The 21st Century Investment Fund provides investments in private equity, venture capital, and mezzanine funds, as well as potential co-investments alongside these funds.
Accelerator Funds facilitate investments in companies at the earliest stages of commercial development. The fund creates a pool of investment capital managed by an experienced venture capitalist or entrepreneur. The MEDC recently contributed to the Michigan Accelerator Fund 1 and Huron River Ventures.
Agricultural Processing Renaissance Zones
Agricultural Processing Renaissance Zones were created to promote agricultural processing and to enhance the industry in Michigan. APRZs provide businesses with significant benefits by virtually eliminating state and local taxes. These zones can be placed anywhere in Michigan, and significantly reduce or eliminate property taxes, beginning in 2012 – the MBT only if a Development Agreement is executed with the MSF as of December 31, 2011. The RZ can be designated for up to 15 years. Our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within an APRZ are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, certain property taxes and beginning in 2012, the CIT, if applicable. APRZs require support by the local unit of government; require recommendation by the Michigan Commission of Agriculture and the Michigan Strategic Fund, and final designation by the State Administrative Board. The Renaissance Zone benefit begins the year following designation. Benefits under APRZs are phased out in 25% increments over the final three years of the designation period.
Biosciences Research and Collaboration Center Pre-Seed Fund
The Biosciences Research and Collaboration Center (BRCC), established in 2003 by the Michigan Legislature, provides startup and gap funding to promising Michigan-based life sciences and medical device ventures entering the commercialization phase of development. The BRCC is located at Western Michigan University and is positioned to access the wealth of scientific talent and pharmaceutical commercialization expertise that is part of Kalamazoo’s heritage. Long-time home to such industry giants as the Upjohn Company, Richard-Allan Scientific, Stryker Corp., and Pfizer Inc., Kalamazoo offers a forward-looking, entrepreneurial business climate and a growing reputation among venture capitalists seeking to invest in life sciences discoveries and promising business ventures.
Brownfield Tax Increment Financing
The Brownfield Tax Increment Financing (TIF) program allows eligible Brownfield projects to utilize certain state and local property taxes (including school taxes) to pay for costs related to Brownfield site redevelopment. TIF funds can be used to pay for certain environmental and non-environmental "eligible activities," including baseline environmental assessments, due care activities, site evaluation, remedial actions, demolition, lead and asbestos abatement, site preparation, and public infrastructure improvements related to the Brownfield property. These projects must occur on eligible property that is included in an established Brownfield Plan, approved by the local Brownfield Authority. Projects seeking the use of state school tax capture must receive approval from the Michigan Strategic Fund (MSF) Board.
Capital Access Program
The Capital Access Program (CAP) is a loan enhancement program aimed at providing credit to small business unable to acquire conventional sources of credit. CAP creates a reserve fund that is administered by local financial institutions and overseen by the MEDC. To qualify, the small business must have less than 500 employees. CAP loans cannot be used to finance passive real estate, residential housing, or refinancing.
Community Development Block Grant: - Machinery and Equipment
The MSF administers the Michigan Community Development Block Grant (CDBG) program, a federal program that provides funds to eligible counties, cities, villages, and townships for economic and community development activities. Qualifying economic development projects are those directly related to a for-profit business location or expansion involving eligible activities that will result in the creation of jobs, with at least 51% of those jobs held by low- and moderate-income workers.
This grant will cover the cost of machinery and other equipment required at the company’s facility, not to exceed 40% of the total cost of machinery and equipment. Upon approval of the community’s CDBG application, the funds will be available for 24 months, during which time the program will reimburse the company for machinery and equipment costs as new employees are hired. The maximum grant and reimbursement schedule will be negotiated based on the number and types of jobs being created, as well as the hourly wage rates of those jobs.
EB-5: Investment Visa Program
The U.S. federal government provides up to 10,000 immigrant visas per year to qualified investors seeking permanent resident status on the basis of their investment in a domestic business. In order to qualify, the foreign investor must invest $1 million in a project that will create or retain ten jobs. In rural and high unemployment areas, the investment threshold is reduced to $500,000.
InvestMichigan! is a $300 million fund supporting companies in early and later stages of development. It comprises two parts. The Growth Capital Program targets lead and co-investment opportunities in venture capital and small buyout stage companies. The Michigan Opportunities Program targets lead investment opportunities in buyouts and growth equity investments in well established companies.
InvestMichigan! Mezzanine Fund
InvestMichigan! Mezzanine Fund is the first licensed Impact Investment Fund in the Small Business Administration’s new Impact Investment Initiative. The fund will focus exclusively on providing capital to businesses that are headquartered in Michigan, have a significant presence in Michigan, or are in the process of expanding their operations in Michigan so they can grow and create jobs. The SBA will partner with Michigan Growth Capital Partners, L.P., an investment partnership whose anchor investors are the State of Michigan Retirement Systems, The Dow Chemical Company, and InvestAmerica to provide up to $130 million of investment capital over the next five years to high-growth businesses throughout Michigan. Visit the Impact Investment Initiative site for more information.
