Brownfield and Land Bank Development Tools Training · 3/10/2020 · Brownfield Redevelopment is the process of cleaning up and reinvesting in brownfield properties which protects

Brownfield and Land Bank Development Tools TrainingWhat are Brownfields?

Dickinson Area Economic Development Alliance

March 10, 2020

Acronym Trivia

• EGLE =

• MEDC =

• MSF =

• LUG =

• TIF/TIR =

• BRA =

• UST =

• LUST =

• ESA =

• BEA =

• DDA =

Acronym Trivia

• EGLE = Environment, Great Lakes and Energy

• MEDC = Michigan Economic Development Corporation

• MSF = Michigan Strategic Fund

• LUG = Local Unit of Government

• TIF = Tax Increment Financing/Tax Increment Revenue

• BRA = Brownfield Redevelopment Authority

• UST = Underground Storage Tank

• LUST = Leaking Underground Storage Tank

• ESA = Environmental Site Assessment

• BEA = Baseline Environmental Assessment

• DDA = Downtown Development Authority

Facility: Contaminated

Functionally Obsolete: Can’t be used for its original purpose

Blighted: Public nuisance, dangerous, eyesore,

or property owned or under control of a Land Bank

Historical Resource: Historic building or structure

Other potential eligible properties:▪ Adjacent and Contiguous▪ Tax Reverted Property▪ Targeted Redevelopment Area▪ Transit-Oriented Property or Development

What are Brownfields? State of Michigan Definition

▪ Landfills and dump sites▪ Mine-scarred lands▪ Industrial sites▪ Commercial facilities▪ Publicly owned/government buildings and land▪ Vacant schools▪ Former health care facilities▪ Abandoned and vacant buildings▪ Dry-cleaning facilities▪ Gas stations▪ Railroad yard▪ Vacant land▪ Distressed housing▪ “Main Street” buildings

Examples of Brownfields

What is Brownfield Redevelopment?

Brownfield Redevelopment is the process of cleaning up and reinvesting in brownfield properties which protects the environment, protects health, reduces blight, and takes development pressures off greenspaces and agricultural land.

▪ According to the U.S. Government Accounting Office, there are an estimated 425,000 brownfields throughout the U.S.

▪ The State of Michigan has approximately 42,912 “brownfield sites.”

▪ Dickinson County has approximately 146 known sites of environmental contamination according to EGLE’s Inventory of Facilities Database (Includes Part 201/Part 213 and BEA sites).

Site Redevelopment Challenges

▪ Apparent/obvious disinvestment

▪ Known or perceived environmental contamination – soil, groundwater, unknown

▪ Lead and asbestos concerns

▪ Underground storage tanks

▪ Need for total or partial demolition

▪ Lack of infrastructure

▪ Corporate “moth-balled” sites

▪ Junk/debris

Benefits of Brownfield Redevelopment

▪ Increase investment, jobs, and revenue

▪ Opportunity for focused redevelopment, e.g., workforce housing, greenspace

▪ Reuse existing infrastructure

▪ Encourage redevelopment

▪ Recovery of tax base

▪ Improve value of surrounding property

▪ Preserve historic and cultural community icons

▪ Conduct environmental cleanup

▪ Reduce sprawl

Before

After

Michigan Act 381 of 1996, as amended (Brownfield Redevelopment Financing Act)

▪ Primary law that allows the creation of Brownfield Redevelopment Authorities and dictates the makeup and powers of an Authority (BRA)

▪ Defines:

• Eligible properties

• Eligible activities

• Rules related to tax increment capture through a Brownfield Plan

• How to interact with the regulatory agencies (i.e., EGLE, MEDC, Department of Treasury)

• Relationships with Local Units of Government

• How to interact with the Local Units of Government and the general public

• Local Brownfield Revolving Fund (LBRF)

Brownfield Redevelopment Authorities

▪ Broad range of capabilities

▪ Primary use:

