HB-4190, As Passed House, May 22, 2019

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 4190

 

 

 

 

 

 

 

 

 

 

 

     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.section 201 of the recodified tax increment financing act,

 

2018 PA 57, MCL 125.4201.

 

     (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, except

 

as otherwise provided in subsection (14), beginning on January 1,

 

2018, the authority or its successor shall not enter into a new

 

written agreement with an eligible business, modify or amend an

 

existing written agreement with an authorized business, or modify,

 

amend, transfer, or assign an existing agreement to another

 

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,

 

amendment, transfer, or assignment reduces the total amount of the

 

credit to the authorized business. However, the authority or its

 

successor may modify, amend, transfer, or assign an existing

 

agreement with an authorized business for technical changes as long

 

as the modification, amendment, transfer, or assignment does not

 

increase the total amount of the credit as determined by the fund

 

to the authorized business. Under no circumstances shall the

 

authority or its successor modify, amend, transfer, or assign an

 

existing agreement to provide the authorized business with a longer

 

term to claim that credit. The authority or its successor has the

 

authority to transfer or assign an existing written agreement as


provided in this section.

 

     (13) Subject to subsection (12), the authority or its sucessor

 

shall establish guidelines for modification and amendment of

 

existing written agreements and shall publish them on its website.

 

     (14) The authority or its successor may modify and transfer an

 

existing written agreement to a transferee if that modification was

 

approved by a resolution of the Michigan strategic fund board on

 

November 27, 2018 and subsequently transferred as long as the value

 

of the credit taken by the transferee does not exceed

 

$12,000,000.00.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 100th Legislature are

 

enacted into law:

 

     (a) House Bill No. 4189.

 

     (b) House Bill No. 4191.