Historic renovation credits among key tools that work
Gov. Rick Snyder’s proposed state budget fundamentals are receiving quick legislative attention, especially when contrasted to the agonizing delays, inaction and unending paralysis exhibited by their predecessors.
Days after Snyder detailed his revenue sharing plan for governmental units planning shared services or consolidations in the Grand Rapids City Commission chambers, the House approved legislation to streamline local government processes for such consolidations. And even while Michigan retains one of the highest unemployment ranks, Senate Republicans marshaled unemployment benefit changes to passage. It would not have happened even one year ago.
The business tax credits now engrained in economic development principles in every state may not be so quickly debated and dumped. Snyder may have set a precedent in this regard in retaining a portion of the Pure Michigan tourism marketing budget and a map to proposed cuts by his reorganization of state departments — not the least of which is exemplified by the Michigan Economic Development Corp.
The new “streamlined” MEDC also now considers work force transformation, the Prevailing Wages on State Projects Act, the Energy Efficiency & Renewable Energy Revolving Loan Fund and State Energy Office, all once under the Department of Energy Labor and Economic Growth. The Land Bank Fast Track Authority and Michigan State Housing Development Authority also is now a part of MEDC, instead of the Treasury.
It is doubtful that tax credits in current percentages will continue for the film industry, but solid evidence of the payback on historic tax credits should give legislators pause, especially those representing urban areas.
Vibrant urban areas are the “economic gardens” attracting talent across the country. The Census Bureau population reports released last week exactly define the talent loss from Michigan and certainly multiply employer anxiety and difficulty in attracting and recruiting needed workers, such as that currently impairing Gentex Corp. in Zeeland, among others.
Legislators must understand that developers willing to take on renovation projects to preserve urban areas also take on the sins of the past, so to speak, to upgrade such buildings to LEED certifications. They deal with lead abatement and a host of other issues that would otherwise continue to cause public health concerns in blighted urban cores. The credits are needed to match any federal tax credits for such projects. The extensive renovations are otherwise too costly for any developer.
Such urban projects have been the source of a Grand Rapids renaissance, from the Amway Grand Plaza Hotel to extended downtown byways including Division Avenue and, one year ago, Clear Water Place, the city’s old water filtration plant on Monroe Avenue. From 1999 to last year, these projects created 6,644 jobs and an estimated investment of $267.5 million. The investments across Michigan leveraged $1.46 billion in investments based on $128 million in credits. For every dollar in credit, the return was $11.37 in direct economic activity.
It is especially important to budget-strapped cities that those buildings are back on the tax rolls and attracting talent rather than promoting blight.
Gov. Snyder’s intent is to make progress and move forward, not backward.