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

[GRDadof3]

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.

"All these buildings" weren't rehabbed using Brownfield Credits. 101 S. Division was, but is mainly residential, with ground floor retail. Verne Berry Place was Brownfield, but it's also residential and retail. Kelsey Bldg and Martineau were Brownfield and are fully occupied. Otherwise, most of the vacant retail on South Division was not part of any Brownfield program.

[GRDadof3]

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.

I'm pretty sure the Meijer at 28th was denied its Brownfield application. They wanted it to clean up the gas station site, but were denied.

JW Marriott, I agree probably didn't need Brownfield.

Amway Grand was way before 1998, when the Brownfield Authority was set up.

I didn't see Avastar Park or any building on Alpine on the Brownfield list by the city. Not sure.

I for one agree the standards need to be tightened. I can think of a couple of projects that applied using "obsolete" status and shouldn't have qualified. I don't think taxpayers should pay for developers to upgrade mechanicals to meet current codes.

[Raildudes dad]

I'm pretty sure the Meijer at 28th was denied its Brownfield application. They wanted it to clean up the gas station site, but were denied.

JW Marriott, I agree probably didn't need Brownfield.

Amway Grand was way before 1998, when the Brownfield Authority was set up.

I didn't see Avastar Park or any building on Alpine on the Brownfield list by the city. Not sure.

I for one agree the standards need to be tightened. I can think of a couple of projects that applied using "obsolete" status and shouldn't have qualified. I don't think taxpayers should pay for developers to upgrade mechanicals to meet current codes.

Avistar is in Walker, I'm pretty sure they got brownfield credits to remove the creosote impregnated wood block floor (that was placed over a solid concrete floor) in the Hanger 42 area. Again GM was still viable when the plant closed. Why did the taxpayers have to pay to clean that up?

The other site is the vacant field north & east of Avistar, west of the RR tracks. Again in Walker, the credits were approved to clean up the dumping area but the 3 warehouses have not been built. Again, GM was viable when they sold the land, but taxpayers are asked to pay to clean it up.

I saw Amway Hotel Corp so I assumed it was for the Amway Grand, maybe the Marriott site? either way, downtown sites office, commercial, light industrial shouldn't qualify if unless it's a site like H Brown. (heavy contamination with no hope of anyone cleaning it up)

[jas49503]

"All these buildings" weren't rehabbed using Brownfield Credits. 101 S. Division was, but is mainly residential, with ground floor retail. Verne Berry Place was Brownfield, but it's also residential and retail. Kelsey Bldg and Martineau were Brownfield and are fully occupied. Otherwise, most of the vacant retail on South Division was not part of any Brownfield program.

I guess that this proves that redevelopment will carry on without brownfield tax credits then.

Redevelopment will occur with a healthy business climate which is what the tax reform is attempting to stimulate. this isn't a guess or conjecture. it has happened literally millions of times all over the world. the key is that there is a vibrant economy present. obviously this doesn't include the past several years in michigan. that doesn't mean that the future is excluded from this. To assume that all redevelopment projects would stall without credits is even absurd. As mentioned here by several others, only a fraction of brownfield credits are really deserved.

You can not rely on developers and their associates to get a straight opinion regarding the necessity of these credits. of course they are going to give the most doom and gloom scenario imaginable because they are the ones that benefit the most from them. it is an obvious conflict of interest. There will still be plenty of profit to go around, although the pace may slow it will not stop.

Avistar is in Walker, I'm pretty sure they got brownfield credits to remove the creosote impregnated wood block floor (that was placed over a solid concrete floor) in the Hanger 42 area. Again GM was still viable when the plant closed. Why did the taxpayers have to pay to clean that up?

The other site is the vacant field north & east of Avistar, west of the RR tracks. Again in Walker, the credits were approved to clean up the dumping area but the 3 warehouses have not been built. Again, GM was viable when they sold the land, but taxpayers are asked to pay to clean it up.

