(As seen on WZZM TV 13) Developers considering potentially transformational projects across the state now have guidelines to earn more incentives.
Gov. Rick Snyder signed a package of bipartisan bills into law in June, and the Michigan Economic Development Corp.’s Michigan Strategic Fund approved the guidelines for the resulting Transformational Brownfield Plan at its meeting July 25.
The program is meant to aid large-scale, mixed-use developments to revitalize “challenging” brownfield sites. The program captures state sales and income taxes to redevelop the brownfield sites.
The program will run through 2022, according to the guidelines passed by the Michigan Strategic Fund.
“As part of Michigan’s reinvention, it’s important that we continue to revitalize our downtowns, waterfronts and main streets to attract and keep talent and business continually growing in our great state,” Snyder said. “This legislation is key to closing existing funding gaps in surrounding brownfield sites and creating vibrant communities where Michiganders can live, work and play.”
The Transformational Brownfield Plan will fill financing gaps where no other Michigan Strategic Fund assistance can be placed, but the organization can approve more than five each year. No more than five projects can be selected for an individual municipality during the program.
The five-bill package Snyder signed in June includes bills from Sen. Ken Horn, R-Frankenmuth; Sen. Jack Brandenburg, R-Harrison Township; Sen. Tom Casperson, R-Escanaba; Sen. Peter MacGregor, R-Rockford; and Sen. Steve Bieda, D-Warren.
The guidelines passed by the Michigan Strategic Fund officially incorporate the Transformational Brownfield Plan into the Brownfield Redevelopment Financing Act, indicating the projects must have a transformational impact on local economic development and community revitalization.
Each of the projects must have some combination of retail, office, residential or hotel use.
There also is a minimum investment threshold based on the population size of the community the project is proposed.
The thresholds for the projects include:
- Population of greater than 600,000 — $500,000,000
- Population of 150,000-599,999 — $100,000,000
- Population of 100,000-149,999 — $75,000,000
- Population of 50,000-99,999 — $50,000,000
- Population of 25,000-49,999 — $25,000,000
- Population of fewer than 25,000 — $15,000,000
Taxes available to capture for the plan include Construction Period Income Tax, Construction Period Sales Tax Exemptions, Construction Period Use Tax Exemptions, Income Tax Capture and Withholding Tax Capture. The tax captures can be used to finance demolition, construction, restoration, alteration, renovation, building improvements, site improvements and infrastructure work.
The guidelines specified that at least 35 percent of the Transformational Brownfield Plan projects and 15 percent of the funds be located in communities with a population of fewer than 100,000 people.
Projects proposing to use more than $1.5 million in tax capture will require a third party economic impact analysis, which is paid for by the developer’s application fees and requires the use of a Michigan Strategic Fund-approved third party. Projects proposing to use less than $1.5 million will be subject to MEDC analysis.
If a project is approved through the Transformational Brownfield Plan, construction must start within 12 months of the Michigan Strategic Fund’s approval.