Michigan Brownfield Redevelopment: More Than Cleanup, It Is a Tool for Community Transformation

Community Transformation

At a time when many states have reduced redevelopment incentives, Michigan has continued to strengthen and modernize its Brownfield Redevelopment Financing Act (Act 381).

Act 381, which began as a program focused primarily on environmental cleanup, has evolved into one of Michigan’s most valuable redevelopment tools, helping communities transform contaminated, blighted, vacant, and underutilized properties into productive assets.

Today, brownfield redevelopment in Michigan is about much more than contamination. While environmental assessments, remediation, and due care activities remain important components of the process, updates to Act 381 have expanded opportunities to support housing, mixed-use development, site preparation, infrastructure improvements, and broader community revitalization efforts.

The result is a more flexible financing tool that helps address the many challenges that can prevent redevelopment, including aging buildings, infrastructure needs, environmental conditions, rising construction costs, and project funding gaps.

What Has Changed?

Recent amendments to Michigan’s Act 381 have expanded eligible activities and provided greater flexibility for redevelopment projects. Eligible activities include:

• Environmental assessments, due care activities, remediation;
• Demolition and site preparation;
• Lead, asbestos, and other hazardous material abatement;
• Infrastructure improvements;
• Public improvements supporting redevelopment;
• Housing-related activities (rent-loss/development-loss) for qualifying projects;
• Preparation/implementation of Brownfield Plans/Act 381 Work Plans;
• Administration, Interest, etc.

These changes reflect the reality that redevelopment challenges rarely stem from a single issue, and they add meaningful incentives to help close housing gaps across the state. Brownfield incentives help communities and developers address the combination of environmental, financial, and infrastructure barriers that can prevent investment.

What Has Stayed the Same?

While Michigan’s brownfield program has expanded significantly, the foundation remains the same: identifying barriers to redevelopment and using tax increment financing (TIF) to help make challenging projects financially feasible. It continues to operate as a reimbursement mechanism, where eligible costs, which are included in an approved Brownfield Plan and/or Act 381 Work Plan, are incurred by developers, property owners, or municipalities and may be reimbursed through future tax increment revenues generated by the redeveloped property.

A Growing Tool for Housing and Redevelopment

Michigan’s brownfield program has become an increasingly valuable tool for supporting housing and mixed-use development. While the program historically focused on addressing environmental conditions, 2023 amendments (Public Act 90 of 2023) to Act 381 expanded eligible activities to include certain housing-related costs for qualifying projects.

Rising construction costs, affordability gaps, and financing challenges can prevent housing projects from moving forward, particularly in communities where new investment is needed most.

For income-restricted housing developments serving households at or below 120% of Area Median Income (AMI), per Michigan State Housing Development Authority (MSHDA) guidance, eligible projects may include Potential Rent Loss (PRL) and Potential Development Loss (PDL).

So, what does that mean?

PRL helps address the difference between market-rate rental income and the restricted rents required for income-qualified affordable housing units. It recognizes the revenue gap created when developers provide housing at below-market rates.

PDL applies to for-sale housing projects and helps address the gap between the cost of constructing a home and the price that income-qualified buyers can reasonably afford.

These housing-related costs are evaluated as part of the project’s Total Housing Subsidy (THS) and reviewed for reasonableness using MSHDA guidelines.

By recognizing these affordability gaps, Michigan’s brownfield program provides another tool to help make challenging housing projects financially feasible. These incentives allow communities to transform vacant and underutilized properties into new housing opportunities while supporting investment, expanding the tax base, and revitalizing neighborhoods.

Navigating Michigan’s Brownfield Process

Successfully utilizing brownfield incentives requires coordination among property owners, developers, municipalities, Brownfield Redevelopment Authorities, and state agencies. Understanding eligibility requirements, preparing the appropriate documentation, and maximizing available incentives are critical to project success.

ASTI Environmental helps clients navigate the full Michigan brownfield redevelopment process, from initial environmental due diligence and eligibility evaluations to Brownfield Plans, Act 381 Work Plans, environmental assessments, due care planning, and reimbursement support. Our team works with developers, municipalities, and property owners to identify redevelopment opportunities, reduce risk, and maximize available incentives.

Common Brownfield Redevelopment Activities ASTI Supports:

• Phase I and Phase II Environmental Site Assessment
• Baseline Environmental Assessments (BEAs)
• Due Care Plans and compliance support
• Brownfield Plan preparation and implementation
• Act 381 Work Plan coordination
• Coordination with the Michigan Department of Environment, Great Lakes, and Energy (EGLE), MSHDA, and the Michigan Economic Development Corporation (MEDC)
• Eligible activity tracking and reimbursement requests
• Environmental due diligence and redevelopment strategy

Michigan’s brownfield program has evolved into a powerful redevelopment strategy. With the right guidance, properties once viewed as challenges can become opportunities for investment, community growth, and long-term economic development.