Driving Legislative Improvements to Economic Redevelopment in Michigan

August 19 2016

A Proposed Amendment to Act 381 and the Creation of Senate Bills 908-913 of 2016 Aim to Facilitate Redevelopments

In 2014, the Michigan Department of Environmental Quality (MDEQ) undertook the Continuous Program Improvement – Collaborative Stakeholder Initiative (CPI-CSI) process to scrutinize Michigan’s Brownfield incentive programs and find improvements. These Brownfield programs govern redevelopment of contaminated, obsolete, blighted and historic properties across the State. In partnership with Michigan Economic Development Corporation (MEDC), MDEQ assembled a committee of Brownfield experts from State agencies, local governments, industrial trade groups, and private consultants. I began my involvement in the CPI-CSI process as a Brownfield Specialist with the MEDC; however, last year I moved to the private sector where I now represent AKT Peerless on the committee.

The CPI-CSI effort resulted in several targeted reform recommendations. These recommendations have been largely adopted in six bills currently progressing through the State Senate (SB 908-913). The package of bills applies to two programs: Brownfield tax increment financing (TIF), and Brownfield grants & loans. In general, the amendments reorganize Michigan’s Brownfield statutes to read more clearly and consistently.

Some specific changes to the Brownfield TIF statute include:

Reducing confusion by combining environmental-eligible activities into a single defined term: “Department Specific Activities”. The current Brownfield statute has separate definitions for baseline environmental activities, due care activities, and additional response activities, which leads to confusion. Combination will make Brownfield plans, and grants and loans, significantly easier to implement and administer.
Clarifying definitions to recognize common environmental mitigation activities. The new amendments clarify the statute’s intent that environmental-eligible activities encompass UST removal, closure of UST releases, disposal of solid waste under Part 215, dust control, removal and disposal of contaminated lake or river sediments, industrial cleaning, sheeting and shoring for projects requiring a Part 301, 303, or 325 permit, and lead and asbestos abatement where there is an imminent threat to health. Clarification will facilitate approval processes.
Cleaning up legislative inconsistencies. The new definition of eligible property specifies that a site or property, as defined in the leaking UST statute (Part 213), is considered eligible property under Act 381.
Adding flexibility to the definition of initial taxable value. The proposed definition allows lowering a Brownfield property’s initial taxable value (base value) once during the life of the Brownfield plan if, due to a decline in assessed values, the property is unable to generate tax increment revenue (TIR) after construction. Such declines were a big problem after the economic crash of 2008-09 where TIR plunged, and bond and TIR-backed loan payments were threatened (or failed).
Streamlining and simplifying the process for Brownfield plan abolition. This will make redevelopments easier in the wake of failed projects.
Increasing Michigan Strategic Fund’s (MSF) capacity for administrative approval of 381 Work Plans. The last major change in terms of MSF funding of non-environmental activities allows MEDC to administratively approve up to $1,000,000 in eligible activity costs (up from $500,000).

In general, the Brownfield TIF amendment expands the pot of eligible environmental costs. With the amendment, underground storage tank costs, industrial cleaning, waste disposal, and mold abatement will be covered. These changes will make TIF a better tool to repurpose industrial facilities. In addition, the Brownfield TIF amendment “cleans up” Act 381, simplifying language and making TIF a more efficient process. Similarly, the Brownfield grants and loan bills clean up a lot of the language in their enabling statute (Part 196). Although the bills do not appropriate needed additional funding to the Brownfield grant and loan program, they do expand the types of sites eligible for support. Together, this package of bills is a plus for both communities and developers. Its changes would make Michigan’s Brownfield program more efficient and effective. I look forward to my continued efforts with the CPI-CSI as we work with the legislature to make these changes a reality.

Driving Legislative Improvements to Economic Redevelopment in Michigan

Driving Legislative Improvements to Economic Redevelopment in Michigan

A Proposed Amendment to Act 381 and the Creation of Senate Bills 908-913 of 2016 Aim to Facilitate Redevelopments

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