LANSING, Mich. — State Sen. Ken Horn was joined by four Senate colleagues on Tuesday in introducing legislation aimed at transforming abandoned buildings, contaminated sites and other difficult-to-develop properties throughout the state.
There are a number of these sites, known as brownfield properties, throughout Michigan. However, they are often viewed as unfavorable to developers because of the costs associated with restoration and redevelopment.
“Because these properties are so much more expensive to develop, we’re seeing a pattern of outward expansion in our urban areas versus redeveloping areas that are already available,” said Horn, R-Frankenmuth. “For more than 30 years we’ve struggled to find a way to develop the Saginaw River with livable spaces and downtown riverfront activities. This legislation gives Michigan a fighting chance to deal with hulking abandoned buildings and empty brownfields in communities just like Saginaw.”
Senate Bills 111-115 would build on the current Brownfield TIF Act to create a new category specifically for major projects that could revitalize major sections of land. The bills would allow a project to keep a portion of the new tax revenue it generates in an effort to close the gap of redevelopment costs for contaminated, blighted or abandoned sites. The rest of the revenue would go to the local government and the state. Because these sites were not producing any revenue to begin with, everyone benefits.
“As we crafted this economic development tool, we applied the “but for” test,” Horn said. “This is designed for projects that would not happen ‘but for’ the tax increment financing (TIF) that only the state can apply. Once the funding gap is satisfied through the tax capture, it goes away.”
This approach is entirely performance-based and puts the risk entirely on the private sector. The developer must 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. Also, because no money from the state is put toward upfront costs, things like the School Aid Fund, local revenue sharing, road and bridge funding, among other programs, are all protected.
In order for investors to be able to receive a portion of the increased tax revenue, certain requirements must be met. Projects must first receive local approval, must be mixed-use development, have a minimal capital investment based on the population of the community requesting the development and have the project’s tax capture approved by the Michigan Strategic Fund. The projects must also provide evidence that the redevelopment will be beneficial to our state.
“Local governments around the state are asking for more tools to assist with redevelopment of these sites,” Horn said. “These vacant, crumbling properties are negatively affecting their ability to generate tax and tourism revenue. When that happens, local and state government pay one way or another — whether it is lost tax revenue, property maintenance, demolition, and so on.”
JoAnne Crary, President and CEO of Saginaw Future, who has worked closely with Horn on similar legislation in the past, argues that revitalizing these properties protects the environment, reuses existing infrastructure and creates economic opportunities for both local governments and residents alike.
“This legislation will get Michigan moving again – and do so in a fiscally responsible manner. The chance to breathe new life into Saginaw and other downtowns across Michigan at no risk to taxpayers is an opportunity that our state cannot afford to pass up.”
Dan Austin, spokesman for the MIThrive Coalition agreed that the bills have the potential to completely revitalize communities.
“As a coalition of nearly 40 members representing every corner of the state, we applaud Senator Horn for his leadership in sponsoring this critical legislation. Communities across Michigan have contaminated or abandoned sites that have sat vacant for decades. Communities simply need tools that will help build a more vibrant downtown, main street, or waterfront and that will 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.”
Horn remained optimistic that these bills will be able to revitalize entire communities.
“Passage of these bills will bring billions of dollars of investment to cities like mine, all over our state. That’s why the legislation has support from groups and lawmakers from every corner of Michigan. This legislation is pro-Michigan, pro-community and pro-growth at precisely the time young professionals, engineers and skilled tradespeople are looking to move back to Michigan. Michigan has a bright future, Senate Bills 111-115 aim to make sure of that.”
SBs 111-115 were assigned to the Senate Committee on Economic Development and International for further consideration.
Editor’s note: A print-quality photograph is available by clicking on the image or by visiting the senator’s website at: www.SenatorKenHorn.com. Click on “Photowire” under the Media Center tab. Video is also be available on Horn’s website under the “Video” tab.
Photo Caption: State Sen. Ken Horn, R-Frankenmuth, stands at the podium with members of the MIThrive Coalition and his Senate colleagues during a press conference introducing the newly updated MIThrive initiative in Michigan.