TAX INCENTIVES
Detroit welcomes businesses from around the world and around the block by offering a variety of tax incentives, including tax abatements and Brownfield plans. These programs are specifically targeted to inspire economic growth for relocating or expanding businesses.
TAX ABATEMENTS
What is a Tax Abatement?
A tax abatement is designed to incentivize investment by reducing tax payments for a company. Tax abatements can attract investment, increase employment, catalyze research and technology development, and drive improvement to less developed areas. Tax abatements can raise the overall economy by stimulating economic growth and tax revenue (after the expiration of the tax holiday/incentive period). Unlike grants or loans, which can help with need for immediate capital, a tax abatement is a way of offsetting or abating property and other taxes as an incentive to come to a city or expand existing operations within the city. Tax abatements allow business owners to use that savings to invest back into the business for a defined period of time.
All projects must demonstrate that “but for” this incentive the project will not occur and that the City will receive a net benefit from the investment. DEGC underwrites all projects and completes a fiscal impact analysis to determine if a project meets these qualifications.
DEGC’s Investment Services team can help you understand which abatement(s) are best suited for your project’s needs and estimate future tax payments with the abatement. These tax abatements have been utilized by many successful projects in Detroit:
DEGC offers tax incentives educational events.
WHAT TAX ABATEMENTS ARE AVAILABLE IN DETROIT?
OBSOLETE PROPERTY REHABILITATION ACT
P.A. 146 of 2000, as amended
Incentive for the rehabilitation of obsolete commercial property
NEIGHBORHOOD ENTERPRISE ZONE
P.A. 147 of 1992, as amended
Incentive for new construction projects, rehabilitation projects, or investments in existing homes that are located within an eligible district.
COMMERCIAL REHABILITATION ACT
P.A. 210 of 2005, as amended
Incentive for the rehabilitation of commercial property
INDUSTRIAL FACILITIES EXEMPTION
P.A. 198 of 1974, as amended
Incentive for the rehabilitation or new construction of manufacturing and industrial property
NEW PERSONAL PROPERTY EXEMPTION
P.A. 328 of 1998, as amended
Incentive for the installation of new personal property
COMMERCIAL FACILITIES EXEMPTION
P.A. 255 of 1978, as amended
Incentive for mixed-use commercial redevelopment in a qualified downtown revitalization district
COMMERCIAL REHABILITATION ACT
(Michigan Strategic Fund Designated Zone) P.A. 376 of 1996, as amended
Incentive to spur business development in the State of Michigan and prevent physical/infrastructure deterioration
NEXT MICHIGAN DEVELOPMENT ACT
P.A. 275 of 2010, as amended. Renaissance Zones P.A. 376 of 1996
Incentive to spur business development in seven targeted regions; specific to companies utilizing two or more methods of transportation to move products
ESTABLISHED TAX ABATEMENT DISTRICTS
Approval for a tax incentive is a two-step process. Ultimately, a certificate approval enables the tax abatement for a particular property. Before a certificate approval can be issued, a district must first be established in accordance with the specific public act for each tax abatement program. The map below can be used to view the existing tax abatement districts that have already been established throughout the City of Detroit.
WHICH DETROIT AREAS ARE ELIGIBLE?
The Commercial Incentive District Information Lookup shows which areas of Detroit are eligible for:
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Commercial Rehabilitation Act (PA210)
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Obsolete Property Rehabilitation Act (OPRA)
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Neighborhood Enterprise Zone (NEZ NR)
TAX ABATEMENT CERTIFICATE APPROVALS
A certificate approval enables a tax abatement for a particular property. Use the interactive map below to view development projects since 2017 that have received certificate approvals from the City of Detroit.
BROWNFIELD REDEVELOPMENT TAX INCREMENT FINANCING
Under the Brownfield Redevelopment Financing Act, Michigan Public Act 381 of 1996, a property can qualify as a brownfield if it is determined to be a facility (contaminated), blighted, functionally obsolete or a historic resource. The higher cost and longer timeline associated with redeveloping brownfield sites compared to development of clean, undeveloped property or “greenfields,”act as barriers to redevelopment on these sites.
Tax increment financing (TIF) is a tool developed to promote the revitalization of environmentally distressed and blighted areas. TIF can be used to reimburse developers for eligible costs associated with new construction or rehabilitating buildings on an eligible property. The redevelopment of an eligible property results in an incremental increase in the taxable value of the property. The property taxes paid as a result of the incremental increase in taxable value are captured and used to reimburse the developer for the eligible activities performed on the site under an approved Brownfield Plan.
The purpose of Act 381 is to level the playing field so that redevelopment occurs in places such as Michigan’s urban cores and traditional downtowns. The redevelopment of Brownfields can provide many benefits to a community, including an increased tax base, the creation of new jobs, the utilization of existing infrastructure, and the removal of blight. The removal of contaminants in the area also helps to protect human health and the environment.
SUCCESS STORIES
Thanks in part to the DEGC, a new 684,000 sq.-ft. industrial facility is being built on the site of the former Cadillac Stamping Plant. Lear, the newly announced tenant, is expected to employ 450 workers in automotive and manufacturing careers.
The century-old site required significant lead and asbestos removal and extensive cleanup of contamination costing more than $18 million. The City of Detroit Brownfield Redevelopment Authority has been approved to receive more than $3.3 million in state tax capture from the Michigan Strategic Fund to reimburse the developer for eligible brownfield activities, making the project possible. “Helping Detroit attract new investment is a key priority for the DEGC,” said DEGC President and CEO Kevin Johnson. “Central to our success is creating Class A Industrial space where developers like NorthPoint can build advanced manufacturing facilities like this. With our partners, DEGC is turning contaminated, blighted property into productive use, creating more jobs for Detroiters and strengthening our competitive position for even more development.”
