HB-5461, As Passed House, December 2, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 5461

A bill to provide for the establishment of a private source of

funding for public infrastructure; to prescribe the powers and

duties of certain public entities; to finance public infrastructure

through public and private sources; to authorize the acquisition

and disposal of interests in real and personal property; to

authorize certain public and private entity partnerships; to

authorize the creation and implementation of certain plans and

negotiated benefit areas; to promote economic development; to

authorize the use of tax increment financing; to prescribe powers

and duties of certain state and local officials; to provide for

rule promulgation; and to provide for enforcement of the act.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"private investment infrastructure funding act".

Sec. 2. As used in this act:

(a) "Administering agency" means the department, the county

road commission, the county drain commissioner, or the city,

village, or township that has jurisdiction over the public

facility, as determined by the negotiating partnership. The

administering agency will administer the development of the public

facility.

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

fiscal year by which the current assessed value of the negotiated

benefit area, including the assessed value of property for which

specific local taxes are paid in lieu of property taxes as

determined in section 3(c), exceeds the initial assessed value. The

state tax commission shall prescribe the method for calculating

captured assessed value.

of a city, the president or village manager of a village, or the

supervisor of a township.

(d) "Department" means the state transportation department.

(e) "Fiscal year" means the fiscal year of the administering

agency.

(f) "Governing body" or "governing body of a municipality"

means the elected body of a municipality having legislative powers.

(g) "Initial assessed value" means the assessed value of all

the taxable property within the boundaries of the negotiated

benefit area at the time the tax increment financing plan is

approved, as shown by the most recent assessment roll of the

municipality at the time the resolution is adopted. 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. The initial assessed

value of property for which a specific local tax was paid in lieu

of a property tax shall be determined as provided in section 3(c).

(h) "Lead fiduciary agency" is the county or counties in which

the public facility is located or other tax collecting unit whose

taxes are subject to capture under this act as determined by the

negotiating partnership.

(i) "Municipality" means a city, village, or township.

(j) "Negotiated benefit area" means the area of tax capture

whose boundaries are described by the negotiating partnership and

are within state boundaries.

(k) "Negotiating partnership" means a collaborative effort

between public entities located within this state governing the

development and financing of public facilities. The negotiating

partnership shall execute a written agreement which shall provide

who the lead fiduciary agency and the administering agency are.

Members of the negotiating partnership are as follows:

(i) The municipality or municipalities within the negotiated

benefit area in which the public facility is to be located.

(ii) One of the following:

(A) If the public facility to be improved or constructed is

under the jurisdiction of the department, the county road

commission, or the drain commissioner, then the department, the

county road commission, or the drain commissioner, as applicable,

and the county in which the public facility is located.

(B) If the public facility to be improved or constructed is

under the jurisdiction of the city, village, or township, then the

county in which the public facility is located.

Sec. 3. As used in this act:

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

treated as separate for valuation or zoning purposes.

(b) "Public facility" means a street, road, or highway, and

any improvements to a street, road, or highway, including street

furniture and beautification, park, parking facility, recreational

facility, right-of-way, structure, waterway, bridge, lake, pond,

canal, utility line or pipe, water or wastewater facilities, or

building, including access routes designed and dedicated to use by

the public generally, or used by a public agency. Public facility

also includes public-transportation-related infrastructure and

light and commuter rail line projects. A public facility does not

include a tunnel or bridge that includes an international border or

crossing.

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, 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.

(d) "State fiscal year" means the annual period commencing

October 1 of each year.

(e) "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

negotiated benefit area. 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, except that portion of the taxes under the

state education tax act, 1993 PA 331, MCL 211.901 to 211.906, not

to exceed 50% of those taxes as determined by the state treasurer

for a period not to exceed 15 years, as determined by the state

treasurer, if the state treasurer determines that the capture under

this subparagraph is necessary to reduce unemployment, promote

economic growth, and increase capital investment in the

municipality.

