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HB-4734, As Passed House, June 29, 2005

SUBSTITUTE FOR

HOUSE BILL NO. 4734

A bill to amend 1975 PA 228, entitled

"Single business tax act,"

by amending section 38g (MCL 208.38g), as amended by 2003 PA 249.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 38g. (1) Subject to the criteria under this section, an

eligible taxpayer may claim a credit against the tax imposed by

this act as determined under subsections (20) to (25); and subject

to the criteria under this section, a qualified taxpayer that has a

preapproval letter issued after December 31, 1999 and before

January 1, 2008, provided that the project is completed not more

than 5 years after the preapproval letter for the project is

issued, or an assignee under subsection (17), or (18), or (34)

may claim a credit that has been approved under subsection (2), or

(3), or (33) against the tax imposed by this act equal to either of

the following:

(a) If the total of all credits for a project is $1,000,000.00

or less, 10% of the cost of the qualified taxpayer's eligible

investment paid or accrued by the qualified taxpayer on an eligible

property provided that the project does not exceed the amount

stated in the preapproval letter. If eligible investment exceeds

the amount of eligible investment in the preapproval letter for

that project, the total of all credits for the project shall not

exceed the total of all credits on the certificate of completion.

(b) If the total of all credits for a project is more than

$1,000,000.00 but $30,000,000.00 or less and, except as provided in

subsection (5)(b), the project is located in a qualified local

governmental unit, a percentage as determined by the Michigan

economic growth authority not to exceed 10% of the cost of the

qualified taxpayer's eligible investment as determined under

subsection (8) paid or accrued by the qualified taxpayer on an

eligible property. If eligible investment exceeds the amount of

eligible investment in the preapproval letter for that project, the

total of all credits for the project shall not exceed the total of

all credits on the certificate of completion.

(2) If the cost of a project will be for more than

$2,000,000.00 but $10,000,000.00 or less, a qualified taxpayer

shall apply to the Michigan economic growth authority for approval

of the project under this subsection. An application under this

subsection shall state whether the project is a multiphase project.

The chairperson of the Michigan economic growth authority or his or

her designee is authorized to approve an application or project

under this subsection. Only the chairperson of the Michigan

economic growth authority is authorized to deny an application or

project under this subsection. A project shall be approved or

denied not more than 45 days after receipt of the application. If

the chairperson of the Michigan economic growth authority or his or

her designee does not approve or deny an application within 45 days

after the application is received by the Michigan economic growth

authority, the application is considered approved as written. The

total of all credits for all projects approved under this

subsection shall not exceed $30,000,000.00 plus any amount

available pursuant to subsection (33) in any calendar year. The

criteria in subsection (6) shall be used when approving projects

under this subsection. When approving projects under this

subsection, priority shall be given to projects on a facility. The

total of all credits for an approved project under this subsection

shall not exceed $1,000,000.00. A taxpayer may apply under this

subsection instead of subsection (3) for approval of a project that

will be for more than $10,000,000.00 but the total of all credits

for that project shall not exceed $1,000,000.00. If the chairperson

of the Michigan economic growth authority or his or her designee

approves a project under this subsection, the chairperson of the

Michigan economic growth authority or his or her designee shall

issue a preapproval letter that states that the taxpayer is a

qualified taxpayer; the maximum total eligible investment for the

project on which credits may be claimed and the maximum total of

all credits for the project when the project is completed and a

certificate of completion is issued; and the project number

assigned by the Michigan economic growth authority. If a project is

denied under this subsection, a taxpayer is not prohibited from

subsequently applying under this subsection or subsection (3) for

the same project or for another project.

