Preserve brownfield tax credits
What would the skyline of Grand Rapids be like without brownfield tax credits?
Erase the offices and support buildings on Medical Mile. We would also have to get rid of the new Urban Institute for Contemporary Arts and many of the cool new places to live downtown, including The Fitzgerald, 38 Commerce, Hopson Flats, Union Square and the Gallery on Fulton.
Replace all those amazing buildings — and the jobs that go with them — with vacant land, empty parking lots or blighted buildings.
All of these projects were successful because their developers were able to secure brownfield tax credits. But if Gov. Rick Snyder has his way, this program will disappear and we will be left with a raft of buildings: old, hulking and unusable. If we lose the brownfield program, an important redevelopment tool will be eliminated from our tool chest and Michigan cities will suffer.
The governor has proposed sweeping changes for Michigan’s budget, including elimination of all credits. True, he has indicated that he intends to honor those credits that have already been awarded. But there is an excellent case to be made for retaining the brownfield program as it currently stands. These credits have proven to be the best economic development tool available in our state. Consider:
- Urban redevelopment: Unlike some government programs, brownfield tax credits are truly stimulus-based credits. They induce private investment as a condition of receiving the credit, encouraging private developers to give new life to blighted urban properties and renewing downtown cityscapes. And the developer only receives the credit after the investment is made.
- Excellent ROI: As an investment, brownfield tax credits have proven their worth and provided an excellent return. These credits leverage capital investment of at least 10 times the amount of the credit. As an added bonus, thousands of new jobs are created.
- Competitive edge: The pool of competition has increased exponentially since brownfield tax credits were first introduced in 2000. Michigan is recognized nationally as a leader in brownfield redevelopment. We stand to lose this competitive edge — and subsequent investment from all developers — if we eliminate brownfield credits.
- Reduce financing worries. A developer who goes to a lender with brownfield tax credits in hand is far more likely to secure bridge financing for a project. This is particularly critical when it comes to high-dollar redevelopment plans.
If the new administration is serious about encouraging private investment, supporting the construction industry, creating new long-term jobs and cleaning up urban blight, the brownfield tax credit program must be preserved and supported.
John V. Byl is a partner at the law firm of Warner Norcross & Judd LLP. He chairs the Michigan Chapter of the National Brownfields Association and the National Board of the National Brownfields Association. He can be reached at email@example.com