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Chamber Supports Economic Development Bills on the Move

Advocacy News – December 9, 2021

The Michigan Chamber has voiced its support for a diverse and inclusive package of economic development bills that just yesterday and today overwhelmingly passed the Michigan Legislature.  The bills, which zipped through the House last night and the Senate this afternoon by wide, bipartisan margins, must now go on the opposite chamber for final approval and can then go to the Governor’s desk. Gov. Whitmer is fully expected to sign the measures.

The bills are broad, diverse and inclusive.  There’s something in them for big and small businesses across all industries and urban and rural areas – and importantly, the bills are equally focused on attracting and retaining jobs in Michigan. The package is different from economic development bills passed in the past; they were crafted to put Michigan in a more competitive position as it relates to job creation and retention, but balance that with transparency, legislative oversight and efficiency.

The bills are timely, given there are a few transformational projects in the pipeline that Michigan would like to secure, projects that may be announced as early as January.  But the bills are broader than just these projects and create a framework for the state to use to help lock in other opportunities in the future.

Here’s an overview of what’s underway:

New Strategic Site Readiness Fund to support business attraction efforts in both rural and urban areas (SB 770/HB 5603).  This legislation creates a strategic site readiness program to provide grants, loans and other economic assistance for the purpose of creating investment-ready sites to attract and promote investment in this state.  It could be used for items such as land acquisition, site preparation, infrastructure improvements, demolition or rehabilitation of a site, environmental remediation and some fees related to engineering, surveying or architecture. This bill is important because site availability and readiness are key deciding factors for companies when considering future growth and expansion opportunities.

New Critical Industry Fund to secure long-term growth and opportunity (SB 771/HB 5604).  This legislation creates a critical industry investment fund that will allow Michigan to use financial resources efficiently by providing support to businesses critical to closing deals and creating and preserving qualified jobs in the state while generating significant capital investment. It could be used to pay for costs such as gap financing, deal-closing or workforce training. When considering an application, the Michigan Strategic Fund has to consider several criteria for a project, including:

  • Its importance to the community;
  • Whether it will be a catalyst for further community revitalization;
  • Amount of local community and financial support;
  • Financial need;
  • Re-use of vacant buildings or blighted properties;
  • Creation of new jobs; and/or
  • Overall return on investment.

Legislative oversight of economic development projects (HB 5602/SB 769).   These bills create The Strategic Outreach and Attraction Reserve or SOAR, which would be funded by the Legislature only after an open and transparent process. It would distribute money to the proposed Michigan Strategic Site Readiness Fund and the Critical Industry Fund to aid in the development of sites and the creation of jobs. The state could not make any investments without a legislative appropriation.  (Note: This type of financial oversight is different than other business incentive programs handled by the Michigan Economic Development Corporation [MEDC].)

This package collectively passed the House with a vote of 83-21 and the Senate with a vote of 27-10.

Support for small businesses by increasing the Personal Property Tax (PPT) exemption from $80,000 to $160,000 (House Bill 5351).  The PPT is a yearly tax on businesses for all real and tangible property (furniture, computers, etc.).  It is paid to a company’s local taxing authority.  In 2014, legislation was passed to include a small business exemption of $80,000.  This amount was a cliff; if a company exceeded $80,000 by even just $1 dollar, it would no longer be eligible for an exemption.  Increasing the PPT exemption to $160,000 would help small businesses throughout Michigan from paying this administratively complex and onerous tax on items that have already been taxed. This bill passed the House by a vote of 58-46.

In terms of transparency, each program (except the PPT proposal) will have claw-back and audit provisions to ensure the companies meet and maintain promises in their grant or loan agreements, including project dates and benchmarks. Any requests for changes to an agreement would have to be noticed to the governor, all lawmakers and the House and Senate fiscal agencies. An annual report also would have to be prepared for the Legislature and Governor on the activities of the fund.

Should these proposals become law, the Legislature likely would use federal American Rescue Plan Act (ARPA) dollars to largely seed the program.  Although an initial appropriation dollar amount has yet to be negotiated, it is widely speculated the program could receive millions of dollars in funding to pursue its initial economic development targets.  The spending bill is expected to pass before the end of December.

Please contact the Chamber’s advocacy team with any questions at info@michamber.com.