Michigan Senate bills seek to promote #LEED construction

By Saulius Mikalonis

States and local governments throughout the United States are promoting the LEED standards for “green” building and construction developed by the United States Green Building Council (USGBC).  The State of Michigan Senate has a series of bills currently in committee designed to promote energy savings and the construction of LEED buildings.  If these bills eventually become law, Michigan will be joining a growing list of jurisdictions promoting LEED construction.

Senate Bills Nos. 1111, 1112, and 1113 seek to promote LEED development by providing tax credits.  The bills would amend the Commercial Redevelopment Act, which allows abatement of property taxes for replacement, restoration and new constrution of commercial property for up to 12 years.  The bills would include a LEED-certified buildings in the category of buildings that can get the tax abatement.  An owner or lessee of a LEED-certified building can file an application for a certificate from a local government that would entitle it to an abatement of up to one-half of the State Education Tax for a period of one to 12 years.  This abatement can be revoked if the building is not completed within two years (or more if good cause is shown) or if the developer filed false information concerning LEED certification.  The owner can transfer the abatement to a new owner or lessee after applying for and obtaining approval.

Senate Bill No. 1114 seeks to amend the Brownfield Redevelopment Financing Act to allow developers to use tax increment financing to recover the costs of building a LEED facility.  Tax increment financing (TIF) is a public financing method by which a developer can recover its “eligible costs” for a project from the difference between the previous tax rate for a property and the tax rate for the improved property over a period of years.  For example, if the tax rate for a piece of property before it was improved was $10 and became $20 after the improvements, the developer can recover the difference ($10) from taxes collected by the local government until it fully recovers its “eligible costs.”  The TIF would be available only if the developer uses the eligible activities to actually achieve a LEED certification.

In 2009, the Michigan House introduced  bills in the works that seek to promote LEED construction.  The bills seek to amend the State’s construction code to allow local governments to adopt LEED standards, allow quicker consideration of construction seeking LEED certification, and allow a tax credit of up to $50,000 for the cost of building to LEED standards.  At present, these bills appear stalled.

There is significant interest to promote greener and more energy-efficienct buildings in Michigan.  LEED-certified buildings promote energy efficiency and resource conservation, while promoting more liveable and workable spaces.  The trend in the United States is towards promoting these types of buildings.  Michigan seems poised to follow.

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