HOUSE BILL No. 5863
May 14, 1998, Introduced by Rep. Profit and referred to the Committee on Tax Policy. 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 govern- mental units; to provide for the exemption from certain taxes; to levy and collect a specific tax upon the owners of certain facil- ities; 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 offi- cers of local governmental units; and to provide penalties," by amending section 9 (MCL 207.559), as amended by 1996 PA 513. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 9. (1) The legislative body of the local governmental 2 unit, in its resolution approving an application, shall set forth 3 a finding and determination that the granting of the industrial 4 facilities exemption certificate, considered together with the 5 aggregate amount of industrial facilities exemption certificates 6 previously granted and currently in force, shall not have the 7 effect of substantially impeding the operation of the local 06097'98 JLB 2 1 governmental unit or impairing the financial soundness of a 2 taxing unit that levies an ad valorem property tax in the local 3 governmental unit in which the facility is located or to be 4 located. If the state equalized valuation of property proposed 5 to be exempt pursuant to an application under consideration, con- 6 sidered together with the aggregate state equalized valuation of 7 property exempt under certificates previously granted and cur- 8 rently in force, exceeds 5% of the state equalized valuation of 9 the local governmental unit, the commission, with the approval of 10 the state treasurer, shall make a separate finding and shall 11 include a statement in the order approving the industrial facili- 12 ties exemption certificate that exceeding that amount shall not 13 have the effect of substantially impeding the operation of the 14 local governmental unit or impairing the financial soundness of 15 an affected taxing unit. 16 (2) Except for an application for a speculative building, 17 which is governed by subsection (4), the legislative body of the 18 local governmental unit shall not approve an application and the 19 commission shall not grant an industrial facilities exemption 20 certificate unless the applicant complies with all of the follow- 21 ing requirements: 22 (a) The commencement of the restoration, replacement, or 23 construction of the facility occurred not earlier than 12 months 24 before the filing of the application for the industrial facili- 25 ties exemption certificate. If the application is not filed 26 within the 12-month period, the application may be filed within 27 the succeeding 12-month period and the industrial facilities 06097'98 3 1 exemption certificate shall in this case expire 1 year earlier 2 than it would have expired if the application had been timely 3 filed. This subdivision does not apply for applications filed 4 with the local governmental unit after December 31, 1983. 5 (b) For applications made after December 31, 1983, the pro- 6 posed facility shall be located within a plant rehabilitation 7 district or industrial development district that was duly estab- 8 lished in a local governmental unit eligible under this act to 9 establish a district and that was established upon a request 10 filed or by the local governmental unit's own initiative taken 11 before the commencement of the restoration, replacement, or con- 12 struction of the facility. 13 (c) For applications made after December 31, 1983, the com- 14 mencement of the restoration, replacement, or construction of the 15 facility occurred not earlier than 6 months before the filing of 16 the application for the industrial facilities exemption 17 certificate. 18 (d) The application relates to a construction, restoration, 19 or replacement program that when completed constitutes a new or 20 replacement facility within the meaning of this act and that 21 shall be situated within a plant rehabilitation district or 22 industrial development district duly established in a local gov- 23 ernmental unit eligible under this act to establish the 24 district. 25 (e) Completion of the facility is calculated to, and will at 26 the time of issuance of the certificate have the reasonable 27 likelihood to create employment, retain employment, prevent a 06097'98 4 1 loss of employment, or produce energy in the community in which 2 the facility is situated. 3 (f) Completion of the facility shall not have the effect of 4 transferring employment from 1 or more local governmental units 5 of this state to the local governmental unit in which the facil- 6 ity is to be located, except that this restriction does not pre- 7 vent the granting of a certificate if the legislative body of 8 each local governmental unit from which employment is to be 9 transferred consents by resolution to the granting of the 10 certificate. If the local governmental unit does not give its 11 consent, a copy of the resolution of denial showing reasons for 12 the denial shall be filed within 20 days after adoption with the 13 department of consumer and industry services. 14 (g) Completion of the facility does not constitute merely 15 the addition of machinery and equipment for the purpose of 16 increasing productive capacity but rather is primarily for the 17 purpose and will primarily have the effect of restoration, 18 replacement, or updating the technology of obsolete industrial 19 property. An increase in productive capacity, even though sig- 20 nificant, is not an impediment to the issuance of an industrial 21 facilities exemption certificate if other criteria in this sec- 22 tion and act are met. This subdivision does not apply to a new 23 facility. 24 (h) The provisions of subdivision (c) do not apply to a new 25 facility located in an existing industrial development district 26 owned by a person who filed an application for an industrial 27 facilities exemption certificate in April of 1992 if the 06097'98 5 1 application was approved by the local governing body and was 2 denied by the state tax commission in April of 1993. 3 (i) The provisions of subdivisions (b) and (c) and 4 section 4(3) do not apply to 1 or more of the following: 5 (i) A facility located in an industrial development district 6 owned by a person who filed an application for an industrial 7 facilities exemption certificate in October 1995 for construction 8 that was commenced in July 1992 in a district that was estab- 9 lished by the legislative body of the local governmental unit in 10 July 1994. An industrial facilities exemption certificate 11 described in this subparagraph shall expire as provided in sec- 12 tion 16(3). 