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STATE ESSENTIAL SERVICES ASSESSMENT EXEMPTION PROGRAM
In August 2014, voters approved a reformation proposal
of Michigan’s Personal Property Tax (PPT). As a result of
the proposal, many changes will take place. The once local
Essential Services Assessment will become a state-level
assessment called the State Essential Services Assessment
(SESA).
The SESA is required for manufacturers (no longer required
to pay personal property tax under the reform) to pay. Local
jurisdictions will be reimbursed for the loss in revenue from
the Michigan Use Tax. Starting January 2015, the Michigan
Strategic Fund (MSF) will be able to grant SESA Exemptions
and Alternatives SESAs to companies that make investments
in personal property greater than or equal to $25 million.
Companies that meet minimum investment thresholds in
personal property may be considered for a SESA Exemption
or Alternative SESA by the MSF. Businesses that make eligible
investments in Eligible Distressed Areas (EDAs) will be eligible
to receive SESA Exemptions (a list of EDAs can be found here).
Investments related to transformational projects made in all
other areas may be eligible for an Alternative SESA.
What is the SESA Exemption value?
The SESA is applied to PPT exempt personal property
according to the following schedule:
• Eligible personal property acquired 1-5 years prior is
assessed 2.4 mills times the acquisition cost
• Eligible personal property acquired 6-10 years prior is
assessed 1.25 mills times the acquisition cost
• Eligible personal property acquired more than 10 years
prior is assessed 0.9 mills times the acquisition cost
The SESA Exemptions are equal to 100% exemption of the
SESA for a period of years. Terms will be determined by a
formal review of considerations detailed in the legislation,
including: level of investment, amount of jobs created, level of
wages, and connection to Michigan suppliers.
Example: SESA Exemption
$150 million investment in personal property in an EDA
could receive a SESA Exemption for 15 years. As a result,
the SESA Exemption would be worth:
©2014 Michigan Economic Development Corporationsm
Years 1-5
SESA Amount
(2.4 mills)
(1.25 mills)
Years 6-10
Years 10-15
$1,800,000
$937,500
$675,000
(0.9 mills)
TOTAL SESA
Exemptions Value
$3,412,500
Alternative SESAs are equal to a 50% exemption for a period
of years. Terms will be determined by a formal review of
considerations detailed in the legislation, including: level
of investment, amount of jobs created, level of wages, and
connection to Michigan suppliers.
Example: Alternative SESA
$150 million investment in personal property, not in an
EDA, could receive a SESA Exemption for 15 years. As a
result, the Alternative SESA would be worth:
Years 1-5
Years 10-15
(2.4 mills @
(1.25 mills @
(0.9 mills @
$900,000
$468,750
$337,500
50%)
Alternative SESA
Years 6-10
50%)
50%)
Amount
TOTAL
Alternative SESA
$1,706,250
Value
What is the process for obtaining a SESA
Exemption?
A high level overview of the process for obtaining a SESA
Exemption is as follows:
1. Company and the Michigan Economic Development
Corporation (MEDC) determine if a planned investment
in personal property meets the SESA Exemption
qualifications
2. Company completes SESA Exemption Application and
Background Check Questionnaire
3. MEDC reviews the Application and performs a
background check
4. MSF considers granting an SESA Exemption
5. Company and MSF come to a final agreement of terms
CONTACT
For more information, contact the MEDC Customer
Contact Center at 517.373.9808.
10/14