April 21, 2005, Introduced by Senators SCHAUER, CHERRY, PRUSI, SCOTT, THOMAS, BRATER, OLSHOVE, JACOBS, LELAND, BARCIA, BASHAM, BERNERO, CLARK-COLEMAN and CLARKE and referred to the Committee on Appropriations.
A bill to amend 1980 PA 450, entitled
"The tax increment finance authority act,"
by amending sections 1 and 3 (MCL 125.1801 and 125.1803), section 1
as amended by 1998 PA 499 and section 3 as amended by 1983 PA 148,
and by adding section 3a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Advance" means a transfer of funds made by a municipality
to an authority or to another person on behalf of the authority.
Evidence of the intent to repay an advance is required and may
include, but is not limited to, an executed agreement to repay,
provisions contained in a tax increment financing plan approved
before the advance or before August 14, 1993, or a resolution of
the authority or the municipality.
(b) "Assessed value" means 1 of the following:
(i) For valuations made before January 1, 1995, the state
equalized valuation as determined under the general property tax
act, 1893 PA 206, MCL 211.1 to 211.157.
(ii) For valuations made after December 31, 1994, taxable value
as determined under section 27a of the general property tax act,
1893 PA 206, MCL 211.27a.
(c) "Authority" means a tax increment finance authority
created under this act.
(d) "Authority district" means that area within which an
authority exercises its powers and within which 1 or more
development areas may exist.
(e) "Board" means the governing body of an authority.
(f) "Captured assessed value" means the amount in any 1 year
by which the current assessed value of the development area,
including the assessed value of property for which specific local
taxes are paid in lieu of property taxes as determined in
subdivision (w), exceeds the initial assessed value. The state tax
commission shall prescribe the method for calculating captured
assessed value.
(g) "Chief executive officer" means the mayor or city manager
of a city, the president of a village, or the supervisor of a
township.
(h) "Development area" means that area to which a development
plan is applicable.
(i) "Development area citizens council" or "council" means
that advisory body established pursuant to section 20.
(j) "Development plan" means that information and those
requirements for a development set forth in section 16.
(k) "Development program" means the implementation of the
development plan.
(l) "Eligible advance" means an advance made before August 19,
1993.
(m) "Eligible obligation" means an obligation issued or
incurred by an authority or by a municipality on behalf of an
authority before August 19, 1993 and its subsequent refunding by a
qualified refunding obligation. Eligible obligation includes an
authority's written agreement entered into before August 19, 1993
to pay an obligation issued after August 18, 1993 and before
December 31, 1996 by another entity on behalf of the authority.
(n) "Fiscal year" means the fiscal year of the authority.
(o) "Governing body" means the elected body of a municipality
having legislative powers.
(p) "Initial assessed value" means the assessed value, as
equalized, of all the taxable property within the boundaries of the
development area at the time the resolution establishing the tax
increment financing plan is approved as shown by the most recent
assessment roll of the municipality for which equalization has been
completed at the time the resolution is adopted. Property exempt
from taxation at the time of the determination of the initial
assessed value shall be included as zero. For the purpose of
determining initial assessed value, property for which a specific
local tax is paid in lieu of a property tax shall not be considered
property that is exempt from taxation. The initial assessed value
of property for which a specific tax was paid in lieu of a property
tax shall be determined as provided in subdivision (w).
(q) "Municipality" means a city.
(r) "Obligation" means a written promise to pay, whether
evidenced by a contract, agreement, lease, sublease, bond, or note,
or a requirement to pay imposed by law. An obligation does not
include a payment required solely because of default upon an
obligation, employee salaries, or consideration paid for the use of
municipal offices. An obligation does not include those bonds that
have been economically defeased by refunding bonds issued under
this act. Obligation includes, but is not limited to, the
following:
(i) A requirement to pay proceeds derived from ad valorem
property taxes or taxes levied in lieu of ad valorem property
taxes.
(ii) A management contract or a contract for professional
services.
(iii) A payment required on a contract, agreement, bond, or note
if the requirement to make or assume the payment arose before
August 19, 1993.
(iv) A requirement to pay or reimburse a person for the cost of
insurance for, or to maintain, property subject to a lease, land
contract, purchase agreement, or other agreement.
(v) A letter of credit, paying agent, transfer agent, bond
registrar, or trustee fee associated with a contract, agreement,
bond, or note.
