Bill Summary – FastDemocracy

Legislative Analysis
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ALLOW SUMMER RESORTS TO BECOME
                                                                               http://www.house.mi.gov/hfa
NONPROFIT CORPORATIONS
                                                                               Analysis available at
House Bill 4312 as reported from committee                                     http://www.legislature.mi.gov
Sponsor: Rep. John R. Roth
House Bill 4313 as reported from committee
Sponsor: Rep. Betsy Coffia
Committee: Local Government and Municipal Finance
Complete to 10-27-23
SUMMARY:
           House Bills 4312 and 4313 would amend 1897 PA 230 and the Nonprofit Corporation Act,
           respectively, to allow summer resort and park associations to convert into domestic nonprofit
           corporations.
           1897 PA 230 allows for the formation of corporations for the purpose of owning, maintaining,
           and improving land and other property kept as a summer resort or a park.
           The bills would allow a summer resort association formed under 1897 PA 230 to convert into
           a domestic nonprofit corporation by satisfying requirements of the Nonprofit Corporation Act
           concerning the conversion of a business organization into a domestic corporation 1 and adopting
           bylaws in accordance with the Nonprofit Corporation Act.
           Each bill would take effect 90 days after being enacted into law, but neither bill would take
           effect unless both bills were enacted.
           HB 4312: MCL 450.2123
           HB 4313: Proposed MCL 455.19
BACKGROUND:
           Reportedly, 43 active summer resort associations have formed under 1897 PA 230.
           The bills are a reintroduction of House Bills 5863 and 5864 of the 2021-2022 legislative
           session, which were passed by the House and referred to the Senate Economic and Small
           Business Development committee. The bills are also similar to House Bills 4048 and 4049 of
           the 2019-20 legislative session, which were re-referred to House committee after being
           reported, and to House Bills 5508 and 5509 of the 2017-18 legislative session, which were
           passed by the House and reported from the Senate Commerce committee.
1
    http://legislature.mi.gov/doc.aspx?mcl-450-2746
House Fiscal Agency                                                                             Page 1 of 2
BRIEF DISCUSSION:
       According to committee testimony, the 1897 act under which many summer resort associations
       were organized does not adequately address circumstances faced by those associations and
       their members today.
       Although 2022 PA 20 increased the act’s monetary limits to account for 125 years of inflation,
       concerns remain that the value of personal property that an association may hold is arbitrarily
       restricted. Additionally, several other provisions of the 1897 act present structural and
       procedural challenges that associations would not have to work around if they could reorganize
       under more flexible terms as modern nonprofits.
       Reportedly, provisions of the 1897 act concerning voting shares and filling vacancies on the
       board of directors are especially outdated, hard to comply with, or otherwise problematic for
       associations and their members. Association shares have in many cases passed through several
       generations in the decades following the association’s organization, which means that more
       shareholders now live out of state and that ownership interests are now often held by a trust—
       circumstances that the 1897 act does not appear to have envisioned and does not easily
       accommodate.
       The bills would allow these summer resort associations to reorganize as domestic nonprofit
       corporations under the Nonprofit Corporation Act, but would not require them to do so.
FISCAL IMPACT:
       House Bills 4312 and 4313 would not be expected to have an appreciable fiscal impact on any
       units of state or local government. If an entity sought a nonprofit charitable institution tax
       exemption under MCL 211.7o, there are several conditions that would have to be satisfied;
       furthermore, tax exemptions are largely dependent on an organization’s federal tax status.
       Therefore, these bills are not anticipated to have any noteworthy impact on tax revenues.
POSITIONS:
       A representative of the Neahtawanta Summer Resort Association testified in support of the
       bills. (10-18-23)
       The Department of Licensing and Regulatory Affairs (LARA) indicated a neutral position on
       the bills. (10-18-23)
                                                          Legislative Analyst: Holly Kuhn
                                                             Fiscal Analysts: Marcus Coffin
                                                                               Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                                           HBs 4312 and 4313 as reported   Page 2 of 2
Statutes affected: 
House Introduced Bill: 450.2123
As Passed by the House: 450.2123