SME Leads The Way in Tax Increment Financing for Housing

SME® | Published on November 24, 2025

 

SME breaks ground on MidVilla Flats, where we served as the consultant for Tax Increment Financing Incentives

SME joins the MidVilla Flats Groundbreaking, a TIF Housing development in Middleville, MI. SME served as the consultant for Tax Increment Financing Incentives

 

As communities across Michigan search for solutions to the growing housing affordability challenge, Michigan’s updated Act 381 Tax Increment Financing (TIF) program is opening new doors for attainable housing development. This blog highlights how SME is helping communities and developers navigate this evolving landscape and leverage TIF to bring meaningful projects to life.

What is Tax Increment Financing for Housing? 

As the challenge of housing affordability intensifies across Michigan, SME is helping guide local community leaders, municipal and county governments, and real estate developers address this critical need through innovative funding solutions made possible by Michigan’s Housing Tax Increment Financing (TIF) program under Act 381. 

In particular, smaller towns, villages, and counties struggle to provide affordable and attractive housing options for local employees, resulting in work force shortages for local employers and downtown district decline due to a lack of population growth. Lower levels of community engagement and dampening economic activity can often follow.   

With the recent legislative updates to the Brownfield Redevelopment Financing Act, TIF can now be harnessed not only for the revitalization of traditional brownfield sites, but also for the development of attainable housing projects that serve residents earning up to 120% of a community’s Area Median Income (AMI). This change has unlocked opportunities for communities, enabling them to finance brand-new housing units, rejuvenate aging properties, and create vibrant mixed-income developments tailored to local needs. SME’s expertise and strategic guidance have become essential in helping stakeholders seize these opportunities – driving meaningful investment and charting a path toward a thriving future for Michigan’s neighborhoods. 

Brownfield Redevelopment Brainstorm 

In October 2025, our Environmental and Economic Development Team hosted community leaders from across West Michigan, representing 27 communities across 16 counties – all committed to leading the charge in community brownfield redevelopment. This informal, discussion-focused forum provided a space for seasoned experts and novices alike to share ideas, make connections, and learn from each other. 

Travis Alden, SME’s Client Relationship Leader in West Michigan, noted  

“The Brownfields world, especially when it comes to housing development, is complex yet powerful. I’ve always felt it best to learn alongside peers who are making great things happen. It’s exciting that we can pull a group like this together. It shows the tangible interest in TIF Housing opportunities.” 

Travis Alden talks at the Brownfields Brainstorm, an event focused on how Tax Increment Financing can help communities.

Travis Alden addresses the Brownfields Brainstorm Event, held in Holland, MI on Oct. 2025.

The impact Tax Increment Financing for Housing can have on local communities 

Across Michigan, communities are discovering new possibilities for attainable housing, thanks to creative partnerships and innovative financial tools. SME supports these efforts across the state, ranging from Middleville and Hastings in Barry County to Lowell, Ludington, and various communities in Metro Detroit; helping navigate processes and programs that are new to most communities that are utilizing them.  

Jess Solis joins the discussion panel at the Brownfields Brainstorm.

SME’s role in projects such as those happening throughout West Michigan have been instrumental in helping communities secure a funding mechanism that would allow projects to come to light. Jess Solis, SME Project Consultant, has been working with developers of all sizes in many communities throughout West Michigan to secure these incentives and help educate communities along the way about the importance of economic development tools to projects, particularly Housing TIF. 

“We know from various studies published over the last several years that we desperately need housing at all price points across the State of Michigan. The Housing TIF tool is vital to the success of many workforce housing projects, especially in smaller and more rural communities. It has been incredible to see communities and developers working together to try to help address the housing shortage. It’s also been very fulfilling to see new developers come forward who see the need for housing and want to help.” 

 

 

Bryce Hansen with Stansen Development Group (Grand Rapids) said  

“The value SME has provided on my project has been tremendous. From the start, the environmental work was handled efficiently, giving us the clarity and confidence to move forward without delay. On the financial incentive consulting side, Jess Solis has been instrumental in navigating complex processes and securing critical support. The combination of technical expertise, responsiveness, and practical insight has provided real, measurable value to the project.” 

In Barry County, SME’s longstanding relationship with Barry County and the county brownfield authority afforded us a unique opportunity to help Dutch Developers navigate the complex process of securing TIF funding. The Team, led by Elizabeth Masserang, SME Senior Project Consultant; Casey Smith, Environmental Group Leader; and Bret Stuntz, Senior Consultant; worked closely with the developer, the county, the brownfield redevelopment authority, and the Village of Middleville to deliver project success. Nate Heyboer of Dutch Developers noted that SME “stood alongside the development team through the good and bad to get the project out of the ground…[The] SME team was helpful and creative to get the solutions we needed. There is no way I could have navigated the process from the paperwork side without the SME team.” 