(s) "On behalf of an authority", in relation to an eligible
advance made by a municipality, or an eligible obligation or other
protected obligation issued or incurred by a municipality, means in
anticipation that an authority would transfer tax increment
revenues or reimburse the municipality from tax increment revenues
in an amount sufficient to fully make payment required by the
eligible advance made by a municipality, or the eligible obligation
or other protected obligation issued or incurred by the
municipality, if the anticipation of the transfer or receipt of tax
increment revenues from the authority is pursuant to or evidenced
by 1 or more of the following:
(i) A reimbursement agreement between the municipality and an
authority it established.
(ii) A requirement imposed by law that the authority transfer
tax increment revenues to the municipality.
(iii) A resolution of the authority agreeing to make payments to
the incorporating unit.
(iv) Provisions in a tax increment financing plan describing
the project for which the obligation was incurred.
(t) "Other protected obligation" means:
(i) A qualified refunding obligation issued to refund an
obligation described in subparagraph (ii) or (iii), an obligation that
is not a qualified refunding obligation that is issued to refund an
eligible obligation, or a qualified refunding obligation issued to
refund an obligation described in this subparagraph.
(ii) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority after August 19, 1993, but
before December 31, 1994, to finance a project described in a tax
increment finance plan approved by the municipality in accordance
with this act before December 31, 1993, for which a contract for
final design is entered into by the municipality or authority
before March 1, 1994.
(iii) An obligation incurred by an authority or municipality
after August 19, 1993, to reimburse a party to a development
agreement entered into by a municipality or authority before August
19, 1993, for a project described in a tax increment financing plan
approved in accordance with this act before August 19, 1993, and
undertaken and installed by that party in accordance with the
development agreement.
(iv) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority to implement a project
described in a tax increment finance plan approved by the
municipality in accordance with this act before August 19, 1993,
that is located on land owned by a public university on the date
the tax increment financing plan is approved, and for which a
contract for final design is entered into before December 31, 1993.
(v) An ongoing management or professional services contract
with the governing body of a county which was entered into before
March 1, 1994 and which was preceded by a series of limited term
management or professional services contracts with the governing
body of the county, the last of which was entered into before
August 19, 1993.
(vi) An obligation issued or incurred by a municipality under a
contract executed on December 19, 1994 as subsequently amended
between the municipality and the authority to implement a project
described in a tax increment finance plan approved by the
municipality under this act before August 19, 1993 for which a
contract for final design was entered into by the municipality
before March 1, 1994 provided that final payment by the
municipality is made on or before December 31, 2001.
(vii) An obligation issued or incurred by an authority or by a
municipality on behalf of an authority that meets all of the
following qualifications:
(A) The obligation is issued or incurred to finance a project
described in a tax increment financing plan approved before August
19, 1993 by a municipality in accordance with this act.
(B) The obligation qualifies as an other protected obligation
under subparagraph (ii) and was issued or incurred by the authority
before December 31, 1994 for the purpose of financing the project.
(C) A portion of the obligation issued or incurred by the
authority before December 31, 1994 for the purpose of financing the
project was retired prior to December 31, 1996.
(D) The obligation does not exceed the dollar amount of the
portion of the obligation retired prior to December 31, 1996.
(u) "Public facility" means 1 or more of the following:
(i) A street, plaza, or pedestrian mall, and any improvements
to a street, plaza, boulevard, alley, or pedestrian mall, including
street furniture and beautification, park, parking facility,
recreation facility, playground, school, library, public
institution or administration building, right of way, structure,
waterway, bridge, lake, pond, canal, utility line or pipeline, and
other similar facilities and necessary easements of these
facilities designed and dedicated to use by the public generally or
used by a public agency. As used in this subparagraph, public
institution or administration building includes, but is not limited
to, a police station, fire station, court building, or other public
safety facility.
(ii) The acquisition and disposal of real and personal property
or interests in real and personal property, demolition of
structures, site preparation, relocation costs, building
rehabilitation, and all associated administrative costs, including,
but not limited to, architect's, engineer's, legal, and accounting
fees as contained in the resolution establishing the district's
development plan.
(iii) An improvement to a facility used by the public or a
public facility as those terms are defined in section 1 of 1966 PA
1, MCL 125.1351, which improvement is made to comply with the
barrier free design requirements of the state construction code
promulgated under the Stille-DeRossett-Hale single state
construction
code act, of 1972, 1972 PA 230, MCL 125.1501
to
125.1531.
(v) "Qualified refunding obligation" means an obligation
issued or incurred by an authority or by a municipality on behalf
of an authority to refund an obligation if the refunding obligation
meets both of the following:
(i) The net present value of the principal and interest to be
paid on the refunding obligation, including the cost of issuance,
will be less than the net present value of the principal and
interest to be paid on the obligation being refunded, as calculated
using a method approved by the department of treasury.