MDEQ Brownfield Grant and Loan Program
The Michigan Department of Environmental Quality (DEQ) Brownfield Redevelopment Program provides grant and loan funding to local units of government to address the environmental issues that hinder the redevelopment of a site. Generally, projects may be awarded up to $1 million in grants or $1 million in loans. The funding can be used for activities such as environmental assessment, clean-up, and actions necessary to reduce the risk of exposure for the intended reuse of the Brownfield property. Projects eligible to receive grant funds must: 1) have a committed developer; 2) be able to document the anticipated private investment; 3) create new jobs in the community; and 4) result in an increase in tax revenue. For projects that may not have a committed developer but have economic development potential, or in situations where there is a viable responsible party who is not participating in the remediation of the site, loan funds may be used. Loans are currently offered at a low 1.5 percent interest rate, with no payments or interest being due for the first five years, and they must be repaid within 15 years.
Michigan Business Development Program
One of the 21st Century Jobs Fund’s economic incentive programs in Michigan administered by the MEDC is the MBDP or “Program”. The MBDP is designed to provide a grant, loan, or other economic assistance to qualified businesses that make qualified investments, create qualified new jobs, or both, in Michigan. While the Program is operated and funded through the MSF, recommendations for awards under the Program are presented by the MEDC to the MSF Board.
Under the program, qualified new jobs are in addition to jobs already located in Michigan.
Any incentive awarded under the Program is contingent upon several factors, including:
- submission by the Company of a completed application and all other documentation required under the Program;
- satisfactory community support;
- available MSF funding;
- completion of financial review, business integrity review, required background checks, and other business and legal review and due diligence as required, and the results of which must be satisfactory to the MEDC, the MSF Board, and as applicable, the Chief Compliance Officer;
- approval of an award by the MSF Board; and
- execution of a final agreement between the Company and the MSF Board containing established milestones and reporting requirements, and all other detailed terms and conditions, required by the MSF Board.
Michigan Business Growth Fund
The Business Growth Fund is comprised of two programs – the Collateral Support Program (CSP) and the Loan Participation Program (LPP). Both increase the availability of loans to businesses. The CSP provides collateral for companies whose property, plant, equipment, etc., are undervalued. The LPP mitigates risk to the lender and provides support for companies experiencing short-term shortfalls in cash flow.
Michigan Community Revitalization Program
The Michigan Community Revitalization Program (MCRP) will provide grants, loans, or other economic assistance to projects that will revitalize regional urban areas, act as a catalyst for additional investment in a community, reuse vacant or historic buildings, and promote mixed use and sustainable development.
Michigan Emerging Technologies Fund
Federal research and development funds support a critical stage for many technology companies as they move from the laboratory to the marketplace. The Emerging Technologies Fund, administered by the Michigan Small Business and Technology Development Center (MI-SBTDC) for the MEDC matches federal Small Business Innovation Research and Small Business Technology Transfer Research SBIR/STTR funding opportunities for exceptional research and technical innovation generated in Michigan. The ETF will match 25% of phase I SBIR/STTR awards up to $25,000, and 25% of phase II SBIR/STTR awards up to $125,000.
Michigan Pre-Seed Fund
The Michigan Pre-Seed Fund supports high-tech start-up companies with early-stage capital as they near commercial viability. Companies developing technologies in advanced automotive, manufacturing and materials, alternative energy, homeland security, defense, information technologies, agriculture, and life sciences are eligible for funding.
New Markets Tax Credit
If your location decision is in an eligible community, your company will be eligible to utilize the federally funded New Markets Tax Credit program that is managed by the Michigan Magnet Fund (MMF). The MMF received a $60 million qualified equity investment allocation of New Markets Tax Credits from the U.S. Department of Treasury. This is a 39% tax credit over a seven year period for investments in job-generating businesses and projects in low income census tracts. The net present value of the tax credit is estimated to be approximately 22%-24% of the total net debt required. The MMF has indicated that it is willing to offer New Markets Tax Credits to your lenders if they place their investment in the MMF as part of the financing of your project.
The MMF will then, in turn and simultaneously, invest the combined debt and tax credit equity in your company. Approximately 22%-24% of the total qualified investment will be in the form of debt at zero interest that is putted to you for $1,000 at the end of a seven year holding period. The Company may need to make a payment to MMF's Revolving Loan Fund from zero percent to six percent of the qualified investment depending on the increase in the project's value during that period. The MMF will coordinate the process to raise the NMTC allocation and equity from several CDEs and obtain the best prices for the tax credit. MMF is prepared to meet with you to discuss the details and eligibility requirements at your earliest convenience.
Private Activity Bonds
The MEDC, through the MSF, can issue tax-exempt and taxable private activity bonds (PAB) for creditworthy companies considering investing in eligible projects.
