Bill Summary – FastDemocracy

Legislative Analysis
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ALLOW MICHIGAN STRATEGIC FUND APPROVAL
                                                                                       http://www.house.mi.gov/hfa
AND EXTENSION OF RENAISSANCE ZONES
                                                                                       Analysis available at
House Bill 5096 as enrolled                                    http://www.legislature.mi.gov
Sponsor: Rep. Kristian C. Grant
House Committee: Economic Development and Small Business
Senate Committee: Committee of the Whole
Complete to 5-17-24
                                                       (Enacted as Public Act 40 of 2024)
SUMMARY:
         House Bill 5096 would amend the Michigan Renaissance Zone Act to allow the board of
         directors of the Michigan Strategic Fund (MSF) to designate all remaining Renewable Energy,
         Forest Product Processing, and Border Crossing Facility renaissance zones and to approve
         extensions for other MSF-designated zones. It would also modify the process for reimbursing
         lost property tax revenue to school districts, community colleges, and public libraries.
         Generally speaking, renaissance zones are tax-free zones designed for businesses in specific
         geographic areas or for specific kinds of facilities or industries anywhere in the state. Under
         the act, the State Administrative Board designates certain areas in Michigan as Renewable
         Energy and Forest Product Processing renaissance zones upon the recommendation of the
         MSF’s board of directors, and the MSF can designate 25 additional areas as Border Crossing
         zones. As of 2020, there were six Renewable Energy, 1 eight Forest Product Processing, and all
         25 Border Crossing Facility renaissance zones available for designation. 2
         Designations
         House Bill 5096 would allow the MSF board of directors, rather than the State Administrative
         Board, to approve the designations of renaissance zones in the three categories listed above
         that have not been designated by September 30, 2023, and approve extensions of designations
         that it has made. Local governments in which a zone was designated could apply to the MSF
         for an extension, beginning on October 1, 2023. (The bill would not change the current criteria
         for the designation or revocation of a renaissance zone.)
         If the MSF board rescinds a designation that it has made on or after October 1, 2023, before
         selecting a beginning date, it would be authorized under the bill to redesignate the zone at a
         later date. 3
         Additionally, the bill would allow the MSF to extend a designation for a renaissance zone
         currently located in a county with a population between 1.7 million and 1.9 million for an
         additional 15 years, up to a total renaissance zone duration of 30 years. 4 A qualified local
         governmental unit (defined by the act as a county or a local government that contains an eligible
1
  Two of these zones must focus primarily on the production of cellulosic biofuels.
2
  See: https://sigma.michigan.gov/EI360TransparencyApp/files/Economic%20Development%20Projects/2020%20R
enaissance%20Zone%20Annual%20Report.pdf.
3
  The MSF currently must set a beginning date for these zones on the January 1 of any year within five years after the
date of the designation.
4
  This provision would effectively apply only to Wayne County.
House Fiscal Agency                                                                                       Page 1 of 3
         distressed area 5) would have to apply for the extension, which could not be granted unless the
         governing body of each city, village, and township in which the renaissance zone is located
         adopts a resolution supporting the extension.
         For such a renaissance zone, an extension would be considered to have begun on January 1,
         2023. The MSF could grant applicable exemptions from city income taxes retroactively to the
         first day of the year in which it approves an amendment, and exemptions from city utility users
         taxes, property taxes, and all other benefits under the act would take effect once the amendment
         is approved.
         The MSF board would be able to delegate any of its responsibilities under the act to any
         authorized MSF employees, officers, and agents, including employees of the Michigan
         Economic Development Corporation (MEDC).
         Reimbursements
         Subject to an appropriation, the state is required under the act to reimburse local school
         districts, intermediate school districts, community college districts, and public libraries for lost
         property tax revenue due to a renaissance zone. (Under the bill, revenue lost from taxes levied
         by local school districts for public recreation facilities would also be reimbursed.)
         These entities must currently report all lost revenue eligible for reimbursement to the Michigan
         Department of Treasury. House Bill 5096 would instead provide that for property exempted
         for a renaissance zone, the assessor of the appropriate local tax collecting unit must report the
         property’s taxable value for that year and the immediately preceding year to the Department of
         Treasury, and the Department of Treasury must calculate the amount of revenue lost based on
         the property’s taxable value.
         Additionally, the bill would require prorated reimbursements to intermediate school districts,
         local school districts, community colleges, and public libraries if the amount appropriated for
         the reimbursements is less than the amount required. 6
         MCL 125.2683 et seq.
BRIEF DISCUSSION:
         Supporters of the bill believe that an update in the renaissance zone designation process is
         necessary to allow local governments to better take advantage of the opportunities that a
         renaissance zone could provide. Reducing taxes in these zones can encourage businesses to
         invest in that area, leading to job creation and increased property values.
         In addition, the bill would allow the MSF to extend a renaissance zone located in Wayne
         County for an additional 15 years with the approval of the local units of government in which
         the renaissance zone is located. This extension appears to apply to the renaissance zone for the
         Detroit Medical Center, which is set to expire at the end of 2025.7 If the MSF approves an
5
  See: https://www.michigan.gov/mshda/-/media/Project/Websites/mshda/about/reports/MSHDA-EDA-
List.pdf#page=2.
6
  Under the act, this provision was only in effect for the 2009-10 fiscal year.
7
  https://detroitmi.gov/departments/office-chief-financial-officer/ocfo-divisions/office-assessor/renaissance-zones.
House Fiscal Agency                                                                HB 5096 as enrolled     Page 2 of 3
       extension in 2024, the 15-year extension would be considered to have begun in 2023, city
       income tax exemptions would be retroactive to January 1, 2024, and other exemptions and
       benefits would apply once the extension is approved.
FISCAL IMPACT:
       The bill is permissive in nature and would not have a direct fiscal impact on state or local
       government. However, if additional renaissance zones were approved, the bill would reduce
       state and local revenue by an indeterminate amount. The bill also could increase state
       expenditures by an unknown amount. The fiscal impact would depend on the specific
       characteristics of the applicable renaissance zone (taxable value and millage rates) and the
       decision on the part of the legislature to make an appropriation as part of state reimbursements
       for losses attributable to renaissance zones.
       The bill includes a provision specific to the extension of a renaissance zone in Wayne County
       for an additional 15 years. An estimate of revenue loss or state expenditures related to the
       relevant renaissance zone does not currently exist. If the renaissance zone was extended it
       would result in state and local revenue loss and increased state expenditures when compared
       to current law. The magnitude of revenue loss and state expenditures would be commensurate
       with current levels.
       The state currently provides an appropriation for reimbursement payments for intermediate
       school districts, local school districts, community colleges, and public libraries affected by
       renaissance zones. To the extent that the bill imposes new administrative responsibilities
       related to taxable value reporting and tax revenue loss calculations on local assessors and the
       Department of Treasury it would increase administrative costs. However, these costs are not
       expected to be significant.
                                                          Legislative Analyst: Holly Kuhn
                                                               Fiscal Analyst: 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                                                     HB 5096 as enrolled   Page 3 of 3
Statutes affected: 
Substitute (H-1): 125.2683
Substitute (S-4): 125.2683
House Introduced Bill: 125.2683
As Passed by the House: 125.2683
As Passed by the Senate: 125.2683
House Concurred Bill: 125.2683
Public Act: 125.2683
House Enrolled Bill: 125.2683