By Craig Mauger, cmauger@detroitnews.com
The Michigan Senate approved a bill Tuesday that would more than double the amount of tax withholding that state officials can allow developers to keep for projects, including, potentially, a massive overhaul of the Renaissance Center in Detroit.
The measure would increase the total amount of taxes developers can capture through the state’s eight-year-old transformational brownfield program from the current cap of $1.6 billion to $3.5 billion. Supporters see the tool as a way to entice the resurgence of problem or contaminated properties by allowing businesses to keep a portion of the new tax revenue they generate on the sites.
The Democratic-controlled Senate voted 20-13 in favor of the bill. It would have to pass the GOP-controlled House to reach Gov. Gretchen Whitmer’s desk.
Hassan Beydoun, Detroit’s group executive of economic development, testified in support of the bill, saying it was “crucial for the revitalization of Detroit’s riverfront.” There, Dan Gilbert’s real estate firm Bedrock and General Motors Co. are planning to redevelop the Renaissance Center by shrinking the five-tower complex to three towers and creating a tourist attraction that might include a marina on the Detroit River.
“It’s an absolutely critical program, because without it, there would be no hope in developing the most challenging brownfield sites across Michigan,” Beydoun said. “These are sites that have huge potential to transform surrounding areas.”
A wide array of properties are eligible for the tax incentive, including ones that were previously used for “commercial, industrial, public or residential purposes,” according to the bill.
However, opponents of the bill criticized on Tuesday its significant financial implications — increasing the current cap by nearly $2 billion — and the speed by which it’s moving forward in the Democratic-controlled Senate. Sen. Sarah Anthony, D-Lansing, introduced the bill on Dec. 3, six days earlier.
Sen. Joe Bellino, R-Monroe, said some of the projects being floated for the expanded program involve buildings owned by “millionaires and billionaires” who are now asking lawmakers and taxpayers for financial relief to revamp them. Forbes pegs Gilbert’s net worth at $28 billion, while GM recorded nearly $15 billion in profits in 2024.
“That’s why I’m against it,” Bellino said.
Eleven of the 13 no votes in the Senate came from Republicans. Sens. Stephanie Chang, D-Detroit, and Jeff Irwin, D-Ann Arbor, also voted in opposition. Sens. John Damoose, R-Harbor Springs, Mark Huizenga, R-Walker, and Mike Webber, R-Rochester Hills, joined majority Democrats in support.
With only two weeks of session days remaining in 2025, Michigan lawmakers are nearing a potentially pivotal moment as the Republican-led House and Democratic-led Senate weigh how to establish new economic development tools to try to bring jobs to Michigan.
Lawmakers decided this year to let the Strategic Outreach and Attraction Reserve (SOAR) Fund expire. Created in late 2021, the program has been championed by Whitmer. The SOAR Fund provided cash subsidies for projects that were supposed to be transformational. But several of the projects that were approved for SOAR funding were either delayed or their expectations were downsized.
Now, the House and Senate are focusing more heavily on programs that allow developers and businesses to keep a portion of the taxes generated through their projects. Lawmakers have contended that the approach brings less risk for state taxpayers than the upfront cash assistance promises of the past.
Republican then-Gov. Rick Snyder signed the transformational brownfield program into law in 2017, allowing developers to keep up to 50% of taxes their projects generate to help recoup the cost of building on the site. This tax subsidy has been used to help finance the construction of Gilbert’s $1.4 billion skyscraper complex at the former J.L. Hudson department store site on Woodward Avenue.
In recent years, lawmakers have expanded the transformational brownfield program. In 2023, for instance, they increased the cap on total capture allowed from $800 million to $1.6 billion.
Under the program, developers can capture revenue from sales taxes, use taxes, income tax withholding and personal income taxes — revenues that would normally flow to the government. The Michigan Strategic Fund, an economic development board appointed by the governor, has the power to approve transformational brownfield plans under the program, deciding the specifics of the tax benefits allocated for each project.
In addition to increasing the cap on the program, the Senate bill would require tax capture amounts to be increased by 25% with the additional money resulting from the 25% attachment being distributed among a state housing fund, childcare programs and initiatives related to small businesses and placemaking, according to the bill.
Sen. Mallory McMorrow, D-Royal Oak, voted for the bill, saying transformational brownfields have been one of the state’s most effective economic development tools. On Tuesday, the Senate approved a separate bill, sponsored by McMorrow, to require the creation of a 10-year economic plan for Michigan.
“We’ve spent years talking with residents, business owners and economic developers across Michigan, and here’s what we’ve learned: our current approach to economic development just isn’t cutting it,” McMorrow said in a statement.
On the brownfield bill, the Senate approved an amendment from Sen. John Cherry, D-Flint, to allow an additional $100 million in tax capture to go to projects involving properties owned by bankruptcy environmental response trusts.
Cherry said he didn’t have a specific project in mind. But he said there are properties in Genesee County and across Michigan, managed by trusts and previously used by manufacturers like Delphi, that could qualify.
“The intent of that change is saying … $100 million is going to go to actually taking these sites that are hugely impactful for these communities and getting them into productive use again,” Cherry said.
The transformational brownfield bill would also allow a transformational brownfield designation for a “qualified cultural institution project” that could keep 100% of the withholding tax capture for a period of up to 10 years.
The proposal doesn’t name the cultural institution but says it’s a nonprofit that provides educational programming and outdoor conservation initiatives available to the general public. The qualifying project would have to bring a capital investment of more than $400 million, according to the bill.
Huizenga, a Republican who represents the Grand Rapids area, voted for the bill and noted some of its language appeared to describe a John Ball Zoo project to build an aquarium in Grand Rapids as one of the potential beneficiaries.
But Huizenga said he didn’t hear anyone explicitly state that the new tax capture would go to the aquarium project. Still, Huizenga said he believes the legislation would help Grand Rapids continue to grow.
Also, on Wednesday, Sterling Heights’ city manager, Mark Vanderpool, spoke in support of the bill, saying it could benefit plans to revitalize the Lakeside Mall. Plans for the project include turning the mall property into five neighborhoods, some of which could include high-rise buildings, along with retail, restaurants and open space.
Sen. Sue Shink, D-Northfield Township, asked Vanderpool, “Are you blocked if we don’t raise the cap?”
He said his short answer would be yes.
“The project would not move forward in its current form,” Vanderpool said.