(3) If the cost of a project will be for more than

$10,000,000.00 and, except as provided in subsection (5)(b), the

project is located in a qualified local governmental unit, a

qualified taxpayer shall apply to the Michigan economic growth

authority for approval of the project. The Michigan economic growth

authority shall approve or deny the project not more than 65 days

after receipt of the application. A project under this subsection

shall not be approved without the concurrence of the state

treasurer. If the Michigan economic growth authority does not

approve or deny the application within 65 days after it receives

the application, the Michigan economic growth authority shall send

the application to the state treasurer. The state treasurer shall

approve or deny the application within 5 days after receipt of the

application. If the state treasurer does not deny the application

within the 5 days after receipt of the application, the application

is considered approved. The Michigan economic growth authority

shall approve a limited number of projects under this subsection

during each calendar year as provided in subsection (5). The

Michigan economic growth authority shall use the criteria in

subsection (6) when approving projects under this subsection, when

determining the total amount of eligible investment, and when

determining the percentage of eligible investment for the project

to be used to calculate a credit. The total of all credits for an

approved project under this subsection shall not exceed the amount

designated in the preapproval letter for that project. If the

Michigan economic growth authority approves a project under this

subsection, the Michigan economic growth authority shall issue a

preapproval letter that states that the taxpayer is a qualified

taxpayer; the percentage of eligible investment for the project

determined by the Michigan economic growth authority for purposes

of subsection (1)(b); the maximum total eligible investment for the

project on which credits may be claimed and the maximum total of

all credits for the project when the project is completed and a

certificate of completion is issued; and the project number

assigned by the Michigan economic growth authority. The Michigan

economic growth authority shall send a copy of the preapproval

letter to the department. If a project is denied under this

subsection, a taxpayer is not prohibited from subsequently applying

under this subsection or subsection (2) for the same project or for

another project.

(4) If the project is on property that is functionally

obsolete, the taxpayer shall include, with the application, an

affidavit signed by a level 3 or level 4 assessor, that states that

it is the assessor's expert opinion that the property is

functionally obsolete and the underlying basis for that opinion.

(5) The Michigan economic growth authority may approve not

more than 15 projects each calendar year under subsection (3), and

the following limitations apply:

(a) Of the 15 projects allowed under this subsection, the

total of all credits for each project may be more than

$10,000,000.00 but $30,000,000.00 or less for up to 3 2 projects.

(b) Of the 15 projects allowed under this subsection, up to 3

projects may be approved for projects that are not in a qualified

local governmental unit if the property is a facility for which

eligible activities are identified in a brownfield plan. For

purposes of this subdivision, a facility includes a building or

complex of buildings that was used by a state or federal agency and

that is no longer being used for the purpose for which it was used

by the state or federal agency.

be a project that also qualifies under subdivision (b).

(6) The Michigan economic growth authority shall review all

applications for projects under subsection (3) and, if an

application is approved, shall determine the maximum total of all

credits for that project. Before approving a project for which the

total of all credits will be more than $10,000,000.00 but

$30,000,000.00 or less only, the Michigan economic growth authority

shall determine that the project would not occur in this state

without the tax credit offered under subsection (3), except that

the Michigan economic growth authority may approve 1 project the

construction of which began after January 1, 2000 and before

January 1, 2001 without determining that the eligible investment

would not occur in this state without the tax credit offered under

this section. The Michigan economic growth authority shall consider

the following criteria to the extent reasonably applicable to the

type of project proposed when approving a project under subsection

(3) and the chairperson of the Michigan economic growth authority

or his or her designee shall consider the following criteria to the

extent reasonably applicable to the type of project proposed when

approving a project under subsection (2) or (33) or when

considering an amendment to a project under subsection (31):

(a) The overall benefit to the public.

(b) The extent of reuse of vacant buildings and redevelopment

of blighted property.

(d) Whether the eligible property is in an area of high

unemployment.

(e) The level and extent of contamination alleviated by the

qualified taxpayer's eligible activities to the extent known to the

qualified taxpayer.

(f) The level of private sector contribution.

(g) The cost gap that exists between the site and a similar

greenfield site as determined by the Michigan economic growth

authority.

(h) If the qualified taxpayer is moving from another location

in this state, whether the move will create a brownfield.

(i) Whether the financial statements of the qualified taxpayer

indicate that it is financially sound and that the project is

economically sound.

(j) Any other criteria that the Michigan economic growth

authority or the chairperson of the Michigan economic growth

authority, as applicable, considers appropriate for the

determination of eligibility under subsection (2) or (3).

(7) A qualified taxpayer may apply for projects under

subsection (2), or (3), or (33) for eligible investment on more

than 1 eligible property in a tax year. Each project approved and

each project for which a certificate of completion is issued under

this section shall be for eligible investment on 1 eligible

property.

