House panel OKs tax incentives for developers

Michael Gerstein
The Detroit News

Lansing — A House panel approved a package of bills Wednesday that would let companies developing long-vacant land collect taxes from new revenue raised by the development that would otherwise go to the state.

The panel approved the bills in a series of 10-3 votes, with three Republicans voting against the plan to let companies withhold a portion of their taxes to encourage development projects that supporters say wouldn’t otherwise happen. They are now eligible for a House floor vote.

A statewide coalition of urban communities such as Pontiac as well as Quicken Loans chairman and Detroit developer Dan Gilbert says communities across the state would benefit from the proposed state tax incentives because they would breathe new economic life into derelict properties.

After a series of hearings, lawmakers amended the package to allow smaller cities to benefit from the plan. The measures are expected “to unlock at least $5 billion in new development,” according to the MIThrive coalition.

“This legislation is so crucial to Michigan’s future and offers a way to revitalize the toughest brownfield properties left in our communities,” said Dan Austin, coalition spokesman. “We have always been committed to fiscal responsibility accountability, and ensuring this tool works for communities of all sizes.”

The plan would allow developers to capture up to half of the income tax revenues generated from any new jobs or residents at the completed site for up to 20 years. Project organizers would also recoup sales and income tax revenues generated on-site during the construction period.

Opponents have argued that the state shouldn’t interfere in market decisions. They also say big companies shouldn’t be receiving what amount to tax rebates, especially when they would capture tax money that would otherwise finance strapped state services such as schools and roads.

The legislation includes a five-year sunset and a requirement that 35 percent of the approved plans are within cities with fewer than 100,000 people.

Lead bill sponsor Sen. Ken Horn, R-Frankenmuth, wants to boost development on blighted or environmentally contaminated land around Michigan. Investors would have to put up at least $15 million in small communities and $500 million in larger ones, such as Detroit.

Passage could also jump-start development projects worth $2 billion to $3 billion that Gilbert has planned in Detroit. The Cleveland Cavaliers owner has said the incentives would help his company Rock Ventures LLC go forward with a bold redevelopment project on Woodward where J.L. Hudson’s department store used to be.

Gov. Rick Snyder supported a version of the plan last year, which failed to pass the House after Senate approval.