Brownfields and Historic Credits Are Focus of First Corporate Tax Hearing

The House Tax Policy committee had their first hearing on the new Corporate Income Tax. This hearing took testimony from the League and League members and partners mostly on the need for Brownfield and Historic credits. 

The hearing lead off with Community Economic Development Association of Michigan (CEDAM) doing an excellent job talking about the importance and need for historic tax credits in community building and place making. She was followed by the City of Detroit, who gave numbers about the positive impacts of the Brownfield and Historic credits in Detroit with projects like Book Cadillac and others. Detroit used the metric that $120 million leads to $2 billion in investments and talked about the number of jobs added as a result of these tools.  The City of Lansing followed and talked about the importance of cities in creating economic development. They also presented several examples of projects that would not have happened without these credits in conjunction with other economic development tools.  

Following them, I testified on behalf of the League along with the City of Sterling Heights. Sterling Heights gave examples of Brownfield credits in revitalizing industrial properties, and bringing industrial companies and jobs to Sterling Heights and Michigan. They were followed by East Lansing, who also focused on the projects that could only happen with the usage of these credits. 

Some issues that were focused on by all parties were:

1.    Cities create economic development, private investments, and jobs using these tools.

2.    Real estate redevelopment decreases blight, increases property values, and creates better places where people will want to live and work.

3.    Credits are necessary instead of an appropriation. Credits are issued after the project is completed. Credits can be used to get financing, and are an asset that can be leveraged. Appropriations cannot be used to leverage financing, and are not assured to be granted when the project is done. Projects from all over the state would fight for an appropriation from the MEDC, which creates winners and losers and makes the allocations political. Also, the $50 million is not nearly enough in appropriation.

4.    Projects would not happen without these credits, so the state would lose the taxes generated. The credits are a small percentage of the total tax captured by the state, and if the projects don’t happen then the state would lose the taxes associated with them.

5.    Contrary to previous testimony, Brownfield credits are one-time credits and can only be taken in a five-year period after original approval.

There were many questions from committee members. Some members seemed to question the actual effectiveness, including asking how the economy can be so bad if this program is so successful. There was also a suggestion that the locals should capture all taxes as a result of these projects and do this economic development on their own without state assistance.

Please continue to talk to your legislators and House Tax Policy members about the importance of these tools! Click here for the League’s action alert and sample letters.

Andy Schor is the Assistant Director of State Affairs for the Michigan Municipal League. Contact him at (517) 908-0300 or by email at aschor@mml.org.