The Senate yesterday passed HB 5495, sponsored by Rep. Joan Bauer, and sent it to the Governor for her signature. This bill solves a problem in current law that prevents municipalities working with developers from allowing condos in historic properties from using the Neighborhood Enterprise Zone (NEZ) law.
Under current NEZ law, a qualified historic building must be transferred or sold to a homeowner-occupant within 6 years. The problem with that, though, is that federal law mandates a qualified property must be held by the developer for 5 years. Thus, the interplay between the state and federal law leaves only about one year for the developer to sell the property. If the property is not sold in that one year, the developer loses the NEZ benefits. HB 5495 simply allows the developer to hold historic properties for all 12 years of the NEZ. The tax implications don’t change, but it gives the developer time to market the properties.
This problem only happens with historic properties. It was first raised in the City of Lansing where they were working with a developer and he couldn’t sell the properties in time. This could happen in any community, though, and this change will make it easier for communities who want to use the NEZ tool to attract residents.
The League testified in support of this bill, and worked with the Legislature and the City of Lansing to get this bill passed.
The League thanks Rep. Bauer for sponsoring and pushing this bill.
Andy Schor is the Assistant Director of State Affairs for the Michigan Municipal League. Contact him at (517) 908-0300 or by email.
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