HOUSE BILL No. 6105 May 21, 2002, Introduced by Reps. Raczkowski, Bishop and Kowall and referred to the Committee on Regulatory Reform. A bill to amend 1975 PA 197, entitled "An act to provide for the establishment of a downtown develop- ment authority; to prescribe its powers and duties; to correct and prevent deterioration in business districts; to encourage historic preservation; to authorize the acquisition and disposal of interests in real and personal property; to authorize the cre- ation and implementation of development plans in the districts; to promote the economic growth of the districts; to create a board; to prescribe its powers and duties; to authorize the levy and collection of taxes; to authorize the issuance of bonds and other evidences of indebtedness; to authorize the use of tax increment financing; to reimburse downtown development authori- ties for certain losses of tax increment revenues; and to pre- scribe the powers and duties of certain state officials," by amending sections 1 and 29 (MCL 125.1651 and 125.1679), sec- tion 1 as amended by 1997 PA 202 and section 29 as amended by 2001 PA 68. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. As used in this act: 2 (a) "Advance" means a transfer of funds made by a 3 municipality to an authority or to another person on behalf of 05204'01 JLB 2 1 the authority in anticipation of repayment by the authority. 2 Evidence of the intent to repay an advance may include, but is 3 not limited to, an executed agreement to repay, provisions con- 4 tained in a tax increment financing plan approved prior to the 5 advance, or a resolution of the authority or the municipality. 6 (b) "Assessed value" means 1 of the following: 7 (i) For valuations made before January 1, 1995, the state 8 equalized valuation as determined under the general property tax 9 act, 1893 PA 206, MCL 211.1 to 211.157. 10 (ii) For valuations made after December 31, 1994, the tax- 11 able value as determined under section 27a of the general prop- 12 erty tax act, 1893 PA 206, MCL 211.27a. 13 (c) "Authority" means a downtown development authority cre- 14 ated pursuant to this act. 15 (d) "Board" means the governing body of an authority. 16 (e) "Business district" means an area in the downtown of a 17 municipality zoned and used principally for business. 18 (f) "Captured assessed value" means the amount in any 1 year 19 by which the current assessed value of the project area, includ- 20 ing the assessed value of property for which specific local taxes 21 are paid in lieu of property taxes as determined in subdivision 22(x)(Y), exceeds the initial assessed value. The state tax 23 commission shall prescribe the method for calculating captured 24 assessed value. 25 (g) "Chief executive officer" means the mayor or city man- 26 ager of a city, the president or village manager of a village, or 27 the supervisor of a township or, if designated by the township 05204'01 3 1 board for purposes of this act, the township superintendent or 2 township manager of a township. 3 (h) "Development area" means that area to which a develop- 4 ment plan is applicable. 5 (i) "Development plan" means that information and those 6 requirements for a development set forth in section 17. 7 (j) "Development program" means the implementation of the 8 development plan. 9 (k) "Downtown district" means an area in a business district 10 that is specifically designated by ordinance of the governing 11 body of the municipality pursuant to this act. 12 (l) "Eligible advance" means an advance made before 13 August 19, 1993. 14 (m) "Eligible obligation" means an obligation issued or 15 incurred by an authority or by a municipality on behalf of an 16 authority before August 19, 1993 and its subsequent refunding by 17 a qualified refunding obligation. Eligible obligation includes 18 an authority's written agreement entered into before August 19, 19 1993 to pay an obligation issued after August 18, 1993 and before 20 December 31, 1996 by another entity on behalf of the authority. 21 (N) "FIRE ALARM SYSTEM" MEANS A SYSTEM DESIGNED TO DETECT 22 AND ANNUCIATE THE PRESENCE OF FIRE, OR BY-PRODUCTS OF FIRE. FIRE 23 ALARM SYSTEM INCLUDES SMOKE DETECTORS. 24 (O)(n)"Fiscal year" means the fiscal year of the 25 authority. 26 (P)(o)"Governing body of a municipality" means the 27 elected body of a municipality having legislative powers. 05204'01 4 1 (Q)(p)"Initial assessed value" means the assessed value, 2 as equalized, of all the taxable property within the boundaries 3 of the development area at the time the ordinance establishing 4 the tax increment financing plan is approved, as shown by the 5 most recent assessment roll of the municipality for which equali- 6 zation has been completed at the time the resolution is adopted. 