Washtenaw County Brownfield Redevelopment Authority

Washtenaw County Brownfield Redevelopment Authority

MEETING AGENDA

9:00 a.m., Thursday, March 3, 2016 Lower Level Conference Room