• Provide funding/financing of brownfield eligible activities that may create a project financing gap

o Brownfield Plans – Tax increment financing

o Secure and implement grants/loans – EPA, EGLE

LOCAL BRAs:• Dickinson County*• Iron Mountain• Kingsford

* Cannot act independently from the local units of government

Brownfield Redevelopment Authorities

▪ Local municipality and/or county-wide

▪ Brownfield “Redevelopment” Plans

• Tax increment financingo Reimburses eligible brownfield costs & activities

− Due Diligence/Due Care

− Site cleanup

− Demolition/lead/asbestos abatement

− Site preparation (Core Communities, Land Banks)

− Public infrastructure (Core Communities, Land Banks)

o Funds future projects through local revolving fund

• Can be layered with other incentives

Core Communities:• Iron Mountain• Kingsford• Norway

Brownfield Plans

▪ Method to finance eligible activities by capturing local and potentially state tax increment

• Plan term – maximum 35 years• Tax Increment Revenue (TIF) capture – maximum 30 years• Transformational Brownfield Plan

o Allows 20-year capture of:− Construction period income tax− Construction period sales tax exemption− Construction period use tax exemptions− Income tax capture− Withholding tax capture

• Act 381 Work Plans required for school tax capture on certain eligible activities – approvals by EGLE and/or MSF

• TIR can be used to repay EPA/EGLE/LBRF Loans

Tax Increment Financing

The New (Incremental) Taxes are used to Reimburse the Party that Financed (Developer and/or Authority) the Eligible Activities Described in the Brownfield Plan.

▪ Tax increment = new taxable value – initial taxable value (based on new investment)

▪ Plans limit amount of Eligible Activities to be reimbursed and the amount of time for reimbursement

▪ Once the Plan reaches one of these limits, it is ended and all future tax increment accrues to the individual taxing jurisdictions

Brownfield Plans and Tax Increment Financing

What are “Eligible Activities”? (Redevelopment Expenses)

▪ EGLE (Environmental):

• Phase I and II ESAs, BEAs, Due Care activities, response activities, removal and closure of USTs, disposal of solid waste, dust control, removal and disposal of lake or river sediments, industrial cleaning, certain sheeting or shoring, lead, mold, or asbestos abatement.

• Demolition that is a response activity

▪ Preparation of Brownfield Plans and Work Plans

▪ Brownfield Plan and Work Plan implementation

What are “Eligible Activities?”

Non-Environmental (Michigan Strategic Fund – MSF):▪ Demolition that is not a response activity (MSF)

▪ Asbestos/lead abatement (MSF)

▪ Site preparation that is not a response activity (MSF – Core Community or Land Bank)

▪ Infrastructure improvements (MSF – Core Community or Land Bank)

▪ Relocation of public buildings or operations (MSF – Core Community or Land Bank)

▪ Develop/prepare Brownfield Plans and Act 381 Work Plans

▪ Administrative and eligible activities of BRA ($100,000+ annually, depending on number of projects)

Core Communities:• Iron Mountain• Kingsford• Norway

Brownfield Plans

▪ Per pupil school funding is not affected when school tax millages are captured in a Brownfield Plan

▪ Interaction with other LUG, County, Library taxes, and other debt/millages

▪ Reimburses eligible brownfield costs only if project creates tax increment from new investment and the taxes are paid

▪ Reimburses Authority expenses and funds LBRF for future projects

Brownfield Plans and Potentially Exempted Millages

▪ School taxes State Education Tax (6 mil) and Operating Tax (18 mils)

• Unless Act 381 Work Plan has been approved (EGLE and/or MSF)

▪ Special assessments

▪ Debt millages

▪ Abatements/Exemptions (198, 328)

▪ Other TIFA Districts

• DDA, LDFA, OPRA, etc.

