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GRDadof3

State looking to do away with Brownfield Redevelopment and Historic Preservation Tax Credits

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As part of the proposed budget cuts, Snyder wants to do away with Brownfield Redevelopment and Historic Preservation Tax Credits. Pick a project in the city, any project, in the last 13 years since the Brownfield Authority was set up and it was made possible in most part by Brownfield Tax Credits and Historic Preservation Tax Credits. The Van Andel Arena did not because it was just prior to that in 1996. Michigan Street Development? Yep. JW Marriott? Yep. 38 Commerce, Gallery, etc etc.

Chris Knape has an article about it. More opinion to come on this. The city should put together a report to give to the legislature detailing the success of the Brownfield Tax Credits.

http://www.mlive.com/business/west-michigan/index.ssf/2011/02/some_worry_snyder_budget_plan.html#cmpid=v2mode_be_smoref_face

Here's the most recent list of Brownfield submittals/plans from 2009:

http://www.grand-rapids.mi.us/download_upload/binary_object_cache/econdev_BRA%20PROJECT%20MASTER%20LIST%20Rev%209-03-09.pdf

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When I read some of the names on the list, there's an odor of corporate welfare IMHO.

Would the Michigan Street Development and JW Marriott have been built without Brownfield Credits? Probably. But many of the other projects, probably 80 - 90% of them, most likely would not have been built (as is mentioned in the article as well).

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I think the major players in development will find a way to carry on. after all it's their business. tax credits certainly make many projects more doable but the profit margins on those projects weren't exactly slim and I guess they will just have to tighten up like the rest of us. the beauty of Snyders budget is that pretty much everybody is complaining. when everybody is affected you know it's fair.

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I think the major players in development will find a way to carry on. after all it's their business. tax credits certainly make many projects more doable but the profit margins on those projects weren't exactly slim and I guess they will just have to tighten up like the rest of us. the beauty of Snyders budget is that pretty much everybody is complaining. when everybody is affected you know it's fair.

2 points:

1. of course the major players will "carry on." as you say, it's their business. but to suggest that development will continue apace is silly. anything that effects the bottom line makes development that much less likely. it's no different than cancelling a deal because the cost of land is too high for the pro forma, or because the market won't bear the rents required to make the project work.

2. to suggest that because it effects everyone means that it is fair is silly as well. just as higher tax rates across the board have a more severe effect on the lower tax brackets, lower profit margins have a more severe effect on smaller-scale development. the devoses and vanandels are obviously more able to shrug it off (and are more willing to take hits in exchange for a higher profile and / or good press) than a one-person shop that does a deal or two a year.

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I think the major players in development will find a way to carry on. after all it's their business. tax credits certainly make many projects more doable but the profit margins on those projects weren't exactly slim and I guess they will just have to tighten up like the rest of us. the beauty of Snyders budget is that pretty much everybody is complaining. when everybody is affected you know it's fair.

So you favor a system that only benefits the 10% of the projects done by "major players?" What about all the infill redevelopment projects that don't involve big family names? Do you know what the margins were on those projects? What about developers like Locus Development, Brookstone Capital, Lighthouse Communities (LINC), ICCF, and even small manufacturers who would be willing to redevelop an urban site? Future projects by them won't be on slimmer margins, they won't happen, period.

You also have to keep in mind that the opportunities for "major projects" is dwindling fast, as downtown land becomes more scarce. I predict(ed) that the next decade would involve a lot of infill projects and continued reuse of warehouses at the Southern end of downtown. That's probably not going to happen now, unless a commitment is made to continue to clean up these contaminated sites and provide economic incentives to do so. Plus, you can't argue with the "permanent" jobs that have been created by the Brownfield Tax Incentives, unlike social programs and welfare.

I think Michigan voters need to be careful they don't hand over dictatorial powers to Snyder.

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So you favor a system that only benefits the 10% of the projects done by "major players?" What about all the infill redevelopment projects that don't involve big family names? Do you know what the margins were on those projects? What about developers like Locus Development, Brookstone Capital, Lighthouse Communities (LINC), ICCF, and even small manufacturers who would be willing to redevelop an urban site? Future projects by them won't be on slimmer margins, they won't happen, period.