(8) When a project under subsection (2), or (3), or (33) is

completed, the taxpayer shall submit documentation that the project

is completed, an accounting of the cost of the project, the

eligible investment of each taxpayer if there is more than 1

taxpayer eligible for a credit for the project, and, if the

taxpayer is not the owner or lessee of the eligible property on

which the eligible investment was made at the time the project is

completed, that the taxpayer was the owner or lessee of that

eligible property when all eligible investment of the taxpayer was

made. The chairperson of the Michigan economic growth authority or

his or her designee, for projects approved under subsection (2) or

(33), or the Michigan economic growth authority, for projects

approved under subsection (3), shall verify that the project is

completed. The Michigan economic growth authority shall conduct an

on-site inspection as part of the verification process for projects

approved under subsection (3). When the completion of the project

is verified, a certificate of completion shall be issued to each

qualified taxpayer that has made eligible investment on that

eligible property. The certificate of completion shall state the

total amount of all credits for the project and that total shall

not exceed the maximum total of all credits listed in the

preapproval letter for the project under subsection (2) or (3) or

section 35c as applicable and shall state all of the following:

(a) That the taxpayer is a qualified taxpayer.

(b) The total cost of the project and the eligible investment

of each qualified taxpayer.

(d) The qualified taxpayer's federal employer identification

number or the Michigan treasury number assigned to the taxpayer.

(e) The project number.

(f) For a project approved under subsection (3) for which the

total of all credits is more than $10,000,000.00 but $30,000,000.00

or less, the total of all credits and the schedule on which the

annual credit amount shall be claimed by the qualified taxpayer.

(g) For a multiphase project under subsection (32), the amount

of each credit assigned and the amount of all credits claimed in

each tax year before the year in which the project is completed.

(9) Except as otherwise provided in this section, qualified

taxpayers shall claim credits under subsections (2), ~~and~~ (3), and

(33) in the tax year in which the certificate of completion is

issued. For a project approved under subsection (3) for which the

total of all credits is more than $10,000,000.00 but $30,000,000.00

or less, the qualified taxpayer shall claim 10% of its approved

credit each year for 10 years. A credit assigned based on a

multiphase project shall be claimed in the year in which the credit

is assigned.

(10) The cost of eligible investment for leased machinery,

equipment, or fixtures is the cost of that property had the

property been purchased minus the lessor's estimate, made at the

time the lease is entered into, of the market value the property

will have at the end of the lease. A credit for property described

in this subsection is allowed only if the cost of that property had

the property been purchased and the lessor's estimate of the market

value at the end of the lease are provided to the Michigan economic

growth authority.

(11) For credits under subsections (2) and (3), credits

claimed by a lessee of eligible property are subject to the total

of all credits limitation under this section.

(12) Each qualified taxpayer and assignee under subsection

(17), or (18), or (34) that claims a credit under subsection

(1)(a) or (b) or (33) shall attach a copy of the certificate of

completion and, if the credit was assigned, a copy of the

assignment form provided for under this section to the annual

return filed under this act on which the credit under subsection

(2), or (3), or (33) is claimed. An assignee of a credit based on

a multiphase project shall attach a copy of the assignment form

provided for under this section and the component completion

certificate provided for in subsection (32) to the annual return

filed under this act on which the credit is claimed but is not

required to file a copy of a certificate of completion.

(13) Except as otherwise provided in this subsection or

subsection (15), (17), ~~(19), or (32)~~ (18), (32), or (34), a

credit under subsection (2), or (3), or (33) shall be claimed in

the tax year in which the certificate of completion is issued to

the qualified taxpayer. For a project described in subsection

(8)(f) for which a schedule for claiming annual credit amounts is

designated on the certificate of completion by the Michigan

economic growth authority, the annual credit amount shall be

claimed in the tax year specified on the certificate of completion.

(14) The credits approved under this section shall be

calculated after application of all other credits allowed under

this act. The credits under subsections (2), ~~and~~ (3), and (33)

shall be calculated before the calculation of credits under

subsections (20) to (25) and before the credits under sections 37c

and 37d.

(15) If the credit allowed under subsection (2), or (3), or

(33) for the tax year and any unused carryforward of the credit

allowed under subsection (2), or (3), or (33) exceed the

qualified taxpayer's or assignee's tax liability for the tax year,

that portion that exceeds the tax liability for the tax year shall

not be refunded but may be carried forward to offset tax liability

in subsequent tax years for 10 years or until used up, whichever

occurs first. Except as otherwise provided in this subsection, the

maximum time allowed under the carryforward provisions under this

subsection begins with the tax year in which the certificate of

completion is issued to the qualified taxpayer. If the qualified

taxpayer assigns all or any portion of its credit approved under

subsection (2), or (3), or (33), the maximum time allowed under

the carryforward provisions for an assignee begins to run with the

tax year in which the assignment is made and the assignee first

claims a credit, which shall be the same tax year. The maximum time

allowed under the carryforward provisions for an annual credit

amount for a credit allowed under subsection (3) begins to run in

the tax year for which the annual credit amount is designated on

the certificate of completion issued under this section.

