Senate Bill 922, a bill to extend the December 31, 2014 sunset for bonding for communities with a AA credit rating switching from defined benefit plans to defined contribution plans, passed out of the Senate Finance committee today.  The introduced version would extend the sunset to December 31, 2016 but an amendment was added in committee today changing that to December 31, 2015.

Samantha Harkins is the Director of State Affairs for the League handling municipal finance issues.  She can be reached at sharkins@mml.org or 517-908-0306.

House Bill 5397, a bill creating the Municipal Utility Residential Clean Energy Program Act, passed out of the House Energy and Technology Committee today.  This would enable municipalities that own electric utilities to establish a program to help provide financing to residential property owners for energy efficiency projects. This is modeled after the PACE Act.

This is an idea that was brought to Rep. Joe Haveman’s attention by the city of Holland who would like the opportunity to create a program such as this.

Samantha Harkins is the Director of State Affairs for the League handling municipal finance issues.  She can be reached at sharkins@mml.org or 517-908-0306.

Today the full Senate passed SB 313, legislation making changes to the Housing Law dealing with rental inspections. If you recall, the version that passed out of the senate committee last fall had detrimental impacts on rental inspections in Michigan and the health and safety of residents living in them. That version, which affects communities over 10,000, capped both registration fees (and only allowed to require re-registration if the property is sold or transferred or if new units are constructed) and inspection fees for rental inspections, did not allow a community to charge for a re-inspection and changed the timeline for inspections to not less than 6 years but no longer than 10 years. The bill would also require an inspector to inform the lessee of their right to refuse an inspection and request and obtain permission from the lessee to inspect.

A lot of work has been done on that version of the bill to get to the version that passed the Senate today: 313_Senatepassedversion. As it passed today, both the registration fee and inspection fee caps have been removed and the ability to charge for re-inspections has been restored. The timeline for inspection has been returned to what is in current law (no longer than 4 years but may go longer if community chooses for good actors). What remains in the Senate passed version is as follows:
1. only allowing for re-registration when additional dwelling units are constructed and when the property is sold or transferred,
2. clarifying the leesee has the right to refuse an inspection. Language was added in that would allow the municipality to require the landlord to seek the permission of the lessee for the inspection and notify the inspector of the response. This does not apply to emergency situations or where there is a warrant (in those cases, no permission is needed for the inspection).
3. Payment of the inspection is due after the inspection is completed except in cases of new construction or where the property has been transferred to a new owner.

While we still have concerns with this version of the legislation, we want to thank the bill sponsor and his staff for working with us to address many of our concerns from the original version of the legislation. We will continue working on this as it makes its way to the House and look forward to our continued work with the bill sponsor and his staff.

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

Please see below from Treasury’s Office of Revenue and Tax Analysis.

STATE LAW REQUIRES 2014 DEBT MILLAGE RATE CALCULATIONS TO REFLECT STATE REIMBURSEMENT FOR 2014 PERSONAL PROPERTY TAX CUT

Local units of government have levied property taxes on all taxable property in its geographic boundaries, including commercial personal and industrial personal property. Pursuant to Public Act 402 of 2012, as amended by PA 153 of 2013, a new “small taxpayer” personal property exemption (the “Exemption”) comes into effect in 2014 for commercial and industrial personal property. A “small taxpayer” is one whose combined commercial and industrial personal property owned by, leased to, or used by the taxpayer has a true cash value under $80,000. Application of that exemption will result in a loss of taxable value for governmental entities, including school districts.

For debt obligations incurred before 2013 by taxing units pledging their unlimited or limited taxing power, recently enacted Public Acts 86 and 87, Public Acts of Michigan, 2014, require the state of Michigan to reimburse taxing units for the amount of estimated revenue lost due to the Exemption and provides a mechanism for the reimbursement to occur in 2014. As a result, for debt obligations incurred before 2013, taxing units levying debt millage in 2014 must include in their debt millage rate calculation the anticipated debt millage reimbursement that may be received from the State of Michigan for any reduction in the 2014 taxable value related to commercial personal and industrial personal property.

State law measures the taxable value loss from this new exemption by subtracting each taxing unit’s total 2014 taxable value of commercial personal and industrial personal property from its total 2013 taxable value of commercial personal and industrial personal property. This difference is defined as the ‘small taxpayer exemption loss”. This amount will be multiplied by the taxing unit’s 2014 debt millage rate to determine the state reimbursement for 2014 debt millage. Local units must use the reimbursement to repay the debt obligation.

