COMMERCIAL REHABILITATION SUNSET S.B. 556:
SUMMARY OF BILL
REPORTED FROM COMMITTEE
Senate Bill 556 (as reported without amendment)
Committee: Economic Development and International Investment
CONTENT
The bill would repeal Section 16 of the Commercial Rehabilitation Act, which states that no new exemptions may be granted under the Act after December 31, 2015, but an exemption then in effect will continue until the exemption certificate expires.
Under the Act, a city, village, or township may establish a commercial rehabilitation district consisting of a "qualified facility" if the county containing the district does not disapprove. The owner of a qualified facility who intends to rehabilitate it may apply for a commercial rehabilitation exemption certificate with the local government. With approval from the local governmental unit and the State Tax Commission, a qualified facility for which an exemption certificate is in effect is exempt from property taxes. However, the facility owner must pay a commercial rehabilitation tax. Certificates remain in effect for a period of time determined by the local governmental unit, as long as it does not exceed 10 years.
MCL 207.856 Legislative Analyst: Drew Krogulecki
FISCAL IMPACT
The bill would have an unknown impact on local government revenue and increase the cost of the State Tax Commission within the Department of Treasury by a minimal amount. To the
extent that the designated property would be rehabilitated without the bill, the bill would reduce revenue to cities, villages, townships, and counties with commercial rehabilitation districts. If the elimination of the sunset on the designation of new commercial rehabilitation districts resulted in property rehabilitation and taxable value growth that would not otherwise occur, the local governments would receive an increase in tax revenue that would begin when the commercial rehabilitation exemption expired. The amount and timing of revenue change would depend on the decision of a city, village, or township to designate a district, county approval, the approval of the State Tax Commission, the duration of the district, and the number and value of participating properties. The net revenue to local school districts would not be changed by the bill. The State Tax Commission would have additional costs of a minimal amount to approve and report on additional commercial rehabilitation districts approved pursuant to the bill.
The Department of Treasury reported that for the 2013 tax year, there were 45 properties receiving an exemption in districts established by 28 local governments. For the 2014 tax year, this increased to 63 properties in districts established by 34 local governments.
Date Completed: 10-26-15 Fiscal Analyst: Elizabeth Pratt
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.