Honors and Dark Stores and Roads, Oh My! 2015 Busy Year for League Legislative Staff

Dark Stores, speed limits, League honors and roads were just of the many issues and accomplishments involving the Michigan Municipal League in 2015.

Having Governor Snyder sign a long-term road funding package in November following the defeat of Proposal 1 back in May was certainly one of the top news stories out of Lansing this year. But there were many other noteworthy accomplishments in 2015 by the Michigan Municipal League’s advocacy staff in Lansing and Washington D.C.

Like in Michigan, Transportation funding was a hot topic in D.C. in 2015. A major long-term package, called the FAST Act, was signed into law by President Obama earlier this month. Of course, the major national issue in 2016 will be the President election and the League is an active supporter of the Cities Lead 2016 platform led by the National League of Cities.

Back in Michigan, 2015 ended with a flurry of activity in the state Legislature as lawmakers took on numerous bills in the final session days of the year. Click on these links below for details about some of the recent activity:

Other legislation positively impacting our municipalities include bills allowing for training reciprocity to out-of-state firefighters; cleaning up the personal property tax (PPT) implementation process; establishing the March Presidential Primary as the election date for local ballot questions; extending the Commercial Rehabilitation Act; expanding recreation authorities; clarifying rental inspections; and changing portions of the Mobile Home Commission Act. Some of these bills have been signed into law and others continue to move through the process.

There also are numerous other issues in which the League was very engaged 2015 and will continue to be into 2016 , including the Dark Stores Big Box property tax loophole; local speed limits; and a shift in broadband relocation costs to communities. View the League’s newly created web page dedicated to the Dark Stores issue.

In addition, throughout 2015 the League has been extremely active behind the scenes informing lawmakers about the state’s broken municipal finance system and the need for change. Stay tuned for more on this major initiative in 2016.

The final week of session for the Legislature wrapped up Thursday, Dec. 17. Read more on what happened and for all the latest legislative news be sure to frequently visit the League’s Inside 208 blog here.

Posted by Matt Bach on behalf of the League’s advocacy team.

Commercial Rehab Act Sunset Extension Signed By Governor

This week SB 556, a bill to extend the sunset of the Commercial Rehabilitation Act from December of this year to 2020, was signed by Governor Snyder! This act has been used in communities across the state to assist in eradicating blight and putting properties back to productive use.

Thank you to Sen. Horn for being such a great advocate on this issue and keeping a valuable local tool that assists our communities in blight control and economic development.

Nikki Brown is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at nbrown@mml.org or 517-908-0305.

City Income Tax Communities Oppose Senate Changes

The Michigan Senate voted Tuesday, Dec. 15, 2015, to discharge House Bill 4462 from the Senate Finance committee and then inserted language that many of the 22 income tax communities have weighed in on opposing. Despite the opposition, the Senate passed it late Tuesday night on a vote of 21-17.

The new language added by the Senate would allow a “voluntary” written agreement between an income tax levying city and an owner of property located in the city on behalf of a qualified employer or with a qualified employer who would make an advance payment of the withholding tax that would normally be deducted from employee compensation and remitted to the city, equal to the nonresident rate for the duration of the written agreement.

The Michigan City Income Tax Administrators Association, representing all 22 income tax cities met last week to discuss this proposal and subsequently, the 14 cities who were represented at the meeting passed a unanimous resolution opposing this proposal. Those cities represented at the meeting were: Grand Rapids, Muskegon, Pontiac, Saginaw, Lansing, Springfield, Jackson, Big Rapids, Lapeer, Ionia, Portland, Detroit, Battle Creek and Flint.

Beyond the grave concerns over the administrative burden that this type of concept would place on a city, there were numerous questions raised about the ability to administer such an agreement, where there is no model to follow and no other similar allowance for treatment of income tax and the federal, state, or local level.  Negative consequences for the taxpayer, possible loss of revenue for the city, and an inability to ensure accountability or compliance were among many of the reasons cited in opposition to this idea.

The League is working with these communities to oppose this legislation now that the bill has been returned to the House.

Chris Hackbarth is the League’s director of state affairs. He can be reached at 517-908-0304and chackbarth@mml.org.

Urge Your Representative to Vote NO on HB 5016

Here is an urgent action alert we’ve sent to our members this morning:

We need your help! The Michigan House is currently working on legislation, HB 5016, that could be voted on this week that the Michigan Municipal League strongly opposes. The bill would require municipalities to reimburse a telecommunications provider a portion of relocation costs if a community fails to notify the provider at least one year in advance of a project that will require relocation of their lines.

