SB-1189, As Passed Senate, March 26, 2008

SUBSTITUTE FOR

SENATE BILL NO. 1189

     A bill to amend 1995 PA 24, entitled

"Michigan economic growth authority act,"

by amending sections 6 and 8 (MCL 207.806 and 207.808), section 6

as amended by 2007 PA 150 and section 8 as amended by 2007 PA 62.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 6. The authority shall have powers necessary or

convenient to carry out and effectuate the purpose of this act,

including, but not limited to, the following:

     (a) To authorize eligible businesses to receive tax credits to

foster job creation in this state.

     (b) To determine which businesses qualify for tax credits

under this act.

     (c) To determine the amount and duration of tax credits

authorized under this act.

     (d) To issue certificates and enter into written agreements

specifying the conditions under which tax credits are authorized

and the circumstances under which those tax credits may be reduced

or terminated.

     (e) To charge and collect reasonable administrative fees.

     (f) To delegate to the chairperson of the authority, staff, or

others the functions and powers it considers necessary and

appropriate to administer the programs under this act.

     (g) To assist an eligible business to obtain the benefits of a

tax credit, incentive, or inducement program provided by this act

or by law.

     (h) To determine the eligibility of and issue certificates to

certain qualified taxpayers for credits allowed under former

section 38g(3) of the single business tax act, 1975 PA 228 , MCL

208.38g, and section 431 of the Michigan business tax act, 2007 PA

36, MCL 208.1431, and to develop the application process and

necessary forms to claim the credit under former section 38g(3) of

the single business tax act, 1975 PA 228 , MCL 208.38g, and section

431 of the Michigan business tax act, 2007 PA 36, MCL 208.1431. 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 former section 38g(3) of the single business

tax act, 1975 PA 228 , MCL 208.38g, and section 431 of the Michigan

business tax act, 2007 PA 36, MCL 208.1431. The report shall

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

     (i) A listing of the projects under former section 38g(3) of

the single business tax act, 1975 PA 228 , MCL 208.38g, and section

431 of the Michigan business tax act, 2007 PA 36, MCL 208.1431,

that were approved in the previous calendar year.

     (ii) The total amount of eligible investment approved under

former section 38g(3) of the single business tax act, 1975 PA 228 ,

MCL 208.38g, and section 431 of the Michigan business tax act, 2007

PA 36, MCL 208.1431, in the previous calendar year.

     (i) To approve the capture of school operating taxes and work

plans as provided in sections 13 and 15 of the brownfield

redevelopment financing act, 1996 PA 381, MCL 125.2663 and

125.2665.

     (j) To determine the eligibility of and issue certificates to

certain qualified taxpayers for credits allowed under section 407

of the Michigan business tax act, 2007 PA 36, MCL 208.1407.

     (k) To determine the eligibility of and issue certificates to

certain taxpayers for credits allowed under sections 431a and 431b

of the Michigan business tax act, 2007 PA 36, MCL 208.1431a and

208.1431b.

     Sec. 8. (1) After receipt of an application, the authority may

enter into an agreement with an eligible business for a tax credit

under section 9 if the authority determines that all of the

following are met:

     (a) Except as provided in subsection (5), the eligible

business creates 1 or more of the following within 12 months of the

expansion or location as determined by the authority and provided

with written agreement:

     (i) A minimum of 50 qualified new jobs at the facility if

expanding in this state.

     (ii) A minimum of 100 50 qualified new jobs at the facility if

locating in this state.

     (iii) A minimum of 25 qualified new jobs at the facility if the

facility is located in a neighborhood enterprise zone as determined

under the neighborhood enterprise zone act, 1992 PA 147, MCL

207.771 to 207.786, is located in a renaissance zone under the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

125.2696, or is located in a federally designated empowerment zone,

rural enterprise community, or enterprise community.

     (iv) A minimum of 5 qualified new jobs at the facility if the

eligible business is a qualified high-technology business.

     (v) A minimum of 5 qualified new jobs at the facility if the

eligible business is a rural business.

     (b) Except as provided in subsection (5), the eligible

business agrees to maintain 1 or more of the following for each

year that a credit is authorized under this act:

     (i) A minimum of 50 qualified new jobs at the facility if

expanding in this state.

     (ii) A minimum of 100 50 qualified new jobs at the facility if

locating in this state.

     (iii) A minimum of 25 qualified new jobs at the facility if the

facility is located in a neighborhood enterprise zone as determined

under the neighborhood enterprise zone act, 1992 PA 147, MCL

207.771 to 207.786, is located in a renaissance zone under the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

125.2696, or is located in a federally designated empowerment zone,

rural enterprise community, or enterprise community.