(ii) The net present value of the sum of the tax increment
revenues described in subdivision (aa)(ii) and the distributions
under section 12a to repay the refunding obligation will not be
greater than the net present value of the sum of the tax increment
revenues described in subdivision (aa)(ii) and the distributions
under section 12a to repay the obligation being refunded, as
calculated using a method approved by the department of treasury.
(w) "Specific local tax" means a tax levied under 1974 PA 198,
MCL 207.551 to 207.572, the commercial redevelopment act, 1978 PA
255, MCL 207.651 to 207.668, the technology park development act,
1984 PA 385, MCL 207.701 to 207.718, and 1953 PA 189, MCL 211.181
to 211.182. The initial assessed value or current assessed value of
property subject to a specific local tax shall be the quotient of
the specific local tax paid divided by the ad valorem millage rate.
However, after 1993, the state tax commission shall prescribe the
method for calculating the initial assessed value and current
assessed value of property for which a specific local tax was paid
in lieu of a property tax.
(x) "State fiscal year" means the annual period commencing
October 1 of each year.
(y) "Tax increment district" or "district" means that area to
which the tax increment finance plan pertains.
(z) "Tax increment financing plan" means that information and
those requirements set forth in sections 13 to 15.
(aa) "Tax increment revenues" means the amount of ad valorem
property taxes and specific local taxes attributable to the
application of the levy of all taxing jurisdictions upon the
captured assessed value of real and personal property in the
development area, subject to the following requirements:
(i) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of all taxing jurisdictions other than the state pursuant to
the state education tax act, 1993 PA 331, MCL 211.901 to 211.906,
and local or intermediate school districts upon the captured
assessed value of real and personal property in the development
area for any purpose authorized by this act.
(ii) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state pursuant to the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, and local or intermediate school
districts upon the captured assessed value of real and personal
property in the development area in an amount equal to the amount
necessary, without regard to subparagraph (i), to repay eligible
advances, eligible obligations, and other protected obligations.
(iii) Tax increment revenues do not include any of the
following:
(A) Ad valorem property taxes attributable either to a portion
of the captured assessed value shared with taxing jurisdictions
within the jurisdictional area of the authority or to a portion of
value of property that may be excluded from captured assessed value
or specific local taxes attributable to such ad valorem property
taxes.
(B) Ad valorem property taxes excluded by the tax increment
financing plan of the authority from the determination of the
amount of tax increment revenues to be transmitted to the authority
or specific local taxes attributable to such ad valorem property
taxes.
(iv) The amount of tax increment revenues authorized to be
included under subparagraph (ii), (v), or (vi), and required to be
transmitted to the authority under section 14(1), from ad valorem
property taxes and specific local taxes attributable to the
application of the levy of the state education tax act, 1993 PA
331, MCL 211.901 to 211.906, a local school district or an
intermediate school district upon the captured assessed value of
real and personal property in a development area shall be
determined separately for the levy by the state, each school
district, and each intermediate school district as the product of
sub-subparagraphs (A) and (B):
(A) The percentage which the total ad valorem taxes and
specific local taxes available for distribution by law to the
state, local school district, or intermediate school district,
respectively, bear to the aggregate amount of ad valorem millage
taxes and specific taxes available for distribution by law to the
state, each local school district, and each intermediate school
district.
(B) The maximum amount of ad valorem property taxes and
specific local taxes considered tax increment revenues under
subparagraph (ii), (v), or (vi).
(v) Tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state under the state education tax act, 1993 PA 331,
MCL 211.901 to 211.906, and local or intermediate school districts
upon the captured assessed value of real and personal property in
any part of that portion of an authority district designated as a
downtown expansion zone under section 3a.
(vi) To the extent authorized under section 3a and not
otherwise considered tax increment revenues under subdivision
(aa)(ii), tax increment revenues include ad valorem property taxes
and specific local taxes attributable to the application of the
levy of the state under the state education tax act, 1993 PA 331,
MCL 211.901 to 211.906, and local or intermediate school districts
upon the captured assessed value of real and personal property in
any downtown development area as defined by section 3a.
Sec. 3. (1) If the governing body of a municipality determines
that it is in the best interests of the public to halt a decline in
property values, increase property tax valuation, eliminate the
causes of the decline in property values, and to promote growth in
an area in the municipality, the governing body of that
municipality may declare by resolution its intention to create and
provide for the operation of an authority. The determinations
required under this subsection for the creation of an authority
shall not be required for the expansion of an authority district of
an existing authority to include a downtown expansion zone
designated under section 3a.