Additionally, communities will no longer be able to charge for a permit fee, inspection fee, or survey cost, when a relocation is required. The bill also fails to provide any protection to the municipality if the provider installs or relocates their lines in an area other than allowed by the permit or causes construction delays.

If passed, municipalities would be required to pay a private for-profit company for moving their telecommunication lines within the public right-of-way. Communities are already prohibited from denying the telecommunications access to these public spaces they get to occupy for free. This proposed legislation sets a terrible precedent in this state and could lead to other utility providers, i.e. gas and electric companies, to seek the same deal.

Relocation costs can be very expensive. If communities are required to shoulder a portion of those costs it could result in projects being delayed, scaled back, or even eliminated as a result of this unnecessary, one-sided legislation.

The League encourages you to contact your representative TODAY and tell them to oppose HB 5016 and protect our taxpayers from paying these costs. Go here to get the contact info for your legislators.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

Michigan Municipal League Members Testify on Dark Stores Issue; Call for Immediate Fix

Chris Hackbarth testifies on the Dark Stores issue along with MTA and MAC officials.

Chris Hackbarth testifies on the Dark Stores issue along with MTA and MAC officials.

(UPDATE: View the League’s new Dark Stores resource web page and view additional Dark Stores-related photos here).

The Michigan Municipal League and some of our members were given the opportunity to offer testify on the Dark Stores tax loophole issue Wednesday before the House Tax Policy Committee. If you’re not aware, the Dark Stores situation involving property tax appeals by Big Box stores like Meijer, Kmart and Wal-mart, is quickly becoming one of the most significant issues, with the biggest implications, facing Michigan communities.

The League testified along with the Michigan Association of Counties and the Michigan Townships Association. We discussed the impact from Dark Store theory of assessment and the need for immediate fixes. We told the committee about the manipulation of property values that big box retailers are perpetrating through the placement of negative use deed restrictions to devalue buildings that they vacate and then point to later on as support for lowering their assessments.

The League has organized a coalition of more than a dozen organizations to take on this issue. View our joint statement previously given to the committee. Along with organizing this coalition, the League is pursuing an aggressive public relations campaign to bring attention to this important issue through radio, television and print media. We urge your assistance with this effort by contacting your Senator and Representative to explain to them the importance of addressing these dark store appeals and restoring a fair and proper valuation system.

Three Rivers City Manager Joseph Bippus and Mayor Thomas Lowry testify on the Dark Stores issue Dec. 9, 2015.

Three Rivers City Manager Joseph Bippus and Mayor Thomas Lowry testify on the Dark Stores issue Dec. 9, 2015.

Among those testifying Wednesday were League members Three Rivers Mayor Thomas Lowry and City Manager Joseph Bippus. They testified as guests of State Rep. Aaron Miller, R-Sturgis. Lowry discussed the financial impact of the Dark Stores issue on his city.

“In the last two years we’re pushing well over $300,000 that we had to give back. We only have a $4.3 million budget, we’re approaching 10 percent of (our budget) just from the Dark Store theory,” Lowry told the committee. “We can get an employee for roughly 1 ½ percent of our budget. So for every 1 to 2 percent reduction in our general fund revenues we’re letting an employee go. This absolutely affects the level of services that we can provide to our citizens and our citizens still expect the same level of services.”

In essence, the Dark Store theory is a tax loophole scheme being used by Big Box retailers to lower the amount they pay in property taxes. Retailers such as Meijer, Lowe’s, Target, Kohl’s, Menards, IKEA, Wal-Mart and Home Depot across Michigan are arguing that the market value of their operating store should be based on the sales of similar size “comparable” properties that are vacant and abandoned (aka “dark”) and may not even be located in Michigan. In the last few years, the political appointees on the Michigan Tax Tribunal have upheld this “Dark Store theory” and cut property tax assessments in some cases by as much as 50 percent. This impacts local revenues and subsequently local services and making Michigan one of the only places in the country that assess Big Box retail buildings in this manner. These rulings have resulted in a loss of millions of dollars in tax revenue for local governments across Michigan and now other businesses – not just Big Box stores – such as drug stores and auto repair businesses are attempting to get their taxes lowered based on this same Dark Store argument.

Auburn Hills officials talk with State Rep. Jim Townsend following a House Tax Policy Hearing on the Dark Stores issue Dec. 9, 2015.

Auburn Hills officials talk with State Rep. Jim Townsend following a House Tax Policy Hearing on the Dark Stores issue Dec. 9, 2015.