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

except that portion of taxes levied by local or intermediate school

districts not to exceed 50% of those taxes as determined by the

state treasurer for a period not to exceed 15 years, as determined

by the state treasurer, if the state treasurer determines that the

capture under this subparagraph is necessary to reduce

unemployment, promote economic growth, and increase capital

investment in the municipality.

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

of the captured assessed value shared with taxing jurisdictions

within the jurisdictional area of the administering agency 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.

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

financing plan of the administering agency from the determination

of the amount of tax increment revenues to be transmitted to the

administering agency or specific local taxes attributable to the ad

valorem property taxes.

(v) Ad valorem property taxes exempted from capture under

section 10(5) or specific local taxes attributable to the ad

valorem property taxes.

(vi) 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.

Sec. 4. Except as otherwise provided in this act, a

municipality may enter into and establish multiple negotiating

partnerships to develop and finance public facilities.

Sec. 5. (1) If the governing body of a municipality determines

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

promote economic development and public infrastructure improvement,

the governing body may, on its own or from a written request of a

potentially affected property owner in the municipality, declare

its intention to enter into 1 or more negotiating partnerships to

develop public facilities as provided in this act.

(2) If the governing body of the municipality intends to

proceed with entering into 1 or more negotiating partnerships, it

shall adopt, by majority vote of its members, a resolution to that

effect. The adoption of the resolution is subject to any applicable

statutory or charter provisions in respect to the approval or

disapproval by the chief executive officer or other appropriate

officer of the municipality and the adoption of a resolution over

his or her veto. A copy of the resolution shall be filed with the

secretary of state promptly after its adoption and shall be

published at least once in a newspaper of general circulation in

the municipality.

(3) A municipality that has entered into a negotiating

partnership may enter into an agreement with an adjoining

municipality that has entered into a negotiating partnership to

jointly operate and administer those negotiating partnerships under

an interlocal agreement under the urban cooperation act of 1967,

1967 (Ex Sess) PA 7, MCL 124.501 to 124.512.

Sec. 6. (1) Meetings and proceedings concerning a negotiating

partnership are subject to the open meetings act, 1976 PA 267, MCL

15.261 to 15.275.

(2) A writing prepared, owned, used, in the possession of, or

retained by the municipality concerning a negotiating partnership

is subject to the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246.

Sec. 7. (1) The negotiating partnership may provide for 1 or

more of the following:

(a) Study and analyze the need for public facilities within

the negotiated benefit area and identify other potential negotiated

benefit areas.

(b) That the administering agency shall plan and propose the

construction, renovation, repair, remodeling, rehabilitation,

restoration, preservation, or reconstruction of a public facility

in a negotiated benefit area. The administering agency is

encouraged to develop a plan that reasonably conserves the natural

features of the site and reduces impervious surfaces.

development of a public facility in the negotiated benefit area

necessary to achieve the purposes of this act in accordance with

the powers granted by this act.

(d) That the administering agency shall make and enter into

contracts necessary or incidental to the exercise of its powers and

the performance of its duties.

(e) That the administering agency shall acquire by purchase or

otherwise, on terms and conditions and in a manner the

administrative agency considers proper, or own, convey, or

otherwise dispose of, or lease as lessor or lessee, land and other

property, real or personal, or rights or interests in the property,

that the administrative agency determines are reasonably necessary

to achieve the purposes of this act, and to grant or acquire

licenses, easements, and options.

(f) That the administering agency shall improve land and

construct, reconstruct, rehabilitate, restore and preserve, equip,

clear, improve, maintain, and repair any public facility, building,

and any necessary or desirable appurtenances to those buildings

provided in the negotiating partnership to be reasonably necessary

to achieve the purposes of this act, within the negotiated benefit

area for the use, in whole or in part, of any public or private

person or corporation, or a combination thereof.

(g) That the administering agency shall fix, charge, and

collect fees, rents, and charges for the use of any facility,

building, or property under its control or any part of the

facility, building, or property, and pledge the fees, rents, and

charges for the payment of any debts incurred pursuant to the

negotiating partnership. Fees, rents, and charges shall not include

the adding of a toll or employment of new user fees for any motor

vehicle access to a new or existing highway, road, street, highway

ramp, or bridge.

