SB-0530, As Passed House, December 14, 2005

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 530

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1992 PA 147, entitled

 

"Neighborhood enterprise zone act,"

 

by amending sections 2, 3, 4, 8, 10, 11, 12, and 13 (MCL 207.772,

 

207.773, 207.774, 207.778, 207.780, 207.781, 207.782, and 207.783),

 

sections 2, 3, and 12 as amended by 2004 PA 396, section 4 as

 

amended by 2004 PA 566, and sections 10 and 11 as amended by 2001

 

PA 217.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Commission" means the state tax commission created by

 

1927 PA 360, MCL 209.101 to 209.107.

 

     (b) "Condominium unit" means that portion of a structure

 

intended for separate ownership, intended for residential use, and

 


established pursuant to the condominium act, 1978 PA 59, MCL

 

559.101 to 559.276. Condominium units within a qualified historic

 

building may be held under common ownership.

 

     (c) "Developer" means a person who is the owner of a new

 

facility at the time of construction or of a rehabilitated facility

 

at the time of rehabilitation for which a neighborhood enterprise

 

zone certificate is applied for or issued.

 

     (d) "Facility" means a homestead facility, a new facility, or

 

a rehabilitated facility.

 

     (e) "Homestead facility" means an existing structure,

 

purchased by or transferred to an owner after December 31, 1997,

 

that has as its primary purpose residential housing consisting of 1

 

or 2 units, 1 of which is occupied by an owner as his or her

 

principal residence and that is located within a subdivision

 

platted pursuant to state law before January 1, 1968.

 

     (f)  (d)  "Local governmental unit" means a qualified local

 

governmental unit as that term is defined under section 2 of the

 

obsolete property rehabilitation act, 2000 PA 146, MCL 125.2782, or

 

a county seat.

 

     (g)  (e)  "New facility" means a new structure or a portion of

 

a new structure that has as its primary purpose residential housing

 

consisting of 1 or 2 units, 1 of which is or will be occupied by an

 

owner as his or her principal residence. New facility includes a

 

model home or a model condominium unit. New facility includes a new

 

individual condominium unit, in a structure with 1 or more

 

condominium units, that has as its primary purpose residential

 

housing and that is or will be occupied by an owner as his or her

 


principal residence. New facility does not include apartments.

 

     (h)  (f)  "Neighborhood enterprise zone certificate" or

 

"certificate" means a certificate issued pursuant to sections 4, 5,

 

and 6.

 

     (i)  (g)  "Owner" means the record title holder of, or the

 

vendee of the original land contract pertaining to, a new facility,

 

a homestead facility, or a rehabilitated facility for which a

 

neighborhood enterprise zone certificate is applied for or issued.

 

     (j)  (h)  "Qualified historic building" means a property

 

within a neighborhood enterprise zone that has been designated a

 

historic resource as defined under section 266 of the income tax

 

act of 1967, 1967 PA 281, MCL 206.266.

 

     (k)  (i)  "Rehabilitated facility" means an existing structure

 

or a portion of an existing structure with a current true cash

 

value of $80,000.00 or less per unit that has or will have as its

 

primary purpose residential housing, consisting of 1 to 8 units,

 

the owner of which proposes improvements that if done by a licensed

 

contractor would cost in excess of $5,000.00 per owner-occupied

 

unit or 50% of the true cash value, whichever is less, or $7,500.00

 

per nonowner-occupied unit or 50% of the true cash value, whichever

 

is less, or the owner proposes improvements that would be done by

 

the owner and not a licensed contractor and the cost of the

 

materials would be in excess of $3,000.00 per owner-occupied unit

 

or $4,500.00 per nonowner-occupied unit and will bring the

 

structure into conformance with minimum local building code

 

standards for occupancy or improve the livability of the units

 

while meeting minimum local building code standards. Rehabilitated

 


Senate Bill No. 530 as amended December 8, 2005

 

facility also includes an individual condominium unit, in a

 

structure with 1 or more condominium units that has as its primary

 

purpose residential housing, the owner of which proposes the above

 

described improvements. Rehabilitated facility also includes

 

existing or proposed condominium units in a qualified historic

 

building with 1 or more existing or proposed condominium units.

 

Rehabilitated facility does not include a facility rehabilitated

 

with the proceeds of an insurance policy for property or casualty

 

loss. A qualified historic building may contain multiple

 

rehabilitated facilities.