 

Grand Rapids Attorney Jack Van Coevering, former chief judge and chairman of the Michigan Tax Tribunal, testified about how the Michigan Tax Tribunal rulings have resulted in Big Box property tax assessments that are significantly lower in Michigan compared to other states. He gave multiple examples:

  • In Michigan, Lowes stores are assessed at $22.10 per square foot. In Lowes home state of North Carolina, the same stores are valued at $79.08 per square foot.
  • In Michigan, Menards and Target are valued at $24.97 per square foot. In Menard’s home state of Wisconsin, the sames stores are valued at $61.23 per square foot.
  • Sam’s Clubs and Wal-Mart now average around $25.68 per square foot in Michigan. Studies of those buildings in the home state of Arkansas are being done, but Van Coevering said he expects them to be much higher than they are in Michigan.

Van Coevering added that most of the Big Box stores in Michigan used to be valued in the $55 range per square foot and now the amounts have been cut in half due to the Dark Stores theory.

Escanaba Assessor Daina Norden attends the Dark Stores hearing Dec. 9, 2015.

Escanaba Assessor Daina Norden attends the Dark Stores hearing Dec. 9, 2015.

The House Tax Policy committee led by Representative Jeff Farrington, R-Utica, first met on the issue Nov. 4 and scheduled this follow-up hearing after it ran out of time to hear from all those who wanted to speak on the issue. Officials from Auburn Hills were also present and attempted to testify and unfortunately time ran out and they did not get a chance to speak. Instead, they did submit written testimony and those in attendance were recognized by Chairman Farrington. I want to thank the Auburn Hills contingent for their continued work on this issue – Auburn Hills City Manager Thomas Tanghe; Assessor Michael Lohmeier; and City Attorney Derk Berkerleg.

Escanaba Assessor Daina Norden also attended the hearing.

The House Tax Policy committee has established a work group to study the issue. The work group, being led by House Tax Policy Committee Vice-Chair David Maturen, R-Vicksburg, includes representatives from all sides of the issue, including the League. Check out an in-depth radio video interview of Maturen discussing the issue and the workgroup.

Posted by Matt Bach on behalf of Chris Hackbarth, the League’s director of state affairs. Chris can be reached at 517-908-0304 and chackbarth@mml.org.

House Committee Passes League Supported Rental Inspection Legislation

Today, the House Local Government committee passed out SB 394 (S-2 version: SB 394 S-2), a bill to fold townships into the mix of those local communities who qualify for the Housing Law, clarifies that inspection programs are optional at the local level, and states a rental inspection fee cannot be required to be paid more than 6 months prior to the actual inspection.  The League testified in support of this legislation when it was inSenate committee.

Again, thank you to Sen. Robertson, his staff, Rental Property Owners Association, and Apartment Association of Michigan for working with us on this issue to address our concerns from last session’s legislation.

The legislation now goes to the House.

Nikki Brown is a legislative associate for the League handling economic development, land use, and municipal services issues.  She can be reached at nbrown@mml.org or 517-908-0305.

League, MAC and MTA Issue Joint Statement on Data Center Abatement Proposals

The Michigan House Tax Policy Committee today is reviewing legislative proposals regarding what’s known as the data center issue and the Michigan Municipal League along with other organizations have distributed a joint statement regarding the legislation.

The biggest concern from the League’s perspective is ensuring that local communities continue to have the ability to establish local control on both existing and future abatement requests, like we have for other economic development abatement tools. One proposal being shopped by the existing data center industry would eliminate the current language providing local involvement in future data center investments. The League and other local government groups are opposed to this effort. We feel it is appropriate to maintain local involvement in any decision on whether to abate taxes as an economic development tool.

Here is the full statement on this issue by the League, the Michigan Association of Counties (MAC) and the Michigan Townships Association (MTA):

As the representatives of local government in Michigan, our organizations ― which are responsible for delivering the daily services Michigan residents count on ― wish to clarify our position on the various legislative proposals being discussed for the data center industry, especially those surrounding exemptions for personal property.

Local governments welcome economic development/job creation in this state and our goal is to continue to partner with the state.

If the Legislature and administration believe exemptions for existing firms and their existing equipment in a broad-based personal property exemption framework are necessary, we recommend the exemption for current equipment follow the recently adopted system for small taxpayers and manufacturers, allowing the local units to be fully reimbursed for the reductions to their tax base.

In our view, though, a blanket, state-ordered exemption would be counterproductive, given the existing economic development tools available to reduce/abate personal property for business, including data centers.

Absent a reimbursement mechanism, language similar to what the House and Senate are considering, which allows for a local unit to approve/deny a request for an abatement of data center personal property, is vital. Allowing local governments to be involved in this way ensures they are able to evaluate the local budget costs against the benefits of proposed exemptions, just as they do with all other economic development decisions.