Tax-Exempt PABs can be issued for capital expenditures in manufacturing plants, not-for-profit corporations, co-generation solid waste projects, and solid waste facilities. They can be used for projects up to $10 million per site/municipality, with a $40 million corporate limit. There is no limit on the size of the bond if it is being used to finance a not-for-profit corporation, co-generation solid waste project, or a solid waste facility, and there are also no capital expenditure limitations on these projects. Historically, because the interest paid to bond buyers is exempt from federal, state, and local income taxes, the tax-exempt rates have been 60-70% of conventional rates, including letter of credit fees.
Taxable PABs have few federal restrictions and can be used for financing large business projects in excess of $10 million. The interest rates are approximately 0.50-1.25 percent below conventional long-term rates because state and local income taxes are exempted. Advantages are found in longer terms (20 years or more), better interest rates, and providing an alternative source of capital compared to commercial banking.
Border Crossing Renaissance Zones
Border Crossing Renaissance Zones (BCRZ) were created to assist businesses located in a qualified border local governmental unit and displaced or otherwise negatively affected by the development of the international border crossing, and are unable to recover from the displacement or negative effect associated with international trade, shipping, or freight hauling, including but not limited to all of the following: (a) customs brokers; (b) distribution centers; and c) trade supply and repair. A qualified border local government is defined as a city with a population of more than 30,000 and less than 36,000 that contains an international border crossing, or a township that adjoins a city with a population of more than 30,000 and less than 36,000 that contains an international border crossing. BCRZs provide businesses with significant benefits by virtually eliminating state and local taxes. These zones can only be within the qualified jurisdictions, and significantly reduce or eliminate property taxes, beginning in 2012 – the MBT only if a Development Agreement is executed with the MSF as of December 31, 2011. The RZ can be designated for up to 15 years. Our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within a BCRZ are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, certain property taxes, and beginning in 2012, the Corporate Income Tax, if applicable. BCRZs require support by the local unit of government and final designation by the MSF Board. The Renaissance Zone benefit begins the year following designation. Benefits under BCRZs are phased out in 25% increments over the final three years of the designation period.
Forest Products Processing Renaissance Zones
Forest Products Processing Renaissance Zones (FPPRZ) were created to promote sustainable forest product operations and to enhance the industry in Michigan. FPPRZs provide businesses with significant benefits by virtually eliminating state and local taxes. These zones can be placed anywhere in Michigan and significantly reduce or eliminate property taxes, beginning in 2012 – the MBT only if a Development Agreement is executed with the MSF as of December 31, 2011. The RZ can be designated for up to 15 years.Our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within a FPPRZ are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, certain property taxes, and beginning in 2012, the CIT if applicable. FPPRZs require support by the local unit of government; require recommendation by the MSF, and final designation by the State Administrative Board. The Renaissance Zone benefit begins the year following designation. Benefits under FPPRZs are phased out in 25% increments over the final three years of the designation period.
Geographic Renaissance Zones
Michigan has created nearly tax-free Renaissance Zones that can be approved by the MSF Board. Renaissance Zones provide occupants with significant benefits by virtually eliminating state and local taxes. These zones significantly reduce or eliminate property taxes, the MBT if a Development Agreement is executed with the MSF as of December 31, 2011, and personal income taxes for up to 15 years. If the location you are considering falls within a Renaissance Zone area, our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within a Renaissance Zone are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, certain property taxes, and beginning in 2012, the Corporate Income Tax if applicable. Renaissance Zones are designated by the local unit of government and require approval by the MSF Board. Benefits under Renaissance Zones are phased out in 25% increments over the final three years of the designation period.
Michigan Strategic Fund Renaissance Zones
Michigan Strategic Fund Renaissance Zones (MSFRZ) were created to promote significant projects in Michigan. MSFRZs provide businesses with significant benefits by virtually eliminating state and local taxes. These zones can be placed anywhere in Michigan, with a minimum of three to be designated in rural areas, and significantly reduce or eliminate property taxes, beginning in 2012 – the MBT only if a Development Agreement is executed with the MSF as of December 31, 2011. The RZ can be designated for up to 15 years. Our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within a MSFRZ are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, certain property taxes, and beginning in 2012, the CIT if applicable. MSFRZs require support by the local unit of government, and final designation by the MSF. The Renaissance Zone benefits begin the year following designation. Benefits under MSFRZs are phased out in 25% increments over the final three years of the designation period.
Next Michigan Renaissance Zone
Next Michigan Renaissance Zones can only be designated within a Next Michigan Development Corporation. In order to be eligible for the Renaissance Zone benefit, a company would need to qualify as an Eligible Next Michigan Business, locate within approved Next Michigan Renaissance Zone areas and receive appropriate approvals.