7 Property exempt from taxation at the time of the determination of 8 the initial assessed value shall be included as zero. For the 9 purpose of determining initial assessed value, property for which 10 a specific local tax is paid in lieu of a property tax shall not 11 be considered to be property that is exempt from taxation. The 12 initial assessed value of property for which a specific local tax 13 was paid in lieu of a property tax shall be determined as pro- 14 vided in subdivision(x)(Y). In the case of a municipality 15 having a population of less than 35,000whichTHAT established 16 an authority prior to 1985, created a district or districts, and 17 approved a development plan or tax increment financing plan or 18 amendments to a plan, and which plan or tax increment financing 19 plan or amendments to a plan, and which plan expired by its terms 20 December 31, 1991, the initial assessed value for the purpose of 21 any plan or plan amendment adopted as an extension of the expired 22 plan shall be determined as if the plan had not expired 23 December 31, 1991. For a development area designated before 1997 24 in which a renaissance zone has subsequently been designated pur- 25 suant to the Michigan renaissance zone act, 1996 PA 376, MCL 26 125.2681 to 125.2696, the initial assessed value of the 27 development area otherwise determined under this subdivision 05204'01 5 1 shall be reduced by the amount by which the current assessed 2 value of the development area was reduced in 1997 due to the 3 exemption of property under section 7ff of the general property 4 tax act, 1893 PA 206, MCL 211.7ff, but in no case shall the ini- 5 tial assessed value be less than zero. 6 (R)(q)"Municipality" means a city, village, or 7 township. 8 (S)(r)"Obligation" means a written promise to pay, 9 whether evidenced by a contract, agreement, lease, sublease, 10 bond, or note, or a requirement to pay imposed by law. An obli- 11 gation does not include a payment required solely because of 12 default upon an obligation, employee salaries, or consideration 13 paid for the use of municipal offices. An obligation does not 14 include those bonds that have been economically defeased by 15 refunding bonds issued under this act. Obligation includes, but 16 is not limited to, the following: 17 (i) A requirement to pay proceeds derived from ad valorem 18 property taxes or taxes levied in lieu of ad valorem property 19 taxes. 20 (ii) A management contract or a contract for professional 21 services. 22 (iii) A payment required on a contract, agreement, bond, or 23 note if the requirement to make or assume the payment arose 24 before August 19, 1993. 25 (iv) A requirement to pay or reimburse a person for the cost 26 of insurance for, or to maintain, property subject to a lease, 27 land contract, purchase agreement, or other agreement. 05204'01 6 1 (v) A letter of credit, paying agent, transfer agent, bond 2 registrar, or trustee fee associated with a contract, agreement, 3 bond, or note. 4 (T)(s)"On behalf of an authority", in relation to an 5 eligible advance made by a municipality, or an eligible obliga- 6 tion or other protected obligation issued or incurred by a munic- 7 ipality, means in anticipation that an authority would transfer 8 tax increment revenues or reimburse the municipality from tax 9 increment revenues in an amount sufficient to fully make payment 10 required by the eligible advance made by the municipality, or 11 eligible obligation or other protected obligation issued or 12 incurred by the municipality, if the anticipation of the transfer 13 or receipt of tax increment revenues from the authority is pursu- 14 ant to or evidenced by 1 or more of the following: 15 (i) A reimbursement agreement between the municipality and 16 an authority it established. 17 (ii) A requirement imposed by law that the authority trans- 18 fer tax increment revenues to the municipality. 19 (iii) A resolution of the authority agreeing to make pay- 20 ments to the incorporating unit. 21 (iv) Provisions in a tax increment financing plan describing 22 the project for which the obligation was incurred. 23 (U)(t)"Operations" means office maintenance, including 24 salaries and expenses of employees, office supplies, consultation 25 fees, design costs, and other expenses incurred in the daily man- 26 agement of the authority and planning of its activities. 05204'01 7 1 (V)(u)"Other protected obligation" means: 2 (i) A qualified refunding obligation issued to refund an 3 obligation described in subparagraph (ii), (iii), or (iv), an 4 obligation that is not a qualified refunding obligation that is 5 issued to refund an eligible obligation, or a qualified refunding 6 obligation issued to refund an obligation described in this 7 subparagraph. 8 (ii) An obligation issued or incurred by an authority or by 9 a municipality on behalf of an authority after August 19, 1993, 10 but before December 31, 1994, to finance a project described in a 11 tax increment finance plan approved by the municipality in 12 accordance with this act before December 31, 1993, for which a 13 contract for final design is entered into by or on behalf of the 14 municipality or authority before March 1, 1994. 