I saw Amway Hotel Corp so I assumed it was for the Amway Grand, maybe the Marriott site? either way, downtown sites office, commercial, light industrial shouldn't qualify if unless it's a site like H Brown. (heavy contamination with no hope of anyone cleaning it up)

I find it interesting that a former child care site was granted brownfield tax credits. kids can make quite a mess but how contaminated can it be? if it was safe for kids to play on, you would think it would be safe enough for a brewery.

[GRDadof3]

I guess that this proves that redevelopment will carry on without brownfield tax credits then.

Redevelopment will occur with a healthy business climate which is what the tax reform is attempting to stimulate. this isn't a guess or conjecture. it has happened literally millions of times all over the world. the key is that there is a vibrant economy present. obviously this doesn't include the past several years in michigan. that doesn't mean that the future is excluded from this. To assume that all redevelopment projects would stall without credits is even absurd. As mentioned here by several others, only a fraction of brownfield credits are really deserved.

You can not rely on developers and their associates to get a straight opinion regarding the necessity of these credits. of course they are going to give the most doom and gloom scenario imaginable because they are the ones that benefit the most from them. it is an obvious conflict of interest. There will still be plenty of profit to go around, although the pace may slow it will not stop.

I put "all these buildings" in quotes precisely because there really aren't that many that received Brownfield credits on S. Division. Block by block down South Division of the Brownfield projects:

71 S. Division - ground floor houses Mos Eisley's, upstairs Studio 71

104 - 134 S. Division, Calvin College on ground floor, Martineau Apartments upstairs

101 S. Division, apartments upstairs, retail on the ground floor (vacant)

235 S. Division, Kelsey Apartments upstairs, ground floor En Fuego gallery and a studio I think called Open Source

44 1/2 S. Division, Verne Berry Place, live work units, most of the residential units are full, some retail space available

There have been 82 projects submitted for the program since its inception and people have questioned the validity of 4 of them. 4/82 is a pretty low percentage.

Snyder's camp is enlisting the help of the entire business community to help craft his new budget to be business friendly. He does not see that as a conflict of interest.

You're right though, they won't stop completely. They'll drop from $100 - $200 Million a year in redevelopment projects down to $10 Million a year. You win.

[GRDadof3]

Avistar is in Walker, I'm pretty sure they got brownfield credits to remove the creosote impregnated wood block floor (that was placed over a solid concrete floor) in the Hanger 42 area. Again GM was still viable when the plant closed. Why did the taxpayers have to pay to clean that up?

The other site is the vacant field north & east of Avistar, west of the RR tracks. Again in Walker, the credits were approved to clean up the dumping area but the 3 warehouses have not been built. Again, GM was viable when they sold the land, but taxpayers are asked to pay to clean it up.

I saw Amway Hotel Corp so I assumed it was for the Amway Grand, maybe the Marriott site? either way, downtown sites office, commercial, light industrial shouldn't qualify if unless it's a site like H Brown. (heavy contamination with no hope of anyone cleaning it up)

You're right, if the perpetrator of the contamination is still around, they should be responsible for the cleanup. The problem may have been that the building was transferred or sold to Lear at some point, and Lear may have pulled a hold harmless in their negotiations.

[x99]

My feelings and emotions have nothing to do with it. The simple fact of the matter is that brownfield credits are a government subsidy to encourage what is deigned by some to be socially desirable behavior. While we might like the end result of what they bring to the table, they are corporate welfare, pure and simple. While UrbanPlaneteers might favor this sort of welfare, let's call a spade a spade here. I don't disagree that turning a contaminated site into something useful may be desirable. The pertinent question, however, is whether the government should be favoring these sites over suburban sites. Ultimately, I suspect this sort of interference has perverse effects, such as making less unpalatable onerous regulations that demand excessive cleanup levels. Cleaning the groundwater or soil in downtown? WHY? *Everything* is paved and on city water supplies. Many other states (and countries, for that matter) have made significant strides toward crafting a more reasonable environmental regime. We haven't. Many of these cleanups that are occurring are incredibly wasteful and patently unnecessary. But, so long as someone else (namely, the taxpayer) is paying with Brownfield credits, who cares?! The developers aren't griping that this is ridiculous, so the wasteful regulations stay in place. Do you really care that the ground under the paved-over parking lot is so clean that you could eat it?

