Tax Incentive Programs
Payment in lieu of taxes (PILOT): A PILOT is an investment incentive negotiated between a tax authority and a developer to establish agreed upon payment each year instead of the typical property taxes. Housing development PILOTs are most often multi-year agreements with payments based on a percentage of net collected rents.
Brownfield TIF: Authorized under PA 381 of 1996, this tool allows the community to authorize reimbursement of eligible expenses for developing on a previously developed site that is no longer in use or has environmental conditions. The purpose here is to help bring the cost of redeveloping a site in line with the cost of developing a “green field” site which instead would likely require new infrastructure and costs to the community. Local brownfield TIFs can be pared with a state brownfield ask from either MEDC or EGLE (or both).
Commercial Rehabilitation Act: PA 21 of 2006 encourages the rehabilitation of commercial property by abating the property taxes generated from new investment for a period up to 10 years. As defined, commercial property is a qualified facility that includes a building or group of contiguous buildings of commercial property that is 15 years or older, of which the primary purpose is the operation of a commercial business enterprise or multifamily residential use. A qualified facility may also include vacant property or other commercial property which, within the immediately preceding 15 years, was commercial property. Types of commercial business enterprises include office, engineering, research and development, warehousing, parts distribution, retail sales, and other commercial activities. Multi-family residential is housing that consists of five or more units. Commercial properties allocated new market tax credits are also considered a qualified facility.
Industrial Property Tax Abatement: PA 198 of 1974 as amended, Industrial property tax abatements provide incentives for eligible businesses to make new investments in Michigan. These abatements encourage Michigan manufacturers to build new plants, expand existing plants, renovate aging plants, or add new machinery and equipment. High technology operations are also eligible for the abatement.
Obsolete Property Rehabilitation Exemption: (OPRA) Available only in Core Communities, this incentive is designed to assist in the redevelopment of contaminated, blighted and functionally obsolete properties. The goal is to convert these underutilized buildings into vibrant commercial and/ or commercial housing opportunities. The incentive offers the community the ability to freeze local property taxes at the pre-development level for up to 12 years. The developer can also apply to the State Treasurer to freeze half of the state education millage for up to six years. Land is not abated.