 

     Sec. 3. (1) The governing body of a local governmental unit by

 

resolution may designate 1 or more neighborhood enterprise zones

 

within that local governmental unit. A neighborhood enterprise zone

 

shall contain not less than 10 platted parcels of land. All the

 

land within a neighborhood enterprise zone shall also be compact

 

and contiguous. Contiguity is not broken by a road, right-of-way,

 

or property purchased or taken under condemnation if the purchased

 

or condemned property was a single parcel prior to the sale or

 

condemnation.

 

     (2) The total acreage of the neighborhood enterprise zones

 

containing only new facilities or rehabilitated facilities or any

 

combination of new facilities or rehabilitated facilities

 

designated under this act shall not exceed 15% of the total acreage

 

contained within the boundaries of the local governmental unit. The

total acreage of the neighborhood enterprise zones containing only

homestead facilities designated under this act shall not exceed <<10% of

the total acreage contained within the boundaries of the local governmental unit or, with the approval of the board of commissioners of the county in which the neighborhood enterprise zone is located if the county does not have an elected or appointed county executive or with the approval of the board of commissioners and the county executive of the county in which the neighborhood enterprise zone is located if the county has an elected or appointed county executive,>> 15%

of the total acreage contained within the boundaries of the local

 


governmental unit.

 

     (3) Not less than 60 days before the passage of a resolution

 

designating a neighborhood enterprise zone or the repeal or

 

amendment of a resolution under subsection (5), the clerk of the

 

local governmental unit shall give written notice to the assessor

 

and to the governing body of each taxing unit that levies ad

 

valorem property taxes in the proposed neighborhood enterprise

 

zone. Before acting upon the resolution, the governing body of the

 

local governmental unit shall make a finding that a proposed

 

neighborhood enterprise zone is consistent with the master plan of

 

the local governmental unit and the neighborhood preservation and

 

economic development goals of the local governmental unit. The

 

governing body before acting upon the resolution shall also adopt a

 

statement of the local governmental unit's goals, objectives, and

 

policies relative to the maintenance, preservation, improvement,

 

and development of housing for all persons regardless of income

 

level living within the proposed neighborhood enterprise zone.

 

Additionally, before acting upon the resolution, the governing body

 

of a local governmental unit with a population greater than 20,000

 

shall pass a housing inspection ordinance. A local governmental

 

unit with a population of 20,000 or less may pass a housing

 

inspection ordinance. Before the sale of a unit in a new or

 

rehabilitated facility for which a neighborhood enterprise zone

 

certificate is in effect, an inspection shall be made of the unit

 

to determine compliance with any local construction or safety codes

 

and that a sale may not be finalized until there is compliance with

 

those local construction or safety codes. The governing body shall

 


hold a public hearing not later than 45 days after the date the

 

notice is sent but before acting upon the resolution.

 

     (4) Upon receipt of a notice under subsection (3), the

 

assessor shall determine and furnish to the governing body of the

 

local governmental unit the amount of the true cash value of the

 

property located within the proposed neighborhood enterprise zone

 

and any other information considered necessary by the governing

 

body.

 

     (5) A resolution designating a neighborhood enterprise zone,

 

other than a zone designated under subsection (2), may be repealed

 

or amended not sooner than 3 years after the date of adoption or of

 

the most recent amendment of the resolution by the governing body

 

of the local governmental unit. The repeal or amendment of the

 

resolution shall take effect 6 months after adoption. However, an

 

action taken under this subsection does not invalidate a

 

certificate that is issued or in effect and a facility for which a

 

certificate is issued or in effect shall continue to be included in

 

the total acreage limitations under this section until the

 

certificate is expired or revoked.

 

     (6) Upon passage, amendment, or repeal of a resolution under

 

this section, the clerk of the local governmental unit shall notify

 

the commission of the action taken.

 

     Sec. 4. (1) The owner of a homestead facility or owner or

 

developer or prospective owner or developer of a proposed new

 

facility or an owner or developer or prospective developer

 

proposing to rehabilitate property located in a neighborhood

 

enterprise zone may file an application for a neighborhood

 


enterprise zone certificate with the clerk of the local

 

governmental unit. The application shall be filed in the manner and

 

form prescribed by the commission. The clerk of the local

 

governmental unit shall provide a copy of each homestead facility

 

application to the assessor for the local governmental unit. Except

 

as provided in subsection (2), the application shall be filed

 

before a building permit is issued for the new construction or

 

rehabilitation of the facility.