When calculating its 2014 debt millage rate for debt obligations incurred before 2013, each taxing unit must add to its 2014 taxable value its 2014 small taxpayer exemption loss. Assessors and county equalization directors are required to calculate in June 2014 each taxing unit’s small taxpayer exemption loss.

Commercial personal and industrial personal property are defined to include IFT personal property, with new facility IFT personal property included at 50% of taxable value. The law provides that certain property classification changes should neither increase nor decrease a small taxpayer exemption loss.   If property was assessed as commercial personal property or industrial property for 2014 but assessed for 2013 as either real property or utility personal property, its 2014 taxable value is excluded from the calculations. Conversely, if property was assessed as either real property or utility personal property in 2014, but assessed as commercial personal or industrial personal in 2013, its 2013 taxable value is excluded from the calculation.

For school districts and ISDs, these provisions apply to voted bond issues approved before 2013, and are not tied to the date the debt was incurred.

Prepared by the Michigan Department of Treasury, Office of Revenue and Tax Analysis

June 2, 2014

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

This afternoon the Senate Government Operations Committee passed a package of bills that seek to deal with the bankruptcy in the City of Detroit. The state will appropriate $194.8 million dollars that will go toward the city’s pension system.

In exchange there are a number of conditions set forth in the package. The bills create an oversight commission that will have approval over the city’s major financial decisions including contracts over $750,000 and collective bargaining agreements. As amended in committee if the commission does not reject a contract for $750,000 or more in 30 days it would be deemed approved. Public Act 312 awards are also subject to review by the commission.

The legislation also requires the city to establish the position of chief financial officer. The bills as amended in committee allow the City to choose between defined contribution plans and defined contribution for new hires but caps the city contribution at 7 percent of base pay. The package also prohibits the City of Detroit from opting out under PA 152 of 2011. The bills limit travel pay for retirement system board members.

The committee did not report HB 5571, a bill that would prohibit new millages for the Detroit Institute of Art. This was an area of concern for many legislators in the House and passed more narrowly than the others (66-44).

The bills very narrowly define eligibility for these provisions as a city over 600,000 that is in bankruptcy. We expect the full Senate to pass this legislation quickly.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

The National League of Cities is Hosting a Free Webinar on Walkability!

What’s Walking Got to do With it? A Look at the Economic and Social Impact of Walkability

Thursday, June 19 from 2:00 to 3:00 pm EDT

To register click here.

Walking is a critical component of our country’s urban transportation system and a practical transportation choice with powerful benefits for both individuals and their communities.  The potential for increased walking is enormous: one quarter of all trips in the United States are less than one mile in length, but only a quarter of these are made by walking.  Providing more walking facilities helps enhance access to other modes of travel, improves air quality and other environmental benefits, and contributes to health and other quality of life factors.   The National League of Cities will be hosting a webinar with America Walks and Smart Growth America to look at how increasing walkability has had an impact in Columbia, MO and Arlington County, VA.  Current and former local officials will discuss the economic and social benefits their communities have seen and how they have gone about to get public support and the financing in place to build pedestrian facilities.  The speakers will address the role federal dollars have played in their pedestrian-related initiatives and the importance of them in leveraging funding from other sources to build walking projects that are meeting the needs of their communities and  advancing social, economic, and environmental goals.

Speakers

Chris Zimmerman, Vice President for Economic Development, Smart Growth America and former Board Member, Arlington County, Virginia

Council Member Ian Thomas, PhD, City of Columbia, Missouri and Board Member, America Walks

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

(Go here to easily send your senators an email opposing SB 850).

In 2011, the legislature passed a number of reforms to help employers control costs and be better stewards of taxpayer resources. One of the, if not the, most significant reform was to prohibit retroactive pay increases after a contract has expired. This game changing statute, PA 54 of 2011, has helped communities settle contracts more quickly and provides more certainty in municipal budgets. On Wednesday the Senate Reforms, Restructuring and Reinventing Committee is expected to vote on Senate Bill 850, a bill that would exempt police and fire from PA 54 so they can have retroactive pay increases after a contract expires.

This would be detrimental to our ability to settle contracts quickly and efficiently. The bill will be taken up in committee on Wednesday, June 4. A similar bill, House Bill 5097, is sitting on the House floor.

I urge you to contact your legislators to let them know how detrimental this carve out would be. The arguments the public safety groups use for supporting this bill are that the number of PA 312 filings would proliferate and the legislature only intended this bill to impact teachers.

According to the Michigan Employment Relations Commission there were only 43 PA 312 filings in 2013 as opposed to 69 in 2011. PA 312 filings are significantly lower than they were before enactment of PA 54.

In addition, even if the legislature only intended this for teachers, it has been a game changer for municipal budgets, and it’s critical that we keep this tool to allow local units the opportunity to settle contracts expeditiously and save taxpayers money.

