State Redevelopment Programs
By Katherine Czarnecki
There seems to be confusion surrounding Michigan’s brownfield program. The state of Michigan, through the Michigan Economic Development Corporation (MEDC), remains committed to returning contaminated, blighted, and underutilized sites to productivity. The only thing that’s changed is the way we go about doing it.
Brownfields are defined as properties that are contaminated, blighted, or functionally obsolete. These sites can be found in cities with long histories of heavy industry or large-scale manufacturing activity, and also in small towns and rural areas.
Up until December 31, 2011, Michigan had the Brownfield Michigan Business Tax (MBT) credit program which provided tax credits ranging from 12.5 percent to 20 percent (in certain cases) on eligible investment. Eligible investment expenses included demolition, construction, restoration, renovation, site improvements, and the addition of new or used machinery, equipment, and fixtures.
|MacKenzies Bakery in Kalamazoo was the first site to be redeveloped along the riverfront and was the start of the “River’s Edge” redevelopment which includes many new funky, eclectic businesses.
Since the MBT is no longer in place, does this mean the MEDC abandoned the use of incentives and tax credits? Certainly not. On December 13, 2011, Governor Snyder signed into law a five-bill package creating two new economic development and community revitalization programs. This new legislation provides $100 million in incentives for highly competitive projects in Michigan. The Michigan Business Development and Michigan Community Revitalization Programs replace the state's previous MEGA, brownfield, and historic tax credit programs that were eliminated under business tax restructuring legislation.
Under this legislation, the Michigan Community Revitalization Program (CRP) is a new incentive program available from the Michigan Strategic Fund (MSF), in cooperation with the MEDC. It is designed to promote community revitalization that will accelerate private investment in areas of historical declining values, contribute to Michigan’s reinvention as a vital, job generating state, foster redevelopment of functionally obsolete or historic properties, reduce blight, and protect the natural resources of this state.
The program is also designed to provide grants, loans, or other economic assistance for eligible investment projects in Michigan. Similar to the Brownfield MBT Credit program, no funds will be disbursed until the project is verified as complete.
There are other similarities between the old program and the new. Project support is also driven by a percentage of the eligible investment. With CRP, eligible investment includes any alteration, construction, improvement, demolition or rehabilitation of buildings; site improvement; addition of machinery, equipment or fixtures; and any architectural, engineering, surveying and similar professional fees for a project, but not certain soft costs of the eligible investment as determined by the MSF.
CRP support will not exceed 25 percent of the total eligible investment for a single project, and in no event exceed a total of $10 million for loan agreements or $1 million for grant agreements. Any grant or loan under the program will be performance based. Grants and loans will include flexible terms and conditions and may be assignable upon approval of the MSF.
The same eligibility on the actual site is still the same, however, and the project site must be a brownfield or a historic resource. Another similarity is the focus on downtowns and commercial cores. Program guidelines specify items considered for MSF support: the importance of the project to the local community; the applicant’s financial need for the incentive; the extent of reuse of vacant buildings and reuse of historical buildings and redevelopment of blighted property; the level and extent of environmental contamination; creation of jobs and others.
|Mason’s Run in Monroe is one of the largest new urbanism projects constructed on an urban brownfield site in the nation.
The program is very focused on assisting in the creation of “places” that will help strengthen our urban and rural cores. One of the main differences between the Brownfield MBT credit program and CRP is that the latter can be used anywhere in the state—projects located in a community the size of Detroit could have the same impact as a project in a smaller community like Portland. CRP is intended to be flexible and tailored to each individual projects’ needs, allowing us to make the most effective use of scarce resources.
For more information, visit michigan advantage.org/MCRPP for program guidelines and a sample application. To be considered for CRP funding, please contact your Community Assistance Team specialist michiganadvantage.org/CAT. The CATeam is dedicated to helping Michigan communities, large and small, urban and rural. Our mission is to strengthen communities by ensuring access to economic development services and programs that cultivate sustainable projects that will build a strong foundation for the future of Michigan.
Redevelopment Ready Communities Program
The Redevelopment Ready Communities® (RRC) Program supports Michigan communities to become development ready, competitive, and “open for business.” RRC is a strategic tool leading change in the development culture for communities. It encourages local units of government to adopt innovative strategies and efficient processes which build confidence among businesses and developers. RRC provides guidance to communities on making places that will attract people and economic growth.
The RRC approach better prepares communities to entice and attract investment. The program measures and then certifies communities that integrate transparency, predictability, and efficiency into their daily practices with the goal of realizing a community-supported vision that is inviting to investors. The overall process is guided by a set of best practices that help communities implement proactive strategies to redevelopment and find new uses for outdated and underutilized buildings and properties.
Developers want to save time and money—it’s their primary concern when they decide to develop in an area. Local governments can positively impact an investor’s bottom line with effective, streamlined, and transparent development practices, administrative procedures, and zoning regulations. And with aggressive reinvestment goals, a realistic action plan, and shovel-ready sites, communities can help jumpstart the market by moving projects faster and more frequently. RRC assists communities in enhancing these strategies.
When a community becomes a certified Redevelopment Ready Community, it signals that it has effective development practices such as clear development procedures, a community-supported redevelopment vision, an open and predictable review process, and many more compelling sites for developers to locate their latest projects. Is your community redevelopment ready?
For more information, visit michigan advantage.org/RRC.
Katherine Czarnecki is community development manager for the Michigan Economic Development Corporation. You may reach her at 517-241-4950 or firstname.lastname@example.org.