Bill Summary – FastDemocracy

Legislative Analysis
                                                                           Phone: (517) 373-8080
ALLOW DOWNTOWN DISTRICTS TO INCLUDE AREAS
                                                                           http://www.house.mi.gov/hfa
SEPARATED BY A BODY OF WATER
                                                                           Analysis available at
Senate Bill 700 (S-1) as passed by the Senate                              http://www.legislature.mi.gov
Sponsor: Sen. Kevin Hertel
House Committee: Economic Development and Small Business
Senate Committee: Local Government
Complete to 12-10-24
SUMMARY:
       Senate Bill 700 would amend Part 2 (Downtown Development Authorities) of the Recodified
       Tax Increment Financing Act to allow a municipality’s designated downtown district to include
       two areas separated by a body of water if the municipality is located on the mainland and one
       or more islands.
       The Recodified Tax Increment Financing Act authorizes the use of various tax increment
       finance authorities (TIFAs) in Michigan, including downtown development authorities
       (DDAs). TIFAs are entities that “capture” increases in property tax revenue in designated tax
       increment finance (TIF) districts. Because the increase in property values in a TIF district is
       expected to be attributable to the TIFA’s development of that area, any tax revenue increases
       beyond what the property originally yielded go to the TIFA.
       Generally speaking, when a local unit of government creates a downtown development
       authority, it establishes a special downtown district and then captures the tax revenues that
       stem from future increases in property values within that district for the DDA to use to promote
       the economic development of the district.
               The act defines downtown district as the part of an area in a city, village, or township
               business district that is specifically designated as such via ordinance. A downtown
               district may include multiple separate and distinct geographic areas in a business
               district under specified circumstances, and those areas are considered part of one
               designated downtown district.
       (A downtown district may include multiple separate and distinct areas within a business district
       if a municipality enters into an interlocal agreement with a township that was previously
       ineligible to create a DDA, is adjacent to a municipality with a DDA, and is a member of the
       same joint planning commission as that municipality, or if the municipality is a city
       surrounding another city and that other city is between the separate and distinct areas.)
       Senate Bill 700 would amend the definition of downtown district to provide that, in a
       municipality located on both the mainland and one or more islands where a body of water lies
       between two separate and distinct downtown areas, a singular downtown district can include
       both of those areas.
       MCL 125.4201
House Fiscal Agency                                                                          Page 1 of 2
FISCAL IMPACT:
       Senate Bill 700 would have a fiscal impact limited in scope, as the provisions of the bill are
       specific to local units located on the mainland and one or more island. The intent of the bill
       appears to be an authorization of the Clay Township DDA to include geographic area on
       Harsens Island. Based on the TIF plan, the township does not appear to capture state property
       tax revenues (State Education Tax) or school operating taxes. To the extent that the local unit
       expands the geographic territory of the DDA, the DDA would be authorized to capture property
       tax revenue growth from an established base year otherwise allocated to the applicable local
       taxing units. The scope of the revenue capture would depend on taxable values and millage
       rates within the geographic area. A DDA, like other tax increment financing authorities,
       captures the incremental growth of local property taxes over a period of time to fund downtown
       development activities.
       It is unclear if there are other local units that would be affected by the provisions of the bill.
       To the extent that there are, any fiscal impact would be a function of the taxable values, local
       taxing unit millages, and millage rates in the geographic area affected by the establishment of
       the DDA.
                                                           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                                       SB 700 (S-1) as passed by the Senate   Page 2 of 2
Statutes affected: 
Substitute (S-1): 125.4201
Senate Introduced Bill: 125.4201
As Passed by the Senate: 125.4201