By Isaac Constans
Capital News Service
After passing through the Senate, legislation to help Michigan cities rebuild from urban decay has been met with enthusiasm, but also questions, in local communities.
The bills would provide tax relief for developers building on previously contaminated and blighted land, known as brownfields. Such projects have clean-up costs, and developers would not ordinarily undertake them without financial assistance, according to proponents.
Sen. Ken Horn, R-Frankenmuth, the primary sponsor for the package, said that communities could benefit greatly from the investments.
“When you develop economically in a community, you get people moving back in again,” Horn said. “So now you have a tax base, and you have people with higher expectations, so you have growth on that site and all around. You kind of regrow your city from the inside out.”
Other sponsors include Sens. Jack Brandenburg, R-Harrison Township; Tom Casperson, R-Escanaba; Peter MacGregor, R-Rockford; and Steven Bieda, D-Warren.
JoAnn Crary, president of Saginaw Future, said that Saginaw faces the challenges of industrial residue in rebuilding the city, which is designated as a brownfield by the Brownfield Redevelopment Authority. As a result, the city has pursued grants for riverfront rejuvenation – bringing in new medical facilities – and to reuse previously inoperable brownfield spaces.
“The key is definitely to address costs that occur on brownfield sites that don’t happen on greenfield sites,” Crary said. “Next to the riverfront, we had geotechnical issues where we had to go down sometimes over 100 feet with pilings to provide the stability that’s needed to hold the building up.”
Crary said that other development costs included the acquisition of property titles and the relocation of utility lines and sewage pipes.
The Mackinac Center for Public Policy is not enthusiastic about the the bills, however, questioning the effectiveness of the proposal.
“We’re against it,” said James Hohman, assistant director of fiscal policy at the Mackinac Center. “These types of programs don’t justify the costs. They’re more about press releases with jobs, and they invite corruption.”
Hohman said that even the current protocol for brownfield subsidization should be reviewed, and the public bears the costs for brownfield development.
“The bottom line with those is that development is going to happen when it makes economic sense to do so,” Hohman said. “And there’s a lot that that’s going on in Michigan, and even some places that are thriving, without having to subsidize development.”
Under current law, the Clean Michigan Initiative fronts $335 million for brownfield funding. However, the new proposition goes beyond that and involves tax benefits.
The bills would allow owners to recapture some of their costs in the form of income, sales and use tax incentives – incentives that proponents say are necessary to encourage certain brownfield transformations.
Crary argues that revitalizing brownfield sites is only possible with sufficient aid. She said the legislation could bring new establishments to the Saginaw downtown and Old Town areas, where she said there’s been the desire but not the means to finalize some deals.
“They wouldn’t happen without the incentives because they’re just not feasible,” Crary said.
Horn said providing the return of funds in the form of taxes would be inherently low-risk, because it would prevent overpaying or paying for a halted operation. Developers would have to demonstrate that they could bear the financial stress of a project before qualifying for a loan.
The bills would “have a generally positive impact over the long term” on the economy, according to Elizabeth Pratt, a fiscal analyst for the Senate Fiscal Agency, as long as they engender new projects that would otherwise not happen.
Horn said such projects go beyond a business, block or neighborhood. Entire communities could be reinvigorated.
“Success begets success. It’s just a standard of economics,” Horn said. “These are multi-use, so that means there are apartments, condominiums, retail space, coffee shops, these little convenience stores and whatever underneath.”
Carrie Geyer, a supervisor of the Brownfield Redevelopment Unit for the Department of Environmental Quality, said numerous examples of community integration, fostering and advancement exist across the state from previous brownfields. Cooley Law School Stadium, for example, in Lansing birthed a whole new stadium district, while Benton Harbor’s Harbor Shores 500-acre turnaround was similar.
With reurbanization movements across the country, Geyer said that Michigan needs thriving, vivacious communities to attract new residents to previously abandoned areas.
“It helps bring people back into the communities rather than scattered abroad,” Geyer said.
“Frankly, Michigan needs to focus on building our communities so that we can retain our young people, and they aren’t running off to Chicago because it’s a cooler place to live,” she said. “We need to really try and focus on building our cities up to make them a cool place to live, and I think Detroit is taking some huge steps in terms of doing that in the last five, 10 years.”
Horn said the state might miss out on the next economic trend if it doesn’t find ways to attract millennials and retain its own future workforce. Bringing back cities might be the best way to do that.
“We’re going to be inviting some young, very smart people, these millennials,” Horn said. “And they’re looking for vibrant, exciting cities to live in. They have a different expectation than people like me and my generation, and so we need to rebuild our communities.”