(16) If a project or credit under subsection (2), or (3), or

(33) is for the addition of personal property, if the cost of that

personal property is used to calculate a credit under subsection

(2), or (3), or (33), and if the personal property is sold or

disposed of or transferred from eligible property to any other

location, the qualified taxpayer that sold, disposed of, or

transferred the personal property shall add the same percentage as

determined pursuant to subsection (1) of the federal basis of the

personal property used for determining gain or loss as of the date

of the sale, disposition, or transfer to the qualified taxpayer's

tax liability after application of all credits under this act for

the tax year in which the sale, disposition, or transfer occurs. If

a qualified taxpayer has an unused carryforward of a credit under

subsection (2), or (3), or (33), the amount otherwise added under

this subsection to the qualified taxpayer's tax liability may

instead be used to reduce the qualified taxpayer's carryforward

under subsection (15).

(17) For credits under ~~subsections~~ subsection (2), ~~and~~

(3), or (33) for which preapproval letters have been issued before

January 1, 2006 and except as otherwise provided in this

subsection, if a qualified taxpayer pays or accrues eligible

investment on or to an eligible property that is leased for a

minimum term of 10 years or sold to another taxpayer for use in a

business activity, the qualified taxpayer may assign all or a

portion of the credit based on that eligible investment to the

lessee or purchaser of that eligible property. A credit assignment

under this subsection shall only be made to a taxpayer that when

the assignment is complete will be a qualified taxpayer. All credit

assignments under this subsection are irrevocable and, except for a

credit based on a multiphase project, shall be made in the tax year

in which the certificate of completion is issued, unless the

assignee is an unknown lessee. If a qualified taxpayer wishes to

assign all or a portion of its credit to a lessee but the lessee is

unknown in the tax year in which the certificate of completion is

issued, the qualified taxpayer may delay claiming and assigning the

credit until the first tax year in which the lessee is known. A

qualified taxpayer may claim a portion of a credit and assign the

remaining credit amount. Except as otherwise provided in this

subsection, if the qualified taxpayer both claims and assigns

portions of the credit, the qualified taxpayer shall claim the

portion it claims in the tax year in which the certificate of

completion is issued or for a credit assigned and claimed for a

multiphase project before a certificate of completion is issued,

the taxpayer shall claim the credit in the year in which the credit

is assigned. If a qualified taxpayer assigns all or a portion of

the credit and the eligible property is leased to more than 1

taxpayer, the qualified taxpayer shall determine the amount of

credit assigned to each lessee. A lessee shall not subsequently

assign a credit or any portion of a credit assigned under this

subsection. A purchaser may subsequently assign a credit or any

portion of a credit assigned to the purchaser under this subsection

to a lessee of the eligible property. The credit assignment under

this subsection shall be made on a form prescribed by the Michigan

economic growth authority. The qualified taxpayer shall send a copy

of the completed assignment form to the Michigan economic growth

authority in the tax year in which the assignment is made. The

assignee shall attach a copy of the completed assignment form to

its annual return required to be filed under this act, for the tax

year in which the assignment is made and the assignee first claims

a credit, which shall be the same tax year. In addition to all

other procedures under this subsection, the following apply if the

total of all credits for a project is more than $10,000,000.00 but

$30,000,000.00 or less:

(a) The credit shall be assigned based on the schedule

contained in the certificate of completion.

(b) If the qualified taxpayer assigns all or a portion of the

credit amount, the qualified taxpayer shall assign the annual

credit amount for each tax year separately.

assignee and the qualified taxpayer may assign all or a portion of

each annual credit amount to any assignee.

(d) The qualified taxpayer shall not assign more than the

annual credit amount for each tax year.

