HB-4027, As Passed Senate, November 30, 2005

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4027

     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 and 7 (MCL 207.552 and 207.557), section 2

as amended by 2005 PA 118 and section 7 as amended by 1996 PA 513.

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 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.

     (c) Inventory.

     (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 which 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.

     (c) The sorting and distribution center has applied for an

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.

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

green space, is used for warehousing, distribution, and logistics

purposes that provide food for institutional, restaurant, hospital,

or hotel customers.

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

Michigan state border.

     (d) Occupies 1 or more buildings or structures that together

are greater than 300,000 square feet in size.

     Sec. 7. (1) Within 60 days after receipt of an approved

application or an appeal of a disapproved application that was

submitted to the commission before October 31 of that year, the

commission shall determine whether the facility is a speculative

building or designed and acquired primarily for the purpose of

restoration or replacement of obsolete industrial property or the

construction of new industrial property, and whether the facility

otherwise complies with section 9 and with the other provisions of

this act. If the commission so finds, it shall issue an industrial

facilities exemption certificate. Before issuing a certificate the

commission shall notify the state treasurer of the application and

shall obtain the written concurrence of the department of  consumer

and industry services labor and economic growth that the

application complies with the requirements in section 9. Except as

otherwise provided in section 7a, the effective date of the

certificate for a replacement facility or new facility is the

immediately succeeding December 31 following the date the

certificate is issued. For a speculative building or a portion of a

speculative building, except as otherwise provided in section 7a,

the effective date of the certificate is the immediately succeeding

December 31 following the date the speculative building, or the

portion of a speculative building, is used as a manufacturing

facility.

     (2) The commission shall send an industrial facilities

exemption certificate, when issued, by certified mail to the

applicant, and a certified copy by certified mail to the assessor

of the assessing unit in which the facility is located or to be

located, and that copy shall be filed in his or her office. Notice

of the commission's refusal to issue a certificate shall be sent by

certified mail to the same persons.

     (3) Notwithstanding any other provision of this act, if on

December 29, 1986 a local governmental unit passed a resolution

approving an exemption certificate for 10 years for real and

personal property but the commission did not receive the

application until 1992 and the application was not made complete

until 1995, then the commission shall issue, for that property, an

industrial facilities exemption certificate that begins December

30, 1987 and ends December 30, 1997.

(4) Notwithstanding any other provision of this act, if

pursuant to section 16a a local governmental unit passed a

resolution approving an industrial facilities exemption certificate

for a new facility on October 14, 2003 for a certificate that

expired in December 2002, the commission shall issue for that

property an industrial facilities exemption certificate that begins

on December 30, 2002 and ends December 30, 2009.