Background: Disincentives for Infill Development



Date: March 1, 2004

RE: Michigan Infill Development Initiatives

Background:

The following memo provides an update on recent land use reforms enacted in Michigan. Reforms directly impacting infill development and urban revitalization are discussed; in particular the enactment of the Michigan Land Bank Fast Tract Act is addressed. Recommendations made by land use advocates in the State are included below. Land use reform, based on Governor Granholm’s land use committee, is currently being shaped into public policy. The memo concludes with recommendations still not enacted in Michigan.

Recommendations Identified for Michigan & Detroit:

Significant effort and research has been conducted to identify the impediments and tools needed to aid in revitalizing Michigan’s urban centers. A series of white papers were submitted to the State Land Use Commission to base their land use reform recommendations for the state. Recommended[1] land use reforms that could most impact infill development include:

• Determining and clarifying the state’s role in planning.

o Develop clear state planning goals and review state policies and investments based on promoting urban reinvestment. Link state revenue sharing for local governments to the adoption of state land use goals.

• Comprehensive Planning Statute Reform

o Specifically define comprehensive plan elements and mandate that local governments examine housing need (in a regional context) in planning activities.

• Zoning Statute Reform

o Specify authority for local government units to adopt incentive based zoning (e.g. density bonuses, relaxation of site restrictions for meeting affordable housing needs).

• Regional Planning Reform

o Better define role of regional planning agencies, define what a regional plan consists of. Reexamine the role and geographic area of the existing 14 regional planning agencies in Michigan.

• Promoting Statewide Affordable Housing

o Establish a Michigan Housing and Community Development Trust Fund, Encourage Smart Housing Zoning Codes that simplify urban redevelopment, Promoting Location Efficient Mortgages, Expansion of the Michigan Individual Development Accounts Program (IDA) to aid low-income households in obtaining home ownership. Require Fair Share Housing Strategies in the master plans of local governments in high cost areas. Regional market studies of housing need at all income levels to base regional housing initiatives.

• State Land Bank Authority Establishment

o Ease transfer of title for property acquisition and redevelopment. Allow local government units to enter into agreements with state for local land bank authorities.

• State Agency to Promote/Coordinate Urban Revitalization

o Provide technical assistance to promote urban redevelopment. Consolidate operation of various urban redevelopment tools (or access to tools) in one government office. Link the multiple urban redevelopment tools to maximize benefits: empowerment, enterprise and renaissance zones; tax increment financing programs; historic district tax credits; neighborhood enterprise zones; downtown development authorities; blight elimination programs; local zoning incentives for infill development; business improvement districts; Brownfield redevelopment; U.S. EPA environmental justice grant programs.

• Expansion of Resources for Brownfield Development

o Aggressively fund the Clean Michigan Initiative for redeveloping Brownfield sites in urban areas.

• More Aggressive Code Enforcement

o Incentives for local governments to assess civil penalties for code violations and blight removal.

Specific Initiatives Enacted in Michigan:

The following describes recent land use reform enacted by the State of Michigan. Particular emphasis is placed on the acts most likely to impact infill development, in particular the Land Bank Fast Tract Act.

Land Bank Fast Tract Acts (House Bills 4480-4484, 4488)

Land bank establishment and fast tract initiatives for tax delinquent properties have been priorities of the state legislature since the 1990’s. An initial land bank act died in committee in 2002 and Public Act 123 of 1999 shortened the time span for acquisition of tax delinquent property from 7-6 years to 1-2 years. This initial legislation also clarified the process for notification of the delinquent property owner before state acquisition proceeded. Based on this reform delinquent properties are transferred directly to the County Treasurer or the County can transfer land to the state at their discretion. The law also allowed profits from tax delinquent land sales to be directed to a Land Reutilization Fund to pay operating costs of managing land acquisition.[2]

One active land bank already exists in the State of Michigan. The City of Flint and Genesee County have jointly operated a land bank (The Genesee County Land Reutilization Council) through intergovernmental agreement. Genesee County established the program after the 1999 land reform bill and based the cooperative agreement on Michigan’s Urban Cooperation Act of 1967.[3] Progress in the first two years of the Genesee County program includes:[4]

• Title has been taken to over 2,500 vacant parcels of land, equaling 5% of the total land area in the City of Flint.

• The Genesee County program also aides families in risk of losing homes to foreclosure (no provision to do this was provided before the LRC). Approximately 750 families have avoided foreclosure due to the County Treasurer’s foreclosure prevention program.

• Approximately 300 dilapidated structures have been demolished, with an aggressive plan to demolish 3,000-4,000 abandoned properties in Flint in upcoming years.

• Twenty five houses have been rehabilitated and hundreds of lots are assembled for city and non-profit development. New infill housing is under construction on 16 tax foreclosed properties.

Genesee County is currently collaborating with the C.S. Mott foundation to fund a more aggressive approach to reusing abandoned properties. The current rate of redevelopment has been small in comparison to the number of vacant properties. The Mott foundation is funding a neighborhood based planning effort to maximize the benefits from the land bank.

The Land Bank Fast Tract Acts signed by Governor Granholm in January of 2004 will bolster the Genesee Count initiative and promote land bank activities throughout the state. Provisions of the land bank acts include: [5]

1. Establishment of a State Land Bank Authority under the Department of Labor Economic Growth.

2. Enables local government units to establish land bank authorities and Brownfield authorities through intergovernmental agreement with the State.

3. Clarifies tax policies for land bank properties, 50% of tax revenues from redeveloped land bank properties are reverted to land bank authority.

4. Further expedites quiet title and foreclosure proceedings and aids private developers who lease, convey, demolish or rehabilitate property.