As for the "MIA desirables list", I'm not sure I understand the point. The original library system was funded in significant part by Andrew Carnegie. Our own library was originally funded by Martin Ryerson. DeVos Hall was funded by Richard and Helen DeVos. Many parks were founded by land donated by someone in the community. People made their money, had lots of it, and gave back to the community because they saw a significant benefit to doing something. As for schools, I'm quite certain there are plenty of private institutions which take no tax dollars, and by and large, make a far better use of their funds than do the public institutions. Regarding the riverfront, it seems to me almost all of the riverfront was shaped by private development. As originally situated, the river was about two to three times wider than it is now with significant adjacent swampland. This was all filled to reclaim land for building construction. I would argue the market has done quite a fine job with the riverfront. Now, as for highways, do we really need to open that can of worms? Highways are the most incredible government subsidy the automobile industry and oil industries could ask for--not to mention the suburbs surrounding urban core cities. Without the government funded and initiated highway system, I submit to you that Grand Rapids would today be a far more vibrant and viable city while the suburbs would remain, in large part, farmland.

So, getting back to the Brownfield credits, are these a good thing? Nope, and for exactly the same reason none of this other junk is necessarily a good thing. The government is constantly sticking its mitts into areas where it really has no legitimate or compelling governmental interest, causing poor capital allocation. If you wonder why we've a major budget hole, they are part of it. Now, if Snyder really wants to get somewhere productive, let's see if he'll sell off the highway system to a private company that will collect tolls for their use, repair, and maintenance. I'm afraid that might still take more cojones than he's got, but we'll see.

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.

[GRDadof3]

My feelings and emotions have nothing to do with it. The simple fact of the matter is that brownfield credits are a government subsidy to encourage what is deigned by some to be socially desirable behavior. While we might like the end result of what they bring to the table, they are corporate welfare, pure and simple. While UrbanPlaneteers might favor this sort of welfare, let's call a spade a spade here. I don't disagree that turning a contaminated site into something useful may be desirable. The pertinent question, however, is whether the government should be favoring these sites over suburban sites. Ultimately, I suspect this sort of interference has perverse effects, such as making less unpalatable onerous regulations that demand excessive cleanup levels. Cleaning the groundwater or soil in downtown? WHY? *Everything* is paved and on city water supplies. Many other states (and countries, for that matter) have made significant strides toward crafting a more reasonable environmental regime. We haven't. Many of these cleanups that are occurring are incredibly wasteful and patently unnecessary. But, so long as someone else (namely, the taxpayer) is paying with Brownfield credits, who cares?! The developers aren't griping that this is ridiculous, so the wasteful regulations stay in place. Do you really care that the ground under the paved-over parking lot is so clean that you could eat it?

As for the "MIA desirables list", I'm not sure I understand the point. The original library system was funded in significant part by Andrew Carnegie. Our own library was originally funded by Martin Ryerson. DeVos Hall was funded by Richard and Helen DeVos. Many parks were founded by land donated by someone in the community. People made their money, had lots of it, and gave back to the community because they saw a significant benefit to doing something. As for schools, I'm quite certain there are plenty of private institutions which take no tax dollars, and by and large, make a far better use of their funds than do the public institutions. Regarding the riverfront, it seems to me almost all of the riverfront was shaped by private development. As originally situated, the river was about two to three times wider than it is now with significant adjacent swampland. This was all filled to reclaim land for building construction. I would argue the market has done quite a fine job with the riverfront. Now, as for highways, do we really need to open that can of worms? Highways are the most incredible government subsidy the automobile industry and oil industries could ask for--not to mention the suburbs surrounding urban core cities. Without the government funded and initiated highway system, I submit to you that Grand Rapids would today be a far more vibrant and viable city while the suburbs would remain, in large part, farmland.

