Bill Summary – FastDemocracy

HOUSE BILL NO. 5886
     June 27, 2024, Introduced by Rep. Skaggs and referred to the Committee on Economic
        Development and Small Business.
          A bill to amend 2000 PA 146, entitled
    "Obsolete property rehabilitation act,"
    by amending sections 2 and 3 (MCL 125.2782 and 125.2783), section 2
    as amended by 2006 PA 70.
                   THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 2. As used in this act:
       (a) "Commercial housing property" means that portion of real
 property not occupied by an owner of that real property that is
 classified as residential real property under section 34c of the
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 general property tax act, 1893 PA 206, MCL 211.34c, is a multiple-
 unit dwelling, or is a dwelling unit in a multiple-purpose
 structure, used for residential purposes. Commercial housing
 property also includes a building or group of contiguous buildings
 previously used for industrial purposes that will be converted to a
 multiple-unit dwelling or dwelling unit in a multiple-purpose
 structure, used for residential purposes.
       (b) "Commercial property" means land improvements classified
 by law for general ad valorem tax purposes as real property,
 including buildings and improvements assessable as real property
 pursuant to sections 8(d) and 14(6) of the general property tax
 act, 1893 PA 206, MCL 211.8 and 211.14, the primary purpose and use
 of which is the operation of a commercial business enterprise.
 Commercial property shall also include includes facilities related
 to a commercial business enterprise under the same ownership at
 that location, including, but not limited to, office, engineering,
 research and development, warehousing, parts distribution, retail
 sales, and other commercial activities. Commercial property also
 includes a building or group of contiguous buildings previously
 used for industrial purposes that will be converted to the
 operation of a commercial business enterprise or a multiple-unit
 dwelling or a dwelling unit in a multiple-purpose structure, used
 for residential purposes. Commercial property does not include any
 of the following:
       (i) Land.
       (ii) Property of a public utility.
       (c) "Commission" means the state tax commission created by
 1927 PA 360, MCL 209.101 to 209.107.
       (d) "Department" means the department of treasury.
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       (e) "Facility", except as otherwise provided in this act,
 means a building or group of contiguous buildings.
       (f) "Functionally obsolete" means that term as defined in
 section 2 of the brownfield redevelopment financing act, 1996 PA
 381, MCL 125.2652.
       (g) "Obsolete properties tax" means the specific tax levied
 under this act.
       (h) "Obsolete property" means commercial property or
 commercial housing property, that is 1 or more of the following:
       (i) Blighted, as that term is defined in section 2 of the
 brownfield redevelopment financing act, 1996 PA 381, MCL 125.2652.
       (ii) A facility as that term is defined under section 20101 of
 the natural resources and environmental protection act, 1994 PA
 451, MCL 324.20101.
       (iii) Functionally obsolete.
       (i) "Obsolete property rehabilitation district" means an area
 of a qualified local governmental unit established as provided in
 section 3. Only those properties within the district meeting the
 definition of "obsolete property" are eligible for an exemption
 certificate issued pursuant to under section 6.
       (j) "Obsolete property rehabilitation exemption certificate"
 or "certificate" means the certificate issued pursuant to under
 section 6.
       (k) "Qualified local governmental unit" means 1 or more of the
 following:
       (i) A city with a median family income of 150% or less of the
 statewide median family income as reported in the 1990 federal
 decennial census that meets 1 or more of the following criteria:
       (A) Contains or has within its borders an eligible distressed
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 area as that term is defined in section 11(u)(ii) and (iii) of the
 state housing development authority act of 1966, 1966 PA 346, MCL
 125.1411.
         (B) Is contiguous to a city with a population of 500,000 or
 more.
         (C) Has a population of 10,000 or more that is located outside
 of an urbanized area as delineated by the United States bureau of
 the census.
         (D) Is the central city of a metropolitan area designated by
 the United States office of management and budget.
         (E) Has a population of 100,000 or more that is located in a
 county with a population of 2,000,000 or more according to the 1990
 federal decennial census.
         (ii) A township with a median family income of 150% or less of
 the statewide median family income as reported in the 1990 federal
 decennial census that meets 1 or more of the following criteria:
         (A) Is contiguous to a city with a population of 500,000 or
 more.
         (B) All of the following:
         (I) Contains or has within its borders an eligible distressed
 area as that term is defined in section 11(u)(ii) of the state
 housing development authority act of 1966, 1966 PA 346, MCL
 125.1411.
         (II) Has a population of 10,000 or more.
