Government and Sustainability

State brownfield law nears sunset

September 23, 2012
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If Lansing lawmakers don’t act by year’s end, Public Act 381 of 1996 will expire when the ball drops on New Year’s Eve and 2013 makes its debut.

The state law has been embraced by property developers and public officials because the Brownfield Redeveloping Financing Act has helped to fuel investments totaling billions of dollars since the start of 1997, the year the bill became law.

So far, in an election year, only one measure has been introduced in the Legislature that would amend and extend the brownfield act. Oakland County State Sen. Mike Kowall, R-White Lake, introduced SB 1210 in July; his bill was voted out of the Senate’s Economic Development Committee in mid-August. However, the full Senate hasn’t taken any further action. The House hadn’t acted on any legislation as of mid-week last week. Both chambers are in session two days this week, Tuesday and Thursday, and on Oct. 17, the last meeting before the Nov. 6 election.

The bill would create the State Brownfield Redevelopment Fund, which would finance a grant and loan program that would cover the eligible costs a developer pursues for a project that gains a brownfield designation from a municipality or county and the Michigan Strategic Fund. The money for the fund would come from the tax revenue a brownfield authority captures and would be required to send to the state Treasury.

The tax capture would be three mills and would come from the State Education Tax. Treasury would have to deposit those dollars into the brownfield fund. A Senate review of the bill has the fund receiving from $1.5 million to $4 million annually. As of now, though, those mills are captured by local brownfield boards such as the Grand Rapids Brownfield Redevelopment Authority.

In addition, the analysis pointed out that revenue to the fund would be lower than the estimate, at least initially.

“The amount of revenue would depend on local authority activity, the pace of development, and the amount of captured taxable value,” wrote Elizabeth Pratt, a fiscal analyst.

“Local brownfield redevelopment authorities would have less revenue under the bill due to this shift of a portion of the captured school operating taxes to the proposed State Brownfield Redevelopment Fund, potentially delaying repayments to developers or other eligible local projects,” added Pratt.

The bill also would allow a local brownfield board to increase the amount of tax-increment revenue it can use for administrative and operating purposes. Right now, the Grand Rapids authority is limited to roughly $300,000 each year for those purposes, which makes for a tight budget with all the activity the board and its small staff handles on a regular basis.

Executive Director Kara Wood is hoping that ceiling will be extended to $500,000.

“The concern is if the bill does not go through, the program sunsets at the end of the calendar year. It’s pretty important to the city of Grand Rapids and this region with the amount of brownfield work that we do. So we’re really working hard to get that taken care of,” said Wood, also the city’s economic development director.

Wood said the brownfield’s importance extends past the city, as the legislation is also vital to the state Department of Environmental Quality and the Michigan Economic Development Corp. Wood said she has been working closely with State Sen. Dave Hildenbrand, R-Lowell, who is also on the Economic Development Committee.

Wood testified before the committee on the legislation and heard a few weeks ago that a substitute bill would be introduced in the Senate, returned to the committee to get voted out, and then sent to the Senate floor for a vote. But none of that had taken place as of mid-week last week.

“It includes a variety of technical modifications,” said Wood of the substitute bill. One modification she would like to see is a streamlining of the brownfield process. But another change has a higher priority.

“One of the things we were interested in doing is increasing the cap on the ability to capture tax-increment (revenue) for administrative purposes because we need money to be able to continue the program.”

The original legislation tied a board’s capturing ability to the number of brownfield projects it was administering. The upper limit was $300,000 per year for authorities that had 26 or more brownfield projects, a range in which the city falls. There are 27 in the city, with all but five collecting reimbursements.

However, Wood said she spoke with Hildenbrand about adding another level with 31 or more projects. Authorities with that many projects would be able to capture $500,000 for operating purposes.

“We’re asking for 31 projects or more to be increased to a half-million. We won’t hit that cap for quite some time, but we want to have that availability once it does get close to that because it’s not likely we’ll open up this legislation next year or the following year,” said Wood.

“It’s going to take some time next year to get the new legislators educated on the program.”

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