Adoption of one of these approaches will protect existing local government budgets and preserve the role of the local unit in these critical local economic development decisions.
Thank you for your consideration. We welcome the opportunity to discuss further should you have any questions.

– Chris Hackbarth, Director of State Affairs for the Michigan Municipal League
– Judy Allen, Director of Government Relations for the Michigan Townships Association
– Steve Currie, Deputy Director for the Michigan Association of Counties

Posted by Matt Bach on behalf of Chris Hackbarth. For more information contact Hackbarth at chackbarth@mml.org and 517-908-0304.

New Federal Transportation Bill, FAST Act, Becomes Law

President Obama signed the FAST (Fixing America’s Surface Transportation) Act yesterday, making the first long term transportation bill in a decade official. There are some big wins for local governments within the new law, which is worth approximately $305 billion. A good, comprehensive 13 page summary of the law can be found here.

The biggest win for local communities, quite simply, is that it is a 5 year arrangement and local leaders will not have to wonder what will happen every six months under more extensions. The League had been advocating first and foremost for a bill that expands beyond the next fiscal year to enable more long-term planning for transportation projects. Specifically, there are many other significant victories being highlighted in the bill, which spans 1300 pages.

The Surface Transportation Program is now the Surface Transportation Block Grant Program and increases the amount allocated to local leaders from 50% to 55% over the length of the bill and gives locals greater flexibility in how the funds are spent.

The Surface Transportation Block Grant Program would now house the Transportation Alternatives Program, and is proposed to be increased from $835 million to $850 million. And the bill gives Metropolitan Planning Organizations additional flexibility in how to spend their funds.

Transit Oriented Development would be eligible for the TIFIA program and the minimum project size threshold would be lowered to $10 million, expanding the program significantly for smaller projects.

The Michigan delegation was mostly supportive with both Senators voting yes and twelve of the fourteen Representatives voting for the bill as well. Congressmen Amash and Huizenga were the two no votes.

Summer Minnick is the Director of External Relations and Federal Affairs. She can be reached at sminnick@mml.org or 517-908-0301.

Commercial Rehabilitation Act Sunset Extension Legislation Passes House

This week SB 556, a bill to extend the sunset of the Commercial Rehabilitation Act from December of this year to 2020, received full passage from the House of Representatives! This act has been used in communities across the state to assist in eradicating blight and putting properties back to productive use.

Thank you to Sen. Horn for continuing to be an advocate on this issue and keeping a valuable local tool that assists our communities in blight control and economic development.

The legislation now goes to the Governor for his signature.

Nikki Brown is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at nbrown@mml.org or 517-908-0305.

Congress Poised to Pass Long-Term Transportation Package This Week

For the first time in ten years, Congress is on the verge of passing a long-term transportation package and there are some big wins for local governments within the new deal. The committee of House and Senate negotiators have agreed to the new bill worth approximately $305 billion, entitled the FAST Act (Fixing America’s Surface Transportation), and both Chambers are expected to pass it by the deadline of this Friday, December 4th. The biggest win for local communities, quite simply, is that it is a 5 year arrangement and local leaders will not have to wonder what will happen every six months under more extensions. The League had been advocating first and foremost for a bill that expands beyond the next fiscal year to enable more long-term planning for transportation projects. Specifically, there are many other significant victories being highlighted in the bill, which spans 1300 pages.

The Surface Transportation Program is now the Surface Transportation Block Grant Program and increases the amount allocated to local leaders from 50% to 55% over the length of the bill and gives locals greater flexibility in how the funds are spent.

The Surface Transportation Block Grant Program would now house the Transportation Alternatives Program, and is proposed to be increased from $835 million to $850 million. And the bill gives Metropolitan Planning Organizations additional flexibility in how to spend their funds.

Transit Oriented Development would be eligible for the TIFIA program and the minimum project size threshold would be lowered to $10 million, expanding the program significantly for smaller projects.

The bill is being paid for by a series of sources, not including any changes to the federal gas tax. Some of the sources include the Federal Reserve surplus account, selling a portion of the Strategic Petroleum Reserve and cutting the dividend the Federal Reserve pays to some member banks.

We will notify you as soon as the bill has cleared both the House and Senate later this week. We’ll know more details of the bill in the coming days, but the changes identified so far show significant improvement for local governments and their support for transportation infrastructure by the federal government. We’re pleased after all these years to be on the verge of such a victory!

Summer Minnick is the Director of External Relations and Federal Affairs. She can be reached at 517-908-0301 or sminnick@mml.org.