Bill Text: MI HB5169 | 2009-2010 | 95th Legislature | Introduced
Bill Title: Michigan business tax; credit; credit for transit-oriented development projects; create. Amends 2007 PA 36 (MCL 208.1101 - 208.1601) by adding sec. 438. TIE BAR WITH: HB 5170'09, HB 5171'09
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2009-07-15 - Reassign To Committee On Intergovernmental And Regional Affairs 07/15/2009 [HB5169 Detail]
Download: Michigan-2009-HB5169-Introduced.html
HOUSE BILL No. 5169
July 14, 2009, Introduced by Reps. Donigan, Lipton, Polidori, Byrnes, Robert Jones and Tlaib and referred to the Committee on Transportation.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
(MCL 208.1101 to 208.1601) by adding section 438.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 438. (1) For tax years that begin after December 31,
2009, a taxpayer that has a preapproval letter for a transit-
oriented development project issued after the effective date of the
amendatory act that added this section, provided that the project
is completed not more than 5 years after the preapproval letter for
that project is issued, or an assignee under subsection (14) may
claim a credit that has been approved under subsection (3) against
the tax imposed by this act equal to 10% of the cost of the
taxpayer's eligible investment paid or accrued by the taxpayer on
an eligible property provided that the transit-oriented development
project does not exceed the amount stated in the preapproval
letter. If the eligible investment exceeds the amount of eligible
investment in the preapproval letter for that project, the total of
all credits for the project shall not exceed the total of all
credits on the certificate of completion.
(2) A taxpayer shall apply to a transit revitalization
investment authority or a downtown development authority for
preapproval of a transit-oriented development project under this
section. Except as otherwise provided under this subsection, the
transit revitalization investment board or the downtown development
authority board, whichever is applicable, is authorized to approve
an application under this section. The transit revitalization
investment board or the downtown development authority board,
whichever is applicable, shall not approve any project applications
under this subsection unless the applicable authority has entered
into an agreement with a public transportation agency to share a
portion of the captured assessed value as provided under the
transit revitalization investment zone act or section 14 of 1975 PA
197, MCL 125.1644, whichever is applicable. Only the director of
the board is authorized to deny an application under this section.
A transit-oriented development project shall be approved or denied
not more than 45 days after receipt of the application. If the
board does not approve or deny the application within 45 days after
the application is received by the authority, the application is
considered approved as written. If the board approves a project
under this subsection, the director of the board or his or her
designee shall issue a preapproval letter that states the maximum
total eligible investment for the project on which credits may be
claimed and the maximum total of all credits for the project when
the project is completed. If an application for preapproval is
denied under this subsection, a taxpayer is not prohibited from
subsequently applying under this section for the same project or
for another project. The transit revitalization investment
authority and the downtown development authority shall develop and
implement the use of an application form to be used for preapproval
under this section.
(3) Upon receipt of the preapproval letter, the taxpayer shall
submit the preapproval letter along with a copy of the transit-
oriented development project to the Michigan economic growth
authority for final approval of that project. The Michigan economic
growth authority shall not approve more than 20 projects each
calendar year under this section, and the total amount of all
credits allowed under this section shall not exceed $40,000,000.00
in a calendar year.
(4) The Michigan economic growth authority shall review all
preapproval letters and transit-oriented development projects for
final approval under this section and, if a transit-oriented
development project is approved, shall assign a number to the
project and determine the maximum total of all credits for that
project. The Michigan economic growth authority shall consider the
following criteria to the extent reasonably applicable to the type
of project proposed when approving a project under this section:
(a) The overall benefit to the public.
(b) The extent to which the project will enhance the transit
revitalization investment zone by providing more public
transportation options and promoting transit ridership or passenger
rail use.
(c) Creation of jobs.
(d) Whether the eligible property is in an area of high
unemployment.
(e) Whether the project is financially and economically sound.
(f) The extent to which the project will encourage further
transit-oriented development.
(g) Whether the project is situated on sites that are
currently surface parking lots or is located in a downtown area or
within immediate walking distance of a downtown area.
(h) Any other criteria that the Michigan economic growth
authority considers appropriate for the determination of
eligibility under this section.
(5) A taxpayer may apply for projects under this section for
eligible investment on more than 1 eligible property in a tax year.
Each project approved and each project for which a certificate of
completion is issued under this section shall be for eligible
investment on 1 eligible property.
