Act 425 Intergovernmental Agreement for Development
What - Act 425 Agreements allow two or more local governments to cooperate and share the costs and benefits of economic development. For example, a City with excess capacity in utilities or special development incentives, can partner with a Township that has large undeveloped tracts of land. By doing so, both the City and Township can provide the ingredients that a business needs to grow. With the Agreement, both the upfront public costs of infrastructure to support the development and the new taxes it generates are shared by the City and Township. The two communities also can share the responsibilities of providing police, fire and other vital services to the new development.
Who - Any two or more local incorporated governments in Michigan can enter into an Act 425 Agreement. For example two Cities, three Townships or a City and Township are three possible combinations of parties to an agreement. The terms of the agreement are negotiable and provide the flexibility to fit most economic development situations.
Why - Michigan with its strong form of local government, has thousands of local governments. Today's competitive world makes it imperative that we cooperate regionally so we can continue to thrive economically. Also diminishing local tax revenues and a struggling economy necessitate efficiency in local government. Inter-governmental cooperation with the use of tools like the Act 425 Agreement is vital if we want to retain the high quality of life and economic opportunities we are accustom to in Michigan.