You also have to keep in mind that the opportunities for "major projects" is dwindling fast, as downtown land becomes more scarce. I predict(ed) that the next decade would involve a lot of infill projects and continued reuse of warehouses at the Southern end of downtown. That's probably not going to happen now, unless a commitment is made to continue to clean up these contaminated sites and provide economic incentives to do so. Plus, you can't argue with the "permanent" jobs that have been created by the Brownfield Tax Incentives, unlike social programs and welfare.

I think Michigan voters need to be careful they don't hand over dictatorial powers to Snyder.

I think that a lot of these sites have lot less contamination than the credits they receive. brewery vivant used to be a child care. how contaminated can it be. also, I doubt that Locus and the others are just going to quit and submit their applications to blockbuster. the real effect is that the value of undeveloped land(abandoned buildings) will drop considerably. this will only hurt people who are squatting on properties. I have no doubt that redevelopment will continue because historically that is what happened. nothing has changed since grand rapids was founded. The lower business taxes that Snyder is proposing will drive additional growth and will be beneficial for continued redevelopment.

you can argue about jobs that brownfield credits have created because there is no direct link. the projects may have happened anyway, or the job may be temporary or never happened in the first place. I read something recently that only 30% of the projected job creation actually occurred with granting of the tax credits.

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I think that a lot of these sites have lot less contamination than the credits they receive. brewery vivant used to be a child care. how contaminated can it be. also, I doubt that Locus and the others are just going to quit and submit their applications to blockbuster. the real effect is that the value of undeveloped land(abandoned buildings) will drop considerably. this will only hurt people who are squatting on properties. I have no doubt that redevelopment will continue because historically that is what happened. nothing has changed since grand rapids was founded. The lower business taxes that Snyder is proposing will drive additional growth and will be beneficial for continued redevelopment.

you can argue about jobs that brownfield credits have created because there is no direct link. the projects may have happened anyway, or the job may be temporary or never happened in the first place. I read something recently that only 30% of the projected job creation actually occurred with granting of the tax credits.

please cite your source for "only 30%" of job creation, or don't throw the number around.

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I think the big question is what will the final plan look like. From what I've heard, tax credits have become so convoluted and complex, you almost need a 'lobbyist' to work your way through the process, and it becomes somewhat unfair. Is Snyder firing a salvo to say "let's clean it up, make it better".

I think Michigan is in for some tough love over the next few years. Hopefully it will put us in a better position. I think Grand Rapids has always been a model of public/private partnerships, and maybe the bigger issue is that brownfield and historic tax credits are abused/misused or don't live up to their promises in the rest of the state. Snyder pointed out that the rest of Michigan needs to be more like Grand Rapids (from our get it done attitude to the Right Place, etc). Maybe this is the tough love we need for someone to show practical, repeatable examples. And maybe Grand Rapids has enough of a history of success to lead the way.

Any way you look at it, someone is going to be pissed at the budget. But we have to find the balance between spending money we don't have and making our core cities stagnant.

I'm glad I'm not in politics. ;)

Joe

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I think that a lot of these sites have lot less contamination than the credits they receive. brewery vivant used to be a child care. how contaminated can it be. also, I doubt that Locus and the others are just going to quit and submit their applications to blockbuster. the real effect is that the value of undeveloped land(abandoned buildings) will drop considerably. this will only hurt people who are squatting on properties. I have no doubt that redevelopment will continue because historically that is what happened. nothing has changed since grand rapids was founded. The lower business taxes that Snyder is proposing will drive additional growth and will be beneficial for continued redevelopment.

you can argue about jobs that brownfield credits have created because there is no direct link. the projects may have happened anyway, or the job may be temporary or never happened in the first place. I read something recently that only 30% of the projected job creation actually occurred with granting of the tax credits.

I think you're thinking of the MEGA tax credits. And you're right, many of those never produced the jobs they intended to.

