HB-5926, As Passed Senate, December 12, 2012

SUBSTITUTE FOR

HOUSE BILL NO. 5926

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending sections 90a, 90b, 90c, and 90d (MCL 125.2090a,

125.2090b, 125.2090c, and 125.2090d), section 90a as added by 2011

PA 252, section 90b as amended by 2012 PA 145, and sections 90c and

90d as added by 2011 PA 253.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 90a. As used in this chapter:

(a) "Community revitalization grant" or "grant" means a grant

that is approved under section 90b and that is subject to

requirements in section 90c.

(b) "Community revitalization incentive" means a community

revitalization grant, a community revitalization loan, or other

economic assistance.

that is approved under section 90b and that is subject to the

requirements in section 90d.

(d) "Eligible investment" means 1 or more of the following,

subject to a written agreement under this section, including

investment which occurred prior to the approval of the application,

to the extent that it the project has not been completely

reimbursed to or been paid for on behalf of the person requesting a

community revitalization incentive under this chapter:

(i) Any demolition, construction, alteration, rehabilitation,

or improvement of buildings.

(ii) Site improvements.

(iii) The addition of machinery, equipment, or fixtures to the

approved project.

(iv) Architectural, engineering, surveying, and similar

professional fees but not certain soft costs of the eligible

investment as determined by the board, including, but not limited

to, developer fees, appraisals, performance bonds, closing costs,

bank fees, loan fees, risk contingencies, financing costs,

permanent or construction period interest, legal expenses, leasing

or sales commissions, marketing costs, professional fees, shared

savings, taxes, title insurance, bank inspection fees, insurance,

and project management fees.

(e) "Eligible property" means property that meets 1 or more of

the following conditions:

(i) Is determined to be a facility. As used in this

subparagraph, "facility" means that term as defined in section 2 of

the brownfield redevelopment financing act, 1996 PA 381, MCL

125.2652.

(ii) Is a historic resource. As used in this subparagraph,

"historic resource" means a publicly or privately owned historic

building or structure located within a historic district designated

by the national register of historic places, the state register of

historic sites, or a local unit acting under the local historic

districts act, 1970 PA 169, MCL 399.201 to 399.215.

(iii) Is blighted property. As used in this subparagraph,

"blighted property" means property that meets any of the following

criteria:

(A) Has been declared a public nuisance in accordance with a

local housing, building, plumbing, fire, or other related code or

ordinance.

(B) Is an attractive nuisance to children because of physical

condition, use, or occupancy.

of persons or property.

(D) Has had the utilities, plumbing, heating, or sewerage

permanently disconnected, destroyed, removed, or rendered

ineffective so that the property is unfit for its intended use.

(E) Is tax reverted property owned by a qualified local

governmental unit, by a county, or by this state.

(F) Is property owned or under the control of a land bank fast

track authority under the land bank fast track act, 2003 PA 258,

MCL 124.751 to 124.774.

(G) Has substantial subsurface demolition debris buried on

site so that the property is unfit for its intended use.

(iv) Is functionally obsolete property. As used in this

subparagraph, "functionally obsolete" means that the property is

unable to be used to adequately perform the function for which it

was intended due to a substantial loss in value resulting from

factors such as overcapacity, changes in technology, deficiencies

or superadequacies in design, or other similar factors that affect

the property itself or the property's relationship with other

surrounding property as determined by a Michigan advanced assessing

officer or a Michigan master assessing officer.

(v) Is a parcel that is adjacent or contiguous to property

described in subparagraphs (i) through (iv) if the development of the

adjacent or contiguous parcel is estimated to increase the taxable

value of the property described in subparagraphs (i) through (iv).

(f) "Other economic assistance" means any other form of

assistance allowed under this act that is not a community

revitalization loan or community revitalization grant.

Sec. 90b. (1) The fund shall create and operate the Michigan

community revitalization program to provide community

revitalization incentives for eligible investments on eligible

property in this state. The fund shall develop and use a detailed

application, approval, and compliance process adopted by a

resolution of the board and published and available on the fund's

website. Program standards, guidelines, templates, or any other

forms used by the fund to implement the Michigan community

revitalization program shall be approved by the board.

(2) A person or 2 or more persons may apply to the fund for

approval of community revitalization incentives associated with a

project under this section. Community revitalization incentives

shall not be approved for any property that is not eligible

property.

(3) Funds appropriated for programs under this chapter shall

be placed in the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260.

(4) Subject to section 88c, the fund shall review all

applications for community revitalization incentives. As part of

the application, the applicant shall include documentation

establishing that the project is located on eligible property and a

project description that includes a project pro-forma. The fund

shall consider the following criteria to the extent reasonably

applicable to the type of project proposed when approving a

community revitalization inventive:

(a) The importance of the project to the community in which it

is located.

(b) If the project will act as a catalyst for additional

revitalization of the community in which it is located.

the project.

(d) The applicant's financial need for a community

revitalization incentive.

(e) The extent of reuse of vacant buildings, reuse of

historical buildings, and redevelopment of blighted property.

(f) Creation of jobs.

(g) The level of private sector and other contributions,

including, but not limited to, federal funds and federal tax

credits.

(h) Whether the project is financially and economically sound.

(i) Whether the project increases the density of the area.

(j) Whether the project promotes mixed-use development and

walkable communities.

(k) Whether the project converts abandoned public buildings to

private use.

(l) Whether the project promotes sustainable development.

(m) Whether the project involves the rehabilitation of a

historic resource.

(n) Whether the project addresses areawide redevelopment.

(o) Whether the project addresses underserved markets of

commerce.

(p) The level and extent of environmental contamination.

(q) If the rehabilitation of the historic resource will meet

the federal secretary of the interior's standards for

rehabilitation and guidelines for rehabilitating historic

buildings, 36 CFR 67.

(r) Whether the project will compete with or effect existing

Michigan businesses within the same industry.

(s) Any other additional criteria approved by the board that

are specific to each individual project and are consistent with the

findings and intent of this chapter.

(5) An application shall be approved or denied not more than

90 days after receipt of the application that is considered

administratively complete by the board or its designee. If the

application is neither approved nor denied within 90 days after

being considered administratively complete, it shall be considered

by the fund board, or its president if delegated, for action at, or

by, the next regularly scheduled board meeting. If an application

is approved, the fund shall determine the amount of community

revitalization incentives for the project based on the fund's

review of the application and the criteria specified in subsection

(4).

(6) The amount of community revitalization incentives that the

board may approve for a single project shall not exceed 25% of a

project's eligible investment up to $10,000,000.00. A community

revitalization loan shall not exceed $10,000,000.00 and a community

revitalization grant shall not exceed $1,000,000.00. However, a

combination of loans, grants, and other economic assistance under

this chapter shall not exceed $10,000,000.00 per project. The board

may not approve $10,000,000.00 per project in community

revitalization incentives to more than 3 projects per fiscal year.

The board shall approve not less than 5 projects of $1,000,000.00

or less per project per fiscal year. If, after reviewing all

applications in a fiscal year, the fund determines that less than 5

projects warranted an award of $1,000,000.00 or less, this

subsection shall not apply.

(7) When the board approves an application and determines the

amount of community revitalization incentives, the board shall

enter into a written agreement with the applicant. The written

agreement shall provide in a clear and concise manner all of the

conditions imposed, including specific time frames, on the

applicant to receive the community revitalization incentive under

this chapter. The written agreement shall provide for the secured

status of any loan, repayment, and penalties if the applicant fails

to comply with the provisions of the written agreement as

determined by the board. The applicant shall agree to provide the

data described in the written agreement that is necessary for the

fund to report to the legislature under this chapter.

(8) Not more than 4% of the annual appropriation as provided

by law from the 21st century jobs trust fund established in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, may be

used for the purposes of administering the programs and activities

authorized under this chapter. However, the fund and the fund board

shall not use more than 3% of the annual appropriation for

administering the programs and activities authorized under this

chapter unless the fund board by a 2/3 vote authorizes the

additional 1% for administration. The MEDC may charge actual and

reasonable fees for costs associated with the community

revitalization incentive authorized under this chapter. These fees

are in addition to an amount of the appropriation used for

administering the programs and activities authorized under this

chapter.

Sec. 90c. Upon ~~completion of a project~~ satisfying a milestone

established in a written agreement for which the board has approved

a community revitalization grant under section 90b, the applicant

may apply to the fund for ~~the~~ a grant ~~and may assign a grant by~~

~~submitting written request of the assignment to the fund~~

disbursement as specified in the written agreement. All or a

portion of the rights or obligations of the applicant under the

written grant agreement may be assigned by the applicant to 1 or

more assignees with prior written approval of, and on terms and

conditions acceptable to, the fund. The board shall develop and

implement the use of an application form and assignment form to be

used under this section. Within 90 days of receipt of an

application for disbursement, the fund or its designee shall then

determine whether the project has complied with the terms of the

written agreement and, if applicable, the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR 67. If the fund or its

designee determines that the project has complied with the written

agreement and, if applicable, the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR 67, the fund shall issue

the grant proceeds to the applicant or, if the grant has been

assigned, to the assignee.

Sec. 90d. (1) Upon ~~completion of a project~~ satisfying a

milestone established in a written agreement for which the board

has approved a community revitalization loan under section 90b, the

applicant may apply to the fund for ~~the loan proceeds and may~~

~~assign some or all of the loan proceeds by submitting written~~

~~notice of the assignment to the fund~~ a loan disbursement as

specified in the written agreement. All or a portion of the rights

or obligations of the applicant under the written loan agreement

may be assigned by the applicant to 1 or more assignees with prior

written approval of, and on terms and conditions acceptable to, the

fund. The board shall develop and implement the use of an

application for disbursement form and assignment form to be used

under this subsection. Within 90 days of receipt or disbursement of

an application for disbursement, the fund or its designee shall

determine whether the project has complied with the written

agreement and, if applicable, the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR 67. If the fund or its

designee determines that the project has complied with the written

agreement and, if applicable, the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR 67, the fund shall

distribute the loan proceeds to the applicant or, if the loan

proceeds have been assigned, to the assignee.

(2) The board shall develop criteria for repayment of the

community revitalization loan.

(3) The proceeds from repayment of community revitalization

loans under subsection (2) shall be paid into the investment fund

described in section 88h and expended exclusively for community

revitalization incentives under this chapter.

(4) Beginning November 1, 2012 and each year thereafter, the

fund shall report to each house of the legislature on the

activities of the fund under this chapter that occurred in the

previous fiscal year. The report shall be made available in an

electronic format. Except as otherwise provided in this subsection

or in this act, the fund shall not divulge sensitive or private

financial information associated with a community revitalization

incentive. The report shall include, but is not limited to, all of

the following:

(a) The total proposed amount of private investment attracted

under this section.

(b) The total actual amount of private investment attracted

under this section as reported to the fund.

(d) The amount of the community revitalization incentives

awarded under this chapter separately for each project.

(e) The actual amount of the community revitalization

incentives made under this chapter separately for each project.

(f) The total actual amount of square footage revitalized or

added for each project approved under this section as reported to

the fund. When reporting square footage, the person must report the

square footage by category, including, but not limited to,

commercial, residential, or retail.

(g) The aggregate increase in taxable value of all property

subject to a written agreement under this chapter when established

and recorded by the local units of government and as reported to

the fund.

(h) A summary of all written agreements for community

revitalization loans.

(i) The total actual number of residential units revitalized

or added for each project approved under this section as reported

to the fund.

(j) The identity of persons who received a community

revitalization incentive outside the program standards and

guidelines and why the variance was given.

(k) The amount of administrative costs used to administer the

programs and activities authorized under this chapter.

(l) A summary of the projected and actual aggregated taxpayer

return on investment for each eligible investment that received a

distribution in the reporting period.

(5) Beginning February 1, 2012 and not less than every 3

months thereafter, the fund shall post on its internet website the

name and location of a person who received approval of community

revitalization investment under this chapter in the immediately

preceding 3-month period.

(6) Beginning on and after January 1, 2012, on a monthly basis

the fund shall provide exact copies of all information that is

provided to board members of the fund for the purpose of monthly

board meetings, subject to confidentiality under section 5, to each

of the following:

(a) The chairperson and minority vice-chairperson of the house

commerce committee.

(b) The chairperson and minority vice-chairperson of the house

appropriations subcommittee on general government.

senate economic development committee.

(d) The chairperson and minority vice-chairperson of the

senate appropriations subcommittee on general government.