The state Land Bank Authority is expected to be formed in early 2004. Sales from state owned property are being utilized to establish the board. The state currently owns over 10,000 tax delinquent properties and local government units are estimated to have more than 50,000 properties.[6]

Joint Municipal Planning Act (House Bill 4284)

The Michigan “Joint Municipal Planning Act” was passed in January of 2004. The bill authorizes all local government units to consolidate planning activities into a joint planning commission. The act is totally permissive with no mandatory requirements for joint planning activities. Initiation into a joint planning commission is dependent on all parties voluntarily agreeing to grant local authority to the joint planning commission.

Clean Michigan Initiative (SB 805)

Senate Bill 805 quadruples the state’s cap on Brownfield redevelopment bond funding by increasing funding to $80 million. [7]

Quality of Life Zoning Violations (HB 5216-5220, 5224)

House Bills 5216-5220 and HB 5224 authorize cities of more than 7,500 residents to establish bureaus to assist in blight reduction. Cities are allowed to impose liens and fines of up to $10,000 for blight, illegal dumping, abandoned vehicles and lack of sanitation.

Planned Unit Developments (House Bills 4666-4668)

This provision amends zoning statutes to allow local government units to promote mixed land use and open space preservation through planned unit developments.

GAP Analysis - Recommendations vs. Policies Enacted:

Land use reforms are under way in Michigan, but many of the important recommendations raised by the Michigan Land Use Leadership Council and other land use stakeholders have not been addressed. Additional Brownfield funding, land bank establishment, better blight enforcement and more coordinated planning will aide infill development in Michigan’s urban areas. But, other areas such as affordable housing, aggressive regional reforms and state investment policies have not been tackled. The following addresses some areas in which the state is yet to enact serious reform measures.

1. Provision of Affordable Housing (in a regional context)

Decreasing the amount of concentrated poverty in the State of Michigan’s urban areas is a guiding principle in the Michigan Land Use Leadership Council’s final report to the governor. A series of affordable housing provisions were discussed by the committee (and suggested by multiple land use stakeholders) as a way to decrease concentrated poverty in the State’s major cities. Many of these suggestions are provided in the first section of this memo. Current reform measures have not explicitly looked at affordable housing recommendations. One key recommendation for the State is to mandate planning activities to address affordable housing in a regional context. At this point, no firm reform measures have been instituted to implement affordable housing at the regional level. The permissive nature of the joint planning act could be viewed as a missed opportunity to fundamentally strengthen regionalism and regional affordable housing solutions in the state.

2. Clarifying the state role in planning and emphasizing state investment in urban areas.

At this point, no measures to formerly establish state land use policies. Also, no legislative reform has occurred to assess the state’s investment policies in respect to promoting urban revitalization. The land use committee recommended the state rethink its public investments and revenue sharing in relation to the goal of promoting urban redevelopment. For example, in Pennsylvania, former Governor Ridge released an executive order that all new state buildings (and there accompanying employment base) be located in downtowns of existing urban areas. In Michigan, the role of MDOT’s fix it first program would be positive example of aligning state policy with land use goals. Initiatives to structure the state’s local revenue sharing based on meeting land use goals (such as affordable housing) could have a dramatic impact in implementing state land use policy.

3. Smart zoning and building codes for urban areas.

Both the City of Detroit and the State Land Use Leadership Commission have identified “smart codes” as a necessary tool for urban revitalization. “Smart Codes” contain relaxed standards related to density, use and building rehabilitation to foster redevelopment. Thus far, no statewide reforms related to the planning and zoning acts have been suggested to authorize “Smart Codes” for local governments.

4. Provisions to improve quality of life in urban areas.

Several recommendations related to improving “green infrastructure” (parks, environmental quality etc.), job availability and urban amenities (public transportation, resources) were proposed by the Michigan Land Use Leadership Commission. No policy reform or specific initiatives have occurred at this state in regard to these recommendations.

5. Improving the inequity in urban school districts.

Multiple studies have identified the role of school quality in promoting urban areas and preventing sprawl. Poor urban school quality is a primary factor in exasperating inequity in urban areas and provides a disincentive for urban redevelopment.[8] Although recommendations have been proposed regarding reinvesting in urban school facilities, no large scale reforms are included to address this issue in the land use debate in Michigan.

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[1] The following list of recommendations was gathered from multiple sources: (1) The Michigan Land Use Leadership Council’s principles/recommendations for urban revitalization. (2) Comments of Michigan Planning, Zoning and Subdivision Laws by the Michigan Society of Planners and the American Planning Institute. (3) Affordable Housing Policy and Land Use Report by the Michigan State Housing Development Authority. (4) Michigan Tax and Finance Policy Affecting Land Use by the Michigan Department of Treasury. All of these resources are available at:

[2] “The Genesee County Urban Land Redevelopment Initiative”. Daniel T. Kildee, Genesee County Treasurer. On-line Source:

[3] “Proposed Genesee County Land Bank”. Public Policy Associates, Inc. March 2002.

[4] Program highlights taken from: “Bringing Flint Back to Life”. Getting Smart. Newsletter of the Smart Growth Network. Volume 6, Number 4. 2003.

[5] Michigan House Bills No. 4480-4484 and 4488.

[6] “Lawmakers Approve Land-Bank Authority”. Crains Detroit Business. December 22, 2003.

[7] “In Lansing, A Legislative Breakthrough”. Michigan Land Use Institute. January 8, 2004.

[8] Baum. (2004) “Smart Growth and School Reform” Journal of the American Planning Association. Vol. 70, No. 1, Winter 2004

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