So, getting back to the Brownfield credits, are these a good thing? Nope, and for exactly the same reason none of this other junk is necessarily a good thing. The government is constantly sticking its mitts into areas where it really has no legitimate or compelling governmental interest, causing poor capital allocation. If you wonder why we've a major budget hole, they are part of it. Now, if Snyder really wants to get somewhere productive, let's see if he'll sell off the highway system to a private company that will collect tolls for their use, repair, and maintenance. I'm afraid that might still take more cojones than he's got, but we'll see.

There's always more than one side to every issue. I was actually thinking that someone would expose some obvious gaping holes in my position that I hadn't thought of (which didn't happen). Thanks for emboldening me to take my point beyond just UrbanPlanet.

[x99]

There's always more than one side to every issue. I was actually thinking that someone would expose some obvious gaping holes in my position that I hadn't thought of (which didn't happen). Thanks for emboldening me to take my point beyond just UrbanPlanet.

Nah. I've got nothing specific to the Brownfield program per se. By and large, it probably does what it is designed to do, and I actually like what it does on a personal level. I am a huge fan of urban development and historic preservation. I simply don't feel it's right to spend tons of other people's money (OPM) to fund urban development projects which otherwise are not feasible. You've got stuff going on over in Detroit where 25% of the cost is being footed by OPM. That's absolutely absurd, and I can't blame anyone for wanted to do away with this sort of handout. You're making an assumption that these projects are a de facto good thing because they result in urban development and jobs. I'm not convinced that's the case.

The more pertinent question, to me, is how much more productively would this money have been spent were it not for these tax credits? When the government shows a little favoritism for one thing, something else necessarily suffers since the government doesn't really expand the economic pie. It just takes money from one set of people and forks it over to another. Here, that happens to be a bunch of guys who wanted to redevelop urban areas. Why should they get a benefit at the expense of everyone else? I'm not convinced anyone has a good answer to that question other than, "Gosh, the government screwed up the cities with its highways and ridiculous environmental rules, so we should help them out." To an extent, I agree with that, but ultimately, brownfield credits bandage over a government-created mess without addressing the root of the problem. I don't think that's helpful to anyone. If Snyder can address the root causes of a lack of urban development, we'll be much better off. That answer, ultimately, is reducing costs, not paying for them with OPM.

[jas49503]

There's always more than one side to every issue. I was actually thinking that someone would expose some obvious gaping holes in my position that I hadn't thought of (which didn't happen). Thanks for emboldening me to take my point beyond just UrbanPlanet.

you haven't actually supported the need to maintain brownfield tax credits other than state that you've talked to some developers who said that they wouldn't do any projects without the credits. a statement that really is without economic or historic support. using other peoples money is always preferred to using your own.

for example. if you need to buy lunch and someone hands you 10 dollars, you'll of course use that and buy something that is tasty and nearby. If nobody is there to give you money, are you going to drive out to costco to get a slice of pizza for a dollar? or are you going to bite the bullet and pick up something from nantucket bakery. some people will drive out to 28th street but plenty of others will spend their own money and get something that while more expensive is clearly better and more convenient.

for about a 150 years development was done without public handouts. it slowed recently because of a stagnant economy and the existence of public handouts which made it stupid to do a project without. With falsely elevated profit margins the cost of completing a project goes up. remove the subsidy and it goes down, very simple economics. You can't subtract the brownfield credits from the project in isolation, it just doesn't work that way. I won't go into a explanation but you can pick up any econ book and you'll find the answer. ( I would start with the The undercover Economist by Tim Harford, an excellent read) . I won't argue that development won't slow down but it is a bit of hyperbole (and without a shred of evidence) to claim that development will grind to a screeching halt.

