Brownfield Single Business Tax Credit (Brownfield SBT)
The Brownfield Single Business Tax (SBT) Credit, Public Act 143 of 2000, as amended, provides an incentive in the form of a tax credit for eligible redevelopment investments on brownfield property. The credit is against the Single Business Tax liability of the developer.
Who Is Eligible to Apply?
Any qualified taxpayer of eligible property with a project included in a duly approved Brownfield Plan.
QUALIFIED TAXPAYER-The qualified taxpayer must own or lease eligible property. The qualified taxpayer must also certify that Michigan Department of Environmental Quality (MDEQ) has not sued or issued a unilateral order to the taxpayer to compel response activity to the property or demanded reimbursement from the taxpayer.
ELIGIBLE PROPERTY-In a Non-Core Community, eligible property is commercial, industrial or residential property, identified in a Brownfield Redevelopment Authority's plan that is contaminated.
In a Core Community, eligible property is commercial, industrial or residential property, identified in a Brownfield Redevelopment Authority Plan, that is contaminated, blighted or functionally obsolete.
PRE-APPROVAL LETTER-A pre-approval letter must be issued after 12/31/99 and before 1/1/08. If the cost of a project is $10 million or less, a taxpayer must obtain a pre-approval letter from the Chairperson of the Michigan Economic Growth Authority (MEGA). The total credits for all projects approved under this section may not exceed $30 million in one calendar year. A taxpayer may also apply to the chairperson of MEGA if the cost of the project is greater than $10 million, but the taxpayer chooses to seek approval of credits totaling $1 million or less.
If the cost of the project is greater than $10 million and the taxpayer is seeking a credit greater than $1 million, the taxpayer must apply to Michigan Economic Growth Authority (MEGA) Board of Directors for pre-approval. MEGA has the ability to award up to 15 credits per calendar year. Of the 15 credits, up to 3 can be credits over $10 million and no more than $30 million. Preference is given to Core Communities, although MEGA does have the ability to award 3 of the credits to Non-Core Communities.
ELIGIBLE INVESTMENT-Eligible investment includes the following: demolition, construction or improvement of a building (i.e. restoration, alteration, renovation), addition of machinery, equipment or fixtures to the property and site improvements.
How Does It Work?
• If the application is approved, the developer will be issued a pre-approval letter.
• The developer must complete the project within 5 years of the date of the pre-approval letter.
• Upon project completion, the MEGA will verify that the project has been successfully completed, and will then issue a Certificate of Completion.
• Once the Certificate of Completion is in-hand, the developer can take the credit on their next tax return.
What Is the Process?
The approval process for the credit is as follows:
1. Contact the Lansing Economic Development Corporation
2. Submittal and approval of a Notice of Intent;
3. Local approval of a Brownfield Plan;
4. Submittal and approval of a SBT Brownfield Redevelopment Credit Project Pre-approval Application; and,
5. Upon project completion, verification that the project has been completed and a Certificate of Completion has been received.
Why Would a Business Want to Apply for a Brownfield SBT Credit?
The Single Business Tax credit is a significant financial incentive that increases the rate of return and reduces the risk of a development project.
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