Bill Text: MI SB0619 | 2015-2016 | 98th Legislature | Engrossed
Bill Title: Economic development; tax increment financing; tax capture districts; provide opt-in and opt-out provisions for certain entities. Amends secs. 1 & 3 of 1980 PA 450 (MCL 125.1801 & 125.1803).
Spectrum: Partisan Bill (Republican 3-0)
Status: (Passed) 2016-12-30 - Assigned Pa 0505'16 With Immediate Effect [SB0619 Detail]
Download: Michigan-2015-SB0619-Engrossed.html
SB-0619, As Passed House, December 14, 2016
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 619
A bill to amend 1980 PA 450, entitled
"The tax increment finance authority act,"
by amending sections 1 and 3 (MCL 125.1801 and 125.1803), section 1
as amended by 2014 PA 38 and section 3 as amended by 2005 PA 14.
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.
Evidence of the intent to repay an advance is required and may
include, but is not limited to, an executed agreement to repay,
provisions contained in a tax increment financing plan approved
before the advance or before August 14, 1993, 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, taxable
value as determined under section 27a of the general property tax
act, 1893 PA 206, MCL 211.27a.
(c) "Authority" means a tax increment finance authority
created under this act.
(d) "Authority district" means that area within which an
authority exercises its powers and within which 1 or more
development areas may exist.
(e) "Board" means the governing body of an authority.
(f) "Captured assessed value" means the amount in any 1 year
by which the current assessed value of the development area,
including the assessed value of property for which specific local
taxes are paid in lieu of property taxes as determined in
subdivision (w), exceeds the initial assessed value. The state tax
commission shall prescribe the method for calculating captured
assessed value.
(g) "Chief executive officer" means the mayor or city manager
of a city, the president of a village, or the supervisor of a
township.
(h) "Development area" means that area to which a development
plan is applicable.
(i) "Development area citizens council" or "council" means
that advisory body established pursuant to section 20.
(j) "Development plan" means that information and those
requirements for a development set forth in section 16.
(k) "Development program" means the implementation of the
development plan.
(l) "Eligible advance" means an advance made before August 19,
1993.
(m) "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.
Eligible obligation also includes an ongoing management contract or
contract for professional services or development services that was
entered into by the authority or a municipality on behalf of the
authority in 1991, and related similar written agreements executed
before 1984, if the 1991 agreement both provides for automatic
annual renewal and incorporates by reference the prior related
agreements; however, receipt by an authority of tax increment
revenues authorized under subdivision (aa)(ii) in order to pay
costs arising under those contracts shall be limited to:
(i) For taxes levied before July 1, 2005, the amount permitted
to be received by an authority for an eligible obligation as
provided in this act.
(ii) For taxes levied after June 30, 2005 and before July 1,
2006, $3,000,000.00.
(iii) For taxes levied after June 30, 2006 and before July 1,
2007, $3,000,000.00.
(iv) For taxes levied after June 30, 2007 and before July 1,
2008, $3,000,000.00.
(v) For taxes levied after June 30, 2008 and before July 1,
2009, $3,000,000.00.
(vi) For taxes levied after June 30, 2009 and before July 1,
2010, $3,000,000.00.
(vii) For taxes levied after June 30, 2010 and before July 1,
2011, $2,650,000.00.
(viii) For taxes levied after June 30, 2011 and before July 1,
2012, $2,400,000.00.
(ix) For taxes levied after June 30, 2012 and before July 1,
2013, $2,125,000.00.
(x) For taxes levied after June 30, 2013 and before July 1,
2014, $1,500,000.00.
(xi) For taxes levied after June 30, 2014 and before July 1,
2015, $1,150,000.00.
(xii) For taxes levied after June 30, 2015, $0.00.
(n) "Fiscal year" means the fiscal year of the authority.
(o) "Governing body" means the elected body of a municipality
having legislative powers.
(p) "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 resolution 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
property that is exempt from taxation. The initial assessed value
of property for which a specific tax was paid in lieu of a property
tax shall be determined as provided in subdivision (w).
(q) "Municipality" means a city.
(r) "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.
(s) "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 a municipality, or the 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.
(t) "Other protected obligation" means:
(i) A qualified refunding obligation issued to refund an
obligation described in subparagraph (ii) or (iii), 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 the municipality or authority
before March 1, 1994.
