Bill Text: MI HB4459 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Economic development; downtown development authorities; capture of increased tax revenue levied for certain millages; prohibit. Amends sec. 1 of 1975 PA 197 (MCL 125.1651).
Spectrum: Bipartisan Bill
Status: (Passed) 2013-06-19 - Assigned Pa 66'13 With Immediate Effect [HB4459 Detail]
Download: Michigan-2013-HB4459-Engrossed.html
HB-4459, As Passed Senate, June 13, 2013
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4459
A bill to amend 1975 PA 197, entitled
"An act to provide for the establishment of a downtown development
authority; to prescribe its powers and duties; to correct and
prevent deterioration in business districts; to encourage historic
preservation; to authorize the acquisition and disposal of
interests in real and personal property; to authorize the creation
and implementation of development plans in the districts; to
promote the economic growth of the districts; to create a board; to
prescribe its powers and duties; to authorize the levy and
collection of taxes; to authorize the issuance of bonds and other
evidences of indebtedness; to authorize the use of tax increment
financing; to reimburse downtown development authorities for
certain losses of tax increment revenues; and to prescribe the
powers and duties of certain state officials,"
by amending section 1 (MCL 125.1651), as amended by 2012 PA 396.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Advance" means a transfer of funds made by a municipality
to an authority or to another person on behalf of the authority in
anticipation of repayment by the authority. Evidence of the intent
to repay an advance may include, but is not limited to, an executed
agreement to repay, provisions contained in a tax increment
financing plan approved prior to the advance, or a resolution of
the authority or the municipality.
(b) "Assessed value" means 1 of the following:
(i) For valuations made before January 1, 1995, the state
equalized valuation as determined under the general property tax
act, 1893 PA 206, MCL 211.1 to 211.155.
(ii) For valuations made after December 31, 1994, the taxable
value as determined under section 27a of the general property tax
act, 1893 PA 206, MCL 211.27a.
(c) "Authority" means a downtown development authority created
pursuant to this act.
(d) "Board" means the governing body of an authority.
(e) "Business district" means an area in the downtown of a
municipality zoned and used principally for business.
(f) "Captured assessed value" means the amount in any 1 year
by which the current assessed value of the project area, including
the assessed value of property for which specific local taxes are
paid in lieu of property taxes as determined in subdivision (aa),
exceeds the initial assessed value. The state tax commission shall
prescribe the method for calculating captured assessed value.
(g) "Catalyst development project" means a project that is
located in a municipality with a population greater than 600,000,
is designated by the authority as a catalyst development project,
and is expected to result in at least $300,000,000.00 of capital
investment. There shall be no more than 1 catalyst development
project designated within each authority.
(h) "Chief executive officer" means the mayor or city manager
of a city, the president or village manager of a village, or the
supervisor of a township or, if designated by the township board
for purposes of this act, the township superintendent or township
manager of a township.
(i) "Development area" means that area to which a development
plan is applicable.
(j) "Development plan" means that information and those
requirements for a development plan set forth in section 17.
(k) "Development program" means the implementation of the
development plan.
(l) "Downtown district" means that part of an area in a
business district that is specifically designated by ordinance of
the governing body of the municipality pursuant to this act. A
downtown district may include 1 or more separate and distinct
geographic areas in a business district as determined by the
municipality if the municipality enters into an agreement with a
qualified township under section 3(7) or if the municipality is a
city that surrounds another city and that other city lies between
the 2 separate and distinct geographic areas. If the downtown
district contains more than 1 separate and distinct geographic area
in the downtown district, the separate and distinct geographic
areas shall be considered 1 downtown district.
(m) "Eligible advance" means an advance made before August 19,
1993.
(n) "Eligible obligation" means an obligation issued or
incurred by an authority or by a municipality on behalf of an
authority before August 19, 1993 and its subsequent refunding by a
qualified refunding obligation. Eligible obligation includes an
authority's written agreement entered into before August 19, 1993
to pay an obligation issued after August 18, 1993 and before
December 31, 1996 by another entity on behalf of the authority.
(o) "Fire alarm system" means a system designed to detect and
annunciate the presence of fire, or by-products of fire. Fire alarm
system includes smoke detectors.
(p) "Fiscal year" means the fiscal year of the authority.
(q) "Governing body of a municipality" means the elected body
of a municipality having legislative powers.
