HOUSE BILL No. 4947 June 13, 2001, Introduced by Reps. Bishop, Vear and Stewart and referred to the Committee on Commerce. A bill to amend 1975 PA 228, entitled "Single business tax act," by amending section 39c (MCL 208.39c), as amended by 1999 PA 213. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 39c. (1) A qualified taxpayer with a rehabilitation 2 plan certified after December 31, 1998 and before January 1, 2003 3 may credit against the tax imposed by this act the amount deter- 4 mined pursuant to subsection (2) for the qualified expenditures 5 for the rehabilitation of a historic resource pursuant to the 6 rehabilitation plan in the year in which the certification of 7 completed rehabilitation of the historic resource is issued pro- 8 vided that the certification of completed rehabilitation was 9 issued not more than 5 years after the rehabilitation plan was 10 certified by the Michigan historical center. 03781'01 JCB 2 1 (2) The credit allowed under this section shall be 25% of 2 the qualified expenditures that are eligible for the credit under 3 section 47(a)(2) of the internal revenue code if the taxpayer is 4 eligible for the credit under section 47(a)(2) of the internal 5 revenue code or, if the taxpayer is not eligible for the credit 6 under 47(a)(2) of the internal revenue code, 25% of the qualified 7 expenditures that would qualify under section 47(a)(2) of the 8 internal revenue code except that the expenditures are made to a 9 historic resource that is not eligible for the credit under sec- 10 tion 47(a)(2) of the internal revenue code, subject to both of 11 the following: 12 (a) A taxpayer with qualified expenditures that are eligible 13 for the credit under section 47(a)(2) of the internal revenue 14 code may not claim a credit under this section for those quali- 15 fied expenditures unless the taxpayer has claimed and received a 16 credit for those qualified expenditures under section 47(a)(2) of 17 the internal revenue code. 18 (b) A credit under this section shall be reduced by the 19 amount of a credit received by the taxpayer for the same quali- 20 fied expenditures under section 47(a)(2) of the internal revenue 21 code. 22 (3) To be eligible for the credit under this section, the 23 taxpayer shall apply to and receive from the Michigan historical 24 center certification that the historic significance, the rehabil- 25 itation plan, and the completed rehabilitation of the historic 26 resource meet the criteria under subsection (6) and either of the 27 following: 03781'01 3 1 (a) All of the following criteria: 2 (i) The historic resource contributes to the significance of 3 the historic district in which it is located. 4 (ii) Both the rehabilitation plan and completed rehabilita- 5 tion of the historic resource meet the federal secretary of the 6 interior's standards for rehabilitation and guidelines for reha- 7 bilitating historic buildings, 36 C.F.R. PART 67. 8 (iii) All rehabilitation work has been done to or within the 9 walls, boundaries, or structures of the historic resource or to 10 historic resources located within the property boundaries of the 11 property. 12 (b) The taxpayer has received certification from the 13 national park service that the historic resource's significance, 14 the rehabilitation plan, and the completed rehabilitation qualify 15 for the credit allowed under section 47(a)(2) of the internal 16 revenue code. 17 (4) If a qualified taxpayer is eligible for the credit 18 allowed under section 47(a)(2) of the internal revenue code, the 19 qualified taxpayer shall file for certification with the center 20 to qualify for the credit allowed under section 47(a)(2) of the 21 internal revenue code. If the qualified taxpayer has previously 22 filed for certification with the center to qualify for the credit 23 allowed under section 47(a)(2) of the internal revenue code, 24 additional filing for the credit allowed under this section is 25 not required. 26 (5) The center may inspect a historic resource at any time 27 during the rehabilitation process and may revoke certification of 03781'01 4 1 completed rehabilitation if the rehabilitation was not undertaken 2 as represented in the rehabilitation plan or if unapproved alter- 3 ations to the completed rehabilitation are made during the 5 4 years after the tax year in which the credit was claimed. The 5 center shall promptly notify the department of a revocation. 