Cities today must offer a credible package of incentives in order to remain competitive. Buchanan’s menu of incentives includes assistance for companies that are locating in the city, as well as those that choose to grow and expand here.
|Tax-Free Renaissance Zones
Renaissance zones work by granting virtually tax-free status to any business or resident presently in a zone or moving into a zone.
The zones are designed to provide selected communities with the most powerful market-based incentive, virtually no state or local taxes, to spur new jobs and investment.
The taxes that companies and residents do not pay comprise nearly all the state and local taxes levied on business activity: Single Business Tax (SBT), state personal income tax, six-mill state education tax, local personal property tax, local real property tax, local income tax and utility users tax.
The duration of the zone designation ranges from 10 to 15 years, starting from January 1, 1997. In all cases, the tax relief will be phased out in 25% increments over the last three years of the program.
Industrial Property Tax Abatements
Industrial property tax abatements are used to spur renovation and expansion of aging manufacturing plants and new plant construction. They have recently been extended to high-tech companies.
Abatements are approved by the local units of government and issued by the state, reducing property tax on buildings, machinery and equipment by roughly 50% for new facilities and 100% for renovation projects. They are available for up to 12 years.
Michigan's brownfield law is designed to encourage and assist developers who want to return property to productive use more quickly and at a lower cost than before, while still protecting human health and natural resources. Owners and operators of contaminated sites are no longer required to pay for cleanup actions unless they caused the contamination. Flexible cleanup standards give developers the option of proposing a solution to historical contamination based on future use of the property.
Qualified businesses can now claim a credit against the SBT, provided the taxpayer has a pre-approval letter issued between December 31, 1999 and January 1, 2008 and the project is completed not more than five years after the letter is issued.
If the total of all credits for the project is $1 million or less, the credit is based on 10% of the eligible investment. If the total of all credits for the project is greater than $1 million but not more than $30 million, a credit is available for a percentage of eligible investment to be determined by the Michigan Economic Growth Authority (MEGA), but not to exceed 10% of the eligible investment. Certain location restrictions apply to these credits.
MEGA High-Tech Job Creation Tax Credits
If you are an employer in electronics, communications, medical science and other high technology fields whose company devotes at least 25% of operating expenses to research and development, and you need a reason to expand or locate in Michigan rather than another state, you may be eligible for a high-tech job creation tax credit against the SBT. Each credit may be awarded for up to 20 years and for up to 100% of the tax related to the project.
These tax credits through MEGA (Michigan Economic Growth Authority) are designed to attract new, innovative and cutting-edge companies that specialize in new technologies. They are available to firms doing advanced computing, biotechnology, electronic device technology, engineering and laboratory testing related to product development, medical device technology, product research and development, advanced vehicle technology or technology that assists in the assessment or prevention of threats or damage to human health or the environment.
MEGA tax credits are also available to companies creating good-paying jobs in manufacturing, R&D, wholesale trade and office operations that meet the criteria.
Community Development Block Grants
Federal funds in the form of state-administered Community Development Block Grants can be used for road, water and sewer improvements necessary for a firm to locate or expand in an area. The amount of the grant depends on the number of jobs created and the amount of private investment.