Brownfield Plan Approval Process

▪ Developer (Authority) prepares brownfield plan according to Act 381:▪ https://www.miplace.org/programs/brownfield-tax-increment-financing/

▪ BRA approves plan and recommends adoption subject to:▪ If local BRA:

▪ Notification to taxing jurisdictions▪ Noticed public hearing held by governing council▪ Adoption by resolution by governing council

▪ If County BRA: ▪ Notification to taxing jurisdictions▪ Resolution, by LUG in which project is occurring, concurring with the terms

of the plan▪ Noticed public hearing help by County Board of Commissioners▪ Adoption by resolution by Board of Commissioners

▪ Timing – plan for 60-90 days

https://www.miplace.org/programs/brownfield-tax-increment-financing/

Post Brownfield Plan Approval

▪ Brownfield Plan should have a Reimbursement Schedule

▪ Development and Reimbursement Agreement • “Rules of Engagement”

• Who gets what when

• Tax appeals

• Default

• Reimbursement procedures

Brownfield Plan Implementation

▪ Brownfield Plans are dynamic and can change over time –Plan assumptions/estimates become reality and reality may not fit with the assumptions

▪ Issues that may affect the Plan include:• Changes in TV, e.g., FTV is less than ITV

• Tax appeals

• Tax abatements/exemptions

• Property splits or combinations

• New or changed tax millages

• Delinquent taxes – Delinquent Tax Revolving Fund

• Changes in PRE vs Non-PRE

• Developer default

• Plan amendments

Brownfield Plans and Land Banks

▪ Used to reimburse eligible environmental and non-environmental activities

• Property owned or under the control of a Land Bank expands eligible non-environmental activities normally only allowed in a Core Community

▪ Land Banks allowed to use TIR for eligible activities on any eligible properties owned or under control of Land Bank (multi-site BF Plan)

• Leverage higher value properties to conduct activities on lower value properties

Brownfield Plans and Land Banks

▪ Land Banks can be reimbursed for clearing or quieting title, selling property, or acquiring property

• Unfunded financing gap – affordable housing

▪ Brownfield Plans can be layered with the Eligible Tax Reverted Property Specific Tax (5/50)

▪ Zero initial taxable value creates larger opportunity for tax increment for reimbursement

Project Profiles

Teal Lake Senior Living CommunityNegaunee, Michigan

Teal Lake Senior Living Community, Negaunee

The Teal Lake Senior Living Community project served as the catalyst for the revitalization of a 32-acre vacant brownfield site that had been idle since historic mining operations ceased.

▪ Project involved the redevelopment of a former mining operations area with waste rock piles, contaminated soil, and other debris.

▪ Included an extension of a road and utilities.

▪ Construction of a 32,000-square-foot, 40-unit assisted living facility.

▪ A Brownfield Plan, in conjunction with the Marquette County Land Bank, was utilized to offset eligible environmental and non-environmental costs.

Teal Lake Senior Living Community – Results

Project Investment: ~$5,572,000

Developer Reimbursement: ~$1,500,000

Property Area: 6.4 acres

New Jobs: 26

Funding Sources:

▪ EPA Brownfield Assessment Grant/Brownfield Plan

▪ City of Negaunee

▪ Hinkson Negaunee Properties LLC

▪ Marquette County Land Bank Authority

Project Partners:

▪ City of Negaunee

▪ City of Negaunee Electric Utility

▪ Hinkson Negaunee Properties LLC

▪ Marquette County Brownfield Redevelopment Authority


Teal Lake Senior Living Community

▪ Site was a “facility” and thus an eligible property to be enrolled in a Brownfield Plan.

▪ Not in a Qualified Local Unit of Government, so Brownfield Plan benefits were limited without the use of the Land Bank Authority.

▪ Site redevelopment required significant public infrastructure, an eligible activity for a Brownfield Plan (Core Community or Land Bank).

▪ Land Bank Authority acquired property and maintained ownership through the Brownfield Plan adoption process, which expanded the eligible activities available for reimbursement.

▪ Land Bank conveyed the property back to a new property owner. Land Bank ownership ended prior to December 31 of that year. Property still subject to the Eligible Tax Reverted Property Specific Tax. Brownfield Plan can capture the remaining 50% of the specific tax.