(18) If a qualified taxpayer is a partnership, limited

liability company, or subchapter S corporation, the qualified

taxpayer may assign all or a portion of a credit allowed under

subsection (2), or (3), or (33) for which a preapproval letter

has been issued before January 1, 2006 to its partners, members, or

shareholders, based on their proportionate share of ownership of

the partnership, limited liability company, or subchapter S

corporation or based on an alternative method approved by the

Michigan economic growth authority. A credit assignment under this

subsection is irrevocable and, except for a credit assignment based

on a multiphase project, shall be made in the tax year in which a

certificate of completion is issued. A qualified taxpayer may claim

a portion of a credit and assign the remaining credit amount. If

the qualified taxpayer both claims and assigns portions of the

credit, the qualified taxpayer shall claim the portion it claims in

the tax year in which a certificate of completion is issued. A

partner, member, or shareholder that is an assignee shall not

subsequently assign a credit or any portion of a credit assigned

under this subsection. The credit assignment under this subsection

shall be made on a form prescribed by the Michigan economic growth

authority. The qualified taxpayer shall send a copy of the

completed assignment form to the Michigan economic growth authority

in the tax year in which the assignment is made. A partner, member,

or shareholder who is an assignee shall attach a copy of the

completed assignment form to its annual return required under this

act, for the tax year in which the assignment is made and the

assignee first claims a credit, which shall be the same tax year.

In addition to all other procedures under this subsection, the

following apply if the total of all credits for a project is more

than $10,000,000.00 but $30,000,000.00 or less:

(a) The credit shall be assigned based on the schedule

contained in the certificate of completion.

(b) If the qualified taxpayer assigns all or a portion of the

credit amount, the qualified taxpayer shall assign the annual

credit amount for each tax year separately.

assignee and the qualified taxpayer may assign all or a portion of

each annual credit amount to any assignee.

(d) The qualified taxpayer shall not assign more than the

annual credit amount for each tax year.

(19) A qualified taxpayer or assignee under subsection (17) or

(18) shall not claim a credit under subsection (1)(a) or (b) based

on eligible investment on which a credit claimed under section 38d

was based.

(20) In addition to the other credits allowed under this

section and sections 37c and 37d, for tax years that begin after

December 31, 1999 and for a period of time not to exceed 20 years

as determined by the Michigan economic growth authority, an

eligible taxpayer may credit against the tax imposed by section 31

the amount certified each year by the Michigan economic growth

authority that is 1 of the following:

(a) For an eligible business under section 8(5)(a) of the

Michigan economic growth authority act, 1995 PA 24, MCL 207.808, an

amount that is not more than 50% of 1 or both of the following as

determined by the Michigan economic growth authority:

(i) An amount determined under the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810, that does not

exceed the payroll of the eligible taxpayer attributable to

employees who perform retained jobs multiplied by the tax rate for

the tax year.

(ii) The tax liability attributable to the eligible taxpayer's

business activity multiplied by a fraction the numerator of which

is the ratio of the value of new capital investment to all of the

taxpayer's property located in this state plus the ratio of the

taxpayer's payroll attributable to retained jobs to all of the

taxpayer's payroll in this state and the denominator of which is 2.

(b) For an eligible business under section 8(5)(b) of the

Michigan economic growth authority act, 1995 PA 24, MCL 207.808, an

amount that is not more than 1 or both of the following as

determined by the Michigan economic growth authority:

(i) An amount determined under the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810, that does not

exceed the payroll of the eligible taxpayer attributable to

employees who perform retained jobs multiplied by the tax rate for

the tax year.

(ii) The tax liability attributable to eligible taxpayer's

business activity multiplied by a fraction the numerator of which

is the ratio of the value of capital investment to all of the

taxpayer's property located in this state plus the ratio of the

taxpayer's payroll attributable to retained jobs to all of the

taxpayer's payroll in this state and the denominator of which is 2.

(21) An eligible taxpayer shall not claim a credit under

subsection (20) unless the Michigan economic growth authority has

issued a certificate under section 9 of the Michigan economic

growth authority act, 1995 PA 24, MCL 207.809, to the taxpayer. The

eligible taxpayer shall attach the certificate to the return filed

under this act on which a credit under subsection (20) is claimed.

(22) An affiliated group as defined in this act, a controlled

group of corporations as defined in section 1563 of the internal

revenue code and further described in 26 CFR 1.414(b)-1 and

1.414(c)-1 to 1.414(c)-5, or an entity under common control as

defined by the internal revenue code shall claim only 1 credit

under subsection (20) for each tax year based on each written

agreement whether or not a combined or consolidated return is

filed.