(6) When a project under this section is completed, the
taxpayer shall submit to the transit revitalization investment
authority or the downtown development authority, whichever is
applicable, and the Michigan economic growth authority
documentation that the project is completed, an accounting of the
cost of the project, the eligible investment of each taxpayer if
there is more than 1 taxpayer eligible for a credit for the
project, and, if the taxpayer is not the owner or lessee of the
eligible property on which the eligible investment was made at the
time the project is completed, that the taxpayer was the owner or
lessee of, or was a party to an agreement to purchase or lease,
that eligible property when all eligible investment of the taxpayer
was made. The director of the board of the transit revitalization
investment authority or of the board of the downtown development
authority, or his or her designee, for projects approved under this
section shall verify that the project is completed. The transit
revitalization investment authority or the downtown development
authority shall conduct an on-site inspection as part of the
verification process for projects approved under this section. When
the completion of the project is verified, the director of the
board of the transit revitalization investment authority or the
downtown development authority shall notify the Michigan economic
growth authority. Within 90 days of receiving notification of the
completion of a project approved under subsection (3), the Michigan
economic growth authority shall issue a certificate of completion
to each taxpayer that has made eligible investment on that eligible
property. The certificate of completion shall state the total
amount of all credits for the project, which total shall not exceed
the maximum total of all credits listed in the preapproval letter
for the project, and shall state all of the following:
(a) The total cost of the project and the eligible investment
of each taxpayer.
(b) Each taxpayer's credit amount.
(c) The taxpayer's federal employer identification number or
the Michigan treasury number assigned to the taxpayer.
(d) The project number.
(7) The cost of eligible investment for leased machinery,
equipment, or fixtures is the cost of that property had the
property been purchased minus the lessor's estimate, made at the
time the lease is entered into, of the market value the property
will have at the end of the lease. A credit for property described
in this subsection is allowed only if the cost of that property had
the property been purchased and the lessor's estimate of the market
value at the end of the lease are provided to the Michigan economic
growth authority.
(8) Credits claimed by a lessee of eligible property are
subject to the total of all credits limitation under this section.
(9) Each taxpayer and assignee under subsection (12) that
claims a credit under this section shall attach a copy of the
certificate of completion and, if the credit was assigned, a copy
of the assignment form provided for under this section to the
annual return filed under this act on which the credit under this
section is claimed.
(10) A credit under this section shall be claimed in the tax
year in which the certificate of completion is issued to the
taxpayer.
(11) Except as otherwise provided under this subsection, the
credits approved under this section shall be calculated after
application of all other credits allowed under this act. The
credits under this section shall be calculated before the
calculation of the credits under sections 413, 423, 431, and 450.
(12) Except as otherwise provided under this subsection, if
the credit allowed under this section for the tax year and any
unused carryforward of the credit allowed under this section exceed
the taxpayer's or assignee's tax liability for the tax year, that
portion that exceeds the tax liability for the tax year shall not
be refunded but may be carried forward to offset tax liability in
subsequent tax years for 10 years or until used up, whichever
occurs first. Except as otherwise provided in this subsection, the
maximum time allowed under the carryforward provisions under this
subsection begins with the tax year in which the certificate of
completion is issued to the taxpayer. If the taxpayer assigns all
or any portion of its credit approved under this section, the
maximum time allowed under the carryforward provisions for an
assignee begins to run with the tax year in which the assignment is
made and the assignee first claims a credit, which shall be the
same tax year. If the credit allowed under this section for the tax
year exceeds the taxpayer's tax liability for the tax year, the
taxpayer may elect to have the excess refunded at a rate equal to
85% of that portion of the credit that exceeds the tax liability of
the taxpayer for the tax year and forgo the remaining 15% of the
credit and any carryforward.
(13) If a project or credit under this section is for the
addition of personal property, if the cost of that personal
property is used to calculate a credit under this section, and if
the personal property is disposed of or transferred from the
eligible property to any other location, the taxpayer that disposed
of that property or transferred the personal property shall add the
10% of the federal basis of the personal property used for
determining gain or loss as of the date of the disposition or
transfer to the taxpayer's tax liability under this act after
application of all credits under this act for the tax year in which
the disposition or transfer occurs. If a taxpayer has an unused
carryforward of a credit under this section, the amount otherwise
added under this subsection to the taxpayer's tax liability may
instead be used to reduce the taxpayer's carryforward under
subsection (12).
(14) For projects approved under this section for which a
certificate of completion is issued, a taxpayer may assign all or a
portion of a credit allowed under this section under this
subsection. A credit assignment under this subsection is
irrevocable and shall be made in the tax year in which a
certificate of completion is issued unless the assignee is an
unknown lessee. If a taxpayer wishes to assign all or a portion of
its credit to a lessee but the lessee is unknown in the tax year in
which the certificate of completion is issued, the taxpayer may
delay claiming and assigning the credit until the first tax year in
which the lessee is known. A taxpayer may claim a portion of a
credit and assign the remaining credit amount. If the taxpayer both
claims and assigns portions of the credit, the taxpayer shall claim
the portion it claims in the tax year in which a certificate of
completion is issued pursuant to this section. An assignee may
subsequently assign a credit or any portion of a credit assigned
under this subsection to 1 or more assignees. The credit assignment
or a subsequent reassignment under this subsection shall be made on
a form prescribed by the Michigan economic growth authority. The
Michigan economic growth authority shall review and issue a
completed assignment or reassignment certificate to the assignee or
reassignee. An assignee or subsequent reassignee shall attach a
copy of the completed assignment certificate to its annual return
required under this act, for the tax year in which the assignment
or reassignment is made and the assignee or reassignee first claims
a credit, which shall be the same tax year. In addition to all
other procedures and requirements under this section, the following
apply if the total of all credits for a project is more than
$10,000,000.00 but $30,000,000.00 or less:
(a) The credit shall be assigned based on the schedule
contained in the certificate of completion.
