November 1, 2007, Introduced by Senators BROWN, STAMAS, JANSEN, VAN WOERKOM, ALLEN, BIRKHOLZ and BARCIA and referred to the Committee on Economic Development and Regulatory Reform.
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 9 (MCL 207.552 and 207.559), section 2
as amended by 2007 PA 12 and section 9 as amended by 2006 PA 436.
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
2012, 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
2012.
(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.
(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.
(c) Serves food and beverages at the facility during
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. 9. (1) The legislative body of the local governmental
unit, in its resolution approving an application, shall set forth a
finding and determination that the granting of the industrial
facilities exemption certificate, considered together with the
aggregate amount of industrial facilities exemption certificates
previously granted and currently in force, shall not have the
effect of substantially impeding the operation of the local
governmental unit or impairing the financial soundness of a taxing
unit that levies an ad valorem property tax in the local
governmental unit in which the facility is located or to be
located. If the state equalized valuation of property proposed to
be exempt pursuant to an application under consideration,
considered together with the aggregate state equalized valuation of
property exempt under certificates previously granted and currently
in force, exceeds 5% of the state equalized valuation of the local
governmental unit, the commission, with the approval of the state
treasurer, shall make a separate finding and shall include a
statement in the order approving the industrial facilities
exemption certificate that exceeding that amount shall not have the
effect of substantially impeding the operation of the local
governmental unit or impairing the financial soundness of an
affected taxing unit.
(2) Except for an application for a speculative building,
which is governed by subsection (4), the legislative body of the
local governmental unit shall not approve an application and the
commission shall not grant an industrial facilities exemption
certificate unless the applicant complies with all of the following
requirements:
(a) The commencement of the restoration, replacement, or
construction of the facility occurred not earlier than 12 months
before the filing of the application for the industrial facilities
exemption certificate. If the application is not filed within the
12-month period, the application may be filed within the succeeding
12-month period and the industrial facilities exemption certificate
shall in this case expire 1 year earlier than it would have expired
if the application had been timely filed. This subdivision does not
apply for applications filed with the local governmental unit after
December 31, 1983.
(b) For applications made after December 31, 1983, the
proposed facility shall be located within a plant rehabilitation
district or industrial development district that was duly
established in a local governmental unit eligible under this act to
establish a district and that was established upon a request filed
or by the local governmental unit's own initiative taken before the
commencement of the restoration, replacement, or construction of
the facility.
(c) For applications made after December 31, 1983, the
commencement of the restoration, replacement, or construction of
the facility occurred not earlier than 6 months before the filing
of the application for the industrial facilities exemption
certificate.
(d) The application relates to a construction, restoration, or
replacement program that when completed constitutes a new or
replacement facility within the meaning of this act and that shall
be situated within a plant rehabilitation district or industrial
development district duly established in a local governmental unit
eligible under this act to establish the district.
(e) Completion of the facility is calculated to, and will at
the time of issuance of the certificate have the reasonable
likelihood to create employment, retain employment, prevent a loss
of employment, or produce energy in the community in which the
facility is situated.
(f) Completion of the facility does not constitute merely the
addition of machinery and equipment for the purpose of increasing
productive capacity but rather is primarily for the purpose and
will primarily have the effect of restoration, replacement, or
updating the technology of obsolete industrial property. An
increase in productive capacity, even though significant, is not an
impediment to the issuance of an industrial facilities exemption
certificate if other criteria in this section and act are met. This
subdivision does not apply to a new facility.
(g) The provisions of subdivision (c) do not apply to a new
facility located in an existing industrial development district
owned by a person who filed an application for an industrial
facilities exemption certificate in April of 1992 if the
application was approved by the local governing body and was denied
by the state tax commission in April of 1993.
(h) The provisions of subdivisions (b) and (c) and section
4(3) do not apply to 1 or more of the following:
(i) A facility located in an industrial development district
owned by a person who filed an application for an industrial
facilities exemption certificate in October 1995 for construction
that was commenced in July 1992 in a district that was established
by the legislative body of the local governmental unit in July
1994. An industrial facilities exemption certificate described in
this subparagraph shall expire as provided in section 16(3).
(ii) A facility located in an industrial development district
that was established in January 1994 and was owned by a person who
filed an application for an industrial facilities exemption
certificate in February 1994 if the personal property and real
property portions of the application were approved by the
legislative body of the local governmental unit and the personal
property portion of the application was approved by the state tax
commission in December 1994 and the real property portion of the
application was denied by the state tax commission in December
1994. An industrial facilities exemption certificate described in
this subparagraph shall expire as provided in section 16(3).
(iii) A facility located in an industrial development district
that was established in December 1995 and was owned by a person who
filed an application for an industrial facilities exemptions
certificate in November or December 1995 for construction that was
commenced in September 1995.
(iv) A facility located in an industrial development district
owned by a person who filed an application for an industrial
facilities exemption certificate in July 2001 for construction that
was commenced in February 2001 in a district that was established
by the legislative body of the local governmental unit in September
2001. An industrial facilities exemption certificate described in
this subparagraph shall expire as provided in section 16. The
facility described in this subparagraph shall be taxed under this
act as if it was granted an industrial facilities exemption
certificate in October 2001, and a corrected tax bill shall be
issued by the local tax collecting unit if the local tax collecting
unit has possession of the tax roll or by the county treasurer if
the county has possession of the tax roll. If granting the
industrial facilities exemption certificate under this subparagraph
results in an overpayment of the tax, a rebate, including any
interest and penalties paid, shall be made to the taxpayer by the
local tax collecting unit if the local tax collecting unit has
possession of the tax roll or by the county treasurer if the county
has possession of the tax roll within 30 days of the date the
exemption is granted. The rebate shall be without interest.