(2) In the resolution of intent, the governing body shall set
a date for the holding of a public hearing on the adoption of a
proposed resolution creating the authority and designating the
boundaries of the authority district. Notice of the public hearing
shall be published twice in a newspaper of general circulation in
the municipality, not less than 20 nor more than 40 days before the
date of the hearing. Notice shall also be mailed to the property
taxpayers of record in the proposed authority district not less
than 20 days before the hearing. Failure to receive the notice
shall not invalidate these proceedings. The notice shall state the
date, time, and place of the hearing, and shall describe the
boundaries of the proposed authority district. At that hearing, a
citizen, taxpayer, or property owner of the municipality has the
right to be heard in regard to the establishment of the authority
and the boundaries of the proposed authority district. The
governing body of the municipality shall not incorporate land into
the authority district not included in the description contained in
the notice of public hearing, but it may eliminate described lands
from the authority district in the final determination of the
boundaries.
(3) Not more than 60 days after a public hearing, the
governing body of a taxing jurisdiction levying ad valorem property
taxes that would otherwise be subject to capture may exempt its
taxes from capture by adopting a resolution to that effect and
filing a copy with the clerk of the municipality proposing to
create the authority. The resolution takes effect when filed with
that clerk and remains effective until a copy of a resolution
rescinding that resolution is filed with that clerk.
(4) (3)
After the public hearing, if the governing body
intends to proceed with the establishment of the authority, it
shall adopt, by majority vote of its members, a resolution
establishing the authority and designating the boundaries of the
authority district within which the authority shall exercise its
powers. The adoption of the resolution is subject to any applicable
statutory or charter provisions with respect to the approval or
disapproval by the chief executive or other officer of the
municipality and the adoption of a resolution over his or her veto.
This resolution shall be filed with the secretary of state promptly
after its adoption and shall be published at least once in a
newspaper of general circulation in the municipality.
(5) (4)
The Except as provided by
subsection (7) and subject
to section 29, the governing body may alter or amend the boundaries
of the authority district to include or exclude lands from the
authority district in accordance with the same requirements
prescribed for adopting the resolution creating the authority.
(6) (5)
The validity of the proceedings establishing an
authority shall be conclusive unless contested in a court of
competent jurisdiction within 60 days after the last of the
following takes place:
(a) Publication of the resolution as adopted.
(b) Filing of the resolution with the secretary of state.
(c) The effective date of this subsection.
(7) Notwithstanding section 29, at any time after calling and
holding a public hearing as required by subsection (2), the
governing body of a municipality may alter or amend the boundaries
of an existing authority district that includes a downtown
development area, as defined by section 3a, to include lands only
within an area designated as a downtown expansion zone under
section 3a.
Sec. 3a. (1) An authority may apply to the Michigan economic
development corporation for the following designations:
(a) The designation of a downtown development area as a
development area in which tax increment revenues, as defined by
section 1(aa)(vi), may be captured by the authority for purposes
permitted under subsection (6).
(b) The designation of an area contiguous to an existing
authority district that includes a downtown development area as a
downtown expansion zone.
(2) The application shall be in a form specified by the
Michigan economic development corporation and shall contain
information the Michigan economic development corporation considers
necessary to make the determinations required under this section,
including all of the following:
(a) The boundaries of the proposed downtown expansion zone to
be added to the authority’s existing district.
(b) The description of the downtown development area proposed
to be designated under subsection (1)(a) as a development area in
which tax increment revenues, as defined by section 1(aa)(vi), may
be captured by the authority for the purposes permitted under
subsection (6).
(c) The proposed uses of tax increment revenues within or for
the benefit of the downtown expansion zone.
(3) The designations permitted under this section by the
Michigan economic development corporation shall be based upon a
finding by the Michigan economic development corporation that the
application demonstrates that the proposed downtown expansion zone
would satisfy the following criteria:
(a) The public facilities to be developed in the downtown
expansion zone will attract private businesses to or retain private
businesses in the authority district and contribute to the housing
and economic growth and development of the authority district.
(b) The public facilities planned to be developed will enhance
the attractiveness of the downtown expansion zone to businesses,
residents, and visitors to the authority district.
(c) The proposed downtown expansion zone will be developed to
take advantage of the unique characteristics and specialties
offered by the public and private resources available in the area
in which the proposed downtown expansion zone will be located.
(d) The authority will be able to comply with the requirements
of subsection (6), including the reimbursement of the state and
local or intermediate school districts from tax increment revenues
from any development area within the authority district, including
the downtown expansion zone.