 

     (2) An application may be filed after a building permit is

 

issued only if 1 or more of the following apply:

 

     (a) For the rehabilitation of a facility if the area in which

 

the facility is located is designated as a neighborhood enterprise

 

zone by the governing body of the local governmental unit in the

 

calendar year 1992 and if the building permit is issued for the

 

rehabilitation before December 31, 1994 and after the date on which

 

the area in which the facility is located was designated as a

 

neighborhood enterprise zone by the governing body of the local

 

governmental unit.

 

     (b) For the construction of a new facility if the area in

 

which the new facility is located is designated as a neighborhood

 

enterprise zone by the governing body of the local governmental

 

unit in calendar year 1992 or 1993 and if the building permit is

 

issued for that new facility before December 31, 1995 and after

 

January 1, 1993.

 

     (c) For the construction of a new facility if the area in

 

which the new facility is located is designated as a neighborhood

 

enterprise zone by the governing body of the local governmental

 


unit in July 1997 and if the building permit is issued for that new

 

facility on February 3, 1998.

 

     (d) For a new facility or a rehabilitated facility if the area

 

in which the new facility or rehabilitated facility is located was

 

designated as a neighborhood enterprise zone by the governing body

 

of the local governmental unit in July 1996 and if the building

 

permit was issued for that facility on or before July 3, 2001.

 

     (e) For a new facility or a rehabilitated facility if the area

 

in which the new facility or rehabilitated facility is located was

 

designated as a neighborhood enterprise zone by the governing body

 

of the local governmental unit in October 1994 and if the building

 

permit was issued for that facility on or before April 25, 1997.

 

     (f) For the construction of a new facility if the area in

 

which the new facility is located is designated as a neighborhood

 

enterprise zone by the governing body of the local governmental

 

unit in September 2001 and if the building permit is issued for

 

that new facility on March 3, 2003.

 

     (g) For a rehabilitated facility if all or a portion of the

 

rehabilitated facility is a qualified historic building.

 

     (h) For the construction of a new facility if the area in

 

which the new facility is located is designated as a neighborhood

 

enterprise zone by the governing body of the local governmental

 

unit in July 1993 and the new facility was a model home.

 

     (i) For the construction of a new facility if the area in

 

which the new facility is located is designated as a neighborhood

 

enterprise zone by the governing body of the local governmental

 

unit in August 2004 and if building permits were issued for that

 


facility beginning November 5, 2002 through December 23, 2003.

 

     (j) For a homestead facility.

 

     (3) The application shall contain or be accompanied by all of

 

the following:

 

     (a) A general description of the homestead facility, new

 

facility, or proposed rehabilitated facility.

 

     (b) The dimensions of the parcel on which the homestead

 

facility, new facility, or proposed rehabilitated facility is or is

 

to be located.

 

     (c) The general nature and extent of the construction to be

 

undertaken.

 

     (d) A time schedule for undertaking and completing the

 

rehabilitation of property or the construction of the new facility.

 

     (e) A statement by the owner of a homestead facility that the

 

owner is committed to investing a minimum of $500.00 in the first 3

 

years that the certificate for a homestead facility is in effect

 

and committed to documenting the minimum investment if required to

 

do so by the assessor of the local governmental unit.

 

     (f)  (e)  Any other information required by the local

 

governmental unit.

 

     (4) Notwithstanding any other provisions of this act, for any

 

certificate issued as a result of the enactment of the amendatory

 

act that added subsection (2)(c), the effective date of the

 

certificate shall be the first day of the tax year following the

 

year the certificate is approved by the commission.

 

     (5) Notwithstanding any other provisions of this act, for any

 

certificate issued as a result of the enactment of the amendatory

 


act that added subsection (2)(d) or the amendatory act that added

 

subsection (2)(e), the effective date of the certificate shall be

 

January 1, 2001.

 

     (6) Notwithstanding any other provisions of this act, for any

 

certificate issued as a result of the enactment of the amendatory

 

act that added subsection (2)(j), the effective date of the

 

certificate shall be the first day of the tax year following the

 

year the certificate is approved by the commission.

 

     Sec. 8. A neighborhood enterprise zone certificate shall be in

 

the form prescribed and provided by the commission and shall

 

include the following:

 

     (a) A legal description of the real property on which the new

 

facility is to be located or the legal description of the homestead

 

facility or the rehabilitated property.

