Lansing — A major tax incentive proposal touted by Detroit businessman Dan Gilbert as a way to spur urban “transformational” redevelopment projects around the state died quietly Wednesday during the Michigan Legislature’s so-called lame-duck session.
The House Local Government Committee adjourned its final meeting of the year Wednesday without voting on the Senate-approved legislation, which called for a complicated tax “capture” mechanism to help developers recoup part of their investment in contaminated or blighted brownfield properties.
Rep. Lee Chatfield, a Levering Republican who chairs the committee, said he anticipates the discussion will continue in the new legislative session that starts next year, “but at this point, I don’t think it’s the best direction for us to go. “
“I’m eager to work alongside Dan Gilbert and anyone else who’s willing to move Michigan forward,” he added.
The Quicken Loans founder, who moved his company to Detroit six years ago and is building a downtown real estate empire, lobbied for the proposal Tuesday in Lansing, testifying in committee and meeting with leaders to discuss the bills.
The MIThrive Coalition, a group backing the legislation, said it was “stunned” by the decision to table the proposal and urged reconsideration by House Speaker Kevin Cotter, R-Mount Pleasant.
“A decision by Speaker Cotter and House Republican leadership to not advance this fiscally responsible, game-changing legislation would be a case of ideology overriding what is in the best interest of our state,” the coalition said in a statement. “It leaves thousands of jobs for hardworking Michiganders on the table and says that House leadership has no interest in helping to rebuild Michigan’s cities and help our state grow and prosper.”
Cotter responded to the coalition comments later Wednesday, touting GOP efforts to make Michigan a state “where the best businesses can compete and win on a level playing field, instead of relying on the state to pick winners and losers.”
Gov. Rick Snyder and the Republican-led Legislature overhauled the state tax code in 2011, lowering taxes for all businesses but moving away from large-scale incentives.
“Dan Gilbert has done great things for Detroit, and he has shown that he is a competitor and a winner,” Cotter said in a statement. “If he can’t make a deal work without state aid, then it is not a deal worth doing, and Michigan taxpayers should not be forced to invest.”
The legislation is aimed at helping get off the ground urban brownfield projects, which can often require costly clean-up efforts, by promising a return on part of on developers’ initial investment. The state could have approved five “transformational” incentive packages each year.
“If we deliver, we’re going to have in Detroit alone probably $2.5 to $3 billion in new construction — and cranes and hope and optimism in the air — in a short period of time,” Gilbert told legislators.
Gilbert, who controls more than 90 properties in downtown Detroit and has invested more than $2 billion in the city, is planning two massive redevelopment projects. They include a Monroe Block plan to overhaul a mostly vacant two-square-block area in the heart of downtown Detroit by building two modern towers of at least 16 and 20 stories.
His Bedrock Real Estate company also wants to build an “iconic development, reportedly including a new skyscraper and other mixed uses, on the former J. L. Hudson site downtown on Woodward Avenue.
Gilbert told The Detroit News the size and scope of his projects could depend on the tax incentive package.
“We’re sort of in a holding pattern,” he said Tuesday. “As soon as we know what’s going to happen one way or the other, we’ll look back and see what we can do.”
The brownfield legislation is the second major tax incentive proposal to die in the state House this week as the “lame-duck” session nears close. Any bills not approved by the end of next week would need to be introduced next year, restarting the legislative process.
The Local Government Committee on Tuesday also tabled a $250 million incentive plan approved by the Republican-led Senate designed to lure or retain companies by offering tax abatements to businesses that promise to create at least 250 or 500 jobs, depending on the average wage they would pay employees.
The business incentive plan was backed by the influential Business Leaders for Michigan and supported by the Michigan Economic Development Corporation.
Both proposals would have signaled a significant change in economic development policy under Gov. Rick Snyder and the GOP-led Legislature, which scrapped most major incentives as part of a 2011 tax code rewrite that simplified and lowered taxes for Michigan businesses.
Proponents of both packages argued the state needed to adopt tools that would help it compete for jobs, projects and talent with other states offering generous incentives.
But Cotter and other House Republicans resisted the proposals.
“I think we can incentivize industry and business in our state by creating a low and unregulated tax structure that’s fair to all,” Chatfield said. “Our state is turning around, we have seen over the past several years, and I felt this could take us in the opposite direction.”