We appreciate all the members who have already contacted their lawmakers on this issue and we hope others follow their lead. It is critical that you please contact your legislators and ask them to OPPOSE Senate Bill 850. You can find the contact information for your Legislators here.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

Support Proposal 1 PPT reform at strongandsafecommunities.com.

The following letter is from Michigan Municipal League President Jacqueline Noonan, mayor of Utica, to League members. Noonan urges her fellow League members to support Proposal 1 on the Aug. 5, 2014 statewide ballot:

The Michigan Municipal League needs your help in supporting Proposal 1 on the August 5, 2014 ballot. This is the proposal that completes the reform of the Personal Property Tax (PPT) and represents months of negotiations and work by the League on behalf of our member communities. This proposal does NOT RAISE TAXES, but it does provide a more stable revenue source for community services, such as police and fire protection, roads, schools, libraries and other essential programs.

The League, as part of the Strong & Safe Communities coalition, encourages all member communities to join us in endorsing this proposal by taking the following steps:

1. Write a letter to the editor of your local paper. Four sample letters can be found here.
2. Have your council/commission/board pass a resolution in support of Proposal 1. A sample resolution is available here. Check out the other communities that have already passed resolutions here. (It’s important to note that it is legal for local government bodies to approve resolutions in support of ballot issues as long as no public tax dollars are expended. So resolutions are OK.)

Dearborn Mayor Jack O’Reilly leads a press conference about the need to vote yes on Proposal 1 on the Aug. 5, 2014 ballot.

Again, we encourage our members to support the full replacement of PPT dollars with a significantly more stable reimbursement mechanism by voting “yes” on Proposal 1 on the August 5, 2014 ballot. If you have any questions about this ballot proposal please contact the League’s Samantha Harkins at sharkins@mml.org and (517) 908-0306.

Thank you for your help with this.

Sincerely,

Jacqueline Noonan
President Michigan Municipal League
Mayor of Utica

For years the League has been working on a tax reduction loophole that was created due to the 2002 Michigan Supreme Court case of WPW Acquisition Company v. City of Troy. After Proposal A created the term taxable value, the Legislature passed legislation that allowed for an increase and decrease of certain commercial property’s taxable value based on their occupancy. This was meant to allow the taxable value of income producing property to reflect the ebb and flow of the economy.

Under that system, the City of Troy granted a reduction to WPW Acquisition Company due to a reduced occupancy. However, when the City increased their taxable value when they were more fully occupied, WPW Acquisition Company sued the City, claiming they could not increase their taxable value above 5% or the rate of inflation, whichever is less, due to Proposal A. The Supreme Court addressed the question of increases in occupancy and agreed with WPW. However, the reduction issue due to occupancy was never in question, so a legal loophole, creating tax inequity, was born.

This morning the House Tax Policy Committee passed Senate Bill 114, a bill introduced by Senator Vince Gregory (D-Southfield) that amends the General Property Tax Act. The Act’s definition of “losses” includes an adjustment in value, if any, due to a decrease in the property’s occupancy rate, to the extent provided by law.

In the version that passed the Senate the definition of “additions” includes an increase in value attributable to the property’s occupancy rate if a loss had been previously allowed because of a decrease in occupancy rate, or if the value of new construction was reduced because of a below- market occupancy rate. This language was struck from the House passed version.

In addition the House added an enacting section to indicate that occupancy was struck from the language in the bill to reflect the WPW decision.

The bill would limit the use of occupancy rates in the determination of losses to the period before December 31, 2013. The use of occupancy rates in the determination of additions would be limited to the period before December 31, 2001.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org

The House Regulatory Reform committee passed out HB 4573 today.  As introduced, it would prorate liquor license fees for first-year licensees that are granted a license for less than a full year (prorated quarterly).  During a committee hearing last week, there was discussion (and a substitute that was adopted today to this effect) on changing the bill to make it an annual renewal of liquor licenses (instead of all happening at the same time each year), whether bought or transferred instead of a proration.  An initial concern raised was making sure our local communities were notified by Michigan Liquor Control Commission (MLCC) when a license was up for renewal so councils and law enforcement had ample time to review and ask for revocation if necessary from MLCC.  The substitute that was adopted and voted out of committee this morning does not contain any notice requirements.  We have been in discussion with the bill sponsor, chair of the committee and policy staff on this and the ability to offer an amendment on the floor to give locals notice.

That being said, there are discussions happening on moving the language in the legislation back to the original intent of prorating the fees for first-year licensees.  I will update the blog as this process moves forward.

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