A flat tax for businesses across the board does not make it worthwhile to redevelop urban contaminated sites. In addition, if the project doesn't have cleanup to be done, it doesn't qualify for Brownfield Tax Credits. Could/should the standards be tougher? Sure. Brewery Vivant would not have gotten the credits if there wasn't some kind of "obsolete" status of the utilities inside or hazardous materials that needed to be removed.

Also, you don't think projects will stop with the tax credit gone?

From the article, John Green of Locus:

“Hopefully the governor's office will consider some new program that will continue to drive the redevelopment of downtown Grand Rapids,” he said. “Without it things will just come to a grinding halt.”

John Byl, the preeminent Brownfield attorney in West Michigan:

"The capital investments as a result of these projects is enormous," Byl said. "In most instances the projects wouldn't happen without these tools and we'd see buildings begin to deteriorate."

In fact, you can trace the explosion of downtown projects right back to the inception of the Brownfield Redevelopment Authority forming in 1998 in GR.

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please cite your source for "only 30%" of job creation, or don't throw the number around.

well that was the approximate number that was in the paper, either the Free Press or Grand Rapids Press. I didn't realize that someone would ask me for the link to the article so I didn't record it.

for everybodys viewing pleasure here is the link to the actual budget proposal. http://www.michigan.gov/documents/budget/1_345974_7.pdf.

of note most companies (95,000) will no longer be paying taxes. I'm sure that will help with the whole brownfield tax credit loss.

also provided is a link to the anderson economic group analysis of tax incentives http://www.mea.org/investing/030410_MEA_Evaluating_TaxAbatements.pdf where they find mixed success but overall

"7. Incentive Programs Cannot be the Cornerstone of an Economic

Recovery Policy for the State of Michigan

Some of the programs we examined had positive job creation effects, and we

acknowledge that any analysis of these programs, given the data limitations and

other difficulties, is imprecise. Some of the incentive programs also result in

more tax revenue generation than would occur if the programs were eliminated.

However, collectively the direct impact on job creation summarized in Table1

below account for a very small proportion of the jobs in Michigan, at a time

when more than 700,000 Michigan workers are counted as unemployed.9

While some of these abatement programs produce positive results, it simply is

not practical to expect tax incentive programs to address economic problems of

the magnitude facing Michigan. Instead Michigan should rely upon broader pol-

icies that have proven to promote economic recovery, including improving the

tax climate, improving the regulatory climate, and promoting the education

level of the Michigan workforce"

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well that was the approximate number that was in the paper, either the Free Press or Grand Rapids Press. I didn't realize that someone would ask me for the link to the article so I didn't record it.

for everybodys viewing pleasure here is the link to the actual budget proposal. http://www.michigan.gov/documents/budget/1_345974_7.pdf.

of note most companies (95,000) will no longer be paying taxes. I'm sure that will help with the whole brownfield tax credit loss.

also provided is a link to the anderson economic group analysis of tax incentives http://www.mea.org/investing/030410_MEA_Evaluating_TaxAbatements.pdf where they find mixed success but overall

"7. Incentive Programs Cannot be the Cornerstone of an Economic

Recovery Policy for the State of Michigan

Some of the programs we examined had positive job creation effects, and we

acknowledge that any analysis of these programs, given the data limitations and

other difficulties, is imprecise. Some of the incentive programs also result in

more tax revenue generation than would occur if the programs were eliminated.

However, collectively the direct impact on job creation summarized in Table1

below account for a very small proportion of the jobs in Michigan, at a time

when more than 700,000 Michigan workers are counted as unemployed.9

While some of these abatement programs produce positive results, it simply is

not practical to expect tax incentive programs to address economic problems of

the magnitude facing Michigan. Instead Michigan should rely upon broader pol-

icies that have proven to promote economic recovery, including improving the

tax climate, improving the regulatory climate, and promoting the education

level of the Michigan workforce"

Again, I think you're talking about the tax credits that are given out by MEDC, not Brownfield Tax Credits. The same Anderson Economic Group study you cite didn't really have any criticism of the Brownfield program (only tax credits in general). They even said that Brownfield had positive job growth and negligible impact on tax revenues. They didn't even mention the benefits of reusing existing urban sites and the savings that it has on not developing Greenfields. Plus the mere fact that it's cleaning up contaminated sites.

