- Associated Press - Monday, February 20, 2017

LANSING, Mich. (AP) - The Michigan Senate is poised to pass legislation that would ease some of the financial burden of cleaning up brownfield sites for redevelopment.

Sen. Ken Horn, R-Frankenmuth, introduced the package of bills that he said would help redevelop sites that have sat dormant for many years into mixed-use projects. Brownfield sites cannot be used until environmental contamination is removed, which can be cost-prohibitive for many projects.

The legislation would let developers keep part of the taxes generated from businesses and residents moving in after large-scale projects are finished. No money would be given to a developer upfront. They would be required to have all the money needed to clean up and build on the site. Supporters say the approach puts the risk on the private sector and the debt would not fall on taxpayers if the project fails.

“We think that we’re giving every community in Michigan a fair shot in the way that we’ve structured this bill,” Horn said. “Bottom line on this one here, this isn’t about picking winners and losers and this isn’t about tax policy. This is about fixing things.”

Before building, the project would have to be approved by the city that has the brownfield site. Then the state would analyze that there is a financial gap needed to clean up the land and would only give as much money as is needed. For the largest projects, an independent third party would conduct the analyses and the state treasurer would have to sign off on it.

There would also be a $40 million cap that developers could be reimbursed annually. Developers would be able to receive up to 50 percent of taxes generated from the site for up to a maximum of 20 years.

MIThrive - a coalition of economic development organizations, cities and chambers of commerce from places such as Detroit, Marquette, Pontiac, Flint, Sault Ste. Marie, Lansing and Muskegon - supports the legislation. Last year, Dan Gilbert, chairman of Quicken Loans, was a vocal supporter of it because it could help him with projects in Detroit.

Carlin Smith, president of the Petoskey Chamber of Commerce, said the legislation could help his city with a project known as the Petoskey “hole.” He said that in the early 2000s, a developer wanted to build on a city block, but it stalled and eventually the developer ran out of funding during the financial crisis. It has sat vacant ever since.

“It was literally a big hole in the ground, so now it’s still a hole with some grass around it,” Smith said.

Pontiac Mayor Deidre Waterman also supports the legislation since the city could help redevelop the abandoned Pontiac Silverdome, or as Waterman called it, the “world’s largest bird bath.”

Another project that could benefit is the Hayes Hotel in Jackson.

Shannon Morgan, senior vice president of Farmington-based real estate development company HRS Communities and coalition member, said the hotel has been dormant for years and qualifies as a brownfield site because of the need to remove lead and asbestos. Morgan said the hotel also is a historic, which makes the project more expensive because of plans to restore the building to its original look.

She said other states like Colorado and North Carolina have been successful with legislation similar to Horn’s.

But not everyone is onboard.

Michael LaFaive, director of fiscal policy at the conservative think-tank Mackinac Center for Public Policy, said it would create an uneven playing field and only cater to developers with connections, allowing them to build large projects at taxpayer expense. He also said that research shows that this style of development is ineffective as a development tool.

“Well, first it’s unfair to developers and taxpayers, so if I wanted to build my own building, unless I was one of the lucky few, I would not be able to collect revenue, it creates an unlevel playing field,” Lafaive said. “I think it should be scrapped in its entirety.”

Similar legislation won approval from the GOP-controlled Senate in November but died in the Republican-led House during the lame-duck session. Horn said that was a blessing as he and others improved the bills to address concerns such as accountability. The legislation was passed by the Economic Development and International Investment Committee on Thursday and will now move to the full Senate for likely votes in coming weeks.

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Follow Chris Ehrmann on Twitter at https://www.twitter.com/chrisehrm


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