with

supporting facilities, contains at least 800,000 square feet.

(b) The sorting and distribution center contains at least

950,000 square feet.

industrial facilities exemption certificate after June 30, 2005 and

before January 1, 2006.

(d) The private passenger motor vehicle assembly center is

located on land conditionally transferred by a township with a

population of more than 25,000 under 1984 PA 425, MCL 124.21 to

124.30, to a city with a population of more than 100,000 that

levies an income tax under the city income tax act, 1964 PA 284,

MCL 141.501 to 141.787.

(13) "Commercial property" means that term as defined in

section 2 of the obsolete property rehabilitation act, 2000 PA 146,

MCL 125.2782.

(14) "Qualified commercial activity" means commercial property

that meets all of the following:

~~(a) An application for an exemption certificate approved by~~

~~the local governmental unit is filed for approval by the state tax~~

~~commission not later than~~ ~~April 30, 2006~~.

(a) ~~(b) At least 90% of the property, excluding the~~

~~surrounding green space, is~~ Is used for warehousing, distribution,

~~and logistics~~ or logistic purposes ~~that provide food for~~

~~institutional, restaurant, hospital, or hotel customers~~ or for a

communication center.

~~(c) Is located within a village and is within 15 miles of a~~

~~Michigan~~ ~~state border.~~

(b) ~~(d)~~ Occupies ~~1 or more buildings or structures~~ a building

or structure that ~~together are~~ is greater than ~~300,000~~ 100,000

square feet in size.

(15) "Motorsports entertainment complex" means a closed-course

motorsports facility, and its ancillary grounds and facilities,

that satisfies all of the following:

(a) Has at least 70,000 fixed seats for race patrons.

(b) Has at least 6 scheduled days of motorsports events each

calendar year, at least 2 of which shall be comparable to nascar

nextel cup events held in 2007 or their successor events.

sanctioned events each calendar year through concession outlets, a

majority of which are staffed by individuals who represent or are

members of 1 or more nonprofit civic or charitable organizations

that directly financially benefit from the concession outlets'

sales.

(d) Engages in tourism promotion.

(e) Has permanent exhibitions of motorsports history, events,

or vehicles.

Sec. 4. (1) A local governmental unit, by resolution of its

legislative body, may establish plant rehabilitation districts and

industrial development districts that consist of 1 or more parcels

or tracts of land or a portion of a parcel or tract of land.

(2) The legislative body of a local governmental unit may

establish a plant rehabilitation district or an industrial

development district on its own initiative or upon a written

request filed by the owner or owners of 75% of the state equalized

value of the industrial property located within a proposed plant

rehabilitation district or industrial development district. This

request shall be filed with the clerk of the local governmental

unit.

(3) Except as provided in section 9(2)(h), after December 31,

1983, a request for the establishment of a proposed plant

rehabilitation district or industrial development district shall be

filed only in connection with a proposed replacement facility or

new facility, the construction, acquisition, alteration, or

installation of or for which has not commenced at the time of the

filing of the request. The legislative body of a local governmental

unit shall not establish a plant rehabilitation district or an

industrial development district pursuant to subsection (2) if it

finds that the request for the district was filed after the

commencement of construction, alteration, or installation of, or of

an acquisition related to, the proposed replacement facility or new

facility. This subsection shall not apply to a speculative

building.

(4) Before adopting a resolution establishing a plant

rehabilitation district or industrial development district, the

legislative body shall give written notice by certified mail to the

owners of all real property within the proposed plant

rehabilitation district or industrial development district and

shall hold a public hearing on the establishment of the plant

rehabilitation district or industrial development district at which

those owners and other residents or taxpayers of the local

governmental unit shall have a right to appear and be heard.

(5) The legislative body of the local governmental unit, in

its resolution establishing a plant rehabilitation district, shall

set forth a finding and determination that property comprising not

less than 50% of the state equalized valuation of the industrial

property within the district is obsolete.

(6) A plant rehabilitation district or industrial development

district established by a township shall be only within the

unincorporated territory of the township and shall not be within a

village.

Senate Bill No. 146 as amended May 8, 2008 (1 of 3)

(7) Industrial property that is part of an industrial

development district or a plant rehabilitation district may also be

part of a tax increment district established under the tax

increment finance authority act, 1980 PA 450, MCL 125.1801 to

125.1830.

(8) A local governmental unit, by resolution of its

legislative body, may terminate a plant rehabilitation district or

an industrial development district, if there are no industrial

facilities exemption certificates in effect in the plant

rehabilitation district or the industrial development district on

the date of the resolution to terminate.