Take, for instance, many of the residential projects that have been developed in downtown Grand Rapids. Those brought in thousands of new residents to the city, residents who now pay city income tax and property taxes. Those almost assuredly would not have happened without tax incentives (Brownfield, Historic Preservation, New Market and Low Income Housing tax credits). So there are benefits to incentives other than just "job creation."

I do agree, tax incentives that aren't working should probably be reworked or done away with, and ones that are working should be worked into the new budget. But right now, Snyder is only guessing that lowering taxes across the board will create jobs.

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Again, I think you're talking about the tax credits that are given out by MEDC, not Brownfield Tax Credits. The same Anderson Economic Group study you cite didn't really have any criticism of the Brownfield program (only tax credits in general). They even said that Brownfield had positive job growth and negligible impact on tax revenues. They didn't even mention the benefits of reusing existing urban sites and the savings that it has on not developing Greenfields. Plus the mere fact that it's cleaning up contaminated sites.

Take, for instance, many of the residential projects that have been developed in downtown Grand Rapids. Those brought in thousands of new residents to the city, residents who now pay city income tax and property taxes. Those almost assuredly would not have happened without tax incentives (Brownfield, Historic Preservation, New Market and Low Income Housing tax credits). So there are benefits to incentives other than just "job creation."

I do agree, tax incentives that aren't working should probably be reworked or done away with, and ones that are working should be worked into the new budget. But right now, Snyder is only guessing that lowering taxes across the board will create jobs.

The vast majority of our projects that are not done for large institutions make use of the State Historic and/or Brownfield tax credits - projects that account for approximately half of our revenue in any given year. Losing those programs will affect our business.

The Michigan Historic Preservation Network published a report of the economic benefits of the State's historic tax credit program: Report Card You will recognize some projects from GR in the report.

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Again, I think you're talking about the tax credits that are given out by MEDC, not Brownfield Tax Credits. The same Anderson Economic Group study you cite didn't really have any criticism of the Brownfield program (only tax credits in general). They even said that Brownfield had positive job growth and negligible impact on tax revenues. They didn't even mention the benefits of reusing existing urban sites and the savings that it has on not developing Greenfields. Plus the mere fact that it's cleaning up contaminated sites.

Take, for instance, many of the residential projects that have been developed in downtown Grand Rapids. Those brought in thousands of new residents to the city, residents who now pay city income tax and property taxes. Those almost assuredly would not have happened without tax incentives (Brownfield, Historic Preservation, New Market and Low Income Housing tax credits). So there are benefits to incentives other than just "job creation."

I do agree, tax incentives that aren't working should probably be reworked or done away with, and ones that are working should be worked into the new budget. But right now, Snyder is only guessing that lowering taxes across the board will create jobs.

The 30% figure probably was in reference to the MEDC credits. The report wasn't overwhelmingly positive regarding the brownfield tax credits though. It said they were essentially neutral compared to lowering taxes, which means nothing much will change once they are gone. One thing that is not appreciated is that there are many smaller projects that are done all the time that may not qualify for brownfield tax credits now but are still necessary for the health of a city. rehabbing a rental unit for instance, people doing these projects are often small business owners who will benefit greatly from the tax system overhaul, since they wont be paying any taxes.

what synder is doing is creating a favorable long term tax environment that is transparent to all parties involved. the tax rates now for some businesses exceeds 10 percent, others have much lower rates. Having a equitable and sustainable taxation system will make michigan more attractive for business in the long term.

I think that part of it was also an attempt to rid the system credits in general. overall they are a loser. while getting rid of brownfield and historic tax credits will affect some projects the overall gain to the system will be significant. I won't argue that some people will lose and that some projects may not have gotten done without the credits, but I would be willing to bet that many would have gotten done regardless, especially if the overall tax burden was less. I did some work on my house and in theory should have been able to get some claim some historic tax credits but the paperwork was so onerous that they I didn't even try. by simplifying the system many people like myself, who aren't used to navigating a bureaucratic maze of paperwork will benefit and like the anderson economic group found, the overall economic impact of eliminating the credits will be minimal.

