Act 25 of 2013 Allows Municipalities to Once Again Establish Water Resource Improvement Tax Increment Finance Authorities

When two West Michigan communities that shared a harbor and channel to Lake Michigan faced significant shoaling outside of the channel threatening recreational boating and needed tourism revenue, the communities engaged their local legislators to provide the communities with a tool to provide a possible long-term funding source for needed dredging of the mouth of the channel. In response to the request of the communities and the work of their state legislators, the Michigan Legislature adopted Act 25 of 2013, which amended PA 94 of 2008, the Water Resource Improvement Tax Increment Finance Authority Act, to allow municipalities to establish and expand use of water resource improvement tax increment finance authorities to undertake dredging projects and other projects designed to enhance Michigan’s lakes and waterways.

Act 25 was signed by the Governor on May 9, 2013 and is effective August 9, 2013.

Prior to the enactment of Act 25, under Act 94, a municipality could not establish a new water resource improvement tax increment finance authority or amend a development plan and tax increment financing plan for an existing authority after December 31, 2011. Act 25 repealed the December 31, 2011 “sunset” provision in Act 94.

Act 94, as amended by Act 25, allows a municipality to establish a tax increment financing district and use tax increment revenues generated from properties located within the district to undertake various water resource improvement projects, including the construction and improvement of sanitary sewer systems that service existing structures that have failing on-site disposal systems. Act 25 also amended Act 94 to expressly provide that dredging of a waterway, or other projects that “enhance the navigability of a waterway” are valid improvement projects that may be undertaken by a water resource improvement tax increment financing authority, the costs of which may be paid for using tax increment revenues.

Additionally, Act 25 expanded the definition of a “water resource improvement district” to include:

• an inland body of water and land that is up to one mile from the shoreline of an inland lake that contains one or more public access points;
• an inland body of water and parcels of land that are contiguous to the shoreline of an inland lake that does not contain a public access point;
• the shoreline of a harbor on a Great Lake and land up to one mile from the shoreline of the harbor, or a tributary to that Great Lake harbor up to five miles upstream from the shoreline of the Great Lake harbor, or land up to one mile from each bank of a tributary to that Great Lake.

In essence, Act 25 expanded the properties that can be included in the district and the scope of projects that can be undertaken within the district by a water resource improvement tax increment financing authority.

Mika Meyers was pleased to be able to assist the community in working on the amendment to Act 94, as Act 25 represents another “tool in the toolbox” for Michigan municipalities to address needed infrastructure and community improvements, particularly with respect to preserving and improving Michigan’s great outdoors.