15 (iii) An obligation incurred by an authority or municipality 16 after August 19, 1993, to reimburse a party to a development 17 agreement entered into by a municipality or authority before 18 August 19, 1993, for a project described in a tax increment 19 financing plan approved in accordance with this act before August 20 19, 1993, and undertaken and installed by that party in accord- 21 ance with the development agreement. 22 (iv) An obligation incurred by the authority evidenced by or 23 to finance a contract to purchase real property within a develop- 24 ment area or a contract to develop that property within the 25 development area, or both, if all of the following requirements 26 are met: 05204'01 8 1 (A) The authority purchased the real property in 1993. 2 (B) Before June 30, 1995, the authority enters a contract 3 for the development of the real property located within the 4 development area. 5 (C) In 1993, the authority or municipality on behalf of the 6 authority received approval for a grant from both of the 7 following: 8 (I) The department of natural resources for site reclamation 9 of the real property. 10 (II) The department of consumer and industry services for 11 development of the real property. 12 (v) An ongoing management or professional services contract 13 with the governing body of a county which was entered into before 14 March 1, 1994 and which was preceded by a series of limited term 15 management or professional services contracts with the governing 16 body of the county, the last of which was entered into before 17 August 19, 1993. 18 (vi) A loan from a municipality to an authority if the loan 19 was approved by the legislative body of the municipality on April 20 18, 1994. 21 (vii) Funds expended to match a grant received by a munici- 22 pality on behalf of an authority for sidewalk improvements from 23 the Michigan department of transportation if the legislative body 24 of the municipality approved the grant application on April 5, 25 1993 and the grant was received by the municipality in June 26 1993. 05204'01 9 1 (viii) For taxes captured in 1994, an obligation described 2 in this subparagraph issued or incurred to finance a project. An 3 obligation is considered issued or incurred to finance a project 4 described in this subparagraph only if all of the following are 5 met: 6 (A) The obligation requires raising capital for the project 7 or paying for the project, whether or not a borrowing is 8 involved. 9 (B) The obligation was part of a development plan and the 10 tax increment financing plan was approved by a municipality on 11 May 6, 1991. 12 (C) The obligation is in the form of a written memorandum of 13 understanding between a municipality and a public utility dated 14 October 27, 1994. 15 (D) The authority or municipality captured school taxes 16 during 1994. 17 (W)(v)"Public facility" means a street, plaza, pedes- 18 trian mall, and any improvements to a street, plaza, or pedes- 19 trian mall including street furniture and beautification, park, 20 parking facility, recreational facility, right of way, structure, 21 waterway, bridge, lake, pond, canal, utility line or pipe, build- 22 ing, and access routes to any of the foregoing, designed and ded- 23 icated to use by the public generally, or used by a public 24 agency. Public facility includes an improvement to a facility 25 used by the public or a public facility as those terms are 26 defined in section 1 of 1966 PA 1, MCL 125.1351, which 27 improvement is made to comply with the barrier free design 05204'01 10 1 requirements of the state construction code promulgated under the 2 STILLE-DEROSSETT-HALE SINGLE state construction code act,of31972,1972 PA 230, MCL 125.1501 to 125.1531. 4 (X)(w)"Qualified refunding obligation" means an obliga- 5 tion issued or incurred by an authority or by a municipality on 6 behalf of an authority to refund an obligation if the refunding 7 obligation meets both of the following: 8 (i) The net present value of the principal and interest to 9 be paid on the refunding obligation, including the cost of issu- 10 ance, will be less than the net present value of the principal 11 and interest to be paid on the obligation being refunded, as cal- 12 culated using a method approved by the department of treasury. 13 (ii) The net present value of the sum of the tax increment 14 revenues described in subdivision(z)(ii)(AA)(ii) and the dis- 15 tributions under section 13b to repay the refunding obligation 16 will not be greater than the net present value of the sum of the 17 tax increment revenues described in subdivision(z)(ii)18 (AA)(ii) and the distributions under section 13b to repay the 19 obligation being refunded, as calculated using a method approved 20 by the department of treasury. 