Michigan’s Transformational Brownfield Program: What Municipal Leaders Should Know
Michigan's Transformational Brownfield Program remains an important tool for communities seeking to advance complex redevelopment projects that may not be financially feasible without public support, combining the traditional property tax capture tools of a traditional brownfield plan with the ability to capture income taxes, sales and use taxes and withholding taxes.
Legislation signed over the summer extended and expanded the program, increasing the state's capacity to support qualifying redevelopment projects. For municipal leaders in large and small communities alike, the expanded program provides an opportunity to take a fresh look at stalled, challenging or previously infeasible redevelopment projects and consider whether transformational brownfield financing could help move them forward.
The Transformational Brownfield Program is designed for projects which will have a transformational impact on local economic development and community revitalization. The program targets projects whose extraordinary costs—such as environmental investigation and cleanup, demolition, construction, historic preservation, public infrastructure, or site preparation—make redevelopment financially impractical without assistance.
The new legislation extends the program and substantially expands the amount of state tax revenues that may be captured on projects approved statewide. As the previous authorization approached its funding limits, many communities and developers were concerned that otherwise viable projects could be delayed or left without access to the program. The legislation addresses that concern by providing additional statewide capacity while maintaining the program's oversight structure.
A project might warrant closer review if:
- A significant property has been vacant, obsolete or underused for years
- A developer is interested but extraordinary redevelopment costs are preventing the project from penciling out
- The proposed development could materially improve a downtown, neighborhood or commercial district
- The project involves substantial new housing, employment or commercial activity
- Traditional incentives alone cannot close the financing gap
- Local leaders are prepared to coordinate with the municipality, BRA, developer and state agencies
Smaller communities should not assume the program is beyond their reach simply because of their population; projects in smaller communities have smaller investment requirements based on population size. At the high end, a transformational brownfield plan in a municipality with a population of at least 600,000 must result in capital investment of at least $500 million. At the low end, a transformational brownfield plan in a municipality with a population of less than 25,000 only requires a capital investment of $15 million. The focus is on whether a project is transformational for its community based on its size and meets the statutory criteria.
For developers, the expanded program improves the likelihood that eligible projects with substantial financing gaps can be assembled successfully, providing qualifying projects with greater opportunities for continued access to this program and its funding sources.
The legislation does not eliminate the need for careful planning. Projects must still satisfy statutory eligibility standards, demonstrate that redevelopment would not proceed without assistance, and complete the required state and local approval processes. Financial projections, development agreements, reimbursement provisions, and tax-capture analyses remain critical components of successful applications.
Communities considering major redevelopment initiatives should review pending projects to determine whether they may benefit from the expanded program. Developers should likewise evaluate whether projects previously viewed as financially infeasible may now warrant renewed analysis. Early coordination among the developer, municipality, brownfield redevelopment authority, legal counsel, financial advisers, and state agencies will remain essential.
Michigan's Transformational Brownfield Program is increasingly being used to bring together local borrowing, local and state tax capture, and private financing to make complex redevelopment projects financially feasible. Contact your Miller Canfield attorney with questions about your projects which might qualify.