(e) The designation of the proposed downtown expansion zone
will assist in preventing or halting a deterioration of property
valuation in areas surrounding the existing authority district.
(f) The proposed downtown expansion zone is part of or
adjacent to an area that represents the historic downtown area of
the municipality.
(4) When the Michigan economic development corporation decides
to make a designation under subsection (1), it shall enter into an
agreement with the authority to implement the terms of the
designation, which shall include all of the following:
(a) A description of the boundaries of the downtown expansion
zone and the development area to be created for the downtown
expansion zone.
(b) A description of the downtown development area of the
authority of which the development area created for the downtown
expansion zone shall be considered to be a part during the term of
the agreement.
(c) A description of the public facilities to be developed
within or for the downtown expansion zone.
(d) A statement of the maximum cost of public facilities to be
developed within or for the downtown expansion zone.
(e) The terms of enforcement of the agreement, which may
include the definition of events of default, cure periods, legal
and equitable remedies and rights, and penalties and damages,
actual or liquidated, upon the occurrence of an event of default.
(f) The financial commitments of any party to the agreement
and of any owner or developer of property within the downtown
expansion zone.
(g) Covenants and restrictions, if any, upon all or a portion
of the properties contained within the downtown expansion zone and
terms of enforcement of any covenants or restrictions.
(h) Any limitations imposed by the state treasurer at his or
her discretion upon the term or amount of tax increment revenues
available under section 1(aa)(v) or (vi).
(i) The term of the agreement.
(j) Conditions for the effectiveness of the agreement, which
shall include approval of the creation of the downtown expansion
zone and a development plan for the downtown expansion zone.
(5) The tax increment financing plan of the development area
created for a downtown expansion zone and for all existing
development areas shall provide both for the capture and use of tax
increment revenues from the downtown development area designated
under subsection (1)(a) and for tax increment revenues from the
development area created for the downtown expansion zone. For the
purpose of permitting tax increment revenues from the downtown
development area to be used for public facilities within or for the
benefit of the downtown expansion zone, the downtown expansion zone
shall be considered part of the downtown development area
designated pursuant to subsection (1)(a). However, tax increment
revenues from a development area created for a downtown expansion
zone shall be calculated separately from the calculation of tax
increment revenues made for the downtown development area of the
authority of which the downtown expansion zone is considered a
part. After the agreement entered into under this section has
expired or been terminated, the authority shall not be entitled to
receive tax increment revenues, as defined by section 1(aa)(v) and
(vi), from the development area created for a downtown expansion
zone, and the development area created for the downtown expansion
zone shall not be considered a part of any other development area
within the authority district.
(6) Tax increment revenues, as defined by section 1(aa)(vi),
available to an authority under a designation permitted under
subsection (1)(a) shall be used only for purposes of development or
acquisition of a public facility within or for the benefit of the
downtown expansion zone or to pay the principal of and interest on
obligations issued by or on behalf of the authority for those
purposes. Tax increment revenues available to an authority from a
downtown expansion zone designated under subsection (1)(b) shall
only be used during the term of the agreement made under this
section for reimbursing the state and local or intermediate school
districts for any tax increment revenues, as defined by section
1(aa)(vi), that were received by the authority and used for purposes
permitted under this section.
(7) An authority may not share with taxing jurisdictions or
exclude by the tax increment financing plan any portion of the tax
increment revenues or captured assessed value attributable to
property within the development area created for the downtown
expansion zone.
(8) An agreement made under this section may not be made after
December 31, 2006, but any agreement made on or before December 31,
2006 may be amended after that date. The aggregate maximum cost of
public facilities that may be approved under agreements that may be
entered into under this section and section 3e of 1975 PA 197, MCL
125.1653e, shall not exceed $100,000,000.00.
(9) As used in this section:
(a) "Downtown development area" means a development area that
is principally zoned for commercial or business purposes and that
is within both the central business area of the municipality and an
existing authority district.
(b) "Michigan economic development corporation" means the
public body corporate created under section 28 of article VII of
the state constitution of 1963 and the urban cooperation act of
1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual
interlocal agreement effective April 5, 1999 between local
participating economic development corporations formed under the
economic development corporations act, 1974 PA 338, MCL 125.1601 to
125.1636, and the Michigan strategic fund. If the Michigan economic
development corporation is unable for any reason to perform its
duties under this act, those duties may be exercised by the
Michigan strategic fund or its successor.
(c) "Public facility" means that term as defined by section
1(u), but shall not include a school, library, public institution
or administration building, or any other public or private facility
that is not used primarily by the general public.