21 (Y)(x)"Specific local tax" means a tax levied under 1974 22 PA 198, MCL 207.551 to 207.572, the commercial redevelopment act, 23 1978 PA 255, MCL 207.651 to 207.668, the technology park develop- 24 ment act, 1984 PA 385, MCL 207.701 to 207.718, and 1953 PA 189, 25 MCL 211.181 to 211.182. The initial assessed value or current 26 assessed value of property subject to a specific local tax shall 27 be the quotient of the specific local tax paid divided by the ad 05204'01 11 1 valorem millage rate. However, after 1993, the state tax 2 commission shall prescribe the method for calculating the initial 3 assessed value and current assessed value of property for which a 4 specific local tax was paid in lieu of a property tax. 5 (Z)(y)"State fiscal year" means the annual period com- 6 mencing October 1 of each year. 7 (AA)(z)"Tax increment revenues" means the amount of ad 8 valorem property taxes and specific local taxes attributable to 9 the application of the levy of all taxing jurisdictions upon the 10 captured assessed value of real and personal property in the 11 development area, subject to the following requirements: 12 (i) Tax increment revenues include ad valorem property taxes 13 and specific local taxes attributable to the application of the 14 levy of all taxing jurisdictions other than the state pursuant to 15 the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, 16 and local or intermediate school districts upon the captured 17 assessed value of real and personal property in the development 18 area for any purpose authorized by this act. 19 (ii) Tax increment revenues include ad valorem property 20 taxes and specific local taxes attributable to the application of 21 the levy of the state pursuant to the state education tax act, 22 1993 PA 331, MCL 211.901 to 211.906, and local or intermediate 23 school districts upon the captured assessed value of real and 24 personal property in the development area in an amount equal to 25 the amount necessary, without regard to subparagraph (i), to 26 repay eligible advances, eligible obligations, and other 27 protected obligations. 05204'01 12 1 (iii) Tax increment revenues do not include any of the 2 following: 3 (A) Ad valorem property taxes attributable either to a por- 4 tion of the captured assessed value shared with taxing jurisdic- 5 tions within the jurisdictional area of the authority or to a 6 portion of value of property that may be excluded from captured 7 assessed value or specific local taxes attributable to such ad 8 valorem property taxes. 9 (B) Ad valorem property taxes excluded by the tax increment 10 financing plan of the authority from the determination of the 11 amount of tax increment revenues to be transmitted to the author- 12 ity or specific local taxes attributable to such ad valorem prop- 13 erty taxes. 14 (C) Ad valorem property taxes exempted from capture under 15 section 3(3) or specific local taxes attributable to such ad 16 valorem property taxes. 17 (iv) The amount of tax increment revenues authorized to be 18 included under subparagraph (ii), and required to be transmitted 19 to the authority under section 14(1), from ad valorem property 20 taxes and specific local taxes attributable to the application of 21 the levy of the state education tax act, 1993 PA 331, MCL 211.901 22 to 211.906, a local school district or an intermediate school 23 district upon the captured assessed value of real and personal 24 property in a development area shall be determined separately for 25 the levy by the state, each school district, and each intermedi- 26 ate school district as the product of sub-subparagraphs (A) and 27 (B): 05204'01 13 1 (A) The percentagewhichTHAT the total ad valorem taxes 2 and specific local taxes available for distribution by law to the 3 state, local school district, or intermediate school district, 4 respectively, bears to the aggregate amount of ad valorem millage 5 taxes and specific taxes available for distribution by law to the 6 state, each local school district, and each intermediate school 7 district. 8 (B) The maximum amount of ad valorem property taxes and spe- 9 cific local taxes considered tax increment revenues under sub- 10 paragraph (ii). 11 Sec. 29. (1) A public facility, building, or structure that 12 is determined by the municipality to have significant historical 13 interests shall be preserved in a manner as considered necessary 14 by the municipality in accordance with laws relative to the pre- 15 servation of historical sites. THE PRESERVATION OF FACILITIES, 16 BUILDINGS, OR STRUCTURES DETERMINED TO BE HISTORIC SITES BY A 17 MUNICIPALITY SHALL INCLUDE, AT A MINIMUM, EQUIPPING THE HISTORIC 18 SITE WITH A FIRE ALARM SYSTEM. 19 (2) An authority shall refer all proposed changes to the 20 exterior of sites listed on the state register of historic sites 21 and the national register of historic places to the applicable 22 historic district commission created under the local historic 23 districts act, 1970 PA 169, MCL 399.201 to 399.215, or the 24 department of history, arts, and libraries for review. 05204'01 Final page. JLB