(r) "Initial assessed value" means the assessed value, as
equalized, of all the taxable property within the boundaries of the
development area at the time the ordinance establishing the tax
increment financing plan is approved, as shown by the most recent
assessment roll of the municipality for which equalization has been
completed 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 subdivision
(aa). In the case of a municipality having a population of less
than 35,000 that established an authority prior to 1985, created a
district or districts, and approved a development plan or tax
increment financing plan or amendments to a plan, and which plan or
tax increment financing plan or amendments to a plan, and which
plan expired by its terms December 31, 1991, the initial assessed
value for the purpose of any plan or plan amendment adopted as an
extension of the expired plan shall be determined as if the plan
had not expired December 31, 1991. For a development area
designated before 1997 in which a renaissance zone has subsequently
been designated pursuant to the Michigan renaissance zone act, 1996
PA 376, MCL 125.2681 to 125.2696, the initial assessed value of the
development area otherwise determined under this subdivision shall
be reduced by the amount by which the current assessed value of the
development area was reduced in 1997 due to the exemption of
property under section 7ff of the general property tax act, 1893 PA
206, MCL 211.7ff, but in no case shall the initial assessed value
be less than zero.
(s) "Municipality" means a city, village, or township.
(t) "Obligation" means a written promise to pay, whether
evidenced by a contract, agreement, lease, sublease, bond, or note,
or a requirement to pay imposed by law. An obligation does not
include a payment required solely because of default upon an
obligation, employee salaries, or consideration paid for the use of
municipal offices. An obligation does not include those bonds that
have been economically defeased by refunding bonds issued under
this act. Obligation includes, but is not limited to, the
following:
(i) A requirement to pay proceeds derived from ad valorem
property taxes or taxes levied in lieu of ad valorem property
taxes.
(ii) A management contract or a contract for professional
services.
(iii) A payment required on a contract, agreement, bond, or note
if the requirement to make or assume the payment arose before
August 19, 1993.
(iv) A requirement to pay or reimburse a person for the cost of
insurance for, or to maintain, property subject to a lease, land
contract, purchase agreement, or other agreement.
(v) A letter of credit, paying agent, transfer agent, bond
registrar, or trustee fee associated with a contract, agreement,
bond, or note.
(u) "On behalf of an authority", in relation to an eligible
advance made by a municipality, or an eligible obligation or other
protected obligation issued or incurred by a municipality, means in
anticipation that an authority would transfer tax increment
revenues or reimburse the municipality from tax increment revenues
in an amount sufficient to fully make payment required by the
eligible advance made by the municipality, or eligible obligation
or other protected obligation issued or incurred by the
municipality, if the anticipation of the transfer or receipt of tax
increment revenues from the authority is pursuant to or evidenced
by 1 or more of the following:
(i) A reimbursement agreement between the municipality and an
authority it established.
(ii) A requirement imposed by law that the authority transfer
tax increment revenues to the municipality.
(iii) A resolution of the authority agreeing to make payments to
the incorporating unit.
(iv) Provisions in a tax increment financing plan describing
the project for which the obligation was incurred.
(v) "Operations" means office maintenance, including salaries
and expenses of employees, office supplies, consultation fees,
design costs, and other expenses incurred in the daily management
of the authority and planning of its activities.
(w) "Other protected obligation" means:
(i) A qualified refunding obligation issued to refund an
obligation described in subparagraph (ii), (iii), or (iv), an
obligation that is not a qualified refunding obligation that is
issued to refund an eligible obligation, or a qualified refunding
obligation issued to refund an obligation described in this
subparagraph.
(ii) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority after August 19, 1993, but
before December 31, 1994, to finance a project described in a tax
increment finance plan approved by the municipality in accordance
with this act before December 31, 1993, for which a contract for
final design is entered into by or on behalf of the municipality or
authority before March 1, 1994 or for which a written agreement
with a developer, titled preferred development agreement, was
entered into by or on behalf of the municipality or authority in
July 1993.
(iii) An obligation incurred by an authority or municipality
after August 19, 1993, to reimburse a party to a development
agreement entered into by a municipality or authority before August
19, 1993, for a project described in a tax increment financing plan
approved in accordance with this act before August 19, 1993, and
undertaken and installed by that party in accordance with the
development agreement.
(iv) An obligation incurred by the authority evidenced by or to
finance a contract to purchase real property within a development
area or a contract to develop that property within the development
area, or both, if all of the following requirements are met:
(A) The authority purchased the real property in 1993.
(B) Before June 30, 1995, the authority enters a contract for
the development of the real property located within the development
area.
(C) In 1993, the authority or municipality on behalf of the
authority received approval for a grant from both of the following:
(I) The department of natural resources for site reclamation
of the real property.
(II) The department of consumer and industry services for
development of the real property.
(v) An ongoing management or professional services contract
with the governing body of a county which was entered into before
March 1, 1994 and which was preceded by a series of limited term
management or professional services contracts with the governing
body of the county, the last of which was entered into before
August 19, 1993.
(vi) A loan from a municipality to an authority if the loan was
approved by the legislative body of the municipality on April 18,
1994.
