For many years, policy makers in Lansing have wrestled with the problem of Michigan “brownfield” properties that dot the landscape in both urban and rural areas. A “brownfield” is a former industrial or commercial site that is contaminated with a hazardous substance or otherwise polluted. In Michigan, the definition of a brownfield also includes non-contaminated property such as vacant, functionally obsolete, and underutilized properties in blighted areas. Most of these are abandoned sites that are costly to redevelop due to the additional cost of cleaning up the property and removing any contamination before any new development can commence.
A package of bills moving through the Michigan Legislature seeks to overcome the disadvantage of developing brownfield properties by allowing a developer to keep a portion of the new tax revenues generated by their development activity. Originally dubbed as the “Gilbert bills” because they seemed to be targeted toward helping downtown Detroit developer Dan Gilbert, the legislation has since been redrafted into a proposal with a statewide focus.
The proposed legislation would allow a developer to keep a portion of the new tax revenues generated by the development activity. The total of all such projects statewide would be capped at $40 million per year for annual income tax capture and $200 million total on the amount of construction period tax captures that can be approved over the life of the legislation. The legislation also limits each city to one approved plan per year, so that approved projects would be spread evenly across the state.
Typically, the state’s small business owners are not supportive of legislation like this because they view it as favored treatment for one business at the expense of all others. They believe that if a private project is not economically viable without a government subsidy then it should not be developed in the first place. However, in the debate over how best to proceed with cleaning up and developing abandoned sites and blighted properties the attitudes of small business owners seem to shift away from opposition to the legislation as currently proposed.
A recent survey of the small business members of the National Federation of Independent Business explained the proposals and laid out the arguments pro and con for the brownfield redevelopment bills. When asked: “Should Michigan pass legislation to encourage the redevelopment of brownfield sites by allowing developers to share in new tax revenues from the development?” 52.8 percent of respondents said yes, 43.4 percent said no, and 3.8 percent were undecided.
While the results are far from a groundswell of support for the legislation, it indicates that small business is receptive to arguments on both sides of the issue. The legislation has passed the state Senate and awaits further action in the House.
Charles Owens is the Michigan state director of the National Federation of Independent Business.