Senate Bill 992 was just recently signed into law by Govenor Snyder.Â The legislation, sponsored by Senator Arlen Meekhof, ensures that a â€œnonrecourse loanâ€ cannot become a â€œrecourse loanâ€ due to the borrower's inslovency.Â This is based on that this is fundamentally inconsistent with the nature of a nonrecourse loan.
The need for this Bill originates from several recent court decisions, including one from the Michigan Court of Appeals, interpreting certain financial covenants in industry standard loan documents to result in recourse liability in the event of the borrower's insolvency - a result that none of the original parties to the loan documents ever intended.
Because of this ruling, Michigan will be the ONLY state in which this exists.Â This ruling put Michigan at a disadvantage to other states with national developers.Â Â Meaning, the result of these court rulings could harm future construction as investors will see Michigan as too risky.Â As you know, Michigan's economy relies heavily on commercial real estate development and investment.
The Construction Association of Michigan (CAM) took a position of support on this legislation.
Personal Property Tax Reform
An Eight Bill Package to remove the personal property tax will be introduced in the Senate on April 17thand will come up for their first hearing in the Finance Committee the following day.Â The Chair of the Senate Finance, Senator Jack Brandenburg, is hoping to have the legislation out of his committee within a month.
The highlights of the legislative plan include:
The plan is to use expiring business tax credits to offset the estimated $500 million hit of curbing the personal property tax.
The CAM Government Affairs Committee is closely monitoring this legislation.
A 20 Bill Legislative Package was introduced that would generate over a $1 billion in new revenue to invest in our transporation infrastructure.Â The legislation would also create a number of reforms that would be intended to stretch the dollars generated from this proposal.Â The legislation has an uphill battle with the current legislature; however the Governor has made this a top priority.Â It is believed that this legislation would have a net increase of 11,000 jobs in the State.
There are discussions in the Senate that instead of passing this legislation raising revenue through a gas tax increase that they would put on the ballot in November or August to increase the sales tax to 7% with the revenue from the increase in sales tax to be dedicated to our road infrastructure.