In Lowell, MI, Wendie Priess of Flat River Outreach Ministries, who is currently finishing up an affordable housing project on the edge of downtown consisting of 17 units, contended “[SME] costs…were all fair, clearly communicated as soon as possible, and worth every penny for the quality of work that we received. For this project, the early discussions [with SME] were extremely helpful for us as we made difficult decisions on whether to purchase the property.” 

SME specializes in navigating the complex regulatory landscape of Housing TIF. From crafting compliant brownfield plans to calculating Potential Rent Loss (PRL) and Total Housing Subsidy (THS) figures required by the Michigan State Housing Development Authority (MSHDA), we expertly and collaboratively guide our clients – both at the community level and developers directly- through every step of the process. We’ve had the opportunity to partner with municipalities across Michigan to: 

  • Develop strategic and tactical Housing TIF policies and procedures that align with a community’s vision while meeting MSHDA’s guidelines. 
  • Secure funding approvals for both single-family and multi-family projects. 
  • Facilitate transparent public hearings that bring together developer and local resident’s needs and wants.  
  • Use a collaborative approach to find the right balance of tax capture potential to support long-term housing goals while meeting the needs of the community. 

 

How does Tax Increment Financing for Housing actually work? 

For many communities, the idea of “TIF for housing” can sound complicated, a mix of brownfield law, redevelopment finance, and housing policy. However, it follows a clear process that helps local governments and developers work together to close funding gaps on new or rehabilitated housing projects. 

Here’s how it works: 

  1. Identify the need and project concept

A community or developer identifies a housing project — new construction or redevelopment — that aligns with local housing goals but faces a financial gap. The gap often results from infrastructure costs, site conditions, or the need to price units affordably for local workers. 

  1. Engage the local Brownfield Redevelopment Authority (BRA)

The developer or municipality works with its local BRA to determine if the site and proposed housing activities qualify under Michigan’s Brownfield Redevelopment Financing Act (Act 381). Together, they prepare a Brownfield Plan that lists eligible activities, costs, and the expected increase in taxable value the project will create. 

  1. Draft and adopt the Brownfield Plan

A developer works with a reputable consultant to draft the Brownfield Plan outlining how future tax increment (the increase in property taxes after development) will be captured to reimburse eligible costs. The plan goes through: 

  • Public notice and a local hearing, where residents and taxing entities can provide input. 
  • Local approval by the municipality or county. 

At this point, the local taxing jurisdictions know which taxes will be captured and for how long. 

  1. Secure state approvals (if applicable)

If the project seeks to use *school operating taxes to help fund housing units that are income-restricted, typically up to 120% of Area Median Income. The Brownfield plan is attached to an Act 381 Work Plan (Addendum II) and must be reviewed and approved by the Michigan State Housing Development Authority (MSHDA). MSHDA ensures the proposal meets program rules, that income restrictions are properly documented, and that affordability monitoring will be in place. 

*Brownfield plans do not reduce the amount of state and local funding a school district receives. 

  1. Build first, reimburse later

Housing TIF is a performance-based tool – developers complete construction and begin generating the new taxable value before reimbursements occur. As property values rise, the BRA captures the “tax increment” and uses it to reimburse approved expenses, such as: 

  • Infrastructure improvements (utilities, roads, sidewalks) 
  • Site preparation and environmental work 
  • A portion of construction or financing costs related to income-qualified units 

Reimbursements continue until the approved costs are repaid or the capture period ends. 

  1. Maintain compliance and monitor affordability

For projects that include income-qualified housing, affordability must be maintained and verified over time. The developer is required to submit income verification information and the local BRA is responsible for monitoring and reporting to MSHDA. 

SME’s team of consultants are ready to help your Tax Increment Financing project

Finally, there are other considerations – this can all be paired with other incentives such as tax abatements and state grant/loan programs. Developers and communities can seek multiple incentives to complete a project. SME’s team of expert consultants are ready to help you finance your project. Whether you’re a local government seeking to revitalize your community or a developer looking to close the financing gap, our firm brings the insight, experience, and relationships needed to make your housing vision a reality. 

Michigan’s Housing TIF program is more than a funding tool, it’s a catalyst for inclusive growth. Let us help you harness its full potential.