(vii) Funds expended to match a grant received by a
municipality on behalf of an authority for sidewalk improvements
from the Michigan department of transportation if the legislative
body of the municipality approved the grant application on April 5,
1993 and the grant was received by the municipality in June 1993.
(viii) For taxes captured in 1994, an obligation described in
this subparagraph issued or incurred to finance a project. An
obligation is considered issued or incurred to finance a project
described in this subparagraph only if all of the following are
met:
(A) The obligation requires raising capital for the project or
paying for the project, whether or not a borrowing is involved.
(B) The obligation was part of a development plan and the tax
increment financing plan was approved by a municipality on May 6,
1991.
(C) The obligation is in the form of a written memorandum of
understanding between a municipality and a public utility dated
October 27, 1994.
(D) The authority or municipality captured school taxes during
1994.
(ix) An obligation incurred after July 31, 2012 by an
authority, municipality, or other governmental unit to pay for
costs associated with a catalyst development project.
(x) "Public facility" means a street, plaza, pedestrian mall,
and any improvements to a street, plaza, or pedestrian mall
including street furniture and beautification, park, parking
facility, recreational facility, right-of-way, structure, waterway,
bridge, lake, pond, canal, utility line or pipe, building, and
access routes to any of the foregoing, designed and dedicated to
use by the public generally, or used by a public agency. Public
facility includes an improvement to a facility used by the public
or a public facility as those terms are defined in section 1 of
1966 PA 1, MCL 125.1351, which improvement is made to comply with
the barrier free design requirements of the state construction code
promulgated under the Stille-DeRossett-Hale single state
construction code act, 1972 PA 230, MCL 125.1501 to 125.1531.
Public facility also includes the acquisition, construction,
improvement, and operation of a building owned or leased by the
authority to be used as a retail business incubator.
(y) "Qualified refunding obligation" means an obligation
issued or incurred by an authority or by a municipality on behalf
of an authority to refund an obligation if 1 or more of the
following apply:
(i) The obligation is issued to refund a qualified refunding
obligation issued in November 1997 and any subsequent refundings of
that obligation issued before January 1, 2010 or the obligation is
issued to refund a qualified refunding obligation issued on May 15,
1997 and any subsequent refundings of that obligation issued before
January 1, 2010 in an authority in which 1 parcel or group of
parcels under common ownership represents 50% or more of the
taxable value captured within the tax increment finance district
and that will ultimately provide for at least a 40% reduction in
the taxable value of the property as part of a negotiated
settlement as a result of an appeal filed with the state tax
tribunal. Qualified refunding obligations issued under this
subparagraph are not subject to the requirements of section 611 of
the revised municipal finance act, 2001 PA 34, MCL 141.2611, if
issued before January 1, 2010. The duration of the development
program described in the tax increment financing plan relating to
the qualified refunding obligations issued under this subparagraph
is hereby extended to 1 year after the final date of maturity of
the qualified refunding obligations.
(ii) The refunding obligation meets both of the following:
(A) The net present value of the principal and interest to be
paid on the refunding obligation, including the cost of issuance,
will be less than the net present value of the principal and
interest to be paid on the obligation being refunded, as calculated
using a method approved by the department of treasury.
(B) The net present value of the sum of the tax increment
revenues described in subdivision (cc)(ii) and the distributions
under section 13b to repay the refunding obligation will not be
greater than the net present value of the sum of the tax increment
revenues described in subdivision (cc)(ii) and the distributions
under section 13b to repay the obligation being refunded, as
calculated using a method approved by the department of treasury.
(iii) The obligation is issued to refund an other protected
obligation issued as a capital appreciation bond delivered to the
Michigan municipal bond authority on December 21, 1994 and any
subsequent refundings of that obligation issued before January 1,
2012. Qualified refunding obligations issued under this
subparagraph are not subject to the requirements of section 305(2),
(3), (5), and (6), section 501, section 503, or section 611 of the
revised municipal finance act, 2001 PA 34, MCL 141.2305, 141.2501,
141.2503, and 141.2611, if issued before January 1, 2012. The
duration of the development program described in the tax increment
financing plan relating to the qualified refunding obligations
issued under this subparagraph is extended to 1 year after the
final date of maturity of the qualified refunding obligations. The
obligation may be payable through the year 2025 at an interest rate
not exceeding the maximum rate permitted by law, notwithstanding
the bond maturity dates contained in the notice of intent to issue
bonds published by the municipality. An obligation issued under
this subparagraph is a qualified refunding obligation only to the
extent
that revenues described in subdivision (bb)(ii) (cc)(ii) and
distributions under section 13b to repay the qualified refunding
obligation do not exceed $750,000.00.
(iv) The obligation is issued to refund a qualified refunding
obligation issued on February 13, 2008, and any subsequent
refundings of that obligation, issued before December 31, 2018.
