February 16, 2017 by John Nicholson
Legislators in Michigan recently re-introduced unique legislation in the State Senate meant to spur brownfield development in the state. If passed, the legislation would allow municipalities to choose one project per year to be eligible for a transformational brownfield. The transformation brownfield redevelopment would be eligible for tax relief on state income taxes.
Under the proposed legislation, no taxpayer money would put at risk in the redevelopment of a brownfield site. Instead, the eligible developer of a brownfield site would be not pay state income tax or sales tax from construction activities on the site and also receive a discount of up to 50 percent of state income taxes generated from new jobs and residents for up to 20 years.
Under the proposed legislation, a brownfield redevelopment project would need to be nominated by a municipality and approved by the State. Prior to the project being approved, the state would conduct financial analysis to validate the financial need of the company and ensure the gap does exist between what they can afford to build versus what they need to spend in order to clean up the contamination. Only the amount of money needed to fill the redevelopment gap will be approved for tax capture. The state will also conduct a fiscal impact analysis to determine if the project will have a net fiscal benefit to the state.
Any proposed brownfield redevelopment project that would include $1.5 million or more annually captured in tax relief, would need to be reviewed by an independent third party. The legislation is being supported by a coalition of 40 municipalities and chambers throughout the state.
The legislation is currently in committee. An earlier version of the legislation passed last time with bipartisan support, and that a coalition is working with lawmakers and members of the House committee to attempt to get it into law.