SPARK landlord: Loss of Michigan tax credits would limit redevelopment

BY JOHN GALLAGHER
DETROIT FREE PRESS BUSINESS WRITER


The Ann Arbor SPARK business incubator in Ypsilanti is the sort of entrepreneurial effort that Gov. Rick Snyder hopes to promote.There, start-up companies, often no more than one or two employees strong, occupy cubicles and share business services. Snyder served as SPARK's founding chairman, and recently named SPARK's former president, Mike Finney, to serve as president and CEO of the Michigan Economic Development Corp.

Yet this entrepreneurial effort in Ypsilanti -- a model for promoting entrepreneurship -- might never have existed without the kind of incentives that Snyder is trying to zero out.

Developers Karen and Eric Maurer, who own the building where SPARK leases space, raised about 25% of the $2 million needed to renovate this formerly vacant late 1800s building using two types of credits. One was for rehabilitating historic structures and the other was for renovating brownfield buildings.

Without those credits, Karen Maurer said, the building would still be a vacant eyesore, as it was when they bought it in 2008. "I believe tax credits are important just because they help rehabilitate downtowns," she said.

But Finney contended the deal could still get done under the new system Snyder has proposed. Tax credits would go away under Snyder's plan, but the state would offer a $100-million pool of incentives to help worthwhile projects happen.
"We would still be able to do that deal using the incentives that the governor has been proposing," Finney said Monday.

Tax credits needed for revival?

As a real estate developer, Karen Maurer knows it might be easier to work in the suburbs than trying to rehabilitate century-old buildings in downtown Ypsilanti.

Continued at: http://www.freep.com/apps/pbcs.dll/a...=2011103080383

I wonder how many of these proposed future credits will be rewarded to Finny and Co. who own lots of Woodward properties and are developers of large subdivisions.

But I give credit to Freep for being the only newspaper that I have ever seen to actually spell out to the average citizen the process of the actual sale of the credits through a broker for cash to help fund or carry over the edge a property.

IMHO This is all becoming kinda fishy ,who will be left to fund these projects?
Hard money @ 16 to 18% interest based on after repaired value.
Venture Capital who will finance an idea to make it sellable to wall street.
Neither one is about creating the type of business outlined in the article a long term stable establishment ,they are all about get in maximize profit and get out not bothered about the aftermath left behind.

I wish I could have a taxpayer funded bank account.I agree there have been massive abuses in the credit disbursement process when it comes to enticing out of state companies to relocate or expand but it all has to pass state level anyways.

So here is another states example of using taxpayers money as an incentive to lure a more diversified company.

$100 million cap sounds like allot of money but is it really ?

Read this article and tell me why eliminating all of the proposed cuts are really beneficial to the tax payer. Is it really wise to do away with all incentives and then place what funds are available in a central bank controlled basically by two people? Is anybody really comfortable with that ?

At least some of those credits are controlled locally because the decisions directly impact local taxpayers and is a stop-gap keeping in the case of fraud detained to that local program and not hurting the entire state.

http://www.tampabay.com/news/busines...a-rich/1155323

Richard,

Not sure where you are going with your rambling post, nor where any of your "facts" come from. Finney owning Woodward land? 16-18% interest rates? WTF!?

If everyone in the state has to compete for a single $100 million pool for tax incentives, projects in the City of Detroit could blow through that in less than one year alone. I have to agree with the DEGC and others on this: these incentives are to attempt to level the playing field between suburban greenfield development and urban brownfield redevelopment. Even with the tax breaks redevelopment projects still cost more than greenfield projects for the developer. That's due to a lot of externalities that the greenfield developer is not forced to capture, but the brownfield developer is forced to deal with.

Without these tax credits redevelopment work in Detroit and other urban municipalities in the state will dry up to a trickle again just after things have started to break loose with the banks in the past year. And the only place development is happening in Michigan is urban areas with redevelopment projects. So development will come to a halt in Michigan all together with Synder's plan.

Quote:

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Originally Posted by BVos

Richard,

Not sure where you are going with your rambling post, nor where any of your "facts" come from. Finney owning Woodward land? 16-18% interest rates? WTF!?

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You can WTF all you want but as somebody that is working on bringing a potential $45 million + private money no incentives based job creating investment to Detroit using no incentives you can be rest assured that I have my facts in order in researching the what, wheres, whys and hows.

Even more so when the backers roll their eyes and say why Detroit of all places,and on top of all of that have a state saying that it is open for business but yet have a 0 response from the top of the city and state officials concerning the impact it will place.

Try showing the same backers why it will cost millions more to invest in the state then any other state but in the long run be worth it.

True I do have a tendency to ramble at times but it is for a good reason or I hope so anyways.

As a side note, did you even read the article in the link that I posted ? Maybe I am wrong but it clearly shows that $100 million cap placed in Michigan will pretty much freeze future investment,which brings me to question why and what purpose would it serve and who it would benefit.

Nobody is going to invest in Detroit or Michigan without doing their homework and most certainly without having the facts in place first.