Renewable Energy Renaissance Zones
Renewable Energy Renaissance Zones (RERZ) were created to promote renewable energy operations and to encourage the development of those industries in Michigan. RERZs provide businesses with significant benefits by virtually eliminating state and local taxes. These zones can be placed anywhere in Michigan, and significantly reduce or eliminate property taxes beginning in 2012 – the MBT only if a Development Agreement is executed with the MSF as of December 31, 2011. The RZ can be designated for up to 15 years. Our internal tax team is available to work with you to provide an estimate of these tax savings at your convenience.
Companies located within a RERZ are still responsible for federal obligations, unemployment insurance, workers' compensation insurance, social security taxes, sewer and water fees, sales and use taxes, property taxes, and beginning in 2012 the Corporate Income Tax if applicable. RERZs require support by the local unit of government; require recommendation by the MSF, and in some cases the Michigan Commission of Agriculture, and final designation by the State Administrative Board. The Renaissance Zone benefits begin the year following designation. Benefits under RERZs are phased out in 25% increments over the final three years of the designation period.
Revolving Loan Fund
The Revolving Loan Fund (RLF) is a federal program providing regional-based funds to businesses on a revolving basis. It provides loans, loan enhancements, and equity enhancements to entrepreneurs and businesses that don’t qualify for credit in their region.
CDC/504 Loan Program
The SBA 504 program is designed to finance fixed assets such as real estate and equipment. Lenders work with a Certified Development Corporation to provide two individual loans, one underwritten by the bank and one by the CDC. Borrowers are required to put in between 10% and 15% of the project cost as equity. The biggest benefit among many is that 40% of the project cost can be carried on a long term note which is generally at a low fixed interest rate tied to government backed securities rates.
7(a) Loan Program
The SBA 7(a) program is a loan guarantee program designed to work with a number of business needs. The program is offered through a variety of lenders approved by the SBA. Guarantee amounts go from 75% to 85% in most cases, and are determined based on criteria issued by the SBA. Buildings, equipment, and working capital are all allowed to be financed using an SBA 7(a) guarantee. Generally, the program is used to support credits with potential shortfalls in asset quality or cash flow coverage history, or to support companies with a lack of clear historical performance.
InvestMichigan! Mezzanine Fund – see prior listing.
The SmartZone network provides a full range of services and tools for small businesses emerging and growing in Michigan’s 83 counties. We have formed our organization into four teams dedicated to provide expert assistance to the individual needs of Michigan's small business.
The Venture Michigan Fund
The Venture Michigan Fund (VMF) is a $95 million fund-of-funds. It invests in private equity managers that in turn invest primarily in Michigan-based early stage companies. Capital for the fund is strictly raised by outside investors. The Michigan Department of Treasury offers those investors up to $200 million of tax voucher certificates to offset any shortfall. Credit Suisse manages the fund.
Urban Land Assembly
This program, administered by the MEDC, provides financial assistance in the form of loans to eligible municipalities for the acquisition of certain real property for economic development purposes, including industrial and commercial projects. The program is directed toward revitalizing the economic base of cities experiencing economic distress and decline.
Community Development Block Grant: Public Infrastructure
The MSF administers the Michigan Community Development Block Grant (CDBG) program, which is a federal program that provides funds to eligible counties, cities, villages, and townships for economic and community development. Qualifying economic development projects are those directly related to a for-profit business location or expansion involving eligible activities that will result in the creation of jobs, with at least 51% of those jobs held by low- and moderate-income workers.
Communities may request grants to provide public infrastructure improvements such as public water or sanitary sewer extensions, streets, roads, and other related facilities to support these types of projects.
Michigan Freight Economic Development Program
Under the Freight Economic Development Program, the Michigan Department of Transportation (MDOT) provides low-interest loans to businesses locating or expanding in Michigan and requiring rail service, or to entities interested in assisting these businesses. These loans, which may be for as much as 50% of the cost of the rail infrastructure, are made at a minimum interest rate of two percent below the prime rate in effect at that time. The applicant must supply collateral for the loan in the form of an irrevocable letter of credit. Loans are set to be repaid over a five-year period, but can be totally or partially forgiven if the facility is properly maintained and annual shipping commitments (built into the contract) are met. If the shipping commitments are met for each of the five years, the loan is effectively converted to a grant.
Funding participation is limited to the rail infrastructure itself. Associated facilities specifically related to the applicant's shipping or receiving operation, such as silos or unloading mechanisms, are not eligible for funding. Final approval is based on various important considerations, including job creation/retention, relative project cost, and the volume of anticipated rail use. Following internal approval by MDOT, all loans must be approved by the State Transportation Commission and State Administrative Board.
Transportation Economic Development Fund
The Transportation Economic Development Fund (TEDF) was created to assist in the funding of highway, road, and street projects necessary to support economic growth. Those eligible to apply for funding include the Michigan Department of Transportation (MDOT), county road commissions, cities, and villages.
If public roadway improvements are necessary for a company to invest in Michigan, MDOT will support a TEDF application by an eligible road agency for roadway improvements. Any improvements must be directly related to the traffic generated by the company’s project. A traffic study may be necessary to determine specific roadway needs.