(23) A credit shall not be claimed by a taxpayer under

subsection (20) if the eligible taxpayer's initial certification

under section 9 of the Michigan economic growth authority act, 1995

PA 24, MCL 207.809, is issued after December 31, 2009. If the

Michigan economic growth authority or a designee of the Michigan

economic growth authority requests that a taxpayer who claims the

credit under subsection (20) get a statement prepared by a

certified public accountant verifying that the actual number of new

jobs created is the same number of new jobs used to calculate the

credit under subsection (20), the taxpayer shall get the statement

and attach that statement to its annual return under this act on

which the credit under subsection (20) is claimed.

(24) If the credit allowed under subsection (20)(a)(ii) or

(b)(ii) for the tax year and any unused carryforward of the credit

allowed by subsection (20)(a)(ii) or (b)(ii) exceed the taxpayer's

tax liability for the tax year, that portion that exceeds the tax

liability for the tax year shall not be refunded but may be carried

forward to offset tax liability in subsequent tax years for 10

years or until used up, whichever occurs first.

(25) If the credit allowed under subsection (20)(a)(i) or

(b)(i) exceeds the tax liability of the eligible taxpayer for the

tax year, the excess shall be refunded to the eligible taxpayer.

(26) An eligible taxpayer that claims a credit under

subsection (1)(a), ~~or (b)~~ (1)(b), or (33) is not prohibited from

claiming a credit under subsection (20). However, the eligible

taxpayer shall not claim a credit under ~~both subsections~~

subsection (1)(a), ~~or (b)~~ (1)(b), or (33) and subsection (20)

based on the same costs.

(27) Eligible investment attributable or related to the

operation of a professional sports stadium, and eligible investment

that is associated or affiliated with the operation of a

professional sports stadium, including, but not limited to, the

operation of a parking lot or retail store, shall not be used as a

basis for a credit under subsection (2), or (3), or (33).

Professional sports stadium does not include a professional sports

stadium that will no longer be used by a professional sports team

on and after the date that an application related to that

professional sports stadium is filed under subsection (2), or

(3), or (33).

(28) Eligible investment attributable or related to the

operation of a casino, and eligible investment that is associated

or affiliated with the operation of a casino, including, but not

limited to, the operation of a parking lot, hotel, motel, or retail

store, shall not be used as a basis for a credit under subsection

(2), or (3), or (33). As used in this subsection, "casino" means

a casino regulated by this state pursuant to the Michigan gaming

control and revenue act, the Initiated Law of 1996, MCL 432.201 to

432.226.

(29) Eligible investment attributable or related to the

construction of a new landfill or the expansion of an existing

landfill regulated under part 115 of the natural resources and

environmental protection act, 1994 PA 451, MCL 324.11501 to

324.11550, shall not be used as a basis for a credit under

subsection (2), or (3), or (33).

(30) The Michigan economic growth authority annually shall

prepare and submit to the house of representatives and senate

committees responsible for tax policy and economic development

issues a report on the credits under subsection (2). The report

shall include, but is not limited to, all of the following:

(a) A listing of the projects under subsection (2) that were

approved in the calendar year.

(b) The total amount of eligible investment for projects

approved under subsection (2) in the calendar year.

(31) If, after a taxpayer's project has been approved and the

taxpayer has received a preapproval letter but before the project

is completed, the taxpayer determines that the project cannot be

completed as preapproved, the taxpayer may petition the Michigan

economic growth authority to amend the project. The total of

eligible investment for the project as amended shall not exceed the

amount allowed in the preapproval letter for that project.

(32) A project under subsection (2) or (3) may be a multiphase

project but, for projects for which a preapproval letter has been

issued before January 1, 2006, only if the project is an industrial

or manufacturing project. If a project is a multiphase project,

when each component of the multiphase project is completed, the

taxpayer shall submit documentation that the component is complete,

an accounting of the cost of the component, and the eligible

investment for the component of each taxpayer eligible for a credit

for the project of which the component is a part to the Michigan

economic growth authority or the designee of the Michigan economic

growth authority, who shall verify that the component is complete.