(b) If the taxpayer assigns all or a portion of the credit
amount, the taxpayer shall assign the annual credit amount for each
tax year separately.
(c) More than 1 annual credit amount may be assigned to any 1
assignee, and the taxpayer may assign all or a portion of each
annual credit amount to any assignee.
(15) 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 this section. The report shall
include, but is not limited to, all of the following:
(a) A listing of the projects under this section that were
approved in the calendar year.
(b) The total amount of eligible investment for projects
approved under this section in the calendar year.
(16) For purposes of this section, taxpayer includes a person
subject to the tax imposed under chapters 2A and a person subject
to the tax imposed under chapter 2B.
(17) As used in this section:
(a) "Annual credit amount" means the maximum amount that a
taxpayer is eligible to claim each tax year for a project.
(b) "Downtown development authority" means an authority
created pursuant to 1975 PA 197, MCL 125.1651 to 125.1681.
(c) "Downtown development authority board" means the governing
body of the downtown development authority appointed under section
4 of 1975 PA 197, MCL 125.1654.
(d) "Eligible activities" or "eligible activity" means 1 or
more of the following:
(i) Infrastructure improvements that directly benefit eligible
property.
(ii) Reasonable costs of developing and preparing transit-
oriented development projects.
(e) "Eligible investment" or "eligible investments" means,
when made no earlier than 90 days prior to the date of the
preapproval letter, any demolition, construction, restoration,
alteration, renovation, or improvement of buildings or site
improvements on eligible property and the addition of machinery,
equipment, and fixtures to eligible property after the date that
eligible activities on that eligible property have started pursuant
to a transit-oriented development project under the transit
revitalization investment zone act, if the costs of the eligible
investment are not otherwise reimbursed to the taxpayer or paid for
on behalf of the taxpayer from any source other than the taxpayer.
The addition of leased machinery, equipment, or fixtures to
eligible property by a lessee of the machinery, equipment, or
fixtures is eligible investment if the lease of the machinery,
equipment, or fixtures has a minimum term of 10 years or is for the
expected useful life of the machinery, equipment, or fixtures, and
if the owner of the machinery, equipment, or fixtures is not the
taxpayer with regard to that machinery, equipment, or fixtures.
Eligible investment does not include certain soft costs of the
eligible investment as determined by the transit revitalization
investment authority, 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. Notwithstanding the foregoing, eligible
investment does include architectural, engineering, surveying, and
similar professional fees.
(f) "Eligible property" means property for which eligible
activities are identified under a transit-oriented development
project that was used or is currently used for high-density
residential, commercial, or mixed use purposes, including personal
property located on the property, to the extent included in the
transit-oriented development project, and that is in a transit
revitalization investment zone and includes parcels that are
adjacent or contiguous to that property if the development of the
adjacent and contiguous parcels is estimated to increase the
captured taxable value of that property.
(g) "Personal property" means that term as defined in section
8 of the general property tax act, 1893 PA 206, MCL 211.8, except
that personal property does not include either of the following:
(i) Personal property described in section 8(h), (i), or (j) of
the general property tax act, 1893 PA 206, MCL 211.8.
(ii) Buildings described in section 14(6) of the general
property tax act, 1893 PA 206, MCL 211.14.
(h) "Public transportation agency" means that term as defined
under section 2 of the transit revitalization investment zone act.
(i) "Transit-oriented development project" or "project" means
the total of all eligible investments on an eligible property that
is concentrated around and oriented to transit stations in a manner
that promotes transit ridership or passenger rail use and
encourages further transit-oriented development.
(j) "Transit revitalization investment authority" means the
transit revitalization investment authority created under the
transit revitalization investment zone act.
(k) "Transit revitalization investment authority board" means
the governing body of the transit revitalization investment
authority established pursuant to section 8 of the transit
revitalization investment zone act.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No.____ (request no.
00767'09).
(b) Senate Bill No.____ or House Bill No. 5170(request no.
03624'09).
(c) Senate Bill No.____ or House Bill No. 5171(request no.
03929'09).
