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Michigan Bill Would Allow TIFs for Transit

CHICAGO - The push for light rail and commuter mass transit in southeast Michigan would receive a boost under a proposed bill that expands the state's tax increment financing law to include funding for transit systems.

Last week the House Transportation Committee approved Bill 6114, sponsored by Rep. Marie Donigan, D-Royal Oak. It would allow property tax revenue generated within a TIF district to be used to fund mass transit and allow for the creation of local boards with the authority to issue bonds to finance transit projects.

The bill comes as Michigan policymakers are ramping up efforts to develop one or several mass transit systems in the southeast part of the state. The chief proposals being floated now are a commuter service running between Ann Arbor and Detroit, with a stop at the Wayne County Airport, as well as two separate light-rail line proposals along Woodward Avenue, a key Detroit thoroughfare.

The transit financing bill would provide at least some financing for the proposals, Donigan said in an interview yesterday.

"All these proposals will be ready for an action plan in the fall," she said. "So as we anticipate the fall, we'll be talking more and more about transit. This bill is one option [for financing] that we're proposing."

Under the bill, governments would have the ability to create so-called Transit Revitalization Investment Zones that would act like tax increment financing districts in that they would capture future increases in property tax revenues within that district for use to fund improvements. In this case, the revenue would be set aside for construction and operation of transit projects as well as nearby development that would, in partnership with private developers, act as a spur to create high-density, mixed-use development near transit hubs.

The bill allows for governments to cross existing city or county lines to create a district, and creates a five- to nine-member board that would include the head of the founding municipality and local business owners. The board would have the authority to issue revenue bonds backed by future property tax revenue to finance transit or a related development plan. Under the bill, school taxes would not be captured as well as library taxes if requested by the library board.

"We haven't had a mass transit project here since 1976 when the People Mover was introduced," Donigan said, referring to the current one-direction light-rail line in downtown Detroit. "We have woefully underfunded our public transportation systems over the years, and we've stranded people in their cars." She said the transit proposals along Woodward Avenue have already spurred interest among private developers.

Donigan said she would spend the summer working with other legislators, including in the Republican-controlled Senate, to hone the bill and expects floor votes in the early fall.

Also last week, the state's Department of Environment Quality said it would abandon its plan to push for a $1.3 billion environmental bond issue to be put on the November ballot.

The measure would have required a two-thirds majority vote in the Legislature, which would have had to approve the measure before it breaks for the summer around July 1. The department decided to put the issue on hold after deciding there wasn't the "political will" in Lansing to get it done in time for November, according to local media reports.

The bond proposal was to establish a fund for grant and loan programs that finance environmental cleanup of heavily contaminated, formerly industrial brownfield sites and other environmental programs. Officials have said the brownfield program will run out of money by the end of 2008 without the borrowing. The programs cost about $100 million a year to run, and voters have twice approved the funding, in 1988 and 1998.

The department is reportedly now hoping to secure funding in the state's fiscal 2009 budget. On that front, lawmakers and Gov. Jennifer Granholm are within days of approving a final, roughly $45 billion fiscal 2009 budget. Granholm has set a July 1 deadline for lawmakers to pass a final budget.

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