CORRECTION: In all cases where we referred to "tax credits" in this story, we should have used the term "tax increment financing." We regret the error.
As explained by the developer, tax increment financing, or TIF, is a future reimbursement paid to a developer or government for eligible clean up, redevelopment and public infrastructure, paid with captured incremental taxes on the improved brownfield property. This is different that the state's Brownfield Tax Credit, which has a similar use but very different financial implications.
Michigan will continue to support the redevelopment of the former state hospital grounds near Traverse City for another 30 years. Tax credits totaling $26 million dollars will be made available for renovating old buildings on the property.
The Minervini group has led the redevelopment effort, which has mainly focused on the sprawling Building 50. Raymond Minervini says the new package will offer tax credits for the entire Commons, including the historic barns and large cottages.
Minervini says they're grateful the state approved the plan, but he also says it makes sense since the buildings were once owned by the state.
"We are quick to point out that, really, we are talking about tools to help clean up a mess the state left behind... and reuse historic buildings," he says.
When Michigan turned the property over to Traverse City in 1989, there was more than 700,000 square feet of abandoned buildings. Some dated back to the 1800s when the asylum was first built.
Since then redevelopment, supported by tax incentives, has put 250,000 square feet of space back into use for restaurants, shops, offices and condominiums.
The tax credits have been works for a year-and-a-half. Its approval comes just as the state prepares to overhaul and reduce the use of tax credits to encourage redevelopment of blighted property.
The credits reimburse developers for costs associated with old buildings such as removing lead paint and asbestos.