Rochester Hills Legistar System

2. New Policy - Council's tax abatement policy clearly defines the parameters in which

an application will be considered, and uses a matrix for both real and personal property

as a method to consistently evaluate applications.

B. Transfer of Employment

1. Old Policy - Abatements would not be granted for projects that resulted in transfer of

employment from another Michigan community.

2. New Policy - Transfer of employment is not a disqualifying factor. This provision is

based on two factors:

a. Legislative change to PA 198 in 2000 eliminating transfer of employment provisions

b. Other Michigan cities that compete with Rochester Hills do not prohibit the transfer of

employment

C. Eligible vs. Ineligible Facilities

1. Old Policy - Eligible facilities must be owner occupied.

a. Multi-tenant facilities, non-owner occupied, tenant occupied build to suit, or

speculative facilities will not be considered

2. New Policy - Eligible facilities can be owner occupied, multi-tenant, leased or

speculative

a. PA 198 allows companies in leased facilities, multi-tenant and speculative buildings

to apply for tax abatement if the facility is in an Industrial Development District. In Troy

and Southfield, for example, districts often are created for specific suites in multi-tenant

buildings as opposed to the entire building

b. Leased equipment also is eligible for abatement as long as the company leasing the

equipment is responsible for the taxes.

c. The length of abatement for either real and/or personal property is limited to the

length of the lease.

D. Limitations on Length of Abatement

1. Old Policy - The maximum term for which the Rochester Hills City Council will grant

abatement is six (6) years for real property and three (3) years for personal property

2. New Policy - The maximum term for real property is identified in the Tax Exemption

Chart (Exhibit C) based upon job creation and investment. The law permits a maximum

of 12 years after completion of the project and up to two (2) years during construction for

a maximum of 14 years. Personal property abatements also consider job creation and

investment numbers as identified in Exhibit C, Smart Investment Chart. Because of the

impact of depreciation on the value of equipment, the Chart limits the length of

abatement to eight (8) years; however, by law, Council may grant up to 12 years at its

discretion.

d. Smart Investment Abatements are intended in part to support the reinvestment and

diversification of lines of business for Rochester Hills companies, acting as a method of

local support to strengthen their ability to compete

e. Some communities limit the length of abatements for real and/or personal property

to less than the law allows. In some cases, their decisions are based on policies; but

often it is based on what is politically expedient.

Discussion regarding existing Industrial Development Districts included the following:

* Prior rescinded districts are technically still viable based on a recent STC ruling.

* HB5415 - seeks to give units the power to rescind districts.

A motion was made by Barnett, seconded by Zendel, that this matter be

Approved and Referred to the City Council.

RESOLVED: That the Financial Services Committee requests the City Council

President schedule the Tax Abatement Policy on a future City Council Work

Session.

The motion carried by the following vote:

Aye:

Hill, Barnett, Dalton, Atkinson and Zendel