Obsolete Property Tax
Obsolete Property Rehabilitation Act (OPRA)
The Obsolete Property Rehabilitation Act (OPRA), Public Act 146 of 2000, provides for a tax incentive to encourage the redevelopment of obsolete buildings. The tax incentive is designed to assist in the redevelopment of older buildings, in which a facility is contaminated, blighted or functionally obsolete. The goal is to rehabilitate older buildings into vibrant commercial and commercial housing projects.
Who Is Eligible to Apply?
OPRA tax abatements may be given for those eligible projects that take place on an obsolete property and result in a commercial or commercial housing building project.
What are the Benefits?
The benefit to the taxpayer is that the taxable value of the building (not land) is "frozen" at the amount that existed prior to the redevelopment of the building. All millages, except Michigan State Education Tax (SET) and School Operating (Sch Opr), are levied against the frozen value. The actual taxable value is used for purposes of levying the SET and Sch Opr millages. The land continues to be assessed as it normally would.
The Obsolete Property Rehabilitation Act (OPRA) grants the City of Lansing the ability to determine the length of the abatement. The abatement can be granted for any period of time up to a maximum of 12 years. Additionally, conditions may be placed on the OPRA Certificate by the City of Lansing which would require certain performance standards be met.
The reduced tax burden that results from the issuance of the OPRA Certificate may benefit the developer and/or property owner in a variety of ways, including:
• Increased cash flow resulting from decreased tax liability.
• Ability to pass tax savings onto tenants of the property by offering lower lease rates, thus encouraging economic development and building occupancy.
• Improved financing rates or terms.
What Is the Process?
Establishment of the OPRA District – Step 1:
The OPRA process has two steps. The first step is to request that the City of Lansing establish an OPRA District. The District typically encompasses the legal description of the property, but may include additional or adjacent properties if desired.
The District application must be made in the form of a letter to the City of Lansing. The letter must include the following information:
Include in the OPRA District Request Letter the Following Information:
• General project description
• District establishment purpose
• Community benefits
• Basis of eligibility
• Project costs and phasing
• Property taxable value
• Legal Description
Be prepared to provide some basic cash flow and income analysis information which would demonstrate the potential anticipated impact of the OPRA tax incentive on your project's bottom line. After the District request letter is received, the City Council will schedule and hold a public hearing on the request. After the public hearing, action on the establishment of the District will be taken.
Applying for the OPRA Certificate – Step 2:
Assuming the OPRA District has been established by City Council in Step 1, the second step in the OPRA process is to file the OPRA Certificate Application Form . This is an official form generated by the State of Michigan Department of Treasury and can be obtained by requesting it in digital format from your assigned Economic Development Corporation (EDC) staff person, or by going online and downloading it from the State Treasury's website.
Once the OPRA Certificate Application has been submitted to the Lansing EDC, it will be routed to the Lansing City Council. The Council will schedule and hold a second public hearing to receive comments regarding the request. Your Lansing EDC staff person will assist by attending meetings with you and answering questions regarding the incentive and your project. You should expect to attend some meetings and to provide detailed information about your project.
After the public hearing, City Council will take action on the OPRA Certificate Application. Assuming that the action is to approve, you EDC staff person will then package the application and other required information and submit it to the State of Michigan Department of Treasury. The State will then issue a "OPRA Certificate" which is the legal document that provides for the abatement.
Supporting Statute(s)
Supporting Documents and Examples
State Tax Commission Bulletin #9 of 2000 - OPRA
STC Form 3674 (.pdf)