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The 30% figure probably was in reference to the MEDC credits. The report wasn't overwhelmingly positive regarding the brownfield tax credits though. It said they were essentially neutral compared to lowering taxes, which means nothing much will change once they are gone. One thing that is not appreciated is that there are many smaller projects that are done all the time that may not qualify for brownfield tax credits now but are still necessary for the health of a city. rehabbing a rental unit for instance, people doing these projects are often small business owners who will benefit greatly from the tax system overhaul, since they wont be paying any taxes.

what synder is doing is creating a favorable long term tax environment that is transparent to all parties involved. the tax rates now for some businesses exceeds 10 percent, others have much lower rates. Having a equitable and sustainable taxation system will make michigan more attractive for business in the long term.

I think that part of it was also an attempt to rid the system credits in general. overall they are a loser. while getting rid of brownfield and historic tax credits will affect some projects the overall gain to the system will be significant. I won't argue that some people will lose and that some projects may not have gotten done without the credits, but I would be willing to bet that many would have gotten done regardless, especially if the overall tax burden was less. I did some work on my house and in theory should have been able to get some claim some historic tax credits but the paperwork was so onerous that they I didn't even try. by simplifying the system many people like myself, who aren't used to navigating a bureaucratic maze of paperwork will benefit and like the anderson economic group found, the overall economic impact of eliminating the credits will be minimal.

You're doing an awful lot of "betting" and "gambling," while I'd rather reproduce success that has actually happened, and in areas that need it. An overall lower tax base does not make it advantageous to redevelop a contaminated Brownfield over just building on some parcel out in Cascade. There are a lot of factors that make building on urban lots far more expensive than suburban lots. Parcels near downtown are now going for $5 Million an acre, as opposed to $20 - $50,000/acre out in the burbs. Add in the cost and liability involved with contaminated sites, and it's just a lot easier to walk away from urban site.

While rehabbing rental properties is commendable, it doesn't come close to equaling the economic impact of about $1 Billion in redevelopment that has happened as a result of the Brownfield Tax Credits (just in Grand Rapids alone).

I'm not saying we don't need a new business tax system. But let's not put all our eggs in that one basket, particularly when many small businesses say that tax cuts won't spur them to hire more people.

I probably won't convince you to think differently, but every developer and commercial construction company I know in town is worried about these incentives going away. I'm not going to sit around and wait and hope that Snyder makes the right decision on is own.

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You're doing an awful lot of "betting" and "gambling," while I'd rather reproduce success that has actually happened, and in areas that need it. An overall lower tax base does not make it advantageous to redevelop a contaminated Brownfield over just building on some parcel out in Cascade. There are a lot of factors that make building on urban lots far more expensive than suburban lots. Parcels near downtown are now going for $5 Million an acre, as opposed to $20 - $50,000/acre out in the burbs. Add in the cost and liability involved with contaminated sites, and it's just a lot easier to walk away from urban site.

While rehabbing rental properties is commendable, it doesn't come close to equaling the economic impact of about $1 Billion in redevelopment that has happened as a result of the Brownfield Tax Credits (just in Grand Rapids alone).

I'm not saying we don't need a new business tax system. But let's not put all our eggs in that one basket, particularly when many small businesses say that tax cuts won't spur them to hire more people.

I probably won't convince you to think differently, but every developer and commercial construction company I know in town is worried about these incentives going away. I'm not going to sit around and wait and hope that Snyder makes the right decision on is own.

If this passes parcels near downtown are going to be far cheaper than 5 million dollars an acre. real estate prices are driven by the money a developer can make off it. by eliminating the tax credits it is going to drop the profitability of these projects given the current real estate prices. Of course developers wont do a project for charity which means they will offer less for the parcels. Econ 101, the real losers in this scenario are people sitting on vacant properties. The flip side to the this is development spreading out to the burbs. I would hope that the county and surrounding municipalities develop some sort of land use planning. a sort of green belt or equivalent. you can bet that property values will also rise in the burbs which would decrease the desirability of development out there.