13 (ii) A facility located in an industrial development dis- 14 trict that was established in January 1994 and was owned by a 15 person who filed an application for an industrial facilities 16 exemption certificate in February 1994 if the personal property 17 and real property portions of the application were approved by 18 the legislative body of the local governmental unit and the per- 19 sonal property portion of the application was approved by the 20 state tax commission in December 1994 and the real property por- 21 tion of the application was denied by the state tax commission in 22 December 1994. An industrial facilities exemption certificate 23 described in this subparagraph shall expire as provided in sec- 24 tion 16(3). 25 (iii) A facility located in an industrial development dis- 26 trict that was established in December 1995 and was owned by a 27 person who filed an application for an industrial facilities 06097'98 6 1 exemptions EXEMPTION certificate in November or December 1995 2 for construction that was commenced in September 1995. 3 (iv) A FACILITY LOCATED IN AN INDUSTRIAL DEVELOPMENT DIS- 4 TRICT THAT WAS ESTABLISHED IN MARCH 1998 AND WAS OWNED BY A 5 PERSON WHO FILED AN APPLICATION FOR AN INDUSTRIAL FACILITIES 6 EXEMPTION CERTIFICATE IN DECEMBER 1997 FOR CONSTRUCTION THAT WAS 7 COMMENCED IN JUNE 1997. 8 (j) The provisions of subdivision (c) do not apply to any of 9 the following: 10 (i) A new facility located in an existing industrial devel- 11 opment district owned by a person who filed an application for an 12 industrial facilities exemption certificate in October 1993 if 13 the application was approved by the legislative body of the local 14 governmental unit and the real property portion of the applica- 15 tion was denied by the state tax commission in December 1993. 16 (ii) A new facility located in an existing industrial devel- 17 opment district owned by a person who filed an application for an 18 industrial facilities exemption certificate in September 1993 if 19 the personal property portion of the application was approved by 20 the legislative body of the local governmental unit and the real 21 property portion of the application was denied by the legislative 22 body of the local governmental unit in October 1993 and subse- 23 quently approved by the legislative body of the local governmen- 24 tal unit in September 1994. 25 (iii) A facility located in an existing industrial develop- 26 ment district owned by a person who filed an application for an 27 industrial facilities exemption certificate in August 1993 if the 06097'98 7 1 application was approved by the local governmental unit in 2 September 1993 and the application was denied by the state tax 3 commission in December 1993. 4 (iv) A facility located in an existing industrial develop- 5 ment district occupied by a person who filed an application for 6 an industrial facilities exemption certificate in June of 1995 if 7 the application was approved by the legislative body of the local 8 governmental unit in October of 1995 for construction that was 9 commenced in November or December of 1994. 10 (v) A facility located in an existing industrial development 11 district owned by a person who filed an application for an indus- 12 trial facilities exemption certificate in June of 1995 if the 13 application was approved by the legislative body of the local 14 governmental unit in July of 1995 and the personal property por- 15 tion of the application was approved by the state tax commission 16 in November of 1995. 17 (3) If the replacement facility when completed will not be 18 located on the same premises or contiguous premises as the obso- 19 lete industrial property, then the applicant shall make provision 20 for the obsolete industrial property by demolition, sale, or 21 transfer to another person with the effect that the obsolete 22 industrial property shall within a reasonable time again be 23 subject to assessment and taxation under the general property tax 24 act, Act No. 206 of the Public Acts of 1893, being sections 25 211.1 to 211.157 of the Michigan Compiled Laws 1893 PA 206, MCL 26 211.1 TO 211.157, or be used in a manner consistent with the 06097'98 8 1 general purposes of this act, subject to approval of the 2 commission. 3 (4) The legislative body of the local governmental unit 4 shall not approve an application and the commission shall not 5 grant an industrial facilities exemption certificate that applies 6 to a speculative building unless the speculative building is or 7 is to be located in a plant rehabilitation district or industrial 8 development district duly established by a local governmental 9 unit eligible under this act to establish a district; the specu- 10 lative building was constructed less than 9 years before the 11 filing of the application for the industrial facilities exemption 12 certificate; the speculative building has not been occupied since 13 completion of construction; and the speculative building other- 14 wise qualifies under subsection (2)(e) and (f) for an industrial 15 facilities exemption certificate. An industrial facilities 16 exemption certificate granted under this subsection shall expire 17 as provided in section 16(3). 18 (5) Not later than September 1, 1989, the commission shall 19 provide to all local assessing units the name, address, and tele- 20 phone number of the person on the commission staff responsible 21 for providing procedural information concerning this act. After 22 October 1, 1989, a local unit of government shall notify each 23 prospective applicant of this information in writing. 24 (6) Notwithstanding any other provision of this act, if on 25 December 29, 1986 a local governmental unit passed a resolution 26 approving an exemption certificate for 10 years for real and 27 personal property but the commission did not receive the 06097'98 9 1 application until 1992 and the application was not made complete 2 until 1995, then the commission shall issue, for that property, 3 an industrial facilities exemption certificate that begins 4 December 30, 1987 and ends December 30, 1997. The facility 5 described in this subsection shall be taxed under this act as if 6 it was granted an industrial facilities exemption certificate on 7 December 30, 1987. 8 (7) Notwithstanding any other provision of this act, if a 9 local governmental unit passed a resolution approving an indus- 10 trial facilities exemption certificate for a new facility on July 11 8, 1991 but rescinded that resolution and passed a resolution 12 approving an industrial facilities exemption certificate for that 13 same facility as a replacement facility on October 21, 1996, the 14 commission shall issue for that property an industrial facilities 15 exemption certificate that begins December 30, 1991 and ends 16 December 2003. The replacement facility described in this sub- 17 section shall be taxed under this act as if it was granted an 18 industrial facilities exemption certificate on December 30, 19 1991. 06097'98 Final page. JLB