A minimum 20% local match is required, which may be met in part or in whole through the acquisition of any necessary right-of-way, preliminary engineering, and/or construction engineering. The project must meet program requirements, such as private investment and job creation.
Commercial Rehabilitation Abatement under PA 210 of 2005
Local communities have the ability to create commercial rehabilitation districts, which encourage the rehabilitation of commercial property that is at least 15 years old by abating the taxes on new investment. As defined, ‘commercial property’ is a qualified facility which is primarily used in the operation of a commercial business. A ‘qualified facility’ means any of the following: a building or group of contiguous buildings of commercial property that is at least 15 years old; has been allocated for a New Markets Tax Credit; or a qualified retail food establishment, as defined in Section 207.842 (j). Land and personal property are not eligible for abatement under this act. The abatement process is similar to the Obsolete Property Rehabilitation Act, PA 146 of 2000. The city, village, or township must first hold a hearing to establish a Commercial Rehabilitation District. Notification of the hearing must be given to the county board of commissioners and all real property owners in the proposed district. The district must be at least three acres in size unless it is located in a downtown or business area or contains a qualified retail food establishment.
Michigan NextEnergy Authority Property Tax Benefits
The Michigan NextEnergy Authority (MNEA) was created to promote the development of alternative energy technologies and to provide tax incentives for activities and property related to the research, development, and manufacturing of those technologies. Across the State of Michigan, new personal property that is certified as Alternative Energy Personal Property (AEPP) is exempt from the collection of personal property taxes through 2012. The MNEA may certify an alternative energy system, an alternative energy vehicle, the personal property of an alternative energy technology business, or personal property that is used solely for the purpose of researching, developing, or manufacturing an alternative energy technology.
Property Tax Exemptions
Various property tax exemptions in Michigan help reduce the tax liability for companies. Available tax exemptions are outlined below. A company should discuss these tax exemptions with its tax preparer, CPA, or tax attorney, as needed.
Michigan Personal Property Tax Reform
In an ongoing effort to make the state a more attractive place for businesses to invest and grow, Michigan is phasing out its Personal Property Tax (PPT) for most businesses beginning in 2014. This reform will substantially reduce compliance and administrative costs for businesses and will be especially attractive to manufacturers who rely on expensive capital investments in tools and other equipment. Table 1 and Table 2 summarize the timing of the PPT phase out for small businesses and eligible manufacturing personal property.
Eligible Manufacturing Personal Property
Eligible manufacturing personal property could include both commercial personal property and industrial personal property. More specifically, the term refers to all personal property located on real property where that personal property is used more than 50% of the time in industrial processing or in supporting industrial processes.
Pollution Control Equipment Property Tax Exemption
The Water Pollution Control Exemption, PA 451 of 1994, Part 37, as amended, affords a 100% property and sales tax exemption to facilities that are designed and operated primarily for the control, capture, and removal of industrial waste from the water.
The Air Pollution Control Exemption, PA 451 of 1994, Part 59, as amended, affords a 100% property and sales tax exemption to facilities that are designed and operated primarily for the purpose of controlling or disposing of air pollution that, if released, would render the air harmful or inimical to the public health or property within this state.
After review by the Property Services Division, a recommendation is made to the State Tax Commission (STC) regarding the qualification of any application submitted to receive either of these exemptions. The STC is responsible for final approval and issuance of certificates. Exemptions are not effective until approved by the STC.
Special Tooling Property Tax Exemption
Michigan exempts special tooling from all property taxes. “Special Tooling” includes tools, dies, jigs, fixtures, and patterns that are used to manufacture a product which could not be used to manufacture another product without substantial modification to the device. A business may claim the special tooling exemption on its personal property tax statement filed with the local property tax assessor each year.
Property Tax Abatement under PA 198 of 1974 (Non-Rehab)
Local units of government have the ability to reduce property taxes on new investment by 50% for manufacturers and high-tech businesses. These abatements can last up to 12 years and can provide relief on both real and personal property taxes. The local unit of government is responsible for approving these abatements and their duration.
Property Tax Abatement under PA 198 of 1974 (Eligible Warehouse/Distribution/Logistic Center)
(Border County - Berrien, Branch, Cass, Chippewa, Dickinson, Gogebic, Hillsdale, Iron, Lenawee, Menominee, Monroe, St. Clair, St. Joseph, or Wayne)
Local units of government in Michigan’s border counties have the ability to reduce property taxes on new investment by 50% for some warehouse, distribution, and logistics centers. These abatements can last up to 12 years and can provide relief on both real and personal property taxes. The business must occupy a building that is no smaller than 100,000 square feet in size, and at least 90% of the facility must be used for warehousing, distribution, or logistic purposes. The local unit of government is responsible for approving these abatements and their duration.