If I was a developer I'd be worried also. I've seen where Sam Cummings lives but he's (nor any other developer) not getting any of my sympathy. I make 30 percent less on certain jobs this year compared to last year due to some governmental executive decision but, guess what? I still go to work and do my job. I suspect that they will do the same.

Also, the federal historic credits still exist. according to http://www.preservationnation.org/issues/rehabilitation-tax-credits/addtional-resources/Michigan-Report-on-Tax-Credit.pdf michigan tax credits are only 5 percent on income producing properties.

I think due to the pseudoscience of government and economics that we can never really know what the real impact is until it is tried in real world. The current system is broken and the available evidence does not demonstrate that historic or brownfield tax credits are overwhelmingly positive from a system wide prespective. Whenever policy changes are proposed people react like the sky is falling which is rarely the case. The people who did so much to redevelop grand rapids will continue to do so. the deals will look different but I do not doubt that they will continue.

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If this passes parcels near downtown are going to be far cheaper than 5 million dollars an acre. real estate prices are driven by the money a developer can make off it. by eliminating the tax credits it is going to drop the profitability of these projects given the current real estate prices. Of course developers wont do a project for charity which means they will offer less for the parcels. Econ 101, the real losers in this scenario are people sitting on vacant properties. The flip side to the this is development spreading out to the burbs. I would hope that the county and surrounding municipalities develop some sort of land use planning. a sort of green belt or equivalent. you can bet that property values will also rise in the burbs which would decrease the desirability of development out there.

If I was a developer I'd be worried also. I've seen where Sam Cummings lives but he's (nor any other developer) not getting any of my sympathy. I make 30 percent less on certain jobs this year compared to last year due to some governmental executive decision but, guess what? I still go to work and do my job. I suspect that they will do the same.

Also, the federal historic credits still exist. according to http://www.preservationnation.org/issues/rehabilitation-tax-credits/addtional-resources/Michigan-Report-on-Tax-Credit.pdf michigan tax credits are only 5 percent on income producing properties.

I think due to the pseudoscience of government and economics that we can never really know what the real impact is until it is tried in real world. The current system is broken and the available evidence does not demonstrate that historic or brownfield tax credits are overwhelmingly positive from a system wide prespective. Whenever policy changes are proposed people react like the sky is falling which is rarely the case. The people who did so much to redevelop grand rapids will continue to do so. the deals will look different but I do not doubt that they will continue.

Again, you are guessing and speculating based on your gut feeling and one economic group's opinion, and not on empirical evidence that says otherwise. I'll rely on the advice of developers, architects and construction companies who actually work in this arena. They may still do their job, but it won't include redeveloping urban sites. In fact, one posted earlier in this thread that half his business will be lost. Not doing work at reduced margins. Lost.

There already is a program called Purchase of Development Rights in Kent County, meant to reduce development in exurban and rural areas. It will take many decades at its current pace before it affects the cost of land in the suburbs in any significant way, or steers development back to the city. And a "greenbelt" will never gain acceptance in Kent County.

This isn't a defense of developers like Sam Cummings, and where he lives (not even sure why that matters), it's a defense of a program that obviously has worked very well in the past, and should be continued in some form in the future.

If there are programs that are affecting your business in a negative way, you should concentrate on working to fix those instead of trying to derail programs that help other businesses and the community as a whole.

edit: Pro-business publication Crain's in Detroit has now said it's an open question whether Snyder's plan will work:

http://www.crainsdetroit.com/article/20110220/FREE/302209995/snyders-bet-will-lower-taxes-trump-lost-incentives

Whatever happened to calculated risk, instead of just shooting from the hip?

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Brownfield credits are a bunch of bull, plain and simple. They encourage people to engage in activity that otherwise they would not engage in were it left to the market. In other words, by their very nature, they appear to encourage economically bad investments. Granted, these poor uses of capital may be politically popular or socially popular by those not footing the bill, but the basic fact cannot be avoided that "making viable" an otherwise nonviable project encourages perverse behavior.

