State incentive programs slowly begin to roll out but will they work?

9 Apr 2012

I’ve blogged before about Governor Snyder’s replacements for the Brownfield MBT, historic property tax and MEGA credit programs.   Last August, the Michigan Economic Development Corporation (MEDC) announced that, effective October 1, 2011, those old programs were recast as the: (1) Michigan Business Development Program; and (2) the Michigan Community Revitalization Program.  This was the Governor’s effort at focusing on “business gardening” – ostensibly

These programs are just now being rolled out – a delay of some 7 months.  Thus far, not a single project has been approved (but to be fair, I’m not sure anyone has applied). The rigor that the Michigan Strategic Fund is going to put applicants through is severe. For example the return on the developer’s investment will be evaluated.  Here is some of what they are looking for (as applicable) before funding grants or loans under the Community Revitalization Program:

1. Projects that revitalize regional urban areas get preference;

2. Only projects within a downtown or traditional commercial center and only projects that primarily promote the desired revitalization of urban areas;

3. The amount of local community and financial support for the project;

4. The applicant’s financial need for the incentive and whether the project is financially and economically sound;

5. The extent of contamination and reuse of vacant buildings and historical buildings and redevelopment of blighted property;

6. Whether the project increases area density and promotes mixed-use development and walkable communities;

7. Whether the project promotes sustainable development; and

8. Whether the project will compete with or affect existing Michigan businesses.

Despite the “no picking winners/losers” mantra – clearly this program has a specific focus and asks for much more than the old programs did.  Some developers might not want their finances looked into this deeply   This is different from the Business Development Program which last month approved 5 incentive packages for five business expansion projects.  That Program is clearly focused on jobs and provides:

•  No support for any retail projects;
•  No support for any retention projects;
•  Consideration given to out-of-state competition;
•  Net-positive return to Michigan;
•  Level of investment made by business;
•  Shovel-ready projects with funding support;
•  Business diversification;
•  Re-use of existing facilities;
•  Near-term job creation;
•  Wage levels for those new jobs;
•  Employer provided benefits;
•  Strong links to Michigan suppliers; and
•  Whether the project is in a distressed or targeted community.

There was a pot of $100 million for incentives, which can be grants of up to $1Million; or loans or other economic assistance of up to a total of $10 million per recipient.

Leave a Comment Below

Leave a Reply