Introduction of Michigan Thrive Initiative
The Michigan Economic Growth Coalition (MI Thrive) is a group leading Michigan economic development organizations, cities and chambers who support legislation to unleash $5 billion in major brownfield redevelopment projects that will transform cities across the state.
Click read more to see the Press Release from yesterday.
Reprinted
PRESS RELEASE
February 7, 2017
Contact: Dan Austin
Dan@VanDykeHorn.com
(313) 820-4112
Michigan Thrive Initiative to Provide Necessary Tools to Breathe New Life into Cities Across the State Legislation Would Unlock $5 Billion in New Investments Statewide
LANSING — Legislation aimed at transforming abandoned buildings, contaminated sites and other eyesores across Michigan into thriving areas is being reintroduced this week in the Michigan Senate. The Michigan Thrive Initiative would give developers the tools they need to bridge financial gaps holding back these large and complicated brownfield projects — at no risk to the state or taxpayers.
Given pent-up demand across the state, the package of bills would unlock at least $5 billion in new development that will bring jobs and growth to cities throughout Michigan.
MIthrive is a coalition of nearly 40 communities, chambers, and economic development leaders who have come together to support this legislation. The MIthrive coalition covers communities across the state, from Monroe to Marquette and everywhere in between. The legislation limits each city to one approved plan per year, guaranteeing that the program’s benefits will be spread evenly across Michigan.
“Communities all across the state have contaminated or abandoned sites that have sat vacant for decades,” said Dan Austin, spokesperson for the MIthrive Coalition. “And every community wants to build a more vibrant downtown, main street, or waterfront to attract talent, jobs and growth. This bill package is how we make it happen, and we believe it will be a game changer for our state.”
How it Works
The Michigan Thrive Initiative recognizes that the redevelopment of large, challenging brownfield sites is very costly and these projects often have financial gaps that make it impossible to move forward. The legislation solves the problem by allowing a project to keep a portion of the new tax revenue it generates in order to close that gap – with the rest going to the local government and the state. Because these sites were not producing any revenue to begin with, everyone benefits.
This approach, referred to as Tax Increment Financing (TIF), is entirely performance-based and puts all of the risk on the private sector. The developer gets nothing on the front end: they have to put up the capital, build the project, and fill it with people and jobs that generate new revenue. If the project does not generate the expected tax revenues, that risk is entirely on the developer – not taxpayers.
The legislation being re-introduced today builds on the current Brownfield TIF Act (PA381) to create a new category specifically for major projects that will transform contaminated, blighted or abandoned sites into vibrant new developments. To close the financial gap and make these large, challenging projects possible, the legislation allows the project to capture:
1. State sales and income taxes generated from the construction activities on-site; and
2. Up to 50% of the state income taxes generated from new jobs and residents within the completed development, for a period not to exceed 20 years.
Michigan Thrive Initiative Provides Fiscal Responsibility, Caps and Protections
This legislation includes some of the most rigorous caps and projections ever put in place in economic development legislation in Michigan. Both local and state approvals are required. The local government has to designate the plan as transformational, and then the state has to approve based on criteria below:
1. First, the state has to conduct a financial analysis to validate the financial need or “gap” to make the project economically viable. The state can then approve only as much tax capture as needed to close that gap – not a dollar more or a year longer.
2. The state then has to conduct a fiscal impact analysis, and can only approve a project if it determines the TIF will result in a net fiscal benefit to the state. The state has to come out ahead.
3. For the largest projects, the legislation requires an independent third party to conduct these analyses and requires the state Treasurer to review and sign off.
About the MIthrive Coalition
MIthrive is a coalition of leading economic development organizations, cities and chambers of commerce working in support of legislation to revitalize and redevelop contaminated sites into thriving economic development engines in communities across Michigan. In addition, statewide and regional organizations including the Michigan Municipal League (MML), Michigan Association of Realtors, Michigan Regional Council of Carpenters, and the Associated Builders and Contractors of Michigan (ABC) support the legislation.
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