(h) That the administering agency may lease, in whole or in

part, any facility, building, or property under its control.

(i) That the administering agency may accept grants and

donations of property, labor, or other things of value from a

public or private source.

(j) That the administering agency may acquire and construct

public facilities.

(k) That the negotiating partnership may add reasonable

administrative costs for the administering agency as a result of

any agreement.

House Bill No. 5461 (H-4) as amended November 10, 2010

(2) The construction and operation of a public facility

authorized in subsection (1) shall be in conformity with all laws

relating to the use of state and federal funds [

Sec. 8. (1) The development of the public facility may be

financed from 1 or more of the following sources:

(a) Funds from parties to the agreement with the negotiating

partnership, under the terms of the agreement.

(b) Funds of the members of the negotiating partnership, as

permitted by applicable law.

(d) Proceeds from the capture of taxes in a negotiated benefit

area under this act or other acts.

(e) Proceeds from a special assessment district.

(f) Federal loans, grants, aid, or appropriations, as

permitted by federal law.

(g) Donations, contributions, and gifts.

(h) Any other source as may be accepted by the negotiating

partnership.

(2) Money received by the administering agency and not covered

under subsection (1) shall immediately be deposited to the credit

of the administering agency, subject to disbursement under this

act. Except as provided in this act, a municipality or public

entity that is part of a negotiating partnership shall not obligate

itself, and shall not be obligated, to pay any sums from public

funds, other than money received by the municipality or public

entity that is part of a negotiating partnership under this

section, for or on account of the activities of the administering

agency.

Sec. 9. (1) The administering agency on behalf of the

negotiating partnership may negotiate with private sector investors

or solicit private sector investors through a bid process to secure

funding for a public facility.

(2) The administering agency and private sector investor may

include the following costs in financing the development of the

public facility:

(a) The cost of purchasing, acquiring, constructing,

improving, enlarging, extending, or repairing property in

connection with the development of a public facility in the

negotiated benefit area.

(b) Any engineering, architectural, legal, accounting, or

financial expenses.

private sector investor.

(3) The administering agency on behalf of the negotiating

partnership may pledge all or a portion of the tax increment

revenues as provided in the negotiating partnership to pay for the

public facility. If the revenue generated by the tax increment, as

negotiated by the negotiating partnership and the private sector

investor, turns out to be insufficient to provide the rate of

return expected by the investor, the municipality, the

administering agency, and the negotiating partnership are not under

any obligation to make up the difference for the investor. The

private sector investor shall look solely to the revenue generated

by the tax increment projected to generate funds for the interest

payments and the principal repayment. The administering agency

shall not pledge or commit any other funds of a municipality or

public entity that is part of the negotiating partnership to pay

for the financing or development of a public facility without the

approval of the municipality or public entity that is part of the

negotiating partnership.

(4) The administering agency on behalf of the negotiating

partnership and the private sector investors shall enter into a

written agreement which shall become part of the negotiating

partnership and shall contain all of the following:

(a) The amount of the tax increment revenue to be captured for

the public facility.

(b) The rate of interest and the return of principal for the

private sector investor.

within the negotiated benefit area.

(d) The payment schedule from the administering agency and the

lead fiduciary agency describing the payments of principal and

interest to the private sector investor.

(e) A statement from the private sector investor that they

acknowledge that they will be repaid for their investment only from

the tax increment revenues described in the negotiating partnership

and not from any other funds or property of the municipalities or

public entities of the negotiating partnership.

(f) The boundaries of the negotiated benefit area.