When the completion of the component is verified, a component

completion certificate shall be issued to the qualified taxpayer

which shall state that the taxpayer is a qualified taxpayer, the

credit amount for the component, the qualified taxpayer's federal

employer identification number or the Michigan treasury number

assigned to the taxpayer, and the project number. The taxpayer may

assign all or part of the credit for a multiphase project as

provided in this section after a component completion certificate

for a component is issued. The qualified taxpayer may transfer

ownership of or lease the completed component and assign a

proportionate share of the credit for the entire project to the

qualified taxpayer that is the new owner or lessee. A multiphase

project shall not be divided into more than 3 20 components. A

component is considered to be completed when a certificate of

occupancy has been issued by the local municipality in which the

project is located for all of the buildings or facilities that

comprise the completed component and a component completion

certificate is issued. A credit assigned based on a multiphase

project shall be claimed by the assignee in the tax year in which

the assignment is made. The total of all credits for a multiphase

project shall not exceed the amount stated in the preapproval

letter for the project under subsection (1)(a). If all components

of a multiphase project are not completed by 10 years after the

date on which the preapproval letter for the project was issued,

the qualified taxpayer that received the preapproval letter for the

project shall pay to the state treasurer, as a penalty, an amount

equal to the sum of all credits claimed and assigned for all

components of the multiphase project and no credits based on that

multiphase project shall be claimed after that date by the

qualified taxpayer or any assignee of the qualified taxpayer. The

penalty under this subsection is subject to interest on the amount

of the credit claimed or assigned determined individually for each

component at the rate in section 23(2) of 1941 PA 122, MCL 205.23,

beginning on the date that the credit for that component was

claimed or assigned. As used in this subsection, "proportionate

share" means the same percentage of the total of all credits for

the project that the qualified investment for the completed

component is of the total qualified investment stated in the

preapproval letter for the entire project.

(33) If the total of all credits for a project is $200,000.00

or less, a qualified taxpayer shall apply to the Michigan economic

growth authority for approval of the project under this subsection.

An application under this subsection shall state whether the

project is a multiphase project. Subject to section 35c, the

chairperson of the Michigan economic growth authority or his or her

designee is authorized to approve an application or project under

this subsection. Only the chairperson of the Michigan economic

growth authority is authorized to deny an application or project

under this subsection. A project shall be approved or denied not

more than 45 days after receipt of the application. If the

chairperson of the Michigan economic growth authority or his or her

designee does not approve or deny the application within 45 days

after the application is received by the Michigan economic growth

authority, the application is considered approved as written. The

total of all credits for all projects approved under this

subsection shall not exceed $10,000,000.00 in any calendar year. If

the chairperson of the Michigan economic growth authority or his or

her designee approves a project under this subsection, the

chairperson of the Michigan economic growth authority or his or her

designee shall issue a preapproval letter that states that the

taxpayer is a qualified taxpayer; the maximum total eligible

investment for the project on which credits may be claimed and the

maximum total of all credits for the project when the project is

completed and a certificate of completion is issued; and the

project number assigned by the Michigan economic growth authority.

If a project is denied under this subsection, a taxpayer is not

prohibited from subsequently applying under this subsection for the

same project or for another project. The Michigan economic growth

authority shall use the criteria under subsection (6) to approve a

project under this subsection. On June 30 each year, if the total

of all credits for all projects approved under this subsection for

the calendar year is less than $10,000,000.00, the Michigan

economic growth authority may use the difference between

$10,000,000.00 and the amount approved to fund credits under

subsection (2).

(34) For projects approved under subsection (2), (3), or (33)

for which a preapproval letter has been issued after December 31,

2005, an eligible taxpayer may assign all or a portion of a credit

allowed under subsection (2), (3), or (33). A credit assignment

under this subsection is irrevocable and shall be made in the tax

year in which the credit under subsection (2), (3), or (33) may

first be claimed by the eligible taxpayer. An eligible taxpayer may

claim a portion of the credit and assign a portion of 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 credit under

subsection (2), (3), or (33) may be claimed. An assignee may

subsequently assign a credit or any portion of a credit assigned

under this subsection to 1 or more assignees. An assignment of a

credit allowed under this subsection shall not be made after 10

years after the first tax year in which the credit under subsection

(2), (3), or (33) may be claimed. A credit assignment under this

subsection shall be made on a form prescribed by the department.

The eligible taxpayer or subsequent assignee shall send a copy of

the completed assignment form to the department in the tax year in

which the assignment is made. The assignee shall attach a copy of

the completed assignment form to its annual return required under

this act, for the tax year in which the assignment is made and the

assignee first claims a credit, which shall be the same tax year.