Property Tax Abatement under PA 198 of 1974 (Property Rehabilitation)
Investments to rehabilitate existing plants, machinery, and equipment can be completely exempted from local property taxes for up to 12 years by local units of government. The local unit of government is responsible for approving these abatements and their duration.
Property Tax Abatement under PA 328 of 1998
Certain local units of government in Michigan have the ability to reduce property taxes by 100% on investment in new personal property made by eligible businesses. Any new personal property investment made at the facility is exempt from property taxes for a period of time, as determined by the local unit of government. Eligible distressed communities and qualified municipalities in Michigan’s border counties are able to provide this type of abatement. The local unit of government is responsible for approving these abatements and their duration. After the PA 328 abatement expires, any taxes paid on the existing industrial personal property become eligible for the Industrial (or Commercial) Personal Property Tax Relief.
State Education Tax Abatement
The MEDC can abate half or all of the 6-mill State Education Tax on new investment when the project presents significant economic benefits to Michigan, and when the project receives a property tax abatement under PA 198 of 1974.
Commercial Personal Property Tax Relief
Michigan automatically reduces the personal property tax burden on a company’s commercial personal property anywhere in the state. Commercial personal property automatically receives a12-mill exemption, and the savings will be realized on both new and existing commercial personal property. This property tax relief will remain in effect beyond the number of years specified in the incentives matrix, contingent upon the statutory authority remaining in place.
No inventory tax - no matter where a company locates in Michigan. All inventory is exempt from state and local property taxes. Sales Tax Exemptions
The 6 percent state sales tax is not levied on the purchase of machinery and equipment used in manufacturing.
The MEDC is ready and able to provide an extensive workforce development package through our Talent Enhancement program. Talent Enhancement services are coordinated by a designated Talent Advisor that specializes in your industry that will work closely with the leadership team of your company to create and implement a custom Talent Enhancement strategy. Your Advisor will integrate programs to attract, train, and retain key talent for the success of your business.
- Job posting and talent outreach services on the Michigan Job Portal.
- Ability to search thousands of highly accomplished resumes.
- Feature opportunities in e-newsletters that reach 5000+ job seekers each week.
- Launch a robust social media campaign that includes Facebook, LinkedIn and Twitter.
- Host senior-level invitation only career networking events.
- Arrange with Michigan college and university placement offices for on-campus interviewing.
- Contact candidates and schedule interviews at a variety of local area office locations or at the company’s workplace.
Talent Interviewing: Talent Enhancement can contact candidates and schedule interviews at a variety of office locations or at the company’s workplace.
Relocation & Partner Assistance: The MEDC staff will also work with local realtors and other partners to connect relocating employees with housing, education, and community resources to quickly welcome them into the community. Talent Enhancement will also meet with any transferring employee’s spouse or partner to understand their career objectives, and will make critical introductions to integrate the spouse/partner into the relevant professional communities.
Salary & HR Consulting: Talent Enhancement can provide salary data and labor market information relevant to your industry.
Training Grants: Talent Enhancement will work closely with your company to maximize utilization of worker training programs and funds that may be available for companies in Michigan.
Internships/Co-ops: Talent Enhancement will work closely with your company to help you establish co-op and internship programs at Michigan colleges and universities.
Program Value: The approximate value for all of these services is as follows:
- Recruiting services for each position: This will range between approximately $5,000 and one third of the annual salary for each hire. (If you are hiring a person that has a $90,000 annual salary, the value would be approximately $30,000.)
- Relocation services: The value for each relocating employee including partner career assistance would be $2,500.
MiVirtualCareerFair is a live, interactive, 3-D virtual environment where employers can interact with top Michigan talent to fill open positions with their company. MiVirtualCareerFair provides employers the opportunity to:
- post open positions,
- engage in conversation and prescreening with qualified candidates from all over the world via instant chat and/or webcam during live events,
- attend a career fair without the costs associated with travel, food or lodging, and printing costs,
- save time and money by having recruiters attend from their own office,
- customize your virtual booth to match your corporate employment brand,
- view and collect resumes and applications from candidates,
- receive in-depth, post-event reporting, including chat transcripts.
Michigan New Jobs Training Program
The Michigan New Jobs Training Program (MNJTP), offered via the community college system, is available to assist businesses that are creating new jobs in Michigan. If a business is expanding operations, or locating a new facility in the state, the MNJTP can provide flexible funding to meet a wide variety of training needs for new employees – at no cost to employers. The training available ranges from highly specialized, customized programs to basic skill development. The terms of the MNJTP must be negotiated with a participating community college.
Education and Training Programs
Michigan possesses nearly 200 college and university campuses with about one-third granting bachelor’s degrees and 40+ offering graduate degrees. More than 100,000 postsecondary degrees are awarded annually by Michigan colleges and universities. Our Talent Enhancement Team can connect you to the various business-serving institutes and continuing education centers at our postsecondary institutions.
Community colleges exist all across the state as they number nearly 30. Eighteen Michigan Technical Educational Centers (M-TEC) have been constructed throughout the Michigan community college system. M-TECs provide a comprehensive array of standardized and customized training and workforce development programs for Michigan’s businesses.