     (iv) If the eligible business is a qualified high-technology

business, all of the following apply:

     (A) A minimum of 5 qualified new jobs at the facility.

     (B) A minimum of 25 qualified new jobs at the facility within

5 years after the date of the expansion or location as determined

by the authority and a minimum of 25 qualified new jobs at the

facility each year thereafter for which a credit is authorized

under this act.

     (v) If the eligible business is a rural business, all of the

following apply:

     (A) A minimum of 5 qualified new jobs at the facility.

     (B) A minimum of 25 qualified new jobs at the facility within

5 years after the date of the expansion or location as determined

by the authority.

     (c) Except as provided in subsection (5) and as otherwise

provided in this subdivision, in addition to the jobs specified in

subdivision (b), the eligible business, if already located within

this state, agrees to maintain a number of full-time jobs equal to

or greater than the number of full-time jobs it maintained in this

state prior to the expansion, as determined by the authority. After

an eligible business has entered into a written agreement as

provided in subsection (2), the authority may adjust the number of

full-time jobs required to be maintained by the authorized business

under this subdivision, in order to adjust for decreases in full-

time jobs in the authorized business in this state due to the

divestiture of operations, provided a single other person continues

to maintain those full-time jobs in this state. The authority shall

not approve a reduction in the number of full-time jobs to be

maintained unless the authority has determined that it can monitor

the maintenance of the full-time jobs in this state by the other

person, and the authorized business agrees in writing that the

continued maintenance of the full-time jobs in this state by the

other person, as determined by the authority, is a condition of

receiving tax credits under the written agreement. A full-time job

maintained by another person under this subdivision, that otherwise

meets the requirements of section 3(i), shall be considered a full-

time job, notwithstanding the requirement that a full-time job be

performed by an individual employed by an authorized business, or

an employee leasing company or professional employer organization

on behalf of an authorized business.

     (d) Except as otherwise provided in this subdivision, the

average wage paid for all each retained jobs job and qualified new

jobs job is equal to or greater than 150% of the federal minimum

wage. However, if the eligible business is a qualified high-

technology business high-wage activity, then the average wage paid

for all each qualified new jobs job is equal to or greater than

300% of the federal minimum wage.

     (e) Except for a qualified high-technology business, the

expansion, retention, or location of the eligible business will not

occur in this state without the tax credits offered under this act.

     (f) Except for an eligible business described in subsection

(5)(b)(ii), the local governmental unit in which the eligible

business will expand, be located, or maintain retained jobs, or a

local economic development corporation or similar entity, will make

a staff, financial, or economic commitment to the eligible business

for the expansion, retention, or location.

(e) (g) The financial statements of the eligible business

indicated that it is financially sound or has submitted a chapter

11 plan of reorganization to the bankruptcy court and that its

plans for the expansion, retention, or location are economically

sound.

(f) (h) Except for an eligible business described in

subsection (5)(c), the eligible business has not begun construction

of the facility.

(g) (i) The expansion, retention, or location of the eligible

business will benefit the people of this state by increasing

opportunities for employment and by strengthening the economy of

this state.

(h) (j) The tax credits offered under this act are an

incentive to expand, retain, or locate the eligible business in

Michigan and address the competitive disadvantages with sites

outside this state.

(i) (k) A cost/benefit analysis reveals that authorizing the

eligible business to receive tax credits under this act will result

in an overall positive fiscal impact to the state.

     (l) If feasible, as determined by the authority, in locating

the facility, the authorized business reuses or redevelops property

that was previously used for an industrial or commercial purpose.

(j) (m) If the eligible business is a qualified high-

technology business described in section 3(m)(i), the eligible

business agrees that not less than 25% of the total operating

expenses of the business will be maintained for research and

development for the first 3 years of the written agreement.

     (2) If the authority determines that the requirements of

subsection (1), or (5), (9), or (11) have been met, the authority

shall determine the amount and duration of tax credits to be

authorized under section 9, and shall enter into a written

agreement as provided in this section. The duration of the tax

credits shall not exceed 20 years or for an authorized business

that is a distressed business, 3 years. In determining the amount

and duration of tax credits authorized, the authority shall

consider the following factors:

     (a) The number of qualified new jobs to be created or retained

jobs to be maintained.

     (b) The average wage and health care benefit level of the

qualified new jobs or retained jobs relative to the average wage

and health care benefit paid by private entities in the county in

which the facility is located.

     (c) The total capital investment or new capital investment the

eligible business will make.

     (d) The cost differential to the business between expanding,

locating, or retaining new jobs in Michigan and a site outside of

Michigan.

     (e) The potential impact of the expansion, retention, or

location on the economy of Michigan.

