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The Senate Economic Development and International Investment Committee approved bills allowing tax capture by "transformational" brownfield developments on Feb. 16, 2017.

(Emily Lawler | MLive.com)

LANSING, MI -- A package of bills that would allow large-scale brownfield redevelopment projects to capture taxes cleared the Senate Economic Development and International Investment Committee on Thursday.

The incentive is designed to help really big, or "transformational," projects all over the state.

"When you do projects like this, you watch the level of service inside of the businesses, these restaurants and bars and nightclubs are all growing when new development happens... everything around it grows, because the expectations of the tenants are so high," said Sen. Ken Horn, R-Frankenmuth, lead sponsor on the legislation.

The projects will be in Michigan cities where developers find a gap between the financial viability of a development project and the cost building that development on an existing site. It could happen anywhere in the state, though not more than one project would be approved per city per year.

During the construction phase, such a project could capture sales and use taxes. Afterward, they would capture income and withholding taxes. The total tax capture the state authorizes cannot exceed $1 billion over the life of the bill, or $40 million per year.

The legislation is backed by the MiThrive Coalition, a group of more than 40 who want these types of "transformational" developments in their communities. The group praised the legislation's movement out of committee and its fiscal provisions.

"This legislation goes above and beyond to ensure that it provides the incentives needed to move a project forward, while at the same time, protecting our state," said JoAnn Crary, president of Saginaw Future and a member of the MIthrive Coalition.

The bills require a certain level of investment from each project based on the size of the community it's located in, and also require the projects show a net economic benefit to be eligible for the tax capture. Local governments would have to approve projects, as well.

The concept of the transformational brownfields was first introduced last year with backing from Detroit businessman Dan Gilbert, who came to Lansing to testify on last year's version of the bills.

They passed the Senate, but died quietly in the House of Representatives.

The legislation faces opposition from the Mackinac Center, a free-market think tank in Midland.

"This legislation, if adopted, will permit a lucky handful of well-connected developers to build grand facades at taxpayer expense," said the center's Director of Fiscal Policy Michael LaFaive.

"They get the profits and applause and everyone else gets the bill. It has been done before and on smaller and larger scales and with little or nothing to show for it," he said.

Horn noted that the bills last time had faced some of that thinking, but in his mind the bills are competitive. Even within cities, since only one project can be approved per year, he said, multiple companies could be competing for that project.

The bills cleared the committee without opposition. Horn said he hopes for them to clear the Senate in March, and said this time in the House "we think we have the votes on that side," but he's also making himself available to members who may have questions.

The bills are Senate Bills 111-115.

Note: This story has been updated with additional comments.