Perhaps, just perhaps, the loss of brownfield credits would force the city to start behaving significantly more responsibly with regard to development. If Grand Rapids actually has to complete on a level playing field, perhaps they will actually make the necessary changes to become competitive with surrounding areas. And, as others have pointed out, perhaps the loss of these ridiculous credits will provide a much needed corrective influence in the prices of some of these junky old buildings and empty land. Or (heaven forbid) it will spur action to do away with some of the onerous environmental nonsense that precludes redevelopment of old contaminated commercial properties unless they are cleaned up to the level of a kiddie daycare.

I think you're thinking of the MEGA tax credits. And you're right, many of those never produced the jobs they intended to.

A flat tax for businesses across the board does not make it worthwhile to redevelop urban contaminated sites. In addition, if the project doesn't have cleanup to be done, it doesn't qualify for Brownfield Tax Credits. Could/should the standards be tougher? Sure. Brewery Vivant would not have gotten the credits if there wasn't some kind of "obsolete" status of the utilities inside or hazardous materials that needed to be removed.

Also, you don't think projects will stop with the tax credit gone?

From the article, John Green of Locus:

“Hopefully the governor's office will consider some new program that will continue to drive the redevelopment of downtown Grand Rapids,” he said. “Without it things will just come to a grinding halt.”

John Byl, the preeminent Brownfield attorney in West Michigan:

"The capital investments as a result of these projects is enormous," Byl said. "In most instances the projects wouldn't happen without these tools and we'd see buildings begin to deteriorate."

In fact, you can trace the explosion of downtown projects right back to the inception of the Brownfield Redevelopment Authority forming in 1998 in GR.

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Brownfield credits are a bunch of bull, plain and simple. They encourage people to engage in activity that otherwise they would not engage in were it left to the market. In other words, by their very nature, they appear to encourage economically bad investments. Granted, these poor uses of capital may be politically popular or socially popular by those not footing the bill, but the basic fact cannot be avoided that "making viable" an otherwise nonviable project encourages perverse behavior.

Perhaps, just perhaps, the loss of brownfield credits would force the city to start behaving significantly more responsibly with regard to development. If Grand Rapids actually has to complete on a level playing field, perhaps they will actually make the necessary changes to become competitive with surrounding areas. And, as others have pointed out, perhaps the loss of these ridiculous credits will provide a much needed corrective influence in the prices of some of these junky old buildings and empty land. Or (heaven forbid) it will spur action to do away with some of the onerous environmental nonsense that precludes redevelopment of old contaminated commercial properties unless they are cleaned up to the level of a kiddie daycare.

Other than just your "feelings" and "emotions" about it, got anything else to back up your claims that they're bull? How is cleaning up contamination that was left generations ago (much of it by companies that don't even exist anymore), and turning the property back into something useful, bad investments? If everything were just "left to the market," there would be no parks, no libraries, no symphony, no Devos Hall, no highways, no bridges, no Civic Theatre, no ballet, no art galleries, no museums, no schools, and I can only imagine what the riverfront would look like.

And your second paragraph doesn't even make sense. The reason why land downtown is so expensive is because it's "scarce," and mostly owned by private landowners who are holding out for the right opportunity. You know, acting like businesspeople. Are you suggesting the city government should force landowners to valuate their property more in line with plentiful suburban land? Isn't that a bit against free market?

I don't know about you, but if I'm going to eat at a restaurant on an old industrial site, I'd like to know that the heavy caustic chemicals used to make wood furniture a hundred years ago are taken off the site first.

You guys are shooting blanks here.

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a sort of green belt or equivalent. you can bet that property values will also rise in the burbs which would decrease the desirability of development out there.

The municipalities are already fighting the PDRs. Their is a snowballs chance in hell that they will agree to a green belt, they want their land taxed at the very highest possible use, which is developed land.

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You guys are shooting blanks here.

I can see both sides of this. I don't think jas49503 and x99's points are without merit and you may be too quick to dismiss them.

Brownfield tax credits are a policy tool to encourage reuse of property that's otherwise uneconomical to redevelop. Once the tax credits get into encouraging development for development's sake, they've gone too far and really are a form of corporate welfare. Ultimately a balance to be struck. Maybe we've reached a tipping point in some neighborhoods where redevelopment will occur regardless. Or maybe we've encouraged so much redevelopment we're left with a ton of vacant storefronts and offices.

