City staff outlines new MSHDA housing TIF tool to support downtown and infill housing

Assistant City Manager and Director of Economic and Community Development Mark Cochran gave a detailed presentation to the Monroe City Council on the Michigan Brownfield Act (Act 381) and PA 90 of 2023, a new state provision that allows Brownfield tax capture to reimburse certain housing development costs for households at or below 120% of area median income.

Cochran said the change "unlocked a whole new world" for the city by adding reimbursement for housing development activities to the list of Brownfield-eligible activities. He told council members the program can reimburse acquisition, demolition, asbestos/lead abatement, site preparation, infrastructure (including privately owned driveways and fire-suppression work), relocation costs for tenants during rehab, and a defined share of a project's financing gap when developers must charge below-market rents to meet MSHDA affordability limits.

Why it matters: The tool can reduce upfront costs that discourage developers from converting downtown upper floors or redeveloping obsolete sites. Cochran used downtown buildings and the "academy" site as examples where costs such as elevator installation or fire suppression can make or break a project; he said those safety- or accessibility-related costs are now potentially reimbursable.

Key points from the presentation: - Legal framework: The Brownfield Redevelopment Authority (established by city council) historically reimburses environmental and demolition costs by capturing incremental local tax revenue generated by redevelopment. Act 381 defines eligible activity categories; PA 90 (2023) added specified housing activities to those eligible items. Cochran reviewed the typical Phase I/Phase II/BEA (Baseline Environmental Assessment)/due-care process that precedes many Brownfield projects. - Income and rent controls: MSHDA publishes county-level AMI numbers and maximum rents for qualifying projects; for Monroe County Cochran cited 120% of AMI as the cap for this housing-TIF program and referenced MSHDA's published control rents that projects must use to calculate a developer's annual "loss" (the gap between control rent and proposed rent). Cochran walked council through example arithmetic used to size subsidies and demonstrated how the total eligible TIF capture for a site constrains the available housing subsidy. - Eligible housing activities: New construction and rehabilitation of one or more residential units (including upper-floor units in mixed-use buildings), acquisition costs, qualified rehabilitation, relocation costs for tenants, and infrastructure improvements necessary for housing. Notably, infrastructure may be privately owned (for example, a privately owned driveway or on-site fire-suppression system), not only public infrastructure. - Process and approvals: Projects are vetted first by city staff and the Brownfield Authority; if the plan proposes capture of school-operating millages the plan must also be approved by the state (MSHDA). Cochran emphasized the Brownfield Authority reviews and approves plans before city council action; if state review is required, MSHDA must respond in writing within 60 days or the application is automatically approved per the legislature's timetable. - Practical issues and outreach: Cochran said the city will pursue a housing market analysis and a sub-area plan for the High Property to meet MSHDA requirements and strengthen future applications; the Department of Treasury has offered to fund those studies because of the community's coal-plant decommissioning context. He urged staff and council to publicize available incentives to downtown property owners and realtors and noted that multiple incentives (historic tax credits, DDA grants, Brownfield loans/grants) can be stacked to close financing gaps.

Council members asked technical and procedural questions, including whether the housing subsidy can exceed tax capture (Cochran: it cannot), whether tax increment capture is site-specific (Cochran: capture is listed per-parcel in a Brownfield plan), and how the city will screen proposals to ensure projects are financially viable and meet quality standards (Cochran: staff and MSHDA review financials and lenders' letters; MSHDA is adding quality metrics).

Cochran identified several potential target sites raised during the discussion: downtown upper-floor conversions such as the academy property, the La-Z-Boy redevelopment area, the Mason Run and port-area sites, the High Property (135 acres), the Mako site (constrained by rail noise for other programs), and infill houses on otherwise blighted parcels. He said the Brownfield Authority already provides grants and loans for environmental assessments and asbestos abatement and that staff are available to help prospective developers complete applications.

Council direction and next steps: Cochran said staff will seek quotes for a county housing market analysis and a sub-area plan for the High Property (Treasury has offered funding). The Brownfield Authority will continue monthly reviews and will bring any Brow nfield plans to council for approval when tax capture is involved. Cochran closed by reiterating that the program is intended to be flexible and locally tailored, and that staff will return with concrete proposals as developers advance projects.