Bill Text: MI HB6052 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Economic development; other; economic development incentive evaluation act; create. Creates new act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-12-31 - Assigned Pa 540'18 With Immediate Effect [HB6052 Detail]
Download: Michigan-2017-HB6052-Engrossed.html
HB-6052, As Passed Senate, December 13, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 6052
A bill to evaluate certain economic development incentives; to
report those evaluations and make certain recommendations; and to
impose certain powers and duties on certain state employees and
officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"economic development incentive evaluation act".
Sec. 3. As used in this act:
(a) "Contractor" means the private entity, nonprofit entity,
or academic institution selected by the department under section 5
to evaluate certain economic development incentives.
(b) "Department" means the department of technology,
management, and budget.
(c) "Economic development incentive" means the abatements, tax
credits, exemptions, grants, loans, or loan guarantees related to
economic development activities in this state as determined by the
Michigan strategic fund provided under the following acts:
(i) The Michigan business tax act, 2007 PA 36, MCL 208.1101 to
208.1601.
(ii) The income tax act of 1967, 1967 PA 281, MCL 206.1 to
206.713.
(iii) 1974 PA 198, MCL 207.551 to 207.572.
(iv) The commercial redevelopment act, 1978 PA 255, MCL
207.651 to 207.668.
(v) The enterprise zone act, 1985 PA 224, MCL 125.2101 to
125.2123.
(vi) 1953 PA 189, MCL 211.181 to 211.182.
(vii) The technology park development act, 1984 PA 385, MCL
207.701 to 207.718.
(viii) Part 511 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.51101 to 324.51120.
(ix) The neighborhood enterprise zone act, 1992 PA 147, MCL
207.771 to 207.786.
(x) The city utility users tax act, 1990 PA 100, MCL 141.1151
to 141.1177.
(xi) The city income tax act, 1964 PA 284, MCL 141.501 to
141.787.
(xii) The general property tax act, 1893 PA 206, MCL 211.1 to
211.155.
(xiii) The Michigan economic growth authority act, 1995 PA 24,
MCL 207.801 to 207.810.
(xiv) The Michigan renaissance zone act, 1996 PA 376, MCL
125.2681 to 125.2696.
(xv) The obsolete property rehabilitation act, 2000 PA 146,
MCL 125.2781 to 125.2797.
(xvi) The brownfield redevelopment financing act, 1996 PA 381,
MCL 125.2651 to 125.2670.
(xvii) The Michigan strategic fund act, 1984 PA 270, MCL
125.2001 to 125.2094.
(xviii) Any new economic development programs as determined by
the Michigan strategic fund.
(d) "Exclusive economic development incentive" means an
economic development incentive that is intended to encourage a
single specific entity, project, or associated projects to locate,
expand, invest, or remain in this state or to hire or retain
employees in this state as determined by the strategic fund.
(e) "The strategic fund" means the fund under the Michigan
strategic fund act, 1984 PA 270, MCL 125.2001 to 125.2094.
Sec. 5. (1) The department shall contract with 1 or more
contractors for the periodic evaluation of economic development
incentives. The department along with the department of treasury
and the Michigan strategic fund shall develop a scope of services
for a request for proposals for professional services necessary to
complete the economic development incentive evaluations under this
act. The department may solicit input from a local governmental
unit or 1 or more public agencies, as those terms are defined in
section 2 of the urban cooperation act of 1967, 1967 (Ex Sess) PA
7, MCL 124.502, or a Michigan economic development corporation
corporate partner, in developing the scope of services for a
request for proposal for professional services necessary to
complete an economic development incentive evaluation under this
act. When selecting a contractor, the department shall consider the
ability for economic development incentive evaluations to be done
in an objective manner.
(2) The contractor will complete the economic development
incentive evaluations within 270 days of entering into the
contract. The department shall provide the economic development
incentive evaluation with any additional information to the house
and senate appropriations committees no more than 30 days after the
completion of the evaluation.
(3) The department shall enter into contracts with contractors
for economic development incentive evaluations as follows:
(a) At least once every 6 years for economic development
incentives funded with state appropriations of $15,000,000.00 or
less each year.
(b) At least once every 4 years for all other economic
development incentives, excluding programs that have entered into
legacy status. A program is considered to be in legacy status if
the Michigan strategic fund board or other governing body has not
approved, authorized, or originated any new abatement, tax credit,
or exemption, or distributed funds under a grant, loan, or loan
guarantee within the immediately preceding fiscal year period.
(c) Upon the conclusion of an economic development incentive,
a 1-time final analysis.