[GRDadof3]

you haven't actually supported the need to maintain brownfield tax credits other than state that you've talked to some developers who said that they wouldn't do any projects without the credits. a statement that really is without economic or historic support. using other peoples money is always preferred to using your own.

for example. if you need to buy lunch and someone hands you 10 dollars, you'll of course use that and buy something that is tasty and nearby. If nobody is there to give you money, are you going to drive out to costco to get a slice of pizza for a dollar? or are you going to bite the bullet and pick up something from nantucket bakery. some people will drive out to 28th street but plenty of others will spend their own money and get something that while more expensive is clearly better and more convenient.

for about a 150 years development was done without public handouts. it slowed recently because of a stagnant economy and the existence of public handouts which made it stupid to do a project without. With falsely elevated profit margins the cost of completing a project goes up. remove the subsidy and it goes down, very simple economics. You can't subtract the brownfield credits from the project in isolation, it just doesn't work that way. I won't go into a explanation but you can pick up any econ book and you'll find the answer. ( I would start with the The undercover Economist by Tim Harford, an excellent read) . I won't argue that development won't slow down but it is a bit of hyperbole (and without a shred of evidence) to claim that development will grind to a screeching halt.

If you dismiss a track record of success, that coincides almost precisely to the date of a program starting, and the testimony of experts in the field, then I really don't know what to tell you.

But thanks. I feel even more strongly that I'm on to something.

[AlexPKeaton]

If you dismiss a track record of success, that coincides almost precisely to the date of a program starting, and the testimony of experts in the field, then I really don't know what to tell you.

But thanks. I feel even more strongly that I'm on to something.

Why don't we use a more exaggerated example then? Look at all the films shot in Michigan since 2008: http://www.michiganfilmoffice.org/Made-in-Michigan/Film/Default.aspx. Clearly, these tax credits caused a lot of activity that wouldn't have happened otherwise. So I agree with you that the brownfield credits can claim responsibility for much of the redevelopment Grand Rapids has experienced in recent years.

The question to ask is, at what cost? What don't we have because of these subsidies. Michigan Radio just did a piece this morning on how, under Governor Snyder's budget proposal, the cuts to higher education are the equivalent of completely cutting funding to Michigan Tech, GVSU, SVSU, Ferris, half of CMU's budget and more than I'm forgetting at the moment.

I'm with x99. I love urban areas, and I love what's been happening in Grand Rapids, and I support the brownfield credits in general. But it is also true that the money for the credits comes from us, but it's the developers that directly benefit. With Michigan's budget the way it is, are brownfield credits the best use of our money?

[Ted]

you haven't actually supported the need to maintain brownfield tax credits other than state that you've talked to some developers who said that they wouldn't do any projects without the credits. a statement that really is without economic or historic support. using other peoples money is always preferred to using your own.

for example. if you need to buy lunch and someone hands you 10 dollars, you'll of course use that and buy something that is tasty and nearby. If nobody is there to give you money, are you going to drive out to costco to get a slice of pizza for a dollar? or are you going to bite the bullet and pick up something from nantucket bakery. some people will drive out to 28th street but plenty of others will spend their own money and get something that while more expensive is clearly better and more convenient.

for about a 150 years development was done without public handouts. it slowed recently because of a stagnant economy and the existence of public handouts which made it stupid to do a project without. With falsely elevated profit margins the cost of completing a project goes up. remove the subsidy and it goes down, very simple economics. You can't subtract the brownfield credits from the project in isolation, it just doesn't work that way. I won't go into a explanation but you can pick up any econ book and you'll find the answer. ( I would start with the The undercover Economist by Tim Harford, an excellent read) . I won't argue that development won't slow down but it is a bit of hyperbole (and without a shred of evidence) to claim that development will grind to a screeching halt.

...drive (with government subsidized gas) out to 28th street (government subsidized road construction) to get a slice of pizza...