         (iii) A village with a population of 500 or more as reported in
 the 1990 federal decennial census located in an area designated as
 a rural enterprise community before 1998 under title XIII of the
 omnibus budget reconciliation act of 1993, Public Law 103-66, 107
 Stat. 416.
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       (iv) A city that meets all of the following criteria:
       (A) Has a population of more than 20,000 or less than 5,000
 and is located in a county with a population of 2,000,000 or more
 according to the 1990 federal decennial census.
       (B) As of January 1, 2000, has an overall increase in the
 state equalized valuation of real and personal property of less
 than 65% of the statewide average increase since 1972 as determined
 for the designation of eligible distressed areas under section
 11(u)(ii)(B) of the state housing development authority act of 1966,
 1966 PA 346, MCL 125.1411.a city, village, or township.
       (l) "Rehabilitation" means changes to obsolete property other
 than replacement that are required to restore or modify the
 property, together with all appurtenances, to an economically
 efficient condition. Rehabilitation includes major renovation and
 modification including, but not necessarily limited to, the
 improvement of floor loads, correction of deficient or excessive
 height, new or improved fixed building equipment, including
 heating, ventilation, and lighting, reducing multistory facilities
 to 1 or 2 stories, adding additional stories to a facility or
 adding additional space on the same floor level not to exceed 100%
 of the existing floor space on that floor level, improved
 structural support including foundations, improved roof structure
 and cover, floor replacement, improved wall placement, improved
 exterior and interior appearance of buildings, and other physical
 changes required to restore or change the obsolete property to an
 economically efficient condition. Rehabilitation shall does not
 include improvements aggregating less than 10% of the true cash
 value of the property at commencement of the rehabilitation of the
 obsolete property.
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       (m) "Rehabilitated facility" means a commercial property or
 commercial housing property that has undergone rehabilitation or is
 in the process of being rehabilitated, including rehabilitation
 that changes the intended use of the building. A rehabilitated
 facility does not include property that is to be used as a
 professional sports stadium. A rehabilitated facility does not
 include property that is to be used as a casino. As used in this
 subdivision, "casino" means a casino or a parking lot, hotel,
 motel, or retail store owned or operated by a casino, an affiliate,
 or an affiliated company, regulated by this state pursuant to the
 Michigan gaming control and revenue act, the Initiated Law of
 Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.
       (n) "Taxable value" means the value determined under section
 27a of the general property tax act, 1893 PA 206, MCL 211.27a.
       Sec. 3. (1) A Subject to subsection (5), a qualified local
 governmental unit, by resolution of its legislative body, may
 establish 1 or more obsolete property rehabilitation districts that
 may consist of 1 or more parcels or tracts of land or a portion of
 a parcel or tract of land, if at the time when the resolution is
 adopted, the parcel or tract of land or portion of a parcel or
 tract of land within the district is either of the following:
       (a) Obsolete property in an area characterized by obsolete
 commercial property or commercial housing property.
       (b) Commercial property that is obsolete property that was
 owned by a qualified local governmental unit on the effective date
 of this act, June 6, 2000 and subsequently conveyed to a private
 owner.
       (2) The legislative body of a qualified local governmental
 unit may establish an obsolete property rehabilitation district on
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 its own initiative or upon on a written request filed by the owner
 or owners of property comprising at least 50% of all taxable value
 of the property located within a proposed obsolete property
 rehabilitation district. The written request must be filed with the
 clerk of the qualified local governmental unit.
       (3) Before adopting a resolution establishing an obsolete
 property rehabilitation district, the legislative body shall give
 written notice by certified mail to the owners of all real property
 within the proposed obsolete property rehabilitation district and
 shall afford an opportunity for a hearing on the establishment of
 the obsolete property rehabilitation district at which any of those
 owners and any other resident or taxpayer of the qualified local
 governmental unit may appear and be heard. The legislative body
 shall give public notice of the hearing not less than 10 days or
 more than 30 days before the date of the hearing.
       (4) The legislative body of the qualified local governmental
 unit, in its resolution establishing an obsolete property
 rehabilitation district, shall set forth a finding and
 determination that the district meets the requirements set forth in
 subsection (1) and, if applicable, subsection (5).
       (5) An obsolete property rehabilitation district that is
 established on or after the effective date of the amendatory act
 that added this subsection must meet both of the following
 requirements:
       (a) The obsolete property rehabilitation district must be
 adjacent to existing development, utilize existing infrastructure,
 and have access to municipal water and sewer services on at least 1
 frontage.
       (b) The obsolete property rehabilitation district must
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 encourage compact development.
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Statutes affected: 
House Introduced Bill: 125.2782, 125.2783