25LINKBUDGET(FULL) - Flipbook - Page 178
CITY OF PLYMOUTH
BROWNFIELD REDEVELOPMENT AUTHORITY
The Brownfield Redevelopment Financing Act (Act 381, Public Acts of Michigan, 1996) authorizes local governments to
establish a Brownfield Redevelopment Authority to deal with contaminated properties within its jurisdiction. Brownfield’s
are abandoned, undeveloped or under-utilized properties which are not being developed or fully utilized due to environmental
contamination. The City’s bond counsel has provided a draft resolution for this purpose which is also attached.
How it Works
An authority established under the Act is authorized to capture tax increment revenues (very much like a DDA), and use the
revenues to assess the environmental status of a property, to take steps to mitigate exposure to existing contamination, and to
clean up existing contamination. This can include the costs of preparing a Remedial Action Plan, including the costs of review by
the Michigan Department of Environmental Quality. In addition, it can include the cost of paying back an obligation issued by the
authority to pay for eligible activities. However, the Authority can only capture tax increment revenues on a given site until the
year in which the cost of eligible activities have been repaid, or up to five years after that if the Authority establishes a Local Site
Remediation Revolving Fund.
For example, the City might enter into an agreement with the owner or buyer of a contaminated site, by which the City would
finance the remediation of the contamination and the owner / buyer would redevelop the property. The City would capture taxes
from the additional development to pay for the remediation costs which could be financed by a tax increment bond issue. The
owner/buyer would receive Single Business Tax credits for a portion of the redevelopment costs. Thus, industrial tax abatement
would not have to be used to provide a private incentive.
Limitation on School Tax Capture
An authority is able to capture both local and state school operating taxes, but only for eligible activities that are consistent with
a Remedial Action Plan approved by the DEQ before January 1, 2001. There are no opt-out or sharing provisions for other
governmental taxing units, in contrast to the provisions for DDA=s. However, the Authority=s tax capture may be limited by the
percentage of tax increment revenues captured under all tax increment financing plans in the municipality.
Private Sector Incentive
The biggest incentive for private parties to develop and invest in eligible property is the potential to qualify for a 10% credit on
the Michigan Single Business Tax, up to a maximum of $1,000,000. The credit must be related to redevelopment costs occurring
before January 1, 2001; and must be taken within 10 years. This provides a private tax incentive to redevelop sites which are
remediated by the authority, when industrial tax abatement might be in conflict with the tax-capturing financing of the
remediation.
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