Qualified refunding obligations issued under this subparagraph are
not subject to the requirements of section 305(2), (3), (5), and
(6), 501, 503, or 611 of the revised municipal finance act, 2001 PA
34, MCL 141.2305, 141.2501, 141.2503, and 141.2611. The duration of
the development program described in the tax increment financing
plan relating to the qualified refunding obligations issued under
this subparagraph is extended to 1 year after the final date of
maturity of the qualified refunding obligations. Revenues described
in subdivision (cc)(ii) and distributions made under section 13b in
excess of the amount needed for current year debt service on an
obligation issued under this subparagraph may be paid to the
authority to the extent necessary to pay future years' debt service
on the obligation as determined by the board.
(z) "Qualified township" means a township that meets all of
the following requirements:
(i) Was not eligible to create an authority prior to January 3,
2005.
(ii) Adjoins a municipality that previously created an
authority.
(iii) Along with the adjoining municipality that previously
created an authority, is a member of the same joint planning
commission under the joint municipal planning act, 2003 PA 226, MCL
125.131 to 125.143.
(aa) "Specific local tax" means a tax levied under 1974 PA
198, 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, and 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. However, after 1993, 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.
(bb) "State fiscal year" means the annual period commencing
October 1 of each year.
(cc) "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
development area, subject to the following requirements:
(i) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of all taxing jurisdictions other than the state pursuant to
the state education tax act, 1993 PA 331, MCL 211.901 to 211.906,
and local or intermediate school districts upon the captured
assessed value of real and personal property in the development
area for any purpose authorized by this act.
(ii) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state pursuant to the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, and local or intermediate school
districts upon the captured assessed value of real and personal
property in the development area in an amount equal to the amount
necessary, without regard to subparagraph (i), to repay eligible
advances, eligible obligations, and other protected obligations.
(iii) Tax increment revenues do not include any of the
following:
(A) Ad valorem property taxes attributable either to a portion
of the captured assessed value shared with taxing jurisdictions
within the jurisdictional area of the authority or to a portion of
value of property that may be excluded from captured assessed value
or specific local taxes attributable to such ad valorem property
taxes.
(B) Ad valorem property taxes excluded by the tax increment
financing plan of the authority from the determination of the
amount of tax increment revenues to be transmitted to the authority
or specific local taxes attributable to such ad valorem property
taxes.
(C) Ad valorem property taxes exempted from capture under
section 3(3) or specific local taxes attributable to such ad
valorem property taxes.
(D) Ad valorem property taxes levied under 1 or more of the
following or specific local taxes attributable to those ad valorem
property taxes:
(I) The zoological authorities act, 2008 PA 49, MCL 123.1161
to 123.1183.
(II) The art institute authorities act, 2010 PA 296, MCL
123.1201 to 123.1229.
(iv) The amount of tax increment revenues authorized to be
included under subparagraph (ii) or (v), and required to be
transmitted to the authority under section 14(1), from ad valorem
property taxes and specific local taxes attributable to the
application of the levy of the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, a local school district or an
intermediate school district upon the captured assessed value of
real and personal property in a development area shall be
determined separately for the levy by the state, each school
district, and each intermediate school district as the product of
sub-subparagraphs (A) and (B):
(A) The percentage that the total ad valorem taxes and
specific local taxes available for distribution by law to the
state, local school district, or intermediate school district,
respectively, bears to the aggregate amount of ad valorem millage
taxes and specific taxes available for distribution by law to the
state, each local school district, and each intermediate school
district.
(B) The maximum amount of ad valorem property taxes and
specific local taxes considered tax increment revenues under
subparagraph (ii) or (v).
(v) Tax increment revenues include ad valorem property taxes
and specific local taxes, in an annual amount and for each year
approved by the state treasurer, attributable to the levy by this
state under the state education tax act, 1993 PA 331, MCL 211.901
to 211.906, and by local or intermediate school districts, upon the
captured assessed value of real and personal property in the
development area of an authority established in a city with a
population of 600,000 or more to pay for, or reimburse an advance
for, not more than $8,000,000.00 for the demolition of buildings or
structures on public or privately owned property within a
development area that commences in 2005, or to pay the annual
principal of or interest on an obligation, the terms of which are
approved by the state treasurer, issued by an authority, or by a
city on behalf of an authority, to pay not more than $8,000,000.00
of the costs to demolish buildings or structures on public or
privately owned property within a development area that commences
in 2005.
(vi) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the levy by this state
under the state education tax act, 1993 PA 331, MCL 211.201 to
211.906, and by local or intermediate school districts which were
levied on or after July 1, 2010, upon the captured assessed value
of real and personal property in the development area of an
authority established in a city with a population of 600,000 or
more to pay for, or reimburse an advance for, costs associated with
the land acquisition, preliminary site work, and construction of a
catalyst development project.
