HB-6032, As Passed House, September 11, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 6032

A bill to amend 1992 PA 147, entitled

"Neighborhood enterprise zone act,"

by amending sections 2, 4, 5, 6, 7, 11, and 16 (MCL 207.772,

207.774, 207.775, 207.776, 207.777, 207.781, and 207.786), section

2 as amended by 2008 PA 228, section 4 as amended by 2008 PA 4,

sections 6 and 7 as amended by 2005 PA 338, and section 11 as

amended by 2005 PA 339; and to repeal acts and parts of acts.

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.

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, 1996,

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 other than an

existing structure for which a certificate will or has been issued

after December 31, 2006 in a city with a population of 750,000 or

more, is located within a subdivision platted pursuant to state law

before January 1, 1968.

(f) "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) "New facility" means 1 or both of the following:

(i) 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.

Except as provided in subparagraph (ii), new facility does not

include apartments.

(ii) A new structure or a portion of a new structure that meets

all of the following:

(A) Is rented or leased or is available for rent or lease.

(B) Is a mixed use building or located in a mixed use building

that contains retail business space on the street level floor.

district.

(h) "Neighborhood enterprise zone certificate" or

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

and 6.

(i) "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) "Qualified assessing authority" means 1 of the following:

(i) For a facility other than a homestead facility, the

commission.

(ii) For a homestead facility, the assessor of the local

governmental unit in which the homestead facility is located.

(k) ~~(j)~~ "Qualified downtown revitalization district" means an

area located within 1 or more of the following:

(i) The boundaries of a downtown district as defined in section

1 of 1975 PA 197, MCL 125.1651.

(ii) The boundaries of a principal shopping district or a

business improvement district as defined in section 1 of 1961 PA

120, MCL 125.981.

(iii) The boundaries of the local governmental unit in an area

that is zoned and primarily used for business as determined by the

local governmental unit.

(l) ~~(k)~~ "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.

(m) (l) "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

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. 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) or as otherwise provided by the local

governmental unit by resolution if the application is filed not

later than 6 months following the date the building permit is

issued, 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.

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.

(k) For the construction of a facility if the area in which

the facility is located was designated as a neighborhood enterprise

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

2003, and if the building permit was issued for that facility in

June 2004.

(l) 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 zone by the governing body of the

local governmental unit in February 2004 and if the building permit

for that facility was issued in August 2003 or January 2005.

(m) For the construction of a facility if the area in which

the facility is located was designated as a neighborhood enterprise

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

2007 and if the building permit was issued for that facility after

November 30, 2004 and before November 1, 2006.

(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.

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) 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) or the amendatory act that added

subsection (2)(k), 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~~ qualified assessing authority.

(7) For a certificate issued as a result of the amendatory act

that added subsection (2)(e), both of the following shall apply not

withstanding any other provision of this act:

(a) The effective date of the certificate shall be January 1,

2001 and the taxable value for rehabilitated facilities shall be

set as provided in section 10(3).

(b) For certificates issued or reissued after December 31,

2005, the amount of the neighborhood enterprise zone tax on a

rehabilitated facility is determined each year by multiplying the

taxable value of the rehabilitated facility, not including the

land, as of December 31 of the year prior to the start of the

improvement as described in subsection (3) by the total mills

collected under the general property tax act, 1893 PA 206, MCL

211.1 to 211.155, for the current year by all taxing units within

which the rehabilitated facility is located.

(8) For any certificate issued as result of the amendatory act

that added subsection (2)(l), notwithstanding any other provision of

this act the amount of the neighborhood enterprise zone tax on a

rehabilitated facility is determined each year by multiplying the

taxable value of the rehabilitated facility, not including the

land, as of December 31 of the year prior to the start of the

improvement as described in subsection (3) by the total mills

collected under the general property tax act, 1893 PA 206, MCL

211.1 to 211.155, for the current year by all taxing units within

which the rehabilitated facility is located.

(9) If a new facility is completed in a neighborhood

enterprise zone approved in October 1996 and a building permit was

issued in March 1998 but a neighborhood enterprise zone certificate

was not applied for by the original owner occupying the facility as

a principal residence, a subsequent owner occupying the new

facility as a principal residence can request and, notwithstanding

any other provision of this act, effective December 31 of the year

preceding the application, be granted a neighborhood enterprise

zone certificate for the remainder of the term, not to exceed 12

years, that a neighborhood enterprise zone certificate would have

been in effect for the original owner of the new facility.

