State House considers a new Ren Zone

October 10, 2008
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The details are somewhat fuzzy, but the intention is fairly clear.

Members of the State House are proposing to amend four business-related statutes that would create a new version of the Renaissance Zone called an Aerotropolis, but only for properties located within a three-mile radius of a major Michigan airport.

The new zone would be nearly tax-free like the one in existence since 1997. But an Aerotropolis would also take on an added characteristic in that it could capture the growth portion of property taxes like Tax Increment Financing Authorities do, similar to a SmartZone. In turn, that capture could be spent on making improvements within a designated zone.

But there is a catch. For the property surrounding an airport to qualify as a combination zone and TIFA, the airport must have a minimum of one million enplaned passengers in a given year. Right now, Gerald R. Ford International Airport wouldn’t qualify, as it has been two years since that many passengers left the runways. And the 2008 numbers, at least through August, project that GFIA will fall short this year, too. (See “Passengers Needed” on page 6.)

So the only airports that would qualify for an “aerotropolis development corporation,” as the zone’s governing body would be known, are in the metro Detroit area. In fact, the idea behind the proposed legislation reportedly came from Detroit Renaissance, Wayne County, Washtenaw County, Detroit-area business leaders, and seven communities that surround the Detroit Metro and Willow Run airports.

“Right now, the bill only pertains to the Wayne County airports. But they’d like to expand it into Grand Rapids, and there was conversation about that,” said Becky Bechler of Public Affairs Associates, a Lansing lobbyist that represents Kent County.

Bechler spoke of a hearing that the House New Economy & Quality of Life Committee held in mid-September. She said State Rep. Dave Hildenbrand, R-Lowell, reminded those at the hearing not to forget about Kent County.

“They also got into conversation of how much cargo comes out of Grand Rapids versus the Detroit area. I didn’t get the sense that the chair was opposed to the idea (of including GFIA). He clearly indicated that it was just a hearing, that these were good conversations and would continue,” she added.

The proposal allows for up to 15 zones to be designated statewide and for a maximum of 10 years.

But it’s still a little murky as to what type of businesses would qualify for aerotropolis zone status. The definition of a “qualified aerotropolis business” is an “air-commerce-linked business, supply-chain business, or business needing to be physically located near an airport for business purposes.” Manufacturing, marketing, distribution and logistics, for example, would all seemingly qualify for that status under the supply-chain label.

“The hearing that they had was just very general,” said Bechler. “They didn’t get into it in depth at the hearing, as far as who would qualify, who wouldn’t, or what type of business.”

The laws targeted for amending are the Renaissance Zone Act, PA376 of 1996; the Local Development Act, PA 281 of 1986; the Plant Rehabilitation and Industrial Development Districts Act, PA 198 of 1974; and the General Property Act (section 9g), PA 206 of 1893.

Another uncertainty is whether all the property within a three-mile radius would be automatically designated as a zone, or if a designation would need to be approved on a parcel-by-parcel basis.

The Aerotropolis idea has had success in Louisville, Ky., and the Research Triangle in North Carolina.

The Senate is expected to propose its version of the aerotropolis legislation soon. But it’s likely that a final version won’t emerge until after next month’s election.

“They’re not going to do anything until the lame duck session,” said Bechler.

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