December 21, 2021
Everything old is new again – incentives are back.
Less than 10 years ago, Governor Snyder argued that Michigan should pursue economic development by lowering overall business taxes and stop competing with other states in a race to throw the most tax breaks at new businesses and projects. We argued at the time that this was akin to unilateral disarmament and, for a while, things were quiet. In fact, when Michigan dodged the Foxconn debacle in 2019, Michigan’s position looked pretty wise. Recently, Michigan was ranked as having the 12th business friendly taxes in the Country.
Then came news that Michigan had lost almost $12 Billion in investments by Ford to Kentucky and Tennessee for battery manufacturing and electric pickup trucks. That woke up a lot of people in Lansing. Consequently, a package of bills is racing through the Legislature intended to prevent such a loss from happening again. The bills include:
House Bill 5602 and Senate Bill 769, would create the Strategic Outreach Attraction Reserve (SOAR) Fund, to attract businesses by helping them create jobs and provide other financial assistance.
House Bill 5603 and Senate Bill 770 will create the “Michigan Strategic Site Readiness Fund” to use funds from the SOAR fund to provide grants, loans, investments and additional assistance to businesses to attract and retain them in the State. The grants, loans, investments and additional assistance will help with purchasing land to assemble a site, site preparation, remediation or rehabilitation, infrastructure improvements, demolition and more. It focuses on mega-strategic sites (at least 500 acres in size) and strategic sites (to be used for manufacturing or other commercial use)
House Bill 5604 and Senate Bill 771, would create the “Critical Industry Fund,” that will receive funds from the SOAR Fund to make investments to assist businesses with costs associated with deal-closing, gap financing or other funds to add jobs or buy capital or both.
Yesterday, the Governor announced that she signed HB 5603 and SB 771 stating that the government was appropriating $1 Billion to the SOAR fund which will come from a $5.7 billion pot of discretionary federal stimulus funds and another $500 Million to the Critical Industry Fund to make Michigan’s “economy more adaptable to the rapid pace of technological change, supporting small businesses, and creating or retaining good-paying jobs.”
There are reports that a new GM plant proposed for Lansing may be the first beneficiary of the Legislature’s Christmas spirit to keep the plant in Michigan.
This goes well beyond brownfield tax increment financing (a bill to clarify that program also passed this month and is awaiting the Governor’s signature) and the redevelopment credits that Governor Snyder fought so hard to eliminate. This package moved through the Legislature with lightning speed; the bills were introduced only this month and are now law. Incentives (and the free-for-all to get mega-sites developed) are back in Michigan.