The Michigan Community Revitalization Program (CR), which is intended to replace the Michigan Brownfield and Historic Tax Credits as well as the Michigan Economic Development Corporation (MEGA) Tax Credits, provides new guidelines for Historic and Brownfield Development, including redefining who is eligible and what types of projects will be funded.
A package of bills (SB 566 – 568, 644) outlines the project eligibility requirements for the program. The new program defines an eligible investment as any demolition, construction, alteration, rehabilitation, or improvement of buildings, site improvements, and the addition of machinery, equipment, or fixtures to the approved project, as well as architectural, engineering, surveying and similar professional fees. The definition for an eligible property as defined by the CR includes polluted property, a historic resource, blighted property, functionally obsolete, and any parcel adjacent to these property types.
These programs, as well as the Michigan Business Development Program, will share a pool of appropriated funds from the state budget. The pool amount budgeted for the current fiscal year is $100 million. At least $20 million must be used for the CR program. Awards of CR funds will likely either be made in the form of grants, soft loans or “other financial assistance”. Grants are capped at $1M per project and loans/ other at $10M.
The bills passed the Senate in September and were recently voted out of the House Commerce Committee with amendments, the most controversial of which prohibits functionally obsolete property from receive more than 25% of the total cost of the eligible investment on a single project, and limits the total investment in any one project to $3 million. While better than a previous amendment that would have prohibited functionally obsolete property entirely, this amendment is still cause for concern because it will potentially limit the ability to support projects for obsolete and blighted projects which will create big investments and jobs in our communities (see here).
The bills are expected to be voted on in the full House within the next few weeks, after which the amended bills will be sent back to the Senate.