(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 issued or incurred by an authority or by a
municipality on behalf of an authority to implement a project
described in a tax increment finance plan approved by the
municipality in accordance with this act before August 19, 1993,
that is located on land owned by a public university on the date
the tax increment financing plan is approved, and for which a
contract for final design is entered into before December 31, 1993.
(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) An obligation issued or incurred by a municipality under
a contract executed on December 19, 1994 as subsequently amended
between the municipality and the authority to implement a project
described in a tax increment finance plan approved by the
municipality under this act before August 19, 1993 for which a
contract for final design was entered into by the municipality
before March 1, 1994 provided that final payment by the
municipality is made on or before December 31, 2001.
(vii) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority that meets all of the
following qualifications:
(A) The obligation is issued or incurred to finance a project
described in a tax increment financing plan approved before August
19, 1993 by a municipality in accordance with this act.
(B) The obligation qualifies as an other protected obligation
under subparagraph (ii) and was issued or incurred by the authority
before December 31, 1994 for the purpose of financing the project.
(C) A portion of the obligation issued or incurred by the
authority before December 31, 1994 for the purpose of financing the
project was retired prior to December 31, 1996.
(D) The obligation does not exceed the dollar amount of the
portion of the obligation retired prior to December 31, 1996.
(viii) An obligation incurred by an authority that meets both
of the following qualifications:
(A) The obligation is a contract of lease originally executed
on December 20, 1994 between the municipality and the authority to
partially implement the authority's development plan and tax
increment financing plan.
(B) The obligation qualifies as an obligation under
subparagraph (ii). The obligation described in this subparagraph
may be amended to extend cash rental payments for a period not to
exceed 30 years through the year 2039. The duration of the
development plan and tax increment financing plan described in this
subparagraph is extended to 1 year after the final date that the
extended cash rental payments are due.
(u) "Public facility" means 1 or more of the following:
(i) A street, plaza, or pedestrian mall, and any improvements
to a street, plaza, boulevard, alley, or pedestrian mall, including
street furniture and beautification, park, parking facility,
recreation facility, playground, school, library, public
institution or administration building, right of way, structure,
waterway, bridge, lake, pond, canal, utility line or pipeline,
transit-oriented development, transit-oriented facility, and other
similar facilities and necessary easements of these facilities
designed and dedicated to use by the public generally or used by a
public agency. As used in this subparagraph, public institution or
administration building includes, but is not limited to, a police
station, fire station, court building, or other public safety
facility.
(ii) The acquisition and disposal of real and personal
property or interests in real and personal property, demolition of
structures, site preparation, relocation costs, building
rehabilitation, and all associated administrative costs, including,
but not limited to, architect's, engineer's, legal, and accounting
fees as contained in the resolution establishing the district's
development plan.
(iii) 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.
(v) "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 of the following
applies:
(i) 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 (aa)(ii) and the distributions
under section 12a 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 (aa)(ii) and the distributions
under section 12a to repay the obligation being refunded, as
calculated using a method approved by the department of treasury.
(ii) The refunding obligation is a tax increment refunding
bond issued to refund a refunding bond that is an other protected
obligation issued as a capital appreciation bond delivered to the
Michigan municipal bond authority on December 21, 1994, or bonds
issued to refund that bond, and the authority, by resolution of its
board, authorized issuance of the refunding obligation before
December 31, 2019 with a final maturity not later than 2039. The
municipality by majority vote of the members of its governing body
may pledge its full faith and credit for the payment of the
principal of and interest on the refunding obligation. A refunding
obligation issued under this subparagraph is not subject to the
requirements of section 305(2), (3), (5), or (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
plan and the tax increment financing plan relating to the refunding
obligations described in this subparagraph is extended to 1 year
after the final date of maturity of the refunding obligation.
(w) "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.
(x) "State fiscal year" means the annual period commencing
October 1 of each year.
(y) "Tax increment district" or "district" means that area to
which the tax increment finance plan pertains.
(z) "Tax increment financing plan" means that information and
those requirements set forth in sections 13 to 15.
(aa) "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 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.
(III) Except as otherwise provided in section 3(6), ad valorem
property taxes or specific local taxes attributable to those ad
valorem property taxes levied for a separate millage for public
library purposes approved by the electors after December 31, 2016.