     (f) The cost of the credit under section 9, the staff,

financial, or economic assistance provided by the local government

unit, or local economic development corporation or similar entity,

and the value of assistance otherwise provided by this state.

     (g) Whether the expansion, retention, or location will occur

in this state without the tax credits offered under this act.

     (h) Whether the authorized business reuses or redevelops

property that was previously used for an industrial or commercial

purpose in locating the facility.

     (3) A written agreement between an eligible business and the

authority shall include, but need not be limited to, all of the

following:

     (a) A description of the business expansion, retention, or

location that is the subject of the agreement.

     (b) Conditions upon which the authorized business designation

is made.

     (c) A statement by the eligible business that a violation of

the written agreement may result in the revocation of the

designation as an authorized business and the loss or reduction of

future credits under section 9.

     (d) A statement by the eligible business that a

misrepresentation in the application may result in the revocation

of the designation as an authorized business and the refund of

credits received under section 9.

     (e) A method for measuring full-time jobs before and after an

expansion, retention, or location of an authorized business in this

state.

     (f) A written certification from the eligible business

regarding all of the following:

     (i) The eligible business will follow a competitive bid process

for the construction, rehabilitation, development, or renovation of

the facility, and that this process will be open to all Michigan

residents and firms. The eligible business may not discriminate

against any contractor on the basis of its affiliation or

nonaffiliation with any collective bargaining organization.

     (ii) The eligible business will make a good faith effort to

employ, if qualified, Michigan residents at the facility.

     (iii) The eligible business will make a good faith effort to

employ or contract with Michigan residents and firms to construct,

rehabilitate, develop, or renovate the facility.

     (iv) The eligible business is encouraged to make a good faith

effort to utilize Michigan-based suppliers and vendors when

purchasing goods and services.

     (g) A condition that if the eligible business qualified under

subsection (5)(b)(ii) and met the subsection (1)(g) (1)(e)

requirement by filing a chapter 11 plan of reorganization, the plan

must be confirmed by the bankruptcy court within 6 years of the

date of the agreement or the agreement is rescinded.

     (4) Upon execution of a written agreement as provided in this

section, an eligible business is an authorized business.

     (5) After Through December 31, 2007, after receipt of an

application, the authority may enter into a written agreement ,

which shall include a repayment provision of all or a portion of

the credits under section 9 for a violation of the written

agreement, with an eligible business that meets 1 or more of the

following criteria:

     (a) Is located in this state on the date of the application,

makes new capital investment of $250,000,000.00 in this state, and

maintains 500 retained jobs, as determined by the authority.

     (b) Meets 1 or more of the following criteria:

     (i) Relocates production of a product to this state after the

date of the application, makes capital investment of

$500,000,000.00 in this state, and maintains 500 retained jobs, as

determined by the authority.

     (ii) Maintains 150 retained jobs at a facility, maintains 1,000

or more full-time jobs in this state, and makes new capital

investment in this state.

     (iii) Is located in this state on the date of the application,

maintains at least 100 retained jobs at a single facility, and

agrees to make new capital investment at that facility equal to the

greater of $100,000.00 per retained job maintained at that facility

or $10,000,000.00 to be completed or contracted for not later than

December 31, 2007.

     (iv) Maintains 300 retained jobs at a facility; the facility is

at risk of being closed and if it were to close, the work would go

to a location outside this state, as determined by the authority;

new management or new ownership is proposed for the facility that

is committed to improve the viability of the facility, unless

otherwise provided in this subparagraph; and the tax credits

offered under this act are necessary for the facility to maintain

operations. The authority may not enter into a written agreement

under this subparagraph after December 31, 2007. Of the written

agreements entered into under this subparagraph, the authority may

enter into 3 written agreements under this subparagraph that are

excluded from the requirements of subsection (1)(e), (f), (g), (h),

(j), and (k) (i) if the authority considers it in the public

interest and if the eligible business would have met the

requirements of subsection (1)(e), (i), (j), (1)(g), (h), and (k)

within the immediately preceding 6 months from the signing of the

written agreement for a tax credit. Of the 3 written agreements

described in this subparagraph, the authority may also waive the

requirement for new management if the existing management and labor

make a commitment to improve the viability and productivity of the

facility to better meet international competition as determined by

the authority.