Sec. 5. Not more than 60 days after receipt by its clerk of an

application under section 4, the governing body of the local

governmental unit by resolution shall approve the application for a

neighborhood enterprise zone certificate. The clerk shall forward

the application to the ~~commission~~ qualified assessing authority.

Sec. 6. Not later than 60 days after receipt of an approved

application for a homestead facility or a rehabilitated facility,

and not later than 30 days, or if an approved application is

received after October 31, not later than 45 days after receipt of

an approved application for a new facility, the ~~commission~~

qualified assessing authority shall determine whether the homestead

facility, new facility, or rehabilitated facility complies with the

requirements of this act. If the ~~commission~~ qualified assessing

authority finds compliance, it the qualified assessing authority

shall issue a neighborhood enterprise zone certificate to the

applicant and send a certified copy of the certificate to ~~the~~

~~assessor of the local governmental unit and~~ each affected taxing

unit. The assessor shall keep the certificate filed on record in

his or her office. The ~~commission~~ qualified assessing authority

shall maintain a record of all certificates filed. Notice of ~~the~~

~~commission's~~ the qualified assessing authority's refusal to issue a

certificate shall be sent by certified mail to the same persons.

Sec. 7. (1) The commission shall not issue a neighborhood

enterprise zone certificate for a new facility unless the new

facility meets the requirements of the definition in section 2(g).

(2) The commission shall not issue a neighborhood enterprise

zone certificate for a rehabilitated facility unless the

rehabilitated facility meets the requirements of the definition in

section 2(k).

(3) The ~~commission~~ assessor of the local governmental unit

shall not issue a neighborhood enterprise zone certificate for a

homestead facility unless the homestead facility meets the

requirements of the definition in section 2(e).

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

the ~~commission~~ qualified assessing authority by the holder of a

neighborhood enterprise zone certificate requesting revocation of

the certificate, the ~~commission~~ qualified assessing authority 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~~ qualified assessing

authority 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 governing body of the local

governmental unit, the ~~commission~~ qualified assessing authority

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~~ qualified assessing

authority, upon application of the owner, shall rescind the order

of revocation. If the certificate is submitted after revocation of

the certificate, the ~~commission~~ qualified assessing authority, 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~~ 211.155, the ~~commission~~ qualified

assessing authority by order shall revoke the certificate. However,

if payment of these taxes is made before the revocation is

effective, the ~~commission~~ qualified assessing authority, 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~~ qualified assessing authority, 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~~ qualified assessing authority

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~~

qualified assessing authority by certified mail of the

noncompliance, the ~~commission~~ qualified assessing authority 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~~ qualified

assessing authority 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,~~ and 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. 16. (1) The commission may promulgate rules it considers

necessary for the administration of this act pursuant to the

administrative procedures act of 1969, ~~Act No. 306 of the Public~~

~~Acts of 1969, being sections 24.201 to 24.328 of the Michigan~~

~~Compiled Laws.~~ 1969 PA 306, MCL 24.201 to 24.328.

(2) Not later than June 15 each year, the assessor of each

local governmental unit that issues a certificate under this act

for a homestead facility shall file with the commission a report

that contains all of the following information for the immediately

preceding calendar year:

(a) The number of certificates issued.

(b) The date of issuance of each certificate.

(d) The legal description of the real property of the

homestead facility for which each certificate was issued.

(e) The taxable value for each homestead facility for which a

certificate was issued.

(f) For each certificate that was transferred, all of the

following:

(i) The date of each transfer.

(ii) The name and address of the former holder of the

certificate.

(iii) The name and address of the current holder of the

certificate.

(g) For each certificate that was revoked pursuant to section

11, all of the following:

(i) The reason for the revocation.

(ii) The date of the revocation.

(iii) The name and address of the holder of each certificate

that was revoked.

(h) The impact on neighborhood revitalization in the local

governmental unit, including the estimated tax savings for all new

and current certificate holders.

(3) A report required by this section shall be prepared by the

local assessor on a form provided by the commission. The commission

may require that the report be filed in an electronic format

prescribed by the commission.

Enacting section 1. Section 15 of the neighborhood enterprise