If adopted, the bills would require both the municipality in which the brownfield is located and the Michigan Strategic Fund, a division of the Michigan Economic Development Corp., to sign off on a developer's brownfield plan. Proposed projects would require a financial analysis before the incentive could be approved.

Captured revenue could be used to reimburse developers for any brownfield-eligible costs, including demolition, construction or restoration of buildings and other site improvements.

All projects would have to contain mixed uses, including residential and commercial. The enhanced incentive could apply to a single project, or a series of related developments.

Cities would be limited to one transformational brownfield project annually; the Michigan Strategic Fund could not sign off on more than five statewide in a single year.

"We kind of grew allergic to the tax credits. We have nothing to offer the really big investments," Horn said. "There's still room for more tools. We just have to make sure they all work and they don't over-promise."

Horn, Cullen and others say developers would carry all of the financial risk, since the incremental tax revenue would not have existed without the development. Horn said that is in part because developers will have an interest in ensuring the developments are occupied and gaining value.

Property tax revenue also should rise with the new developments, he said. Today, many of the sites have little to no value.

"You've got nothing today. If we do nothing, you've got nothing tomorrow," Horn said. "If you have no occupancy, no renters, no condo owners, no retail shops that come in, no office space that's leased out, then the state still loses nothing."

The actual financial impact to the state is difficult to determine, but would reduce general fund revenue by a "likely significant amount," according to an analysis by the Senate Fiscal Agency. The actual revenue loss would depend on how many such transformational projects are approved in a given year, how large they are and how loosely the state defines sales tax revenue as having come from a particular development.

"Unlike tax credits distributed to a taxpayer to subsidize an activity, which are not subject to appropriation, the bills would apparently authorize direct expenditure payments to an owner or developer of an eligible property without an appropriation," the agency wrote. "Furthermore, the captured revenue and distributed payments would not be subject to any legislated maximum level other than equaling the sum of all costs permitted to be funded under the bills. Because those costs would not be limited, and could include costs incurred before the approval of a transformational brownfield plan, the bills would effectively impose no limit on the amount of revenue captured. In the case of a transformational brownfield plan located in a non-county municipality with a population of 600,000 or more, over time the captures could exceed $500 million."

A portion of the income tax revenue generated from new residents at a development could be captured, according to the analysis and committee testimony. The Senate Fiscal Agency estimated the state's income tax revenue losses could total between $15 million to $45 million, using an average individual income tax liability of $1,500 in 2013 after credits were applied and an estimated 10,000 to 30,000 tax returns from residents of transformational brownfield projects.

Additionally, Senate fiscal analysts said the bills would create "extensive" administrative costs for the Michigan Department of Treasury, which today does not identify where sales tax revenue originates. The department likely would have to hire more employees and add informational technology systems to track the source of sales tax revenue across multiple sites, they wrote.

Local income taxes would not be captured under the bills. Horn said he has had discussions with the Michigan Municipal League, which supports the legislation "in concept," and other local government associations to address concerns about possible lost revenue.

He said the legislation sets up a tiered approval structure, with multiple sets of eyes in local and state government watching the projects.

"We are trying to be very careful and thoughtful," he said. "The underlying goal in all of this is to make sure there is a net gain for the state."