You're assuming a false equivalency, non urban environments have been subsidized by all levels of government, in an unsustainable manner, in every way for the past 60 years: cars, gas, roads, taxes, utilities, financing. While cities have been left to their own devices. There is no level paying field. Removing a tax credit focused on urban land won't create one.

One reason these urban target programs have been successful is that until they were enacted incentives existed only for greenfield development farther and farther out from the core city. Once the urban programs were put into action you were able to see a more level paying field that resulted in an increase in urban development.

[Ted]

Michigan Historic Preservation Network - Support for Retention of Michigan Historic Tax Credit

[GRDadof3]

Why don't we use a more exaggerated example then? Look at all the films shot in Michigan since 2008: http://www.michiganfilmoffice.org/Made-in-Michigan/Film/Default.aspx. Clearly, these tax credits caused a lot of activity that wouldn't have happened otherwise. So I agree with you that the brownfield credits can claim responsibility for much of the redevelopment Grand Rapids has experienced in recent years.

The question to ask is, at what cost? What don't we have because of these subsidies. Michigan Radio just did a piece this morning on how, under Governor Snyder's budget proposal, the cuts to higher education are the equivalent of completely cutting funding to Michigan Tech, GVSU, SVSU, Ferris, half of CMU's budget and more than I'm forgetting at the moment.

I'm with x99. I love urban areas, and I love what's been happening in Grand Rapids, and I support the brownfield credits in general. But it is also true that the money for the credits comes from us, but it's the developers that directly benefit. With Michigan's budget the way it is, are brownfield credits the best use of our money?

Not to throw the film credits under the bus, but what long-lasting sustainable business model has come out of the film tax credits? Sure, a few Michigan film companies have benefited with a one-shot infusion of cash, but I can't think of one bricks and sticks (or online) business that has been set up to benefit long-term from the film industry. Maybe I'm missing them?

I'm also of the mindset that the higher ed institutions have been doing a massive building campaign over the last decade to compete with each other, but at what cost long term? Someone's gotta pay to maintain and staff those new buildings, which is generally the students' tuition and the State taxpayers.

I should also state that I'm not defending or advocating for developers. Most WILL find other business ventures to get into (and several of them have).

[AlexPKeaton]

One reason these urban target programs have been successful is that until they were enacted incentives existed only for greenfield development farther and farther out from the core city. Once the urban programs were put into action you were able to see a more level paying field that resulted in an increase in urban development.

That's probably true, but the answer is to eliminate subsidies for sprawl, not create more subsidies to counteract them. Yeah, I know, pie in the sky thinking.

Not to throw the film credits under the bus, but what long-lasting sustainable business model has come out of the film tax credits? Sure, a few Michigan film companies have benefited with a one-shot infusion of cash, but I can't think of one bricks and sticks (or online) business that has been set up to benefit long-term from the film industry. Maybe I'm missing them?

Hangar 42?

Okay, kidding about that one, but I believe some other sound stages were set up. No doubt any business that relied on the film credits will be struggling shortly though.

[Veloise]

Not to throw the film credits under the bus, but what long-lasting sustainable business model has come out of the film tax credits? Sure, a few Michigan film companies have benefited with a one-shot infusion of cash, but I can't think of one bricks and sticks (or online) business that has been set up to benefit long-term from the film industry. Maybe I'm missing them?

There are several studios on the east side of the state (brick & mortar). I know of a handful of talent-seeking companies (I'm registered with three of them who all service West Michigan). Find GRNow.com on Facebook; the "we need extras" opportunities show up there.

During the filming on Monroe Center, where they had the stationary car crash and blowing out the windows at Madcap, the intersection was filled with local folks. Even the guys preventing through bicycle travel were local.

I was an extra in Touchback last summer, and used the pay to buy groceries. Local companies provided a lot of the equipment, set accessories, food. The Coopersville boosters sold a gazillion T-shirts printed with the screenplay team.