 

     (b) A statement that unless revoked under this act, the

 

certificate shall remain in effect for the period stated in the

 

certificate.

 

     Sec. 10. (1) Except as provided in subsections (2) and (3),

 

the effective date of the neighborhood enterprise zone certificate

 

is December 31 in the year in which the new facility or

 

rehabilitated facility is substantially completed and, for a new

 

facility, occupied by an owner as a principal residence, as

 

evidenced by the owner filing with the assessor of the local

 

assessing unit all of the following:

 

     (a) For a new facility, a certificate of occupancy.

 

     (b) For a rehabilitated facility, a certificate that the

 

improvements meet minimum local building code standards issued by

 


the local building inspector or other authorized officer or a

 

certificate of occupancy if required by local building permits or

 

building codes.

 

     (c) For a rehabilitated facility, documentation proving the

 

cost requirements of section  2(h)  2(k) are met.

 

     (d) For a homestead facility or a new facility, an affidavit

 

executed by an owner affirming that the homestead facility or new

 

facility is occupied by an owner as a principal residence.

 

     (2) If a new facility is substantially completed in a year but

 

is not occupied by an owner as a principal residence until the

 

following year, upon the request of the owner, the effective date

 

of the neighborhood enterprise zone certificate shall be December

 

31 in the year immediately preceding the date of occupancy by the

 

owner as a principal residence.

 

     (3) Upon the request of the owner, the effective date of the

 

neighborhood enterprise zone certificate for a rehabilitated

 

facility shall be December 31 in the year immediately preceding the

 

date on which the rehabilitated facility is substantially

 

completed.

 

     Sec. 11. (1) Upon receipt of a request by certified mail to

 

the commission by the holder of a neighborhood enterprise zone

 

certificate requesting revocation of the certificate, the

 

commission by order shall revoke the certificate.

 

     (2) The certificate shall expire if the owner fails to

 

complete the filing requirements under section 10 within 2 years of

 

the date the certificate was issued. The holder of the certificate

 

may request in writing to the commission a 1-year automatic

 


extension of the certificate if the owner has proceeded in good

 

faith with the construction or rehabilitation of the facility in a

 

manner consistent with the purposes of this act and the delay in

 

completion or occupancy by an owner is due to circumstances beyond

 

the control of the holder of the certificate. Upon request of the

 

local governmental unit, the commission shall extend the

 

certificate if the new facility has not been occupied.

 

     (3) The certificate for a homestead facility or new facility

 

is automatically revoked if the homestead facility or new facility

 

is no longer a homestead as that term is defined in section 7a of

 

the general property tax act, 1893 PA 206, MCL 211.7a. However, if

 

the owner or any subsequent owner submits a certificate before the

 

revocation is effective, the commission, upon application of the

 

owner, shall rescind the order of revocation. If the certificate is

 

submitted after revocation of the certificate, the commission, upon

 

application of the owner, shall reinstate the certificate for the

 

remaining period of time for which the original certificate would

 

have been in effect.

 

     (4) If the owner of the facility fails to make the annual

 

payment of the neighborhood enterprise zone tax and the ad valorem

 

property tax on the land under the general property tax act, 1893

 

PA 206, MCL 211.1 to 211.157, the commission by order shall revoke

 

the certificate. However, if payment of these taxes is made before

 

the revocation is effective, the commission, upon application of

 

the owner, shall rescind the order of revocation. If payment of

 

these taxes and any subsequent ad valorem property tax due on the

 

facility is made after revocation of the certificate, the

 


commission, upon application of the owner, shall reinstate the

 

certificate for the remaining period of time for which the original

 

certificate would have been in effect.

 

     (5) If a homestead facility, a new facility, or a

 

rehabilitated facility ceases to have as its primary purpose

 

residential housing, the commission by order shall revoke the

 

certificate for that facility. A new or rehabilitated facility does

 

not cease to be used for its primary purpose if it is temporarily

 

damaged or destroyed in whole or in part.

 

     (6) If the governing body of a local governmental unit

 

determines that a homestead facility, a new facility, or a

 

rehabilitated facility is not in compliance with any local

 

construction, building, or safety codes and notifies the commission

 

by certified mail of the noncompliance, the commission by order

 

shall revoke the certificate.

