Bay City offers a number of progressive incentives for businesses expanding or relocating to the area. The following list should be considered as a general summary.

Business Districts

Land Assembly

The City employs professionals to assist businesses with locating, assembling, and purchasing land for residential, commercial, and industrial purposes. Customized site package profiles, guided site visits, and community tours are provided as part of the overall site selection process. The city has a substantial inventory of property available including over 50 acres for riverfront development.

Utilities

Bay City Electric Light & Power, a municipal utility, provides reliable, high-quality, and inexpensive electricity to customers in Bay City and parts of Bay County. Rates are approximately 17% lower than other cities in Mid-Michigan.

Tax Abatements

Industrial Property Tax

Property tax incentives are available to eligible businesses to renovate or expand aging manufacturing plants or build new ones. Property taxes (real and personal) can be reduced for up to 12 years. For a new plant, obsolete plant, or machinery that is being replaced or restored, the City of Bay City can reduce the local millage by half, and the Michigan Economic Development Corporation is able to abate the 6-mill statewide education tax. Abatements include all millage, state and local. Eligible projects include manufacturing, mining, research and development, wholesale and trade, and office operations, but not retail businesses. Bay City offers a number of progressive incentives for businesses expanding or relocating to the area. The following list should be considered as a general summary.

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Click here for application

Obsolete Property Rehabilitation Act

The Obsolete Property Rehabilitation Act adds another avenue for property owners, buyers, developers, and lenders to promote redevelopment projects. The Act provides an exemption from ad valorem property taxes to commercial property and commercial housing property if an obsolete property rehabilitation district has been established. Buildings and improvements within the districts are eligible for exemption from ad valorem property taxes from 1 to 12 years. The property’s value is frozen at its pre-habilitation value and a 60% reduction in taxes for the additional investment.

Properties eligible for obsolete property exemption certificates are those that meet the definition of obsolescence, which means the property must be a “facility” (contaminated), “blighted”, or “functionally obsolete”.

Rehabilitation expenses must exceed 10% of the true cash value of the property.

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Brownfield Redevelopment Act (BRA)

Michigan’s Brownfield law is designed to encourage and assist developers who want to return property to productive use more quickly and at a lower cost than before, while still protecting human health and natural resources. Owners and operators of contaminated sites are no longer required to pay for cleanup actions unless they caused the contamination. Flexible cleanup standards give developers the option of proposing a solution to historical contamination based on future use of the property.

To promote redevelopment of Brownfield sites; Michigan allows qualified businesses to claim a credit against Single Business Tax liability equal to 10% of the investment made on a Brownfield site. Total credit per eligible investment is $1 million.

Under expansions to the Brownfield law, credits are now granted per project. These credits, which can go to lessee or owner, can be as much as $30 million, but are limited in the number that can be issued, i.e., up to 15 credits per year can exceed $1 million. In addition, projects in Bay City may receive credits for functionally obsolete and blighted property, in addition to Brownfield credits.

The Brownfield tax increment-financing feature has been expanded to allow for cleanup of contamination and for asbestos and lead abatement, and certain infrastructure improvements supporting the project. The Bay City Brownfield Redevelopment Authority may capture all new taxes except debt millage and millage not captured by a pre-existing entity. A project “work plan” must be prepared for any environmental remediation activities and approved by the Michigan Department of Environmental Quality (MDEQ). Additionally, a “work plan” must be prepared for infrastructure improvements, lead and asbestos abatement, demolition, and site preparation that is not a response activity and approved by the Michigan Economic Growth Authority (MEGA).

Meets First Wednesday of the month at 4:00 p.m. or immediately after the EDC
Room 317, City Hall, 301 Washington Avenue
Staff Representative:  Mike Brandow – 989-894-8159

General Guidlines and Policies
Brownfield Application
Current Meeting Minutes
Meeting Agenda
 

INFRASTRUCTURE

Federal and State grants are available for eligible projects to develop and build needed infrastructure.

Community Development Block Grants

Community Development Block Grants are federal grant funds that are administered by the City. They provide financial assistance in three broad categories, namely: economic development, housing, and public works. The City can use these funds to stimulate eligible projects with private sector involvement, including land acquisition, construction, demolition, and rehabilitation. Jobs created by the use of these funds should benefit low and moderate-income individuals.

Transportation Economic Development Funds (TEDF)

Transportation Economic Development Funds are state grant funds that support local road development to foster job creation and retention opportunities.

BUSINESS FINANCING

Tax Exempt Industrial Development Revenue Bonds (IDRB)

The Michigan Strategic Loan Fund or the Economic Development Corporation of the City of Bay City can provide the maximum allowable use of IDRB financing. Industrial Development Revenue Bonds lower the cost of borrowing to approximately 70% to 80% of prime rate for eligible capital expenditures. This is due to the federal tax exemption on interest paid to the bond borrower (and state taxes in certain cases). Use of bond proceeds is limited to acquisition of land, machinery and equipment; and construction, renovations or acquisition of buildings.