This is a crane with high-intensity lighting atop.

Article in the Freep this week indicating there's a 600% return on investment.

I'm also of the mindset that the higher ed institutions have been doing a massive building campaign over the last decade to compete with each other, but at what cost long term? Someone's gotta pay to maintain and staff those new buildings, which is generally the students' tuition and the State taxpayers.

...

Agreed. Why does Western need a medical school? Why does Davenport keep changing its collective mind? (I like the fact that they realize they need a building downtown. I don't like the contribution to suburban wasteland sprawl that they've constructed out beyond the sidewalks.)

[GRDadof3]

That's probably true, but the answer is to eliminate subsidies for sprawl, not create more subsidies to counteract them. Yeah, I know, pie in the sky thinking.

Hangar 42?

Okay, kidding about that one, but I believe some other sound stages were set up. No doubt any business that relied on the film credits will be struggling shortly though.

Ha! I'm careful not to use that one as an example because it's a huge abuse (purportedly fraudulent) use of a tax incentive.

[GRDadof3]

There are several studios on the east side of the state (brick & mortar). I know of a handful of talent-seeking companies (I'm registered with three of them who all service West Michigan). Find GRNow.com on Facebook; the "we need extras" opportunities show up there.

During the filming on Monroe Center, where they had the stationary car crash and blowing out the windows at Madcap, the intersection was filled with local folks. Even the guys preventing through bicycle travel were local.

I was an extra in Touchback last summer, and used the pay to buy groceries. Local companies provided a lot of the equipment, set accessories, food. The Coopersville boosters sold a gazillion T-shirts printed with the screenplay team.

This is a crane with high-intensity lighting atop.

Article in the Freep this week indicating there's a 600% return on investment.

Agreed. Why does Western need a medical school? Why does Davenport keep changing its collective mind? (I like the fact that they realize they need a building downtown. I don't like the contribution to suburban wasteland sprawl that they've constructed out beyond the sidewalks.)

I'm not saying the film tax incentives didn't create jobs. But how many people are now on payroll because of those credits? Or have started businesses solely devoted to the new film industry? Plus, what is the film tax credit/rebate? 40% or something like that? That's way more money as an incentive than the 5 - 10% credit given for Brownfield and HP Tax Credits, and yet the payback is much larger over the long term. For instance, a one shot incentive of $1.3 Million in 1998 for a $13 Million investment and 50 jobs at the Coca Cola bottling plant on Butterworth and they're still churning out product, 13 years later. American Seating Park was a one shot Brownfield Tax incentive, and it's still housing hundreds of workers and residents a decade later (paying city income tax and property taxes).

[Veloise]

What an interesting article.

(I'd put each caption under its photo since there are so many.)

[jas49503]

...drive (with government subsidized gas) out to 28th street (government subsidized road construction) to get a slice of pizza...

You're assuming a false equivalency, non urban environments have been subsidized by all levels of government, in an unsustainable manner, in every way for the past 60 years: cars, gas, roads, taxes, utilities, financing. While cities have been left to their own devices. There is no level paying field. Removing a tax credit focused on urban land won't create one.

One reason these urban target programs have been successful is that until they were enacted incentives existed only for greenfield development farther and farther out from the core city. Once the urban programs were put into action you were able to see a more level paying field that resulted in an increase in urban development.

I am including those examples of subsidizing in my example. that's is what makes it so cheap to order that particular slice of pizza and what makes it a viable option vs. staying in the urban center. if there were no roads or it was prohibitively expensive to develop suburban land then the slice of pizza at costco would either be too much of a pain in ass to get to, or too expensive. the point being that things are much cheaper with suburban development but the quality of the experience is lacking and there is greater inconvenience. The acceleration of development in urban area can be attributed to a shift in demographics and preference for urban living just as easily as it can be attributed to brownfield tax credits. the two have been around for just about as long depending on the location you are talking about. I think that what you are seeing is a confluence of several factors, brownfield tax credits being one of them as stated by others though, at what cost are these credits?

those other subsidies are another issue for another day. I think the cheap (artificially so) price of gas is a major contributer to the dilemma we are in with regards to urban centers and needing things like historic or brownfield tax credits. If it were up to me gas would cost 6 dollars a gallon.

