Alliance Backs New Tools For Redevelopment

The Northern Michigan Chamber Alliance threw its support recently behind a package of Michigan Senate bills designed to spur redevelopment of some of the most difficult properties and buildings in the state.

Senate Bills 1061-1065 would allow certain redevelopment projects – those deemed “transformational” by the Michigan Strategic Fund (MSF) – to capture a certain percentage of the increased state income tax and state sales and use tax revenue once the development project is complete.

There is a high bar to be approved for the program, which includes requirements that projects must be mixed-use development, have a minimal level of capital investment, prove the project is transformational in nature and provides a net benefit to the state, and have the project’s tax capture approved by the MSF.

The Alliance was successful in advocating to lower the required capital investment threshold from $25 million to $15 million for communities under 50,000 people. This ensures that it is more likely northern Mcihigan communities have the opportunity to access the program for major, transformational development projects.

Below is a high-level breakdown of the bill package.

For a more in-depth analysis, click HERE.

The Problem: Northern Michigan’s growth and prosperity depends on attracting and retaining talent.  To do so, we need to build vibrant places.  Development projects in our communities and village cores continue to face significant economic gaps – particularly large-scale projects. Market rents do not support major ground-up construction or rehabilitation of large, distressed historic structures.  There is no economic development tool to help bridge the gap. The Community Revitalization Program (CRP) works for smaller projects but not large scale, transformational projects.

Proposal: Add a new category to the Brownfield TIF Act for large-scale, transformational projects (“Transformational Brownfield Plans”).  Allows for capture of part of the incremental sales tax and residential income tax generated from within the footprint of the project in order to make the development possible.  Applies only to mixed-use projects.  Projects can only be approved if the TIF results in a net benefit to the state.  Michigan Strategic Fund (MSF) must approve capture.  Strict minimum investment threshold to limit eligibility to transformational projects, with strict caps on the number of projects that can be approved.  Fully consistent with all constitutional requirements.

Impact: Economic development leaders statewide have identified several billion dollars in catalytic mixed-use development projects that would have transformational benefits, but which are not economically viable without a gap closing tool.  This tool will help unleash investment to regain Michigan’s momentum as the comeback state and build the vibrant communities that are essential to the state’s growth and prosperity.

In northern Michigan alone, many communities struggle with long dormant properties or run-down historic buildings that are ripe for a mixed-use development that could serve as a catalyst for sustained economic growth in our communities. This package, along with the changes that have allowed smaller communities a better shot at using the program, is an important additional tool to help spur economic development in our state, and in northern Michigan.

This is part of a continuing advocacy effort on behalf of the Northern Michigan Chamber Alliance to create and defend policies that enhance local development and economic growth efforts. See “Alliance Working Toward Rural Friendly Solutions On DDA Bills.”