Sec. 10. (1) If an administering agency determines that it is

House Bill No. 5461 as amended December 2, 2010

necessary for the achievement of the purposes of this act, the

administering agency shall prepare and submit a tax increment

financing plan to the governing body of the municipality. The tax

increment financing plan shall include a detailed plan of the

development of the public facility, the designation of boundaries

of the negotiated benefit area, a detailed explanation of the tax

increment procedure, the maximum amount of indebtedness to be

incurred, and the duration of the program, and shall be in

compliance with section 11. The tax increment financing plan shall

contain a statement of the estimated impact of tax increment

financing on the assessed values of all taxing jurisdictions in

which the negotiated benefit area is located. The tax increment

financing plan may provide for the use of part or all of the

captured assessed value, but the portion intended to be used by the

administrative agency shall be clearly stated in the tax increment

financing plan.

(2) Approval of the tax increment financing plan shall comply

with the notice and disclosure provisions of this act.

(3) Before the governing body of the municipality approves the

tax increment financing plan, the governing body <<shall conduct a

public hearing on the proposed tax increment financing plan and>>

shall provide

reasonable opportunity to the taxing jurisdictions levying taxes

subject to capture to meet with the governing body. The

administering agency shall fully inform the taxing jurisdictions of

the fiscal and economic implications of the proposed negotiated

benefit area. The taxing jurisdictions may present their

recommendations at the public hearing on the tax increment

financing plan. The administering agency may enter into agreements

with the taxing jurisdictions and the governing body of the

municipality in which the negotiated benefit area is located to

share a portion of the captured assessed value of the negotiated

benefit area.

(4) A tax increment financing plan may be modified if the

modification is approved by the governing body.

(5) Except as otherwise provided in this subsection, not more

than 60 days after the approval of the tax increment financing

plan, the governing body in a taxing jurisdiction levying ad

valorem property taxes that would otherwise be subject to capture

may exempt its taxes from capture by adopting a resolution to that

effect and filing a copy with the clerk of the municipality in

which it is located and with the administrative agency. A taxing

jurisdiction levying ad valorem property taxes that would be

subject to capture may waive the 60-day period described in this

subsection by resolution. In the event that the governing body

levies a separate millage for public library purposes, at the

request of the public library board, that separate millage shall be

exempt from the capture. The resolution shall take effect when

filed with the clerk and remains effective until a copy of a

resolution rescinding that resolution is filed with that clerk.

Sec. 11. (1) The municipal and county treasurers shall

transmit tax increment revenues to the lead fiduciary agency

designated in the negotiating partnership.

(2) The lead fiduciary agency shall expend the tax increment

revenues received for the development program only under the terms

of the tax increment financing plan and the negotiating

partnership. Unused funds shall revert proportionately to the

respective taxing bodies. Tax increment revenues shall not be used

to circumvent existing property tax limitations. The governing body

of the municipality may abolish the tax increment financing plan if

it finds that the purposes for which it was established are

accomplished. However, the tax increment financing plan shall not

be abolished until the principal of, and interest on, the amounts

financed have been paid or funds sufficient to make the payment

have been segregated.

(3) Annually, the lead fiduciary agency shall submit to the

governing body of each municipality that is part of the negotiating

partnership, to the governing body of each taxing jurisdiction in

which taxes are captured under this act, and to the state tax

commission a report on the status of the tax increment financing

account. The report shall include the following:

(a) The amount and source of revenue in the account.

(b) The amount in any reserve account.

(d) The amount of principal and interest on any outstanding

debt.

(e) The initial assessed value of the negotiated benefit area.

(f) The captured assessed value retained by the administrative

agency.

(g) The tax increment revenues received.

(h) The number of public facilities developed.

(i) Any additional information the governing body considers

necessary.

Sec. 12. A negotiating partnership that has completed the

purposes for which it was organized shall be dissolved by

resolution of the governing body of each municipality that was a

part of the negotiating partnership. The property and assets of the

administering agency remaining after the satisfaction of the

obligations of the administering agency belong to the

municipalities that are part of the negotiating partnership.

Sec. 13. (1) The state tax commission may institute

proceedings to compel enforcement of this act.

(2) The state tax commission may promulgate rules necessary

for the administration of this act under the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.