 

     (7) The revocation shall be effective beginning the December

 

31 following the date of the order or, if the certificate is

 

automatically revoked under subsection (3), the December 31

 

following the automatic revocation. The commission shall send by

 

certified mail copies of the order of revocation to the holder of

 

the certificate, to the local governmental unit in which the

 

facility is located, to the assessor of that local governmental

 

unit, and to the legislative body of each taxing unit that levies

 

taxes upon property in the local governmental unit in which the new

 

facility or rehabilitated facility is located.

 

     Sec. 12. (1) Except as otherwise provided in this section,

 

unless earlier revoked as provided in section 11, a neighborhood

 


enterprise zone certificate issued before January 1, 2006 shall

 

remain in effect for 6 to 12 years and a neighborhood enterprise

 

zone certificate issued after December 31, 2005 shall remain in

 

effect for 6 to 15 years from the effective date of the certificate

 

as determined by the governing body of the local governmental unit.

 

The governing body of a local governmental unit that issued a

 

neighborhood enterprise zone certificate for a new facility or a

 

rehabilitated facility before January 1, 2006 may extend the

 

certificate for an additional 3 years if the extension is approved

 

by resolution before the original neighborhood enterprise zone

 

certificate expires. If the homestead facility, new facility, or

 

rehabilitated facility is sold or transferred to another owner who

 

otherwise complies with this act and, for a homestead facility or a

 

new facility, uses the homestead facility or the new facility as a

 

principal residence, the certificate shall remain in effect.

 

     (2) If a rehabilitated facility was sold before December 29,

 

1994 and a certificate was in effect for that facility at the time

 

of the sale, and the new owner of the rehabilitated facility

 

otherwise complies with this act, the certificate shall be

 

reinstated and remain in effect for the remainder of the original

 

period described in subsection (1), unless earlier revoked under

 

section 11.

 

     (3) Except as provided in subsection (4), a change in

 

ownership of a rehabilitated facility constituting all or a portion

 

of a qualified historic building, occurring after the effective

 

date of a neighborhood enterprise zone certificate for that

 

rehabilitated facility, shall not affect the validity of that

 


neighborhood enterprise zone certificate, and the certificate shall

 

remain in effect for the period specified in this section as long

 

as the rehabilitated facility has as its primary purpose

 

residential housing.

 

     (4) Unless revoked earlier as provided in section 11, a

 

neighborhood enterprise zone certificate in effect for a

 

rehabilitated facility constituting all or a portion of a qualified

 

historic building shall remain in effect for 11 to 17 years from

 

the effective date of the certificate as determined by the

 

governing body of the local governmental unit. However, if a

 

rehabilitated facility constituting all or a portion of a qualified

 

historic building is not transferred or sold to a person who will

 

own and occupy the rehabilitated facility as his or her principal

 

residence within 6 years of the effective date of the neighborhood

 

enterprise zone certificate, the neighborhood enterprise zone

 

certificate is revoked.

 

     Sec. 13. (1) The assessor of each local governmental unit in

 

which is located a homestead facility, a new facility, or a

 

rehabilitated facility for which a neighborhood enterprise zone

 

certificate is in effect shall determine annually, with respect to

 

each homestead facility, new facility, or rehabilitated facility,

 

the assessed valuation of the property comprising the facility

 

having the benefit of a neighborhood enterprise zone certificate

 

and the amount of ad valorem property tax that would have been paid

 

with respect to each homestead facility, new facility, and

 

rehabilitated facility under the general property tax act,  Act No.

 

206 of the Public Acts of 1893, being sections 211.1 to 211.157 of

 


the Michigan Compiled Laws  1893 PA 206, MCL 211.1 to 211.157, if

 

the certificate had not been in force, and the assessed valuation

 

on which the neighborhood enterprise zone tax is based for a

 

homestead facility or a rehabilitated facility. A holder of a

 

certificate shall furnish to the assessor the information necessary

 

for the determination.

 

     (2) After making the determinations under subsection (1), the

 

assessor shall send annually notification of those determinations

 

to the Michigan enterprise zone authority and the governing body of

 

each taxing unit that levies taxes upon property in the local

 

governmental unit in which the new facility or rehabilitated

 

facility is located and the holder of the certificate for which the

 

determination is made. The notice shall be sent by certified mail

 

not later than October 15 and shall be based upon the valuation as

 

of the immediately preceding December 31.