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A Better Partnership

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Nov 2011
04
November 04, 2011

Michigan Introduces New Incentive Programs


The new year will see the loss of three of the most commonly utilized incentive programs by new and expanding businesses in the state, brownfield tax credits, state historic tax credits and Michigan Economic Growth Authority, or MEGA, jobs credits. These incentives recently boasted support from the state of $500 million annually for businesses in Michigan.

Gov. Snyder and the Michigan Legislature expect to replace the popular incentive programs with two more focused programs: the Michigan Community Revitalization Program and the Michigan Business Development Program. The two programs will receive $100 million in funding the first year, which will be administered through the Michigan Strategic Fund, or MSF.

The Community Revitalization Program replaces both the brownfield tax and the historic redevelopment credits, and will focus on urban revitalization in downtowns or commercial centers. To qualify for CRP a project must be on a site that is contaminated or blighted or has a building that is functionally obsolete or historic.

The incentive will generally be in the form of a grant up to $1 million or loan up to $10 million. The amount can be up to 25% of the investment in construction, rehabilitation, equipment and similar improvements, but no more than $10 million per project.

The Business Development Program will focus on job creation and business investments in Michigan and replaces the MEGA jobs credits. A business must commit to providing at least 50 new jobs, or 25 if the jobs are high tech or the business is located in a rural area. Businesses being courted by another state will receive special consideration. Like the CRP, projects must gain support from their local municipality to qualify. Other factors that will be important are: diversification, projects with funding support in place, reuse of existing facilities, wage levels and benefits and links to Michigan suppliers.

All in all, support for these incentives is significantly less than what the previous programs received. Competition for fewer dollars will be great.
 

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