PA 198 (Industrial Facilities Exemption)

PA 198 allows a Michigan municipality that has established an Industrial Development District to grant an Industrial Facilities Exemption Certificate (IFEC), which typically taxes new construction at roughly half the normal industrial rate for up to 12 years (the local unit sets the exact term within statutory limits), or, for rehabilitation of existing obsolete facilities, freezes the taxable value at its pre-improvement level so the improvement itself isn't taxed for the exemption period.

Approval runs through the local unit of government (and, for the abatement to take effect, the State Tax Commission), and is discretionary — a municipality is not required to grant an IFEC even where a project qualifies, and different municipalities apply different standards for job creation or investment thresholds before recommending approval.

PA 198 is a real underwriting variable for industrial buyers and developers evaluating new construction or major rehabilitation in Michigan; it's also relevant to former cannabis cultivation or processing buildings being converted to conventional industrial use, where the redevelopment can sometimes qualify for the rehabilitation exemption depending on the scope of improvement and local unit approval.