(v) A facility located in an industrial development district
owned by a person who filed an application for an industrial
facilities exemption certificate in December 2005 for construction
that was commenced in September 2005 in a district that was
established by the legislative body of the local governmental unit
in December 2005. An industrial facilities exemption certificate
described in this subparagraph shall expire as provided in section
16.
(vi) A facility located in an industrial development district
that was established by the legislative body of the local
governmental unit in August 2007 and was owned by a person who
filed an application for an industrial facilities exemption
certificate in June 2007 for equipment that was purchased in
January 2007.
(i) The provisions of subdivision (c) do not apply to any of
the following:
(i) A new facility located in an existing industrial
development district owned by a person who filed an application for
an industrial facilities exemption certificate in October 1993 if
the application was approved by the legislative body of the local
governmental unit and the real property portion of the application
was denied by the state tax commission in December 1993.
(ii) A new facility located in an existing industrial
development district owned by a person who filed an application for
an industrial facilities exemption certificate in September 1993 if
the personal property portion of the application was approved by
the legislative body of the local governmental unit and the real
property portion of the application was denied by the legislative
body of the local governmental unit in October 1993 and
subsequently approved by the legislative body of the local
governmental unit in September 1994.
(iii) A facility located in an existing industrial development
district owned by a person who filed an application for an
industrial facilities exemption certificate in August 1993 if the
application was approved by the local governmental unit in
September 1993 and the application was denied by the state tax
commission in December 1993.
(iv) A facility located in an existing industrial development
district occupied by a person who filed an application for an
industrial facilities exemption certificate in June of 1995 if the
application was approved by the legislative body of the local
governmental unit in October of 1995 for construction that was
commenced in November or December of 1994.
(v) A facility located in an existing industrial development
district owned by a person who filed an application for an
industrial facilities exemption certificate in June of 1995 if the
application was approved by the legislative body of the local
governmental unit in July of 1995 and the personal property portion
of the application was approved by the state tax commission in
November of 1995.
(j) If the facility is locating in a plant rehabilitation
district or an industrial development district from another
location in this state, the owner of the facility is not delinquent
in any of the taxes described in section 10(1)(a) of the Michigan
renaissance zone act, 1996 PA 376, MCL 125.2690, or substantially
delinquent in any of the taxes described in and as provided under
section 10(1)(b) of the Michigan renaissance zone act, 1996 PA 376,
MCL 125.2690.
(3) If the replacement facility when completed will not be
located on the same premises or contiguous premises as the obsolete
industrial property, then the applicant shall make provision for
the obsolete industrial property by demolition, sale, or transfer
to another person with the effect that the obsolete industrial
property shall within a reasonable time again be subject to
assessment and taxation under the general property tax act, 1893 PA
206,
MCL 211.1 to 211.157 211.155, or be used in a manner
consistent with the general purposes of this act, subject to
approval of the commission.
(4) The legislative body of the local governmental unit shall
not approve an application and the commission shall not grant an
industrial facilities exemption certificate that applies to a
speculative building unless the speculative building is or is to be
located in a plant rehabilitation district or industrial
development district duly established by a local governmental unit
eligible under this act to establish a district; the speculative
building was constructed less than 9 years before the filing of the
application for the industrial facilities exemption certificate;
the speculative building has not been occupied since completion of
construction; and the speculative building otherwise qualifies
under subsection (2)(e) for an industrial facilities exemption
certificate. An industrial facilities exemption certificate granted
under this subsection shall expire as provided in section 16(3).
(5) Not later than September 1, 1989, the commission shall
provide to all local assessing units the name, address, and
telephone number of the person on the commission staff responsible
for providing procedural information concerning this act. After
October 1, 1989, a local unit of government shall notify each
prospective applicant of this information in writing.
(6) 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. The facility described in this
subsection shall be taxed under this act as if it was granted an
industrial facilities exemption certificate on December 30, 1987.
(7) Notwithstanding any other provision of this act, if a
local governmental unit passed a resolution approving an industrial
facilities exemption certificate for a new facility on July 8, 1991
but rescinded that resolution and passed a resolution approving an
industrial facilities exemption certificate for that same facility
as a replacement facility on October 21, 1996, the commission shall
issue for that property an industrial facilities exemption
certificate that begins December 30, 1991 and ends December 2003.
The replacement facility described in this subsection shall be
taxed under this act as if it was granted an industrial facilities
exemption certificate on December 30, 1991.
(8) Property owned or operated by a casino is not industrial
property or otherwise eligible for an abatement or reduction of ad
valorem property taxes under this act. As used in this subsection,
"casino" means a casino or a parking lot, hotel, motel, convention
and trade center, or retail store owned or operated by a casino, an
affiliate, or an affiliated company, regulated by this state
pursuant
to the Michigan gaming control and revenue act, the
Initiated
Law of 1996 IL 1,
MCL 432.201 to 432.226.
(9) Notwithstanding section 16a and any other provision of
this act, if a local governmental unit passed a resolution
approving an industrial facilities exemption certificate for a new
facility on October 28, 1996 for a certificate that expired in
December 2003 and the local governmental unit passes a resolution
approving the extension of the certificate after December 2003 and
before March 1, 2006, the commission shall issue for that property
an industrial facilities exemption certificate that begins on
December 30, 2005 and ends December 30, 2010 as long as the
property continues to qualify under this act.