(Source: MIRS.news, Published 06/25/2024) Warehouse operations could be exempted from certain property taxes if they choose to develop on old industrial sites, rehabilitating and re-purposing sometimes "long-abandoned" factories and plants, under bills approved by the Senate Tuesday.  

Currently, in Michigan, local governments can approve "plant rehabilitation districts and industrial development districts," where interested developers can apply for certain tax exemptions if they choose to revitalize those unused industrial sites. Local governments can allow exemptions to last one to 12 years, and the Governor's three-member State Tax Commission must also provide the exemptions a final green light.  

Under SB 536 and SB 537 by Sen. Paul Wojno (D-Warren) – which passed this afternoon 27-11 – the statute for the exemptions will no longer apply solely to facilities serving a manufacturing purpose, instead expanding eligible business activities to warehousing and distribution facilities.  

One of the backers of today's legislation was 12-year-old NorthPoint Development, a privately held real estate development firm working in modern industrial facilities.  

According to Johnny Sweeny, NorthPoint Development's economic development manager, the firm has invested a little more than $900 million in Michigan through its projects. He pointed to rehabilitating areas like a former test track for the Ford Motor Company in Shelby Township, the old AMC Headquarters once for car manufacturing in Detroit and a previous General Motors transmission plant in Warren.  

"We are often a speculative developer, which means that we start construction before we know who our tenants are. In that setup, we are allowed to apply for a speculative tax abatement for those sites, and then when a tenant is identified, they then apply to that local jurisdiction to receive that abatement themselves," Sweeny said.  

He explained that the present-day statute, and its restrictions on who can apply for the aforementioned tax exemptions, "essentially takes that opportunity off the table for a number of businesses that we think would be interested in locating in the state of Michigan."  

In a document that NorthPoint Development submitted to the Senate Economic and Community Development Committee near the end of February, the firm highlighted nine warehousing or distribution center projects in the five-year project pipeline that could benefit from SB 536 and SB 537.  

It included a Pepsi Frito-Lay distribution project in Bay City, an industrial park that would be partially owned by Marlo Beauty Supply and the Home Depot in Warren and Ecorse Commons, an industrial park in Romulus that would be repurposed by businesses like the Lowe's retail company, the LaserShip shipping company and the Pitney Bowes mailing equipment provider.  

NorthPoint projected that obtaining the companies' commitments – such as through the incentives offered under SB 536 and SB 537 – could result in $914.6 million in capital investment towards Michigan, 3,138 projected job creations and combined wages of more than $324 million over 20 years.  

"This proposed change would benefit those businesses directly. This isn't something that NorthPoint is asking for, this is something that goes to the businesses, the way these leases are done," Sweeney said. "This is true with us, and all of our other competitors, is that the tenant or the business pays those property taxes."  

Ultimately, the legislation could assist real estate development firms as they promote the properties they rehabilitate, authorizing them to advertise to warehouse and distribution operations that they could possibly secure tax abatements. 

Additionally, in February, Jared Belka, a brownfield redevelopment incentive expert, informed the Senate committee that the abatement – or property tax reduction – at-hand could be worth up to 50 percent on new investment.  

"It's not taking away anything that's there now. This is all based on new investment in real property," Belka said. "This legislation would be available across the board or any speculative developer to take advantage of."  

The State Treasury has estimated that for 2021, the present-day tax exemptions for plant rehabilitation and industrial development districts have reduced state and local revenue by $253.4 million. The Senate Fiscal Agency calculated that if the legislation provides a 1 percent increase in lost revenue, the state and local governments would experience a $2.5 million decrease in revenue from warehouse and distribution operations entering the fold.  

The Wojno bills were opposed by Sens. Thomas Albert (R-Lowell), Joseph Bellino JR. (R-Monroe), Jon Bumstead (R-North Muskegon), Roger Hauck (R-Union Twp.), Michele Hoitenga (R-Manton), Ruth Johnson (R-Holly), Dan Lauwers (R-Brockway), Jonathan Lindsey (R-Brooklyn), Aric Nesbitt (R-Lawton), Jim Runestad (R-White Lake) and Lana Theis (R-Brighton).