Community Ventures (CV) is an effort led by the Michigan Economic Development Corporation (MEDC) to help structurally unemployed individuals pursue career opportunities at Michigan companies. This initiative connects pre-screened talent to employers and lays the foundation for sustainable expansion of employment opportunities for residents of Detroit, Pontiac, Flint and Saginaw. Support and resources will be provided to ensure both employers and talent are well matched.
Structurally unemployed are those who lack the basic skills to obtain/retain employment even when jobs are available. Eligibility criteria include one of the following: low income, lack of education (no GED/high school diploma), lack of functional literacy, long term disconnection from employment, former prisoner, or at-risk youth. We will ensure that our CV eligible talent is job ready before we connect them to the employer. The employer screens all CV eligible talent and only hires those who are suitable for the position.
The program provides a grant to a qualified employer of up to $5,000 per qualified employee, with an additional $3,000 per qualified employee available for wraparound support services to assist with job retention and removal of barriers to employment and can include training, transportation, child care, job coaching, and other services.
Pure Michigan Business Connect
Through economic gardening initiatives, Michigan businesses have new ways to buy and sell, raise capital, and connect with each other. Pure Michigan Business Connect is a $3 billion public-private initiative that strengthens our economic gardening philosophy through an alliance of the MEDC, Michigan companies and other Michigan organizations. Pure Michigan Business Connect matches people with resources including venture capital, debt financing, collateral support, and other funding assistance; business support services like customized market research, executive and professional talent search assistance, training support, customized site searches, and ombudsman services; and additional public/private support such as entrepreneur services, export assistance, legal services, and matchmaking with Michigan suppliers.
Business Cost and Tax Estimating
To help with the location decision process, the MEDC offers customized operating cost and business tax estimates to new or expanding companies that are planning to locate in Michigan. With specific operational and investment data from a company, a general analysis can be made for the CIT, workers’ compensation insurance, unemployment insurance taxes, and property tax. The estimates represent approximations of these particular business cost factors, intended to assist the company in its location and expansion decisions.
Business Plan Competitions
Accelerate Michigan is the largest business plan competition in the country, awarding $1 million in prizes to technology companies. Great Lakes Entrepreneur’s Quest provides mentorship, workshops, and tops it off with a business plan competition for new ventures.
Consultation Education and Training
If a company is not satisfied with its workplace safety and health performance, the Michigan Department of Licensing and Regulatory Affairs (LARA) Consultation Education and Training (CET) Division, is available to help companies solve problems. With CET services, companies can develop a safety and health management system, improve an existing program, or find the help needed to solve tough safety and health problems. CET consultation and training services are provided in the company’s facility at no cost by a statewide staff of experienced professional occupational safety consultants and industrial hygienists who work with employers/workers in specific geographic areas.
Energy Efficiency and Renewable Energy Revolving Loan Fund
The Michigan Energy Office administers the Energy Efficiency and Renewable Energy Revolving Loan Fund (Energy Revolving Loan Fund) Program to provide low-interest loans to public or private entities for energy efficiency and renewable energy projects. These funds are provided by the Department of Energy (DOE) through the State Energy Program. The Michigan Energy Office, a US Department of Energy designated State Energy Office, resides within the MEDC. The Office encourages the use of new technologies and alternative fuels in buildings, industrial processes, vehicles and in power generation. Program objectives are advanced through a variety of services, including information dissemination, technical assistance, financial assistance, and demonstration projects.
Environmental Assistance Program
The Environmental Assistance Program is a quick-response service of the Michigan Department of Environmental Quality (DEQ). This program is designed to aid Michigan’s small- and medium-sized businesses and municipalities in resolving environmental issues. Direct and referral assistance is available on a variety of programs and issues, including Clean Corporate Citizen (C3), a program of streamlined permitting and other benefits rewarding environmental excellence; compliance assistance (federal and state); handling, disposal, hauling, licensing, and management of solid, liquid, industrial, medical, and hazardous waste; land and water use, and protection; permits for land, air, and groundwater discharge, National Pollution Discharge Elimination System, oil, gas, and mineral drilling, soil erosion and control, water, wetlands, and floodplains; and pollution prevention, waste reduction, and recycling. Additional information is available at www.michigan.gov/deqenvassistance.
The MEDC now provides resources to small and medium-sized Michigan companies (SMEs) interested in finding new markets through selling products and services overseas. Through our statewide network of strategic export partners, companies located anywhere in Michigan can receive export training and export readiness assessment. As companies advance along the export continuum, direct export incentives are available to eligible SMEs, including access to export financing and expense reimbursements related to penetrating new markets, finding foreign buyers, and participating in export trade missions.
The MEDC’s Corporate Research Office can undertake focused searches to identify federal funding resources and lending programs for companies and leverage federal funding through national governmental programs and solicitations.