6 (6) Qualified expenditures for the rehabilitation of a his- 7 toric resource may be used to calculate the credit under this 8 section if the historic resource meets 1 of the criteria listed 9 in subdivision (a) and 1 of the criteria listed in subdivision 10 (b): 11 (a) The resource is 1 of the following during the tax year 12 in which a credit under this section is claimed for those quali- 13 fied expenditures: 14 (i) Individually listed on the national register of historic 15 places or state register of historic sites. 16 (ii) A contributing resource located within a historic dis- 17 trict listed on the national register of historic places or the 18 state register of historic sites. 19 (iii) A contributing resource located within a historic dis- 20 trict designated by a local unit pursuant to an ordinance adopted 21 under the local historic districts act, 1970 PA 169, MCL 399.201 22 to 399.215. 23 (b) The resource meets 1 of the following criteria during 24 the tax year in which a credit under this section is claimed for 25 those qualified expenditures: 26 (i) The historic resource is located in a designated 27 historic district in a local unit of government with an existing 03781'01 5 1 ordinance under the local historic districts act, 1970 PA 169, 2 MCL 399.201 to 399.215. 3 (ii) The historic resource is located in an incorporated 4 local unit of government that does not have an ordinance under 5 the local historic districts act, 1970 PA 169, MCL 399.201 to 6 399.215, and has a population of less than 5,000. 7 (iii) The historic resource is located in an unincorporated 8 local unit of government. 9 (7) If a qualified taxpayer is a partnership, limited 10 liability company, or subchapter S corporation, the qualified 11 taxpayer may assign all or any portion of a credit allowed under 12 this section to its partners, members, or shareholders, based on 13 the partner's, member's, or shareholder's proportionate share of 14 ownership or based on an alternative method approved by the 15 department. A credit assignment under this subsection is irrevo- 16 cable and shall be made in the tax year in which a certificate of 17 completed rehabilitation is issued. A qualified taxpayer may 18 claim a portion of a credit and assign the remaining credit 19 amount. A partner, member, or shareholder that is an assignee 20 shall not subsequently assign a credit or any portion of a credit 21 assigned to the partner, member, or shareholder under this 22 subsection. A credit amount assigned under this subsection may 23 be claimed against the partner's, member's, or shareholder's tax 24 liability under this act or under the income tax act of 1967, 25 1967 PA 281, MCL 206.1 to 206.532. A credit assignment under 26 this subsection shall be made on a form prescribed by the 27 department. The qualified taxpayer and assignees shall send a 03781'01 6 1 copy of the completed assignment form to the department in the 2 tax year in which the assignment is made and attach a copy of the 3 completed assignment form to the annual return required to be 4 filed under this act for that tax year. 5 (8) If the credit allowed under this section for the tax 6 year and any unused carryforward of the credit allowed by this 7 section exceed the taxpayer's tax liability for the tax year, 8 that portion that exceeds the tax liability for the tax year 9 shall not be refunded but may be carried forward to offset tax 10 liability in subsequent tax years for 10 years or until used up, 11 whichever occurs first. A carryforward under this subsection may 12 be claimed in tax years that began after December 31, 2002 for a 13 credit based on a rehabilitation plan certified before January 1, 14 2003. 15 (9) If the taxpayer sells a historic resource for which a 16 credit under this section was claimed less than 5 years after the 17 year in which the credit was claimed, the following percentage of 18 the credit amount previously claimed relative to that historic 19 resource shall be added back to the tax liability of the taxpayer 20 in the year of the sale: 21 (a) If the sale is less than 1 year after the year in which 22 the credit was claimed, 100%. 23 (b) If the sale is at least 1 year but less than 2 years 24 after the year in which the credit was claimed, 80%. 25 (c) If the sale is at least 2 years but less than 3 years 26 after the year in which the credit was claimed, 60%. 03781'01 7 1 (d) If the sale is at least 3 years but less than 4 years 2 after the year in which the credit was claimed, 40%. 3 (e) If the sale is at least 4 years but less than 5 years 4 after the year in which the credit was claimed, 20%. 