Property Tax Abatement

Tax abatements are available for new real and personal property. The abatements can provide considerable savings for businesses undertaking investment projects to expand or locate in the state.

Real & Personal Property Tax Abatements
Public Act 198

Program Purpose and Description:

Industrial Facilities Tax Abatements are available to any Michigan manufacturer under Public Act 198 of 1974, as amended. The Act is designed to provide a stimulus in the form of significant tax incentives to industry to renovate and expand aging plants, build new plants and promote establishment of research and development laboratories. The granting of property tax incentives under the Act is a local option left to the discretion of the legislative body of the local governmental unit.

For new construction the Act provides for a 50% reduction in both real and personal property taxes for up to a period of 12 years. In the case of a plant rehabilitation, the Act allows for the property values to be frozen at the pre-rehabilitation levels. All rehabilitation work is tax exempt up to the 12 years.

The process to apply for a tax abatement is relatively simple and involves two steps—the establishment of an Industrial Development District or Plant Rehabilitation District and the actual application for the tax abatement.

To establish the district, you need to petition the community to create it. The community then holds a public hearing and considers a resolution to establish the district. Once established the district remains in effect until the community dissolves it. This step is critical in that no funds can be expended until the district is established.

The tax abatement application is a brief three page form with attachments which is filled out and submitted to the community. The process involves a public hearing and the passage of a resolution by the governing board.

You can apply for the tax abatement within six (6) months (6 months before or after) commencement of the project.

We suggest that clients apply after they have the final costs established to avoid having to seek an amendment. If you go over the stated amount on the application by 10% you must request an amendment to your application. If approved the tax abatement becomes effective January 1 of the following year.

View Real & Personal Property Tax Abatements Public Act 198 of 1974

Personal Property Tax Exemption PA 328

Program Purpose and Description:

Communities that have been “designated as economically distressed” (City of Flint, City of Burton, City of Mt. Morris, Mt. Morris Township, and Genesee Charter Township) can exempt all new personal property taxes. Exemptions would include all millage, state and local personal property taxes.

Eligible projects include manufacturing, mining, research and development, wholesale and trade, and office operations, but not retail businesses. The duration of the personal property tax exemption is negotiated between the applicant company and the local community.

To obtain the personal property tax exemption, the personal property must not have been previously subject to property taxes in any other Michigan jurisdiction and must be located within an eligible district.

Previously untaxed or new property placed into service in a industrial development district, a renaissance zone, an enterprise zone, a brownfield redevelopment zone, an empowerment zone, a tax increment financing district, a local development financing district, or a downtown development district would be eligible for the personal property tax exemption under PA 328.

View Personal Property Tax Exemption PA 328 of 1998

Obsolete Property Tax Exemptions

Program Purpose and Description:

Another tool has been added for property owners, buyers, developers, lenders, and local units of government to promote redevelopment projects. This program is designed to complement brownfield redevelopment activities.

The Obsolete Property Rehabilitation Act provides an exemption from ad valorem property taxes to commercial property and commercial housing property. An obsolete property rehabilitation district must be established and located in a qualified local governmental unit.

The following communities in Genesee County are qualified local governmental units - City of Burton, City of Flint, City of Mt. Morris, Genesee Charter Township, Mt. Morris Charter Township.

Eligibility:

Authorized qualified local governmental units (QLGUs) may establish obsolete property rehabilitation districts.

Buildings and improvements within these districts are eligible for exemption from ad valorem property taxes from 1 to 12 years. Personal property is not eligible. The sunset for granting exemption is December 31, 2010.

To qualify, the property must be commercial property or commercial housing property that is a “facility” (contaminated), “blighted” or “functionally obsolete.”

Process:

Applications for Obsolete Property Rehabilitation exemption certificates (ECs) are approved or disapproved by the local governmental legislative unit. The State Tax Commission (STC) must also approve the application.

A QLGU shall not approve an application unless the application shows that completion of a rehabilitated building has a reasonable likelihood of increasing commercial activity, creating employment, preventing loss of employment, or increasing residence within the building’s community. The applicant must also show that “but for” the EC the rehabilitation would not take place. The applicant must not be delinquent in payment of any taxes related to the building.

Owners of rehabilitated buildings shall pay an annual obsolete properties tax on the buildings and improvements.

The tax is equal to the current millage (including school mills) times the pre-rehabilitation taxable value. Payment and disbursement of the tax follow the same requirements of the general property tax act. The State Treasurer may also approve up to 25 new certificates each year for exemption from ½ of the school mills for up to 6 years.

QLGU’s may revoke ECs if the required criteria are not met. An EC may be transferred to a new owner of a building if the LGU approves the transfer.

QLGU’s must annually report to the STC on the status of each EC. The STC must report annually to Tax Policy, Finance and Economic Development committees on the utilization of the obsolete property rehabilitation districts.

View Obsolete Property Rehabilitation Act – Public Act 146 of 2000