Taxable Revenue Bond (TRB)

The Taxable Revenue Bond provides companies with potentially longer term financing (10-20 years), often at a fixed rate and lower cost than conventional financing, and is exempt at the state and local level if purchased by Michigan taxpayers. These bonds are not restricted by the IRS, and can be used to finance projects of more than $10 million. They can be used as working capital and to finance commercial, pollution control, agricultural, and recreational projects.

Small Business Administration 504

For qualified small businesses, the Single Business Administration 504 program can provide subordinated, fixed-asset financing at long-term Treasury bond rates. Loans are limited to the lesser of $750,000 or 40% of project financing requirements.

Loan Guarantees

Through local banks, the City of Bay City works with the Single Business Administration and the Rural Development Agency on projects that require loan guarantees from one of those agencies to secure private financing on eligible projects.
 

P.O.W.E.R. Fund / EDC

The Economic Development Corporation encourages economic development, business expansion, and job creation by providing business loans to supplement other financing. The purpose of the P.O.W.E.R. Fund is to promote economic development within the City of Bay City by: 1) the creation/retention of jobs, 2) increased electrical and utility usage, and 3) the development of taxable real estate through the provision of capital for new and expanding businesses. The P.O.W.E.R. Fund is intended to supplement, but not to replace conventional financing sources. All applicants to the P.O.W.E.R. Fund are subject to the approval of the City’s Economic Development Corporation and the City Commission of the City of Bay City.

Meets First Wednesday of every other month at 3:00 p.m.
Room 317, City Hall, 301 Washington Avenue
Staff Representative: Mike Brandow – 989-894-8159

P.O.W.E.R. Fund Guidlines
P.O.W.E.R. Fund Application
P.O.W.E.R. Fund Ordinance
EDC Bylaws
EDC Delegation of Authority
Current Meeting Minutes
Meeting Agenda
 

Michigan Economic Growth Authority (MEGA)

MEGA was created to promote high quality economic growth and job creation. Companies engaged in manufacturing, research and development, wholesale trade or high-technology businesses that are financially sound and have financially sound proposed plans are eligible for a tax credit against the Single Business Tax.

This is a refundable tax credit based on the incremental Single Business Tax liability attributable to an expansion or new location, and the amount of personal income tax attributable to new jobs being created. The maximum amount that can be awarded is based on the total wages paid at the new facility multiplied by 4.2%, plus the business tax liability resulting from the new facility. Each credit may be awarded for up to 20 years and 100% of the amount attributed to the project.
 

State Venture Capital

The Alternative Investments Division of the Michigan Department of Treasury offers a pool of venture capital for qualified, fast-growing companies seeking equity funding. Typically, the venture capital program is used to support new, high-tech companies on the cutting edge of industrial technology.
 

Tax Incremental Financing (TIF)

Tax increment-financing capture taxes generated from new capital investment except school millage and debt millage. The “capture” can be used for a variety of purposes including, but not limited to, project related infrastructure improvements, i.e. road, water, sewer, and site development (such as land balancing, mass grading, and landscaping). Tax increment financing can be used through a Local Finance Development Authority, a Downtown Development Authority or a Brownfield Redevelopment Authority.

JOB TRAINING

Bay City is an active participant in maintaining a highly trained, skilled labor force. Employers are at the front end, designing their own customized employee training programs and working in partnership with schools, agencies, and other community resources to develop the most effective worker. Grants averaging $1,000 per new employee and $500 for each existing employee can be used to train or upgrade skills.

This state grant program provides $30 million to companies for training or retraining of workers to meet marketplace needs, with the employer required to match 25% of the state grant for training of existing workers. Funds are awarded through a competitive process. The employer works with private or public education providers to design the training.

TAX OBLIGATIONS

Single Business Tax (SBT)

The Single Business Tax is modified value-added tax. A rate of 2.3% is added during the production process. Eligible small businesses may use an alternative 2.0% tax on adjusted business income.

Workers’ Compensation

Michigan employers can choose among a wide variety of rates. The lowest rate is typically one-half the highest rate. The average Michigan firm paid less in 1992 than it did in 1981 for workers’ compensation insurance.

Unemployment Insurance

In Michigan, unemployment insurance rates are determined by past experience. A firm with few layoffs pays very low unemployment rates, while a firm with high cyclical employment pays a higher rate. New employers pay a 2.7% rate in the first and second years. For firms with no layoffs, the rate falls to 1.8% and 1.0% in the third and fourth years, respectively. The minimum rate can drop as low as 0.5% for companies with no layoffs after 5 years.

Property Taxes

Property taxes in Michigan are determined at the state and local levels. The taxable value of property is 50% of the current market value. Both real and personal property, except inventory, are subject to taxation. For properties located within the City of Bay City, the rate ranges from 47.0501 to 65.0501 mills (ad valorem, real, personal) depending on the location and school district.

Sales Tax

There is no local sales tax in Michigan. The statewide sales tax rate is 6.0% excluding electricity and natural gas used in production, air and water pollution abatement equipment, and machinery and equipment used in manufacturing.

Income Tax

Michigan has a 4.4% flat personal income tax rate. There is no local income tax in Bay City.

For more detailed information about these programs
and the City of Bay City, contact the: