Bill Text: MI HB4474 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Economic development; Michigan strategic fund; powers, duties, and notice requirements; modify regarding certain tax credit agreements. Amends sec. 8 of 1995 PA 24 (MCL 207.808).
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2015-04-21 - Printed Bill Filed 04/17/2015 [HB4474 Detail]
Download: Michigan-2015-HB4474-Introduced.html
HOUSE BILL No. 4474
April 16, 2015, Introduced by Reps. Schor, Townsend, LaVoy, Irwin, Dillon and Driskell and referred to the Committee on Tax Policy.
A bill to amend 1995 PA 24, entitled
"Michigan economic growth authority act,"
by amending section 8 (MCL 207.808), as amended by 2009 PA 123.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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 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 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 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(j), 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 wage
paid for each retained job and qualified new job is equal to or
greater than 150% of the federal minimum wage. However, if the
eligible business is a qualified high-wage activity, then the wage
paid for each qualified new job is equal to or greater than 300% of
the state minimum wage. However, beginning on August 4, 2008, the
authority may include the value of the health care benefit in
determining the wage paid for each retained job or qualified new
job for an eligible business under this act.
(e) The plans for the expansion, retention, or location are
economically sound.
(f) Except for an eligible business described in subsection
(5)(c), the eligible business has not begun construction of the
facility.
(g) 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) 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) 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.
(2) If the authority determines that the requirements of
subsection (1), (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. Except as otherwise provided
under 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.
(i) The project's effects on other Michigan businesses within
the same industry.
(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 plus a penalty equal to 10% of the
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)(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) Through December 31, 2007, after receipt of an
application, the authority may enter into a 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), and (h) if the authority considers it in the public
interest and if the eligible business would have met the
requirements of subsection (1)(g) and (h) 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), and (h) if the authority
considers it in the public interest and if the eligible business
would have met the requirements of subsection (1)(e), (g), and (h)
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)(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) Through December 31, 2008, each year, the authority shall
not execute new written agreements 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, rural businesses, or
an eligible business described in subsection (11). For calendar
year 2009, the authority shall not execute new written agreements
described in this subsection that in total provide for more than
400 yearly credits over the terms of those agreements entered into
that year, plus up to 85 additional yearly credits taken from
previously issued credits by the authority. For calendar year 2010
and each year thereafter through calendar year 2014, the authority
shall not execute new written agreements described in this
subsection that in total provide for more than 300 yearly credits
over the terms of those agreements entered into that year, plus up
to 85 additional yearly credits taken from previously issued
credits by the authority. As used in this subsection, beginning
calendar year 2010, "yearly credit" means the number of years over
the term of an agreement multiplied by the percentage amount
authorized in the agreement. As used in this subsection,
"previously issued credits" means 2/3 of the number of tax credits
authorized by the authority for an authorized business beginning in
calendar year 1999 that meet all of the following:
(a) That the authorized business did not use any or a portion
of the tax credits authorized under that written agreement.
(b) The authority determined at a meeting upon a vote of the
majority of the members present that the credits previously
authorized satisfy subdivision (a).
(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. In addition, the
authority may execute not more than 25 additional new written
agreements each year for eligible businesses that are qualified
high-technology businesses that have demonstrated that not less
than 10% of the total operating expenses of the eligible business
in the immediately preceding 2 years was attributable to research
and development. Not more than 35 of the 75 written agreements for
businesses that are qualified high-technology businesses or rural
business may be executed each year for qualified rural businesses.
Not more than 50 of the 75 written agreements for businesses that
are qualified high-technology businesses or rural businesses may be
executed each year for a high-technology business that engages in a
qualified high-wage activity. Not more than 4 of the 75 agreements
executed under this subsection may provide for a tax credit with a
duration of more than 12 years but not more than 20 years. The
authority shall not execute a written agreement for an eligible
business that is a qualified high-technology business or rural
business under this subsection if that eligible business has
claimed a credit under section 455 of the Michigan business tax
act, 2007 PA 36, MCL 208.1455.
(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 invest, through construction, acquisition,
transfer, purchase, contract, or any other method as determined by
the authority, 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 April 28, 2008, 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 greater than 150% of the federal minimum wage.
(12) Notwithstanding any other provision of this act,
beginning January 1, 2015, the authority or its successor shall not
enter into a new written agreement with an eligible business or
modify or amend an existing written agreement with an authorized
business, for a certified credit under section 430, 431, 431a,
431b, 431c, 432, 434, or 450 of the Michigan business tax act, 2007
PA 36, MCL 208.1430, 208.1431, 208.1431a, 208.1431b, 208.1431c,
208.1432, 208.1434, and 208.1450, unless the modification or
amendment reduces the net amount of the credit to the authorized
business. In addition, the authority or its successor shall not
modify or amend an existing written agreement with an authorized
business under this subsection if the amendment or modification
decreases the job creation or job retention requirements, extends
the time frame or term of years for the award of the credit or time
frame when the credit can be claimed, or adds additional facilities
whose jobs can count toward the job creation or job retention
requirements. If the authority or its successor intends to modify
or amend an existing agreement with an authorized business under
this subsection, the authority or its successor shall notify by
electronic mail the governor, the auditor general, the house fiscal
agency, the senate fiscal agency, and members of the house and
senate not less than 30 days before the authority or its successor
modifies or amends the written agreement. The notice provided by
electronic mail shall contain all of the following:
(a) The name of the authorized business.
(b) Description of the modification or amendment and an
explanation of why it is needed.
(c) Fiscal impact of the modification or amendment on this
state and the authorized business.
