MICHIGAN USES TIF TO REDEVELOP BROWNFIELDS

Michigan uses redevelopment agencies, known as Authorities, to administer and implement TIF. A municipality can form an Authority to supervise development plans within a designated district. Once established, the Authority reviews development plans and allocates public funds to supplement a project. These special purpose authorities are structured to target specific types of redevelopment.

In particular, Michigan encourages developers to reuse brownfield properties through extensive financing incentives. Michigan broadened the traditional definition of a brownfield to include badly damaged or functionally obsolete properties. To oversee the distribution of public funds used for brownfield redevelopment, municipalities create Brownfield Redevelopment Authorities (BRAs). According to the Michigan website, 287 BRAs currently exist throughout the State. The goal of a BRA is to make developing brownfields more competitive with greenfield development. To offset the additional costs associated with brownfield redevelopment, BRAs can provide developers with TIF assistance, loans and grants.

TIF eligible costs include pollution abatement activities, environmental insurance, demolition or redevelopment of existing structures, and Baseline Environmental Assessments (BEAs). Normally, any owner in a property’s chain of title may be held liable for environmental contamination. A BEA is designed to determine the amount of existing contamination on a property to protect future purchasers from environmental liability for past contamination. To repay TIF bonds and notes issued for eligible costs, BRAs can capture all incremental property taxes generated by a specific project on eligible property for up to 30 years. BRAs may delay the commencement date to capture incremental property taxes for up to 5 years, potentially providing developers with extra time to remediate their properties prior to development.

Funding for brownfield redevelopment began in the late 1980s when Michigan passed several bond measures including the Environmental Protection Bond Fund (1988) and the Clean Michigan Initiative (1998). These two bond initiatives provide funds for the Brownfield Redevelopment Loan Program, the Brownfield Redevelopment Grant Program as well as the Waterfront Redevelopment Grant Program. In 1996, Michigan also passed the Revitalization Revolving Loan Fund which offers developers low interest loans for brownfield redevelopment costs. As of 2008, funding from these programs was more than $155 million of the approximately $1.4 billion the State had spent for brownfield redevelopment. For BRAs, in particular, from 1998 to 2007 the State provided $120.7 million in assistance to almost 300 brownfield projects.

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