(35) ~~(33)~~ As used in this section:

(a) "Annual credit amount" means the maximum amount that a

qualified taxpayer is eligible to claim each tax year for a project

for which the total of all credits is more than $10,000,000.00 but

$30,000,000.00 or less, which shall be 10% of the qualified

taxpayer's credit amount approved under subsection (3).

(b) "Authority" means a brownfield redevelopment authority

created under the brownfield redevelopment financing act, 1996 PA

381, MCL 125.2651 to 125.2672.

investment", "qualified high-technology business", "retained jobs",

and "written agreement" mean those terms as defined in the Michigan

economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810.

(d) "Blighted", "brownfield plan", "eligible activities",

"eligible property", "facility", "functionally obsolete", and

"response activity" mean those terms as defined in the brownfield

redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672.

(e) "Eligible investment" means demolition, construction,

restoration, alteration, renovation, or improvement of buildings or

site improvements on eligible property and the addition of

machinery, equipment, and fixtures to eligible property after the

date that eligible activities on that eligible property have

started pursuant to a brownfield plan under the brownfield

redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672,

and after the date that the preapproval letter is issued, except

that the date that the preapproval letter is issued is not a

limitation for 1 project the construction of which began after

January 1, 2000 and before January 1, 2001 without the Michigan

economic growth authority determining that the project would not

occur in this state without the tax credit offered under this

section as provided in subsection (7), if the costs of the eligible

investment are not otherwise reimbursed to the taxpayer or paid for

on behalf of the taxpayer from any source other than the taxpayer.

The addition of leased machinery, equipment, or fixtures to

eligible property by a lessee of the machinery, equipment, or

fixtures is eligible investment if the lease of the machinery,

equipment, or fixtures has a minimum term of 10 years or is for the

expected useful life of the machinery, equipment, or fixtures, and

if the owner of the machinery, equipment, or fixtures is not the

qualified taxpayer with regard to that machinery, equipment, or

fixtures.

(f) "Eligible taxpayer" means an eligible business that meets

the criteria under section 8(5) of the Michigan economic growth

authority act, 1995 PA 24, MCL 207.808.

(g) "Michigan economic growth authority" means the Michigan

economic growth authority created in the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810.

(h) "Multiphase project" means a project for which the total

of all credits is $1,000,000.00 or less for a project approved

under subsection (2) that has more than 1 component, each of which

can be completed separately.

(i) "Payroll" and "tax rate" mean those terms as defined in

section 37c.

(j) "Personal property" means that term as defined in section

8 of the general property tax act, 1893 PA 206, MCL 211.8, except

that personal property does not include either of the following:

(i) Personal property described in section 8(h), (i), or (j) of

the general property tax act, 1893 PA 206, MCL 211.8.

(ii) Buildings described in section 14(6) of the general

property tax act, 1893 PA 206, MCL 211.14.

(k) "Project" means the total of all eligible investment on an

eligible property or, for purposes of subsection (5)(b), all

eligible investment on property not in a qualified local

governmental unit that is a facility.

(l) "Qualified local governmental unit" means that term as

defined in the obsolete property rehabilitation act, 2000 PA 146,

MCL 125.2781 to 125.2797.

(m) "Qualified taxpayer" means a taxpayer that meets both of

the following criteria:

(i) Owns or leases eligible property.

(ii) Certifies that, except as otherwise provided in this

subparagraph, the department of environmental quality has not sued

or issued a unilateral order to the taxpayer pursuant to part 201

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.20101 to 324.20142, to compel response activity on or

to the eligible property, or expended any state funds for response

activity on or to the eligible property and demanded reimbursement

for those expenditures from the qualified taxpayer. However, if the

taxpayer has completed all response activity required by part 201

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.20101 to 324.20142, is in compliance with any deed

restriction or administrative or judicial order related to the

required response activity, and has reimbursed the state for all

costs incurred by the state related to the required response

activity, the taxpayer meets the criteria under this subparagraph.

(n) "Tax liability attributable to authorized business

activity" means the tax liability imposed by this act after the

calculation of credits provided in sections 36, 37, and 39.

Enacting section 1. This amendatory act does not take effect

unless House Bill No. 4733 of the 93rd Legislature is enacted into

law.