November 14, 2006, Introduced by Rep. Kolb and referred to the Committee on Tax Policy.
A bill to provide for certain credits for certain approved
projects.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Approved costs" means the sum of both of the following as
determined by the Michigan economic development corporation and
incorporated into an environmental stewardship agreement:
(i) Up to 100% of the eligible skills upgrade costs.
(ii) Up to 25% of eligible equipment costs.
(b) "Department" means the department of treasury.
(c) "Eligible equipment costs" means all of the following:
(i) Obligations incurred for labor and to vendors, contractors,
subcontractors, builders, suppliers, deliverymen, and materialmen
in connection with the acquisition, construction, equipping, and
installation of an environmental stewardship project.
(ii) The cost of contract bonds and of insurance of all kinds
that may be required or necessary during the course of acquisition,
construction, equipping, and installation of an environmental
stewardship project that is not paid by the vendor, supplier,
deliveryman, contractor, or otherwise provided.
(iii) Costs of architectural and engineering services, including
estimates, plans and specifications, preliminary investigations,
and supervision of construction, rehabilitation, and installation,
as well as for the performance of all the duties required by or
consequent upon the acquisition, construction, equipping, and
installation of an environmental stewardship project.
(iv) Costs required to be paid under the terms of any contract
for the acquisition, construction, equipping, and installation of
an environmental stewardship project.
(v) Costs paid by the eligible taxpayer that are required for
the installation of utilities, including, but not limited to,
water, sewer, sewage treatment, gas, electricity, communications,
and access to transportation, and including off-site construction
of the facilities necessary for implementation of an environmental
stewardship project.
(vi) All other costs of a nature comparable to those described
in this subsection.
(d) "Eligible skills upgrade training costs" means:
(i) Fees or salaries paid to instructors who are employees of
the eligible taxpayer, instructors who are full-time, part-time, or
adjunct instructors with an educational institution, and
instructors who are consultants on contract with the eligible
taxpayer in connection with an occupational training program
sponsored by the eligible taxpayer for its full-time employees and
specifically relating to an environmental stewardship project.
(ii) Administrative fees charged by educational institutions in
connection with an occupational training program sponsored by the
eligible taxpayer for its full-time employees and specifically
relating to an environmental stewardship project.
(iii) The cost of supplies, materials, and equipment used
exclusively in an occupational training program sponsored by the
eligible taxpayer for its full-time employees and specifically
relating to an environmental stewardship project.
(iv) The cost of leasing a training facility if space is
unavailable at an educational institution or at the premises of the
eligible taxpayer in connection with an occupational training
program sponsored by the eligible taxpayer for its full-time
employees and specifically relating to an environmental stewardship
project.
(v) Employee wages paid in connection with an occupational
training program sponsored by the eligible taxpayer for its full-
time employees and specifically relating to an environmental
stewardship project.
(vi) Travel expenses paid by the eligible taxpayer incurred by
its full-time employees resulting directly from the costs of
transportation, lodging, and meals that are directly related to an
occupational training program necessary for the implementation of
an environmental stewardship project.
(vii) All other costs of a nature comparable to those described
in this subsection.
(e) "Eligible taxpayer" means an entity that undertakes an
environmental stewardship project.
(f) "Employee benefits" means nonmandated costs paid by an
eligible taxpayer for its full-time employees for health insurance,
life insurance, dental insurance, vision insurance, defined
benefits, and 401(k) or similar plans.
(g) "Environmental stewardship product" means any new
manufactured product or substantially improved existing
manufactured product that has a lesser or reduced adverse effect on
human health and the environment or provides for improvement to
human health and the environment when compared with existing
products or competing products that serve the same purpose.
Environmental stewardship products include, but are not limited to,
products that contain recycled content, minimize waste, conserve
energy or water, and reduce the amount of toxics disposed or
consumed, but do not include products that are the result of the
production of energy or energy producing fuels.
(h) "Environmental stewardship project" or "project" means all
of the following:
(i) The acquisition, construction, and installation of new
equipment and all of the following related to the project:
(A) The construction, rehabilitation, and installation of
improvements to facilities necessary to house the new equipment,
including surveys.
(B) Installation of utilities including water, sewer, sewage
treatment, gas, electricity, communications, and similar
facilities.
(C) Off-site construction of utility extensions to the
boundaries of the real property on which the facilities are
located.
(ii) The provision of an occupational training program to
provide the employees of an approved company or its affiliate with
the knowledge and skills necessary to manufacture the new product.
(i) "Full-time employee" means a person employed by an
eligible taxpayer for a minimum of 35 hours per week and whose
compensation is subject to the income tax act of 1967, 1967 PA 281,
MCL 206.1 to 206.532.
(j) "Manufacturing" means any activity involving the
manufacturing, processing, assembling, or production of any
property, including processing that results in a change in the
condition of the property and any related activity or function,
together with the storage, warehousing, distribution, and related
office facilities.
(k) "Michigan economic development corporation" means the
public body corporate created under section 28 of article VII of
the state constitution of 1963 and the urban cooperation act of
1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual
interlocal agreement effective April 5, 1999, as amended, between
local participating economic development corporations formed under
the economic development corporations act, 1974 PA 338, MCL
125.1601 to 125.1636, and the Michigan strategic fund.
(l) "Michigan strategic fund" means the Michigan strategic fund
as described in the Michigan strategic fund act, 1984 PA 270, MCL
125.2001 to 125.2094.