5 (f) If the sale is 5 years or more after the year in which 6 the credit was claimed, an addback to the taxpayer's tax liabil- 7 ity shall not be made. 8 (10) If a certification of completed rehabilitation is 9 revoked under subsection (5) less than 5 years after the year in 10 which a credit was claimed, the following percentage of the 11 credit amount previously claimed relative to that historic 12 resource shall be added back to the tax liability of the taxpayer 13 in the year of the revocation: 14 (a) If the revocation is less than 1 year after the year in 15 which the credit was claimed, 100%. 16 (b) If the revocation is at least 1 year but less than 2 17 years after the year in which the credit was claimed, 80%. 18 (c) If the revocation is at least 2 years but less than 3 19 years after the year in which the credit was claimed, 60%. 20 (d) If the revocation is at least 3 years but less than 4 21 years after the year in which the credit was claimed, 40%. 22 (e) If the revocation is at least 4 years but less than 5 23 years after the year in which the credit was claimed, 20%. 24 (f) If the revocation is 5 years or more after the year in 25 which the credit was claimed, an addback to the taxpayer's tax 26 liability shall not be made. 03781'01 8 1 (11) The department ofstateHISTORY, ARTS, AND CULTURE 2 through the Michigan historical center may impose a fee to cover 3 the administrative cost of implementing the program under this 4 section. 5 (12) The qualified taxpayer shall attach all of the follow- 6 ing to the qualified taxpayer's annual return required under this 7 act or under the income tax act of 1967, 1967 PA 281, MCL 206.1 8 to 206.532, if applicable, on which the credit is claimed: 9 (a) Certification of completed rehabilitation. 10 (b) Certification of historic significance related to the 11 historic resource and the qualified expenditures used to claim a 12 credit under this section. 13 (c) A completed assignment form if the qualified taxpayer 14 has assigned any portion of a credit allowed under this section 15 to a partner, member, or shareholder, or if the taxpayer is an 16 assignee of any portion of a credit allowed under this section. 17 (13)Not later than July 19, 1999, theTHE department of 18stateHISTORY, ARTS, AND CULTURE shallsubmitPROMULGATE 19 rules to implement this sectionfor public hearingpursuant to 20 the administrative procedures act of 1969, 1969 PA 306, 21 MCL 24.201 to 24.328. 22 (14) The total of the credits claimed under this section and 23 section 266 of the income tax act of 1967, 1967 PA 281, 24 MCL 206.266, for a rehabilitation project shall not exceed 25% of 25 the total qualified expenditures eligible for the credit under 26 this section for that rehabilitation project. 03781'01 9 1 (15) The department ofstateHISTORY, ARTS, AND CULTURE 2 through the Michigan historical center shall report all of the 3 following to the legislature annually for the immediately preced- 4 ing state fiscal year: 5 (a) The fee schedule used by the center and the total amount 6 of fees collected. 7 (b) A description of each rehabilitation project certified. 8 (c) The location of each new and ongoing rehabilitation 9 project. 10 (16) As used in this section: 11 (a) "Contributing resource" means a historic resource that 12 contributes to the significance of the historic district in which 13 it is located. 14 (b) "Historic district" means an area, or group of areas not 15 necessarily having contiguous boundaries, that contains 1 16 resource or a group of resources that are related by history, 17 architecture, archaeology, engineering, or culture. 18 (c) "Historic resource" means a publicly or privately owned 19 historic building, structure, site, object, feature, or open 20 space located within a historic district designated by the 21 national register of historic places, the state register of his- 22 toric sites, or a local unit acting under the local historic dis- 23 tricts act, 1970 PA 169, MCL 399.201 to 399.215; or that is indi- 24 vidually listed on the state register of historic sites or 25 national register of historic places and includes all of the 26 following: 03781'01 10 1 (i) An owner-occupied personal residence or a historic 2 resource located within the property boundaries of that personal 3 residence. 4 (ii) An income-producing commercial, industrial, or residen- 5 tial resource or a historic resource located within the property 6 boundaries of that resource. 