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Sunday, 13 November 2016 13:42

Lame Duck Legislative Outlook: TIF/DDA reforms, brownfield changes on deck

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As Michigan legislators prepare to enter their final session of the year, policy watchers across the state are closely monitoring legislation that could get a vote in the lame duck session. 

This year’s lame duck session could focus on legislative bills designed to put more tools in the commercial development toolbox, rather than controversial policies like Right to Work from prior years, industry experts say. Legislators are expected to take up bills that would reform tax increment financing and change state brownfield incentives. 

Stakeholders say they’re certainly monitoring what does and does not get traction as the legislature finishes out its year, cautioning that the lame duck session tends to be unpredictable. 

For that reason, Patrick Lennon, a Kalamazoo-based attorney focused on real estate development and land use with Honigman Miller Schwartz & Cohn LLC, said he tends to avoid the sausage making and focus on the legislation that actually gets signed. 

“Looking at what’s in the pipeline, we need to see what comes out the other end,” Lennon said. “So many times the early drafts change significantly, if they become law at all.”

Here’s a look at what development-related bills lawmakers in Lansing might take up to close out 2016.

TAX INCREMENTAL FINANCING (TIF)/DOWNTOWN DEVELOPMENT AUTHORITY (DDA) REFORM

A package of bills in the Michigan House of Representatives and legislation already passed by the Senate could bring about a variety of changes to the laws governing the state’s downtown development authorities and, more specifically, to Tax Incremental Financing (TIF) in all its forms. 

Stakeholders say that while TIF is instrumental in drawing investment to downtowns and neglected areas, it’s time to update the economic development tool to bring about greater transparency and reporting mandates.

The legislation has been supported by Downtown Grand Rapids Inc., a quasi-public nonprofit entity that administers the city’s DDA. 

“We’ve done this because we believe that TIF is a tool that can inherently organize communities around a shared set of economic and community development objectives,” DGRI CEO Kris Larson said in House testimony in mid September. “We also recognize, however, that many of the existing TIF-governing statutes require some modifications to align what could be, arguably what should be, with what is allowed and required.”

While the Senate already passed a version of the legislation before its latest recess, the state House has yet to act on a similar bill, but they could take it up in the lame duck session, sources said. 

The bills, introduced by Rep. Lee Chatfield, R-Levering, are similar to what the Senate passed, but feature a key difference. Namely, Chatfield’s bill would eliminate a TIF authority’s ability to continue to capture dollars from special millages such as libraries, transit authorities or parks. 

The overall wording of Chatfield’s legislation and the limiting of dollars that DDAs would be able to capture has led to opposition from the Michigan Municipal League, an Ann Arbor-based advocacy group.

“We’re all for the conversation about what’s best for the district and the community,” said Jennifer Rigterink, a legislative associate with the MML, referring to the ability of municipalities and TIF authorities to decide how captured dollars from special millages get spent. “If it’s a library millage and they’ve been capturing all along, they should maintain what they’ve been capturing. That’s what we’d like to see tightened up.” 

Rep. Chatfield did not respond to requests seeking comment at the time this report went to press. 

TRANSFORMATIONAL BROWNFIELD LEGISLATION

Likewise, Michigan’s brownfield tax capture laws have been credited with getting redevelopment projects over the finish line, often on long-abandoned or contaminated sites.

As MiBiz reported in October, legislation sponsored by Sen. Ken Horn, R-Frankenmuth, would allow for developers of large-scale, “transformational” brownfield redevelopment projects to capture sales and use taxes. 

To tap into the added tax capture, developers would have to hit a variety of private investment thresholds depending on the population of the municipality. 

Despite the public backing from developers like Detroit billionaire Dan Gilbert and a large coalition of other supporters from around the state, the bill has yet to gain any movement on the Senate floor. 

However, Andy Johnston, vice president of government and corporate affairs at the Grand Rapids Area Chamber of Commerce, said the organization continues to monitor the legislation and largely backs its premise.  

“We’re supportive of the concept and want to continue to have discussions with the Senate and with the House about what this tool would do, both for economic development and the effect it would have on state finances,” Johnston said. “This is an ongoing discussion with policymakers as we figure out what tools are necessary to Michigan’s continued transformation.”

Johnston added that the Grand Rapids Chamber also will be closely monitoring legislation focused on the state’s energy markets. 

HISTORIC DISTRICTS

Despite talk that legislation aimed at unwinding the state’s historic districts could be revived, Michigan’s preservation community feels safe, at least for the rest of the year. 

Among the most controversial proposals over the last year, Michigan House Bill 5232 and a companion Senate bill would have made starting a historic district more difficult. They also would have eased the process required to wind down one of the state’s 78 existing districts. 

Action on the bills died off in April after several proponents of historic preservation denounced the legislation, which failed to garner enough support to get out of committee. 

Nancy Finegood, executive director of the Lansing-based Michigan Historic Preservation Network, doesn’t expect them to pop back up in the lame duck session. 

But next year is a different story, she said. 

“We’ve been advised by our lobbyist to remain vigilant,” Finegood said. “We’ve (also) been advised that it most assuredly will reappear next year. There’s a huge interest in individual property rights and local historic districts fall into that pool.” 

In the meantime, Finegood said her organization plans to put out an analysis showing the economic development benefits of historic districts, a report they hope to issue by the end of the year. 

State Rep. Chris Afendoulis,  R-Grand Rapids Township and the sponsor of the bill in the House, said in an email to MiBiz that he’s seen no indication that the legislation will move forward.  

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