Michigan aims for 'renaissance' in depressed areas

From Correspondent Ed Garsten

LANSING, Michigan (CNN) -- It seems like every big city has them: blocks of industrial buildings and run-down housing, much of it abandoned, in depressed neighborhoods. Michigan thinks it has found a way to revitalize neighborhoods in dire straits: make them renaissance zones.

Diane Clark lives in one of the new zones, a neighborhood in Lansing. When she looks around the neighborhood, she is distressed by what she sees.

"Currently it is a depressed neighborhood. You'll see a lot of vacated housing, a neighborhood that has been neglected," she said.

The Detroit neighborhood where John James' shipping firm, the O-J Group, is located, has been neglected for a long time too. James, the company CEO, has always dreamed of turning the area around.

"I, for a long time, had a vision of how to rebuild this area, which I refer to as a brownfield," he said. "There's a lot of non-productive industrial property, that have been left, and abandoned here for years."

Renaissance zones may help both areas turn around. Under the new law, 11 renaissance zones were designated by the state government last week. With the exception of sales taxes, the zones are completely tax free for state and local taxes for up to 15 years for both businesses and residents.

Renaissance zones are unlike empowerment or enterprise zones, which simply provide government money for development. In a renaissance zone, there is no paperwork to fill out, nor any qualifying for breaks. All you have to do to take advantage of the tax breaks is live there or own a business there.

The program won't officially take effect until January 1, 1997, but Diane Clark and her neighbors believe residents will use the extra cash to fix up their aging homes and increase property values.

"It's like that domino effect," Clark said. "Things start looking bright and new and shiny. One person does it, then everyone else wants to 'ditto' off of that."

One of her neighbors, Luke Demyers, agreed. "It would definitely give me incentive to make more improvements, 'cause if there are improvements going on in the area, it tells me the area is going to be there and it's OK to invest my money," he said.

The breaks do add up. The exemption from all personal income and real estate taxes would average about $5500 a year for homeowners.

The savings to business owners are even greater. That's why investors plan to rehabilitate a dilapidated industrial site in Lansing, and why John James sees changes afoot near his Detroit business.

"Now I see activity. I see people making inquiries. I see people actually locating here," James said.

What James has seen is vindication for state legislators, who hope the renaissance zone concept will help the state turn its lagging areas around.

Related sites:

• Michigan State Government
• State Administrative Board Approves Eleven Renaissance Zones
• Promises Made--Promises Kept, 1996 Accomplishments

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