Michigan eyes new mix of incentives to bring investments in hard-to-develop brownfields
Brownfields — former industrial and commercial sites that have been abandoned and are contaminated by pollutants or other hazardous materials — are among the hardest sites to redevelop for other business or residential purposes. This is mainly because of the costs associated with cleaning up the land for new development.
Lawmakers in Michigan, however, are hopeful that a package of bills under consideration will help turn sites across the state into vibrant, productive locations for new businesses and residents.
Last month, the Michigan Senate approved legislation that is part of a package of bills (SB 111-115) known as the Transformational Brownfield Development Plan, which would provide financial assistance to developers who take on the job cleaning up these difficult-to-develop brownfield sites.
“Because these properties are so much more expensive to develop, we’re seeing a pattern of outward expansion in our urban areas versus redeveloping areas that are already available,” says Sen. Ken Horn, chair of the Economic Development and International Investment Committee and sponsor of one of the bills.
Unlike programs in several other states, which largely rely on giving tax credits to developers to help defray the cost of cleanup (the federal Brownfield Tax Credit program ended in 2011), the Michigan proposal would require developers to pay for the cleanup and would spend no state funds until after the property is redeveloped and new industrial, commercial or residential activity is established.
Under the legislative package, developers would keep part of the future taxes generated from businesses and residents who occupy the site after cleanup. They would be eligible to receive up to 50 percent of the revenue generated from income and sales and use taxes for up to 20 years. The bill caps the annual amount that developers could be reimbursed at $40 million.
According to Horn, qualifying projects would have to receive approval from local and state government authorities, meet a minimum investment threshold and have a net fiscal benefit to the state (as determined by an analysis by the state’s Michigan Strategic Fund).
Similar legislation passed the Senate last year, but died in the House. Recently, a coalition of Michigan economic development organizations, cities and chambers of commerce formed to support the legislation.