Borough Ish, Ishpeming

Borough Ish was formerly a gasoline service station and auto repair shop on a main thoroughfare leading into downtown Ishpeming.

▪ The building was constructed around 1940.

▪ It was determined to be a facility; redeveloping the existing structure was not viable.

▪ The owner was unwilling to negotiate acceptable terms of sale to private parties.

▪ County Land Bank Authority strategically negotiated acquisition, preparation, and sale of property.

▪ The structure was ultimately demolished.

Borough Ish – Results

Project Investment: ~$250,000 – $350,000


New Jobs: 4

Funding Sources:


▪ EGLE “Refined Petroleum” Grant ($200,000)

▪ Gauthier Enterprises, LLC


Project Partners:

▪ Gauthier Enterprises, LLC



Borough Ish

▪ The property was acquired by the Marquette County Land Bank.

▪ Environmental investigation and testing were completed to determine the extent of contamination.

▪ EGLE Refined Petroleum Grant was used to remove three underground storage tanks, complete building demolition, soil sampling and associated contaminated soil removal and disposal.

▪ Significant investment by State DOT and local government to improve the thoroughfare.

▪ When the cleanup activities were complete, the Authority conveyed the property to the private developer who intends to construct a commercial building.

▪ Upon conveyance, the property is subject to the Eligible Tax Reverted Property Specific Tax for five years.

Stone Reflections, Inc., Negaunee

The Marquette County Land Bank Authority acquired a parcel in 2014 through tax reversion. An adjoining granite and solid surface countertop company expressed interest in the property for an expansion.

▪ At the time of the acquisition, a 1,008 ft2, vacant, blighted house was on the property.

▪ An asbestos survey was conducted on the house with the intent to demolish the building and remove other debris and garbage throughout the property.

▪ The Land Bank Authority funded the demolition.

▪ After the property was ready for redevelopment, Stone Reflections, Inc. purchased the property and constructed a 10,000 ft2 addition that connected to their building.

Stone Reflections, Inc. – Results

Project Investment: ~$509,000

Developer Reimbursement: ~$27,000


New Jobs: 6

Funding Sources:


▪ Stone Reflections, Inc.



Project Partners:



▪ Negaunee Township

Stone Reflections, Inc.

▪ This redevelopment project supported the expansion of a successful small business.

▪ It created investment in the community, an expanded tax base, and new employment opportunities.

▪ The Land Bank Authority played a critical role in the community by eliminating a blighted property within the township that detracted from the value of adjacent properties.

▪ The Brownfield Redevelopment Authority provided tax increment financing through a Brownfield Plan to reimburse eligible activities of the developer and the Land Bank’s demolition costs.

Land Banks and Brownfield Redevelopment Authorities

▪ Powerful and uniquely flexible economic development resources

▪ Can act as a facilitator to economic development/ redevelopment

▪ Can act as developer

▪ Allows projects to move forward that become stalled due to site conditions and/or financing gaps

▪ Requires patience, innovation, stamina, and an open mind

▪ Strengthens incentives which can attract investment in communities

Wrap-Up

▪ Brownfield Redevelopment Authorities and Land Banks are very powerful economic development tools

▪ Be creative and innovative when applying these tools –flexibility is possible

▪ Bring Brownfield discussion to the potential development early

▪ Ability to layer incentives on a project:

• Grants, loans, TIF, tax abatements, etc.

▪ Ability to close the “unfunded gap” on a project

▪ Leverage other grant/loan programs – potential funds to overcome site conditions

Contact

Jeff Hawkins, CEOEnvirologic(800) 272-7802

[email protected]

www.envirologic.com

mailto:[email protected]

http://www.envirologic.com/

Brownfield and Land Bank Development Tools Training · 3/10/2020 · Brownfield Redevelopment is the process of cleaning up and reinvesting in brownfield properties which protects

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