Legislative Analysis
ALLOW RETROACTIVE TAX CAPTURE FOR SMARTZONES Phone: (517) 373-8080
http://www.house.mi.gov/hfa
House Bill 5074 as reported from committee Analysis available at
Sponsor: Rep. Will Snyder http://www.legislature.mi.gov
Committee: Local Government and Municipal Finance
Complete to 10-18-23
(Enacted as Public Act 312 of 2023)
SUMMARY:
House Bill 5074 would amend Part 4 (Local Development Finance Authorities) of the
Recodified Tax Increment Financing Act to allow local development finance authorities
(LDFAs) to retroactively capture certain tax revenues for certified technology parks,
commonly known as “SmartZones.”
Under the act, these special technology parks or zones are able to capture the growth in property
taxes (tax increments) within the park, with the revenue to be used in the park for a variety of
purposes, including infrastructure construction, property purchases, marketing and promotion,
and creating high-technology support facilities such as laboratories and training centers. There
are currently 20 of these zones. 1 The act also requires the state, in the case of the certified
technology parks created after 2002, to reimburse local school districts, intermediate school
districts, and the state's School Aid Fund for tax revenue lost.
The act currently authorizes an LDFA to capture up to 50% of state and local school taxes for
up to 15 years for certain bonding to finance public facilities for a certified technology park,
with the approval of the state treasurer. It also allows for a five-year extension of school tax
capture if the LDFA agrees to additional reporting requirements and modifies its tax increment
financing plan to include regional collaboration as determined by the state treasurer and the
president of the Michigan Economic Development Corporation (MEDC). 2
The bill would allow the MEDC president and the state treasurer to retroactively approve an
LDFA’s school tax capture for a certified technology park for an additional five years beyond
the five-year extension described above, as long as the LDFA remains in compliance with the
additional reporting and regional collaboration requirements.
MCL 125.4402
1
For a map of the existing zones, see:
https://www.michiganbusiness.org/4a810c/globalassets/documents/reports/fact-
sheets/mismartzonefactsheet.pdf#page=2.
2
The extension can be 15 years in cases where a municipality that has created a certified technology park has entered
into an agreement with another LDFA that does not contain a park to designate a “distinct geographic area” within the
authority as a technology park. This allows, generally speaking, for a community without a designated SmartZone to
have a SmartZone by piggybacking on a SmartZone in another community. House Bill 5074 would not affect this
provision.
House Fiscal Agency Page 1 of 2
BRIEF DISCUSSION:
According to committee testimony, the city of Muskegon applied for a five-year extension of
its SmartZone in 2015, which was approved by the MEDC. The extension would have taken
effect in 2020 after the end of the zone’s initial 15-year term, but a state-level paperwork error
ultimately prevented the extension from being ratified. House Bill 5074 would allow for a
retroactive approval process so that Muskegon SmartZone can receive the extension.
FISCAL IMPACT:
To the extent that it authorizes the capture of state education tax (SET) and local or intermediate
school district levies that would otherwise revert to the respective taxing bodies, the bill would
reduce state School Aid Fund and local revenues. Since revenue from school operating mills
could be reduced under the bill, School Aid Fund expenditures could increase, assuming the
foundation allowance was maintained. The specific impact would depend on the characteristics
of the affected property and the extent to which the taxes were eligible for capture for the
additional period authorized under the bill.
POSITIONS:
Representatives of the following entities testified in support of the bill (10-11-23):
• Michigan Department of Treasury
• City of Muskegon
The Michigan Economic Development Corporation indicated support for the bill. (10-11-23)
Legislative Analyst: Holly Kuhn
Fiscal Analysts: Ben Gielczyk
Jim Stansell
■ 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 HB 5074 as reported Page 2 of 2


Statutes affected:
House Introduced Bill: 125.4402
As Passed by the House: 125.4402
As Passed by the Senate: 125.4402
House Concurred Bill: 125.4402
Public Act: 125.4402
House Enrolled Bill: 125.4402