Sec. 3. (1) Subject to the criteria under this act, an
eligible taxpayer may claim a credit for approved costs of a
project that has been approved under this section against a tax
designated by law as the successor tax to the former single
business tax act, 1975 PA 228, MCL 208.1 to 208.145.
(2) A taxpayer may apply to the Michigan economic development
corporation for approval of a project the costs of which will be
the basis of a credit under this act. The application shall include
all of the following:
(a) The nature of the product to be manufactured.
(b) Costs associated with the project.
(c) The anticipated duration of the project.
(d) Alternatives that are available to the taxpayer.
(e) The influence the credit allowed under this act had on the
taxpayer's decision to locate the project in this state.
(f) Any additional information related to the project that the
Michigan economic development corporation requires.
(3) The Michigan economic development corporation shall
approve or deny an application for a project not more than 45 days
after receipt of the application. If the Michigan economic
development corporation does not approve or deny an application
within 45 days after the application is received by the Michigan
economic development corporation, the application is considered
approved as written. If a project is denied under this subsection,
a taxpayer is not prohibited from subsequently applying under this
act for the same project or for another project. If the Michigan
economic development corporation approves a project under this act,
the Michigan economic development corporation shall enter into an
environmental stewardship agreement with the taxpayer. The Michigan
economic development corporation shall use the following criteria
to approve projects under this section:
(a) A determination that without the credits allowed under
this act, the taxpayer would not bring the project to this state.
(b) The project has eligible costs of at least $5,000,000.00.
(c) The ability of the taxpayer to assure that within 6 months
after the project approval date, the eligible taxpayer will
compensate at least 90% of its full-time employees whose jobs were
created or retained as part of the project with a base hourly wage
equal to or greater than 1 of the following:
(i) Except as provided in subparagraph (iii), 75% of the average
hourly wage paid in this state.
(ii) Except as provided in subparagraph (iii), 75% of the average
hourly wage paid in the county in which the project will be
completed.
(iii) If the base hourly wage calculated under subparagraph (i)
or (ii) is less than 150% of the federal minimum wage, the base
hourly wage shall be 150% of the federal minimum wage.
(d) The eligible taxpayer will provide employee benefits equal
to at least 15% of the applicable base hourly wage under
subdivision (c). The requirement under this subdivision may be
waived if the eligible taxpayer compensated employees who were
hired as part of the project total hourly compensation equal to or
greater than 115% of the applicable base hourly wage under
subdivision (c) through increased hourly wages combined with
employee benefits.
Sec. 5. (1) If the project is approved under section 3, the
Michigan economic development corporation may enter into an
environmental stewardship agreement with an eligible taxpayer. The
agreement shall state all of the following as determined by the
Michigan economic development corporation:
(a) The taxpayer is an eligible taxpayer.
(b) The amount of approved costs.
(c) The total amount of the tax credit allowed under this act
and the annual credit amount and the following limitations apply:
(i) The annual credit amount shall not exceed 25% of the total
credit allowable.
(ii) The total number of tax years for which the credit may be
claimed shall not exceed 10 years.
(d) Penalties that apply if the environmental stewardship
agreement is terminated under subsection (2).
(e) All records pertaining to the project on which a credit
under this section is based shall be available to the Michigan
economic development corporation for review and audit.
(2) All eligible costs for each project shall be expended and
the project completed not more than 3 years after the date on which
an environmental stewardship agreement under subsection (1) has
been finalized. If the project is not completed within the 3-year
period, the Michigan economic development corporation may do any of
the following:
(a) Reduce the total credit amount.
(b) Disallow a credit for specified tax years.
(c) Terminate the environmental stewardship agreement.
(3) If an environmental stewardship agreement is terminated
under subsection (2), the Michigan economic development corporation
may require, at its discretion, that the eligible taxpayer repay
credit amounts as determined in the environmental stewardship
agreement.
Sec. 7. An eligible taxpayer may assign all or a portion of a
credit allowed under this act. A credit assignment under this
section is irrevocable and shall be made in the first tax year in
which an eligible taxpayer is allowed to claim a credit under the
environmental stewardship agreement. An eligible taxpayer may claim
a portion of a credit and assign the remaining credit amount. If
the eligible taxpayer both claims and assigns portions of the
credit, the eligible taxpayer shall claim the portion it claims in
the first tax year in which the eligible taxpayer is allowed to
claim a credit under the environmental stewardship agreement. An
assignee may subsequently assign a credit or any portion of a
credit assigned under this act to 1 or more assignees. An
assignment under this act shall not be made after 10 years after
the first tax year in which that credit may be claimed. The credit
assignment or a subsequent reassignment under this act shall be
made on a form prescribed by the Michigan economic development
corporation. The eligible taxpayer shall send a copy of the
completed assignment form to the Michigan economic development
corporation in the tax year in which an assignment or reassignment
is made. An assignee or subsequent reassignee shall attach a copy
of the completed assignment form to its annual return required
under an act designated by law as the successor tax to the former
single business tax act, 1975 PA 228, MCL 208.1 to 208.145, for the
tax year in which the assignment or reassignment is made and the
assignee or reassignee first claims a credit, which shall be the
same tax year.
Sec. 9. On or before December 1 of each year, the department
shall issue a report to the Michigan economic development
corporation that includes all of the following:
(a) The total amount of credits claimed under this act in the
immediately preceding state fiscal year.
(b) Each eligible taxpayer and both the total amount of credit
approved for that taxpayer and the amount claimed by that taxpayer
in the taxpayer's tax year ending immediately before the date of
the report.