Financing and Incentives

Under the Brownfield Redevelopment Act PA 381 of 1996, as amended, counties can create a Brownfield Redevelopment Authority (BRA) to develop and implement Brownfield projects. A Brownfield Redevelopment Authority is a resource that may use Tax Increment Financing (TIF) as a tool for property redevelopment. The Brownfield Redevelopment Authority may be involved with eligible property throughout the county, but may not include a project in their Brownfield plan unless they have agreement from the affected municipality where the project is located.

The Michigan Business Development Program is a new incentive program available from the State of Michigan. The program is designed to provide grants, loans or other economic assistance to businesses for highly competitive projects in Michigan that create qualified new jobs and/or make a qualified new investment in Michigan. The qualified new jobs must be held by Michigan residents and be in addition to those maintained in Michigan prior to the project. Any business seeking to qualify for MBDP support on the basis of job creation must create a minimum of 50 qualified new jobs. If a project is in a rural county (a county with a population of 90,000 or less) or qualifies as a high-technology activity, the business must create a minimum of 25 qualified new jobs. Grants or loans awarded through the MBDP will be performance-based. MBDP support for any project may not exceed $10,000,000.

Private activity bonds provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates. The local government entity borrows money from private capital markets, secured only by the project’s revenues rather than the government entity’s full faith and credit. Interest income earned on bonds issued by the government to finance a project for a private company which has demonstrated a good public purpose is exempt from federal, state, and local income taxes, thereby reducing the cost of capital (including the cost of letters of credit, remarketing fees, etc.)

The State of Michigan offers a variety of property tax abatement programs to encourage businesses to locate within the state. Below are some of the businesses and activities that qualify for property tax abatement:

• Industrial processors, high-technology activity companies, research and development laboratories and large communication centers.
• New warehouse, distribution or logistics facilities that locate in a border county.
• Redevelopment of obsolete buildings into commercial or commercial housing. The tax incentive is designed to assist in the redevelopment of older buildings, in which a facility is contaminated, blighted or functionally obsolete.
• Commercial real property that is at least 15 years old or more.

In addition, any special tooling, such as tools, dies, jigs, fixtures and patterns that are used to manufacture another product without substantial modification to the device are exempt from personal property taxes.