(iv) The amount of tax increment revenues authorized to be
included under subparagraph (ii), 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 which 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, bear 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).
(bb) "Transit-oriented development" means infrastructure
improvements that are located within 1/2 mile of a transit station
or transit-oriented facility that promotes transit ridership or
passenger rail use as determined by the board and approved by the
municipality in which it is located.
(cc) "Transit-oriented facility" means a facility that houses
a transit station in a manner that promotes transit ridership or
passenger rail use.
Sec. 3. (1) If the governing body of a municipality determines
that it is in the best interests of the public to halt a decline in
property values, increase property tax valuation, eliminate the
causes of the decline in property values, and to promote growth in
an area in the municipality, the governing body of that
municipality may declare by resolution its intention to create and
provide for the operation of an authority.
(2) In the resolution of intent, the governing body shall set
a date for the holding of a public hearing on the adoption of a
proposed resolution creating the authority and designating the
boundaries of the authority district. Notice of the public hearing
shall be published twice in a newspaper of general circulation in
the municipality, not less than 20 nor more than 40 days before the
date of the hearing. Notice shall also be mailed to the property
taxpayers of record in the proposed authority district not less
than 20 days before the hearing. Beginning June 1, 2005, the notice
of hearing within the time frame described in this subsection shall
be mailed by certified mail to the governing body of each taxing
jurisdiction levying taxes that would be subject to capture if the
authority is established and a tax increment financing plan is
approved. Failure to receive the notice shall not invalidate these
proceedings. The notice shall state the date, time, and place of
the hearing, and shall describe the boundaries of the proposed
authority district. At that hearing, a citizen, taxpayer, or
property owner of the municipality has the right to be heard in
regard to the establishment of the authority and the boundaries of
the proposed authority district. The governing body of the
municipality shall not incorporate land into the authority district
not included in the description contained in the notice of public
hearing, but it may eliminate described lands from the authority
district in the final determination of the boundaries.
(3) After the public hearing, if the governing body intends to
proceed with the establishment of the authority, it shall adopt, by
majority vote of its members, a resolution establishing the
authority and designating the boundaries of the authority district
within which the authority shall exercise its powers. The adoption
of the resolution is subject to any applicable statutory or charter
provisions with respect to the approval or disapproval by the chief
executive or other officer of the municipality and the adoption of
a resolution over his or her veto. This 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.
(4) The governing body may alter or amend the boundaries of
the authority district to include or exclude lands from the
authority district in accordance with the same requirements
prescribed for adopting the resolution creating the authority.
(5) The validity of the proceedings establishing an authority
shall be conclusive unless contested in a court of competent
jurisdiction within 60 days after the last of the following takes
place:
(a) Publication of the resolution as adopted.
(b) Filing of the resolution with the secretary of state.
(6) If a separate millage for public library purposes was
levied before January 1, 2017, and all obligations and other
protected obligations of the authority are paid, then the levy is
exempt from capture under this act, unless the library board or
commission allows all or a portion of its taxes levied to be
included as tax increment revenues and subject to capture under
this act under the terms of a written agreement between the library
board or commission and the authority. The written agreement shall
be filed with the clerk of the municipality. However, if a separate
millage for public library purposes was levied before January 1,
2017, and the authority alters or amends the boundaries of the
authority district or extends the duration of the existing finance
plan, then the library board or commission may, not later than 60
days after a public hearing is held under this subsection, exempt
all or a portion of its taxes from capture by adopting a resolution
to that effect and filing a copy with the clerk of the municipality
that created the authority. For ad valorem property taxes or
specific local taxes attributable to those ad valorem property
taxes levied for a separate millage for public library purposes
approved by the electors after December 31, 2016, a library board
or commission may allow all or a portion of its taxes levied to be
included as tax increment revenues and subject to capture under
this act under the terms of a written agreement between the library
board or commission and the authority. The written agreement shall
be filed with the clerk of the municipality. However, if the
library was created under section 1 or 10a of 1877 PA 164, MCL
397.201 and 397.210a, or established under 1869 LA 233, then any
action of the library board or commission under this subsection
shall have the concurrence of the chief executive officer of the
city that created the library to be effective.