(4) At the request of the department, state agencies shall
House Bill No. 6052 as amended December 12, 2018
provide to the contractor, to the extent permitted by law, any
records, information, data, or data analysis necessary for the
contractors to effectively evaluate the economic development
incentives. The contractor shall not disclose or release any data
received from state agencies, except as permitted by law. A record
or portion of a record, material, or other data that relates to
financial, commercial, or proprietary information of any entity
that received an economic development incentive provided by another
department, agency, municipality, or political subdivision of this
state to the department or a contractor in connection with review
of an economic development incentive under this act shall not be
subject to the disclosure requirements of the freedom of
information act, 1976 PA 442, MCL 15.231 to 15.246. The department
and contractor may only use the financial or commercial information
for carrying out the purposes of this act and shall not disclose or
release any data received from a department, agency, municipality,
or political subdivision of this state.
(5) Economic development incentive evaluations shall be
published on the department's website. The department shall also
publish the name of each contractor who is awarded a contract under
this act and a schedule of economic development incentives and when
they shall be evaluated.
<<(6) Not less than 30 days prior to the department releasing the
economic development incentive evaluation under subsection(2) or publishing it on the department's website under subsection (5), the department shall provide a copy of the economic development incentive evaluation to the Michigan strategic fund, the Michigan economic development corporation, the state agency that has oversight of the economic development incentive, and the entity that is the recipient of the economic development incentive. The Michigan strategic fund, the Michigan economic development corporation, the state agency that has oversight over the economic development incentive, and the entity that is the recipient of the economic development incentive may issue a response to the economic development incentive evaluation.>>
Sec. 7. The department, in conjunction with the strategic fund
and the department of treasury, shall, not later than February 28,
2019, develop a multiyear schedule that lists all economic
development incentives and indicates the year when an economic
development incentive evaluation will be published for each
economic development incentive. The department shall consider
economic development incentive sunset dates and program inactivity
when creating the schedule and may group economic development
incentives for review by objective or policy rationale of each
economic development incentive. The department shall update the
schedule annually and include any new economic development programs
as determined by the Michigan strategic fund. The department shall
also list all economic development incentives that are exclusive
economic development incentives.
Sec. 9. (1) Evaluations of economic development incentives
shall include, to the extent practicable, all of the following:
(a) A description of the history of the economic development
incentive and its goals.
(b) A literature review of the effectiveness of this type of
incentive, including an inventory of similar incentives in other
states.
(c) An estimate of the economic and fiscal impact of the
economic development incentive. This estimate shall take into
account all of the following considerations in addition to other
relevant factors:
(i) The extent to which the economic development incentive
influences business behavior.
(ii) The results of the economic development incentive for the
economy of this state as a whole. This consideration includes both
positive direct and indirect impacts and any negative effects on
other businesses located in this state.
(iii) A comparison to the results of other economic
development incentives or other economic development strategies
with similar goals.
(iv) An evaluation of the loss of potential gains from other
alternatives or programs enacted by the legislature or existing
economic development incentives that have been extended.
(d) An assessment of whether adequate protections are in place
to ensure that the fiscal impact of the economic development
incentive does not increase substantially beyond the state's means
or expectations in future years.
(e) An assessment of whether the economic development
incentive is being administered effectively, including a review of
auditor general reports.
(f) An assessment of whether the economic development
incentive is achieving its goals.
(g) Recommendations for how this state can most effectively
achieve the economic development incentive's goals, including
recommendations on whether the economic development incentive
should be retained, reconfigured, or repealed.
(h) Recommendations for any changes to state policy, rules, or
statutes that would allow the economic development incentive to be
more easily or conclusively evaluated in the future. These
recommendations may include changes to collection, reporting and
sharing of data, and revisions or clarifications to the goal of the
economic development incentive.
(i) Any other information the contractor considers necessary
to assess the effectiveness of the economic development incentive
and whether it is achieving its goals.
(2) Each evaluation for exclusive economic development
incentives shall include all of the following based on a program-
wide basis:
(a) Aggregate information and a description of trends related
to this state's exclusive economic development incentives, which
may include analysis of their structure, performance standards, and
economic and fiscal impact.
(b) Recommendations for how exclusive economic development
incentives should be structured or in what circumstances they
should be offered to ensure they successfully change business
behavior.
(c) Recommendations for how exclusive economic development
incentives should be structured or in what circumstances they
should be offered to maximize positive direct and indirect impacts
on this state's economy and minimize negative effects on other
businesses located in this state.
(d) Recommendations for how exclusive economic development
incentives should be structured or in what circumstances they
should be offered to ensure that they represent a cost-effective
approach compared to other economic development incentive programs
or other economic development strategies.
(e) Recommendations for what protections exclusive economic
development incentives should include ensuring their costs do not
substantially exceed this state's expectations.
(f) Recommendations for how exclusive economic development
incentives should be structured or in what circumstances they
should be offered to avoid adverse impacts on the fiscal stability
of local units of government.
(g) Recommendations for the types of performance standards
that should be included in exclusive economic development
incentives, how these standards should be structured, and how they
should be monitored.
(3) A contractor shall disclose a summary of its methodology
and source materials in how it arrived at its evaluation under this
act.
