LANSING – The Michigan House of Representatives today passed a series of bills that will create a state-level New Market Tax Credit (NMTC) program to help boost Michigan's economy by encouraging new investment in low-income and underserved communities across the state.
"This plan will be a great job-creator for Michigan," said State Representative Kate Ebli (D-Monroe), Chair of the House Tax Policy Committee and lead sponsor of the plan. "We need to make Michigan more attractive to the businesses and small businesses that drive our local economies. These tax credits will encourage new investments that will lift up our struggling communities, create lasting jobs for our residents and help get Michigan's economy back on track."
The legislation passed today will create $20 million in tax credits for individuals or businesses who invest in low-income communities or low-income residents. The state-level tax credits will work in conjunction with the federal NMTC program to encourage investment in underserved areas across Michigan. Since 2005, the federal NMTC program has helped create 18,000 jobs in Michigan and more than 255,000 jobs across the country.
Beginning in 2011, organizations who qualify for the tax credit will receive a credit of 5 percent for the first three years of the award, 6 percent for the fourth and fifth years, and 12 percent in the final year. To qualify as a low-income area, communities must either have a 20 percent poverty rate or a median income of less than 80 percent of Michigan's average income.
"With today's action, we are working to change Michigan's economic climate and create good-paying jobs for our workers," said State Representative Jon Switalski (D-Warren), a sponsor of the plan. "We need to be bringing new investments to each corner of Michigan if we intend to turn our economy around, and this plan will do exactly that."
Residents in Detroit are benefiting from three NMTC investments, including a renovation of a former General Motors building sponsored by the College for Creative Studies, which has created more than 210 construction jobs, 200 permanent jobs and 300 new school seats; a fourth campus for the University Preparatory Academy, which created 30 construction jobs and 27 positions at the school; and TechTown's 300,000-square-foot business incubator where more than 70 businesses in the fields of public health, biobanking, life sciences, alternative energy, education and advanced manufacturing are creating new economic opportunities and jobs in the Detroit area.
Just last week, Peckham Inc., a nonprofit organization that provides job training and placement assistance for people with disabilities and other barriers to employment, held a grand opening for its flagship building in Lansing – a LEED certified building that was made possible by the federal NMTC program. The new building consolidates Peckham's Lansing-based operations into one flexible facility, and gives Peckham the ability to expand by 200 to 300 jobs within the next 10 years.
The federal NMTC program was created in 2000 to encourage greater capital investments in low-income and underserved communities. Through 2008, the program authorized $19.5 billion in credits and has been widely acclaimed for its impact in low income communities. An additional $1.5 billion also has been authorized for both 2008 and 2009 as part of the federal American Recovery and Reinvestment Act.
"Michigan is in no position to pass up on any federal funds," said State Representative Tim Melton (D-Pontiac), a sponsor of the plan. "Not only that, but our state should be the most aggressive state in the union in acquiring these dollars. Other states taking advantage of this credit and are taking federal dollars away from our residents and economy. This plan is a step in the right direction and will help cut our unemployment rate, keep more of our residents in their homes and puts Michigan in a position to take advantage of invested dollars coming into our state's hardest-hit areas."