What incentives are there for greenfield development are there, I guess I don't know much about those (unless you are talking about the subsidization of utilities, roads, etc.)

[jas49503]

Article in the Freep this week indicating there's a 600% return on investment.

that's not exactly what it says. it states that 6 dollars of business is generated for every dollar spent in tax credits. how much of that 6 dollars is returned to the state in the form of tax revenue. well, if were pure income (gross = net revenue) then the state would get 4.5% of that or approximately 27 cents. that assume no deductions and using the income tax rate for individuals, not businesses. So it ends up being a huge loser for the state. people may be employed in the film industry but would agree with some other studies I've read that the increase in taxes for the rest of the state actually results in a net decrease in jobs for the state.

[RegalTDP]

that's not exactly what it says. it states that 6 dollars of business is generated for every dollar spent in tax credits. how much of that 6 dollars is returned to the state in the form of tax revenue. well, if were pure income (gross = net revenue) then the state would get 4.5% of that or approximately 27 cents. that assume no deductions and using the income tax rate for individuals, not businesses. So it ends up being a huge loser for the state. people may be employed in the film industry but would agree with some other studies I've read that the increase in taxes for the rest of the state actually results in a net decrease in jobs for the state.

You're both off a tad. Jas is right that it's a loss to the state, but for the sake of accuracy, that's not the right math. The theoretical "dollar" is after new taxes have already been accounted for; that dollar represents the net cost of the program.

Forget theoreticals, let's just use the actual numbers from the study being cited. You can read it in full here.

They determined the net cost to the state of MI in 2010 was $84.7 million. That's after new taxes, fees, and savings from unemployment insurance are taken into account.

The statewide sales to MI businesses was calculated to be $503 million. And that's just instate business only.

503 / 84.7 = 5.94 (that's where the "about 6 dollars for every one dollar" came from). So there's no more 27 cents to be returned to the state, or spent, or nothing. Those are just the numbers. $84.7 million is the net cost to MI's budget, $503 million is the economic output generated. In 2009 it was $309.3 million at a cost of $52.5 million. Michigan residents made $172.5 million in income in 2010, and $108 million in 2009.

Jas' point in all this is, "Is that worth the cost?" Excellent question, not sure yet myself. But in discussing it, I think the actual numbers are easier to understand than the theoretical "6 dollars for every one" figure," which just clouds things. I will say though, with that much local business generated, I don't understand how this would all lead to a net loss of jobs.

[einsteinrig]

that's not exactly what it says. it states that 6 dollars of business is generated for every dollar spent in tax credits. how much of that 6 dollars is returned to the state in the form of tax revenue. well, if were pure income (gross = net revenue) then the state would get 4.5% of that or approximately 27 cents. that assume no deductions and using the income tax rate for individuals, not businesses. So it ends up being a huge loser for the state. people may be employed in the film industry but would agree with some other studies I've read that the increase in taxes for the rest of the state actually results in a net decrease in jobs for the state.

i guess i don't follow...since the produce as much tax revenue as it costs, it doesn't make sense? i'm not sure i can think of ANY government program that "pays for itself" in that fashion.

you could argue that a government program that can't do so shouldn't exist, but i don't think that's really the point of this discussion.

[jas49503]

i guess i don't follow...since the produce as much tax revenue as it costs, it doesn't make sense? i'm not sure i can think of ANY government program that "pays for itself" in that fashion.

you could argue that a government program that can't do so shouldn't exist, but i don't think that's really the point of this discussion.

I was only illustrating that the return on investment was actually negative. many programs are like this but it is, and in itself is not a reason to stop doing it.