7 (iii) A resource owned by a governmental body, nonprofit 8 organization, or tax-exempt entity that is used primarily by a 9 taxpayer lessee in a trade or business unrelated to the govern- 10 mental body, nonprofit organization, or tax-exempt entity and 11 that is subject to tax under this act. 12 (iv) A resource that is occupied or utilized by a governmen- 13 tal body, nonprofit organization, or tax-exempt entity pursuant 14 to a long-term lease or lease with option to buy agreement. 15 (v) Any other resource that could benefit from 16 rehabilitation. 17 (d) "Local unit" means a county, city, village, or 18 township. 19 (e) "Long-term lease" means a lease term of at least 27.5 20 years for a residential resource or at least 31.5 years for a 21 nonresidential resource. 22 (f) "Michigan historical center" or "center" means the state 23 historic preservation office of the Michigan historical center of 24 the department ofstateHISTORY, ARTS, AND CULTURE or its suc- 25 cessor agency. 03781'01 11 1 (g) "Open space" means undeveloped land, a naturally 2 landscaped area, or a formal or man-made landscaped area that 3 provides a connective link or a buffer between other resources. 4 (h) "Person" means an individual, partnership, corporation, 5 association, governmental entity, or other legal entity. 6 (i) "Qualified expenditures" means capital expenditures that 7 qualify for a rehabilitation credit under section 47(a)(2) of the 8 internal revenue code if the taxpayer is eligible for the credit 9 under section 47(a)(2) of the internal revenue code or, if the 10 taxpayer is not eligible for the credit under section 47(a)(2) of 11 the internal revenue code, the qualified expenditures that would 12 qualify under section 47(a)(2) of the internal revenue code 13 except that the expenditures are made to a historic resource that 14 is not eligible for the credit under section 47(a)(2) of the 15 internal revenue code that were paid not more than 5 years after 16 the certification of the rehabilitation plan that included those 17 expenditures was approved by the center, and that were paid after 18 December 31, 1998 for the rehabilitation of a historic resource. 19 Qualified expenditures do not include capital expenditures for 20 nonhistoric additions to a historic resource except an addition 21 that is required by state or federal regulations that relate to 22 historic preservation, safety, or accessibility. Expenditures 23 made after December 31, 2002 and not more than 5 years after the 24 certification of the rehabilitation plan are qualified expendi- 25 tures only if the rehabilitation plan received certification by 26 the Michigan historical center before January 1, 2003. 03781'01 12 1 (j) "Qualified taxpayer" means a person that is an assignee 2 under subsection (7) or either owns the resource to be 3 rehabilitated or has a long-term lease agreement with the owner 4 of the historic resource and that has qualified expenditures for 5 the rehabilitation of the historic resource equal to or greater 6 than 10% of the state equalized valuation of the property. If 7 the historic resource to be rehabilitated is a portion of a his- 8 toric or nonhistoric resource, the state equalized valuation of 9 only that portion of the property shall be used for purposes of 10 this subdivision. If the assessor for the local tax collecting 11 unit in which the historic resource is located determines the 12 state equalized valuation of that portion, that assessor's deter- 13 mination shall be used for purposes of this subdivision. If the 14 assessor does not determine that state equalized valuation of 15 that portion, qualified expenditures, for purposes of this subdi- 16 vision, shall be equal to or greater than 5% of the appraised 17 value as determined by a certified appraiser. If the historic 18 resource to be rehabilitated does not have a state equalized val- 19 uation, qualified expenditures for purposes of this subdivision 20 shall be equal to or greater than 5% of the appraised value of 21 the resource as determined by a certified appraiser. 22 (k) "Rehabilitation plan" means a plan for the rehabilita- 23 tion of a historic resource that meets the federal secretary of 24 the interior's standards for rehabilitation and guidelines for 25 rehabilitation of historic buildings under 36 C.F.R. PART 67. 26 Enacting section 1. This amendatory act does not take 27 effect unless Senate Bill No. _______ or House Bill No. 4941 03781'01 13 1 (request no. 02873'01) of the 91st Legislature is enacted into 2 law. 03781'01 Final page. JCB