     (v) Maintains 100 retained jobs at a facility; is a rural

business, unless otherwise provided in this subparagraph; the

facility is at risk of being closed and if it were to close, the

work would go to a location outside this state, as determined by

the authority; new management or new ownership is proposed for the

facility that is committed to improve the viability of the

facility; and the tax credits offered under this act are necessary

for the facility to maintain operations. The authority may not

enter into a written agreement under this subparagraph after

December 31, 2007. Of the written agreements entered into under

this subparagraph, the authority may enter into 3 written

agreements under this subparagraph that are excluded from the

requirements of subsection (1)(e), (f), (g), and (h) , (j), and (k)

if the authority considers it in the public interest and if the

eligible business would have met the requirements of subsection

(1)(e), (i), (j), and (k) (1)(g), (h), and (e) within the

immediately preceding 6 months from the signing of the written

agreement for a tax credit. Of the 3 written agreements described

in this subparagraph, the authority may also waive the requirement

that the business be a rural business if the business is located in

a county with a population of 500,000 or more and 600,000 or less.

     (vi) Maintains 175 retained jobs and makes new capital

investment at a facility in a county with a population of not less

than 7,500 but not greater than 8,000.

     (vii) Is located in this state on the date of the application,

maintains at least 675 retained jobs at a facility, agrees to

create 400 new jobs, and agrees to make a new capital investment of

at least $45,000,000.00 to be completed or contracted for not later

than December 31, 2007. Of the written agreements entered into

under this subparagraph, the authority may enter into 1 written

agreement under this subparagraph that is excluded from the

requirements of subsection (1)(h) (1)(f) if the authority considers

it in the public interest.

     (viii) Is located in this state on the date of the application,

makes new capital investment of $250,000,000.00 or more in this

state, and makes that capital investment at a facility located

north of the 45th parallel.

     (c) Is a distressed business.

     (6) The Each year, the authority shall not execute more than

25 new written agreements each that in total provide for more than

400 yearly credits over the terms of those agreements entered into

that year for eligible businesses that are not qualified high-

technology businesses, distressed businesses, or rural businesses,

or an eligible business described in subsection (11). If the

authority executes less than 25 new written agreements in a year,

the authority may carry forward for 1 year only the difference

between 25 and the number of new agreements executed in the

immediately preceding year.

     (7) The authority shall not execute more than 50 new written

agreements each year for eligible businesses that are qualified

high-technology businesses or rural business. Only 25 of the 50

written agreements for businesses that are qualified high-

technology businesses or rural business may be executed each year

for qualified rural businesses.

     (8) The authority shall not execute more than 20 new written

agreements each year for eligible businesses that are distressed

businesses. The authority shall not execute more than 5 of the

written agreements described in this subsection each year for

distressed businesses that had 1,000 or more full-time jobs at a

facility 4 years immediately preceding the application to the

authority under this act. The authority shall not execute more than

5 new written agreements each year for eligible businesses

described in subsection (11). The authority shall not execute more

than 4 new written agreements each year for eligible businesses

described in subsection (11) in local governmental units that have

a population greater than 16,000.

     (9) Beginning January 1, 2008, after receipt of an

application, the authority may enter into a written agreement with

an eligible business that does not meet the criteria described in

subsection (1), if the eligible business meets all of the

following:

     (a) Agrees to retain not fewer than 50 jobs.

     (b) Agrees to make new capital investment at a facility equal

to $50,000.00 or more per retained job maintained at the facility.

     (c) Certifies to the authority that, without the credits under

this act and without the new capital investment, the facility is at

risk of closing and the work and jobs would be removed to a

location outside of this state.

     (d) Certifies to the authority that the management or

ownership is committed to improving the long-term viability of the

facility in meeting the national and international competition

facing the facility through better management techniques, best

practices, including state of the art lean manufacturing practices,

and market diversification.

     (e) Certifies to the authority that it will make best efforts

to keep jobs in Michigan when making plant location and closing

decisions.

     (f) Certifies to the authority that the workforce at the

facility demonstrates its commitment to improving productivity and

profitability at the facility through various means.

     (10) Beginning on the effective date of the amendatory act

that added this subsection, if the authority enters into a written

agreement with an eligible business, the written agreement shall

include a repayment provision of all or a portion of the credits

received by the eligible business for a facility if the eligible

business moves full-time jobs outside this state during the term of

the written agreement and for a period of years after the term of

the written agreement, as determined by the authority.

     (11) Beginning January 1, 2008, after receipt of an

application, the authority may enter into a written agreement with

an eligible business that does not meet the criteria described in

subsection (1), if the eligible business meets all of the

following:

     (a) Agrees to create or retain not fewer than 15 jobs.

     (b) Agrees to occupy property that is a historic resource as

that term is defined in section 435 of the Michigan business tax

act, 2007 PA 36, MCL 208.1435, and that is located in a downtown

district as defined in section 1 of 1975 PA 197, MCL 125.1651.

     (c) The average wage paid for each retained job and full-time

job is equal to or great than 150% of the federal minimum wage.

     Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 94th Legislature are

enacted into law:

     (a) Senate Bill No. 1187.

     (b) Senate Bill No. 1188.

     (c) Senate Bill No. 1190.