Michigan Business Ombudsman
The Michigan Business Ombudsman Office provides assistance in resolving disputes, investigating business complaints, and making connections with state government agencies. Ombudsmen investigate inquiries from businesses and organizations, acting as a reliable and credible source of information for all parties. Ombudsman services include guidance to Michigan businesses on State of Michigan regulations, procedures, and processes; assistance to state government agencies on problem solving and issue resolution; and dispute resolution on issues that have not been resolved via traditional departmental administrative procedures.
Michigan Defense Center
The Michigan Defense Center identifies growth opportunities for Michigan businesses based on the needs of the U.S. Department of Defense (DOD) and Department of Homeland Security (DHS). The Defense Center helps businesses access research and development resources in universities, federal laboratories, and industry in order to form strategic alliances and respond to new challenges in defense and homeland security. The Defense Center partners with the Procurement Technical Assistance Center statewide network, as well as, regional economic development organizations to advocate with federal agencies on behalf of the Michigan contracting community.
Michigan Manufacturing Technology Center
The Michigan Manufacturing Technology Center (MMTC) offers training and direct technical assistance to small and medium-sized Michigan manufacturers to upgrade them to the best manufacturing practices available. Services are delivered through five regional offices around the state. The MMTC is the Michigan affiliate of the national Manufacturing Extension Partnership program, which is linked to national industry groups, major manufacturers, automation equipment vendors, universities, and research laboratories. MMTC services include training and consulting in customer acquisition, lean manufacturing, lean office, quality systems compliance, Six Sigma, green manufacturing, and activity-based quoting. In addition, the MMTC offers a unique service, free only to Michigan manufacturers, comparing a company’s performance to that of its peers. For more information, visit www.mmtc.org and www.performancebenchmarking.org.
Michigan Procurement Technical Assistance Centers
Michigan’s network of Procurement Technical Assistance Centers (PTACs) matches the capabilities of Michigan companies with government contract opportunities. PTACs prepare Michigan businesses to compete for government contracts, educating them on the opportunities, requirements, and process of becoming successful government contractors. PTACs provide pre- and post-award assistance, helping companies through the entire procurement process, from registering as a government contractor and finding bid opportunities through proposal preparation and post-award modifications.
Michigan Small Business and Technology Development Centers
The MI-SBTDC network provides a full range of services and tools for small businesses emerging and growing in Michigan's 83 counties. The organization has four teams dedicated to provide expert assistance to the individual needs of Michigan's small business.
State of Michigan Contract Connect Program
The Contract Connect Program provides opportunities for business growth through access to a wide range of governmental procurement opportunities. The Contract Connect website provides information on more than 1,100 state contract opportunities, assistance with vendor registry and bids, and tools that can notify registered users of relevant upcoming opportunities. Contract Connect serves the procurement needs of the State of Michigan and multiple Michigan municipalities, school districts, non-profit hospitals, colleges, and universities.
Permitting and Regulatory Assistance
In Michigan, business growth and environmental protection work hand-in-hand. MEDC staff can provide assistance in working with the Michigan Department of Environmental Quality (DEQ) and other state regulatory agencies to streamline permitting and clear the decks for a company’s business expansion.
Site Location/Real Estate
Michigan operates an electronic site location network that allows for confidential, customized site information tailored to a company’s needs. This system allows us to provide immediate information on available buildings, certified industrial parks, and Greenfield sites in any area of Michigan.
Technology Assistance Referrals
Michigan has a wealth of public research universities and institutes that offer technology assistance to Michigan companies. The MEDC will make introductions and referrals to the appropriate organizations if require technical support is required.
Unemployment Insurance Services
Michigan’s unemployment insurance system is among the most experience-rated in the United States. This means that employers with few layoffs pay very low unemployment tax rates while those with large or seasonal layoffs pay higher rates. The unemployment tax rate for new employers is 2.7 percent (based on the first $9,000 of each employee’s wages). To learn more about Michigan's unemployment insurance system, visit www.michigan.gov/uia. MEDC can help companies cut the cost of unemployment insurance taxes by working to resolve administrative red tape, reviewing company rate calculations for accuracy, and providing guidance on disputed invalid claims.
Workers’ Compensation Insurance Services
The Workers’ Compensation Cost Control Service assists employers in designing and implementing strategies for minimizing their costs of workers’ compensation insurance coverage. This program also benefits employees by stressing the importance of injury prevention and early return-to-work programs.
Web Resources and Contact Info
Please provide the main state-level contact prospects interested in learning more about available tax and incentives programs. Also, please include links to publically available data or documents that detail available taxes and incentives in your state.
Please visit the website below for more information on the programs referenced above. www.michiganbusiness.org/fact-sheets/
Please contact our Lansing office with any questions:
Michigan State Contact:
Michigan Economic Development Corporation
300 N. Washington Square
Lansing, Michigan 48913
888.522.0103 Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings. This information was last updated October 2015.