(9) Before acting on a proposed resolution terminating a plant

rehabilitation district or an industrial development district, the

local governmental unit shall give at least 14 15 days' written

notice by certified mail to the owners of all real property within

the plant rehabilitation district or industrial development

district as determined by the tax records in the office of the

assessor or the treasurer of the local tax collecting unit in which

the property is located and shall hold a public hearing on the

termination of the plant rehabilitation district or industrial

development district at which those owners and other residents or

taxpayers of the local governmental unit, or others, shall have a

right to appear and be heard.

<<Sec. 14. (1) The amount of the industrial facility tax, in each year for a replacement facility, shall be determined by multiplying the total mills levied as ad valorem taxes for that year by all taxing units within which the facility is situated by the taxable value of the real and personal property of the obsolete industrial property for the tax year immediately preceding the effective date of the industrial facilities exemption certificate after deducting the taxable value of the land and of the inventory as specified in section 19.

(2) The amount of the industrial facility tax, in each year for a new facility or a speculative building for which an industrial facilities

Senate Bill No. 146 as amended May 8, 2008

exemption certificate became effective before January 1, 1994, shall be

determined by multiplying the taxable value of the facility excluding the land and the inventory personal property by the sum of 1/2 of the total mills levied as ad valorem taxes for that year by all taxing units within which the facility is located other than mills levied for school operating purposes by a local school district within which the facility is located or mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, plus 1/2 of the number of mills levied for local school district operating purposes in 1993.

(3) Except as provided in subsection (4) or (5), the amount of the industrial facility tax in each year for a new facility or a speculative building for which an industrial facilities exemption certificate becomes effective after December 31, 1993, shall be determined by multiplying the taxable value of the facility excluding the land and the inventory personal property by the sum of 1/2 of the total mills levied as ad valorem taxes for that year by all taxing units within which the facility is located other than mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, plus, subject to section 14a, the number of mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906.

(4) For taxes levied after December 31, 2007, for the personal property tax component of an industrial facilities exemption certificate for a new facility or a speculative building that is sited on real property classified as industrial real property under section 34c of the general property tax act, 1893 PA 206, MCL 211.34c, the amount of the industrial facility tax in each year for a new facility or a speculative building shall be determined by multiplying the taxable value of the facility excluding the land and the inventory personal property by the sum of 1/2 of the total mills levied as ad valorem taxes for that year by all taxing units within which the facility is located other than mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, and the number of mills from which the property is exempt under section 1211(1) of the revised school code, 1976 PA 451, MCL 380.1211.

(5) For taxes levied after December 31, 2008, the amount of the industrial facility tax in each year for a new facility or a speculative building that is sited on real property classified as commercial real property under section 34c of the general property tax act, 1893 PA 206, MCL 211.34c, and that is located in a county that does not border another state or country shall be determined by multiplying the taxable value of the facility excluding the land and the inventory personal property by the sum of 1/2 of the total mills levied as ad valorem taxes for that year by all taxing units within which the facility is located other than mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, and mills levied under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211, plus, subject to section 14a, the number of mills levied under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, and mills levied under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211.

(6) ~~(5)~~ For a termination or revocation of only the real property Senate Bill No. 146 as amended May 8, 2008

component, or only the personal property component, of an industrial

facilities exemption certificate as provided in this act, the valuation and the tax determined using that valuation shall be reduced

proportionately to reflect the exclusion of the component with respect to which the termination or revocation has occurred.

Sec. 14a. (1) Within 60 days after the granting of an industrial facilities exemption certificate under section 7 for a new facility, the state treasurer may exclude 1/2 or all of the number of mills levied 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 14(3) or (5) if the state treasurer determines that reducing the number of mills used to calculate the specific tax under section 14(3) or (5) is necessary to reduce unemployment, promote economic growth, and increase capital investment in this state. This section does not apply to the personal property tax component of a certificate described in section 14(4).

(2) Within 60 days after the granting of an industrial facilities exemption certificate under section 7 for a new facility or a speculative building that is sited on real property classified as commercial real property under section 34c of the general property tax act, 1893 PA 206, MCL 211.34c, and that is located in a county that does not border another state or country, the state treasurer may exclude 1/2 of the number of mills levied under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211, from the specific tax calculation on the facility under section 14(5) if the state treasurer determines that reducing the number of mills used to calculate the specific tax under section 14(5) is necessary to reduce unemployment, promote economic growth, and increase capital investment in this state.

Sec. 17a. Beginning in 2008 and each year after 2008, the commission shall report to the senate and house of representatives standing committees that have jurisdiction over economic development issues. The commission shall also make the report available to the public on the internet. The report shall contain all of the following:

(a) The amount of qualified commercial activity that is subject to the industrial facility tax in that year.

(b) The amount of local ad valorem property tax not collected due to use of the industrial facilities exemption certificate for qualified commercial activity in that year.

(c) The information contained in the industrial facilities tax exemption list for all years report that is produced by the department of treasury.>>