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Monday, 23 January 2012 15:22

State moves forward to support brownfield redevelopment

Written by  Andy Schor
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By Andy Schor | Special to MiBiz
Assistant Director of State Affairs, Michigan Municipal League

Andy SchorImagine if an old, rundown building in your community was stripped down and rebuilt to be LEED-certified and to have multiple uses with shops on the ground floor and apartments or condos above.

Have you seen this type of revitalization in your downtown or elsewhere in your community?

Most dense, urban, older communities have either seen this type of activity, or need it. Infrastructure that is old and obsolete needs to be fixed and updated.

The new workforce demands amenities in their communities if they want to live there, as do seniors who want to move back to the dense areas. They want walkability and mixed-use, restaurants and cultural instructions.

But creating these new places out of the outdated old buildings in dense communities is expensive, and that’s where economic development tools are absolutely necessary.

Michigan’s local governments work closely with developers to create jobs and private investments using specific economic development tools. These tools make it possible redevelop old and blighted buildings.

The Brownfield and Historic tax credits were two very effective and successful tools used to rebuild and revitalize communities. They allowed developers to close the financing gap by receiving tax credits on investments for blighted and obsolete buildings in addition to contaminated facilities.

This changed last year when the Legislature eliminated the Brownfield and Historic credits, along with the MEGA credits. Governor Snyder called for the removal of all tax credits in the elimination of the Michigan Business Tax, and left these credits out of the new Corporate Income Tax.

So, while businesses saw less taxes, the ability of communities and developers to close the financing gap for revitalization projects was put in jeopardy. The Governor, though, did recognize the necessity of these projects and called for a cash fund to help finance these projects.

Gov. Snyder proposed $50 million, and the Legislature reduced that to $25 million.

This was less than a quarter of the amount of the Brownfield credits used by developers in the recent past. It would have brought several projects to a grinding halt — costing private investments, jobs and slowing the revitalization of Michigan.

After fierce lobbying by the Michigan Municipal League, developers, the Historic Preservation Network and other groups, the Legislature and Governor upped the fund to $100 million in the final version of the budget. They then created two new programs to spend this money:

  1. The Community Revitalization Program utilizes money for redevelopment and revitalization of old buildings to make the new places where people want to be.
  2. The Business Development Program will lure businesses to Michigan (and serve as a replacement of the former MEGA credits).

Again, there was an effort to make these programs less effective by preventing the Community Revitalization Program from spending money on obsolete or blighted projects. The lobbying efforts of the Michigan Municipal League, developers, MEDC and other groups, though, was able to keep the program whole.

So what does that mean for the future?

We will keep a close eye on how the fund is spent. As of Jan. 1, 2012, the money was available to be allocated by the MEDC (according to certain scoring conditions). The League will watch the spending of that money to ensure it is assisting communities big and small throughout Michigan. And we will continue to fight yearly for the necessary funding to be allocated in the budget.

The Governor has said that $100 million is not enough, but will he walk the talk? Will he increase the recommended allocation for these programs in his 2012-13 fiscal year budget? And will the Legislature approve more money?

Economic development is the linchpin to bringing people back to Michigan. Place matters, and people expect to have a lively downtown with shops and restaurants. They want walkability and need infrastructure to accommodate this.

Local governments are investing to make this happen. They are giving tax breaks and spending limited resources on making the places that young and old alike want to live, work and play.

The state needs to be a partner in this effort and needs to appropriate enough money to make this a reality. They have given businesses a tax break but need to help create the type of places where people want to be in order for those businesses to thrive.

Will it work? Looks like we will find out.

Read 1269 times Last modified on Monday, 13 August 2012 12:47

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