I'm with Governor Snyder in that the whole tax code needs simplification, and the first step towards that goal is removing all the special cases.

FWIW, I also think the federal government should do away with the mortgage interest deduction. Talk about perverse incentives! :ph34r:

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Again, you are guessing and speculating based on your gut feeling and one economic group's opinion, and not on empirical evidence that says otherwise. I'll rely on the advice of developers, architects and construction companies who actually work in this arena. They may still do their job, but it won't include redeveloping urban sites. In fact, one posted earlier in this thread that half his business will be lost. Not doing work at reduced margins. Lost.

Daddy~ To be clear: I was pointing out how much of our work happens in concert with the credits in question. While I can identify two projects right off the top that will die immediately on the elimination of these credits, I can't say for certain what the loss of these tools will mean for our work in the City. But, there is no doubt that the loss of the credits in a down market and an adverse lending environment will make getting anything built that much tougher.

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I can see both sides of this. I don't think jas49503 and x99's points are without merit and you may be too quick to dismiss them.

Brownfield tax credits are a policy tool to encourage reuse of property that's otherwise uneconomical to redevelop. Once the tax credits get into encouraging development for development's sake, they've gone too far and really are a form of corporate welfare. Ultimately a balance to be struck. Maybe we've reached a tipping point in some neighborhoods where redevelopment will occur regardless. Or maybe we've encouraged so much redevelopment we're left with a ton of vacant storefronts and offices.

I'm with Governor Snyder in that the whole tax code needs simplification, and the first step towards that goal is removing all the special cases.

FWIW, I also think the federal government should do away with the mortgage interest deduction. Talk about perverse incentives! :ph34r:

I don't know that there's much "development for development's sake" going on, especially since the real estate market crash in 2006 and the extreme tightening of lending. Pretty much every Brownfield project has been for a specific user, or residential (which most are pretty close to fully occupied, with a few exceptions). The office vacancy rate in downtown is still pretty high, so I don't think you'd get financing for an office project right now unless it was planned to be fully leased out.

I just ask that people provide reasoned arguments other than "all government is bad." This isn't MLive.

Daddy~ To be clear: I was pointing out how much of our work happens in concert with the credits in question. While I can identify two projects right off the top that will die immediately on the elimination of these credits, I can't say for certain what the loss of these tools will mean for our work in the City. But, there is no doubt that the loss of the credits in a down market and an adverse lending environment will make getting anything built that much tougher.

Thanks Ted for the clarification. I hear ya.

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I don't know that there's much "development for development's sake" going on, especially since the real estate market crash in 2006 and the extreme tightening of lending.

I'm not so sure. Just look down S. Division and count the empty storefronts. All these buildings were rehabbed yet how many are still vacant?

I think you're right about residential though. It seems both market rate and low income rentals have done well downtown.

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Here's a couple sites for thought:

Meijers - 28th @ Kazoo - it was a vacant field before the original store was built (I remember those days - 28th St was a 2 lane road w/ gravel shoulders.) If they got the brownfield credits for the leaking gas station, that's wrong as well. A multi-billion dollar company can clean up their leaks. (No reason the big refiners can't clean up their own leaks and not use MUSTFA (which is broke by the way))

JW Marriott - part of the site was the site of the old county jail and a parking lot after that. Where's the contamination ?

Amway Grand - prior office use possibly light industrial, I don't see much contamination there either.

GM property east and north of the Avistar site. The property was sold and brownfield credits granted to a developer when GM was a viable company. Again - a multiple billion dollar company can clean up after themselves.

The H Brown was a site I can see the value of a brownfield credit. Brown broke open batteries and let the acid soak into the ground. The only people on the hook were folks that sold them scrap batteries with the expectation they were disposed of properly. H Brown was a long gone scrap dealer. Without credits, that was going to be a leaking site for years.

One also needs to keep in mind that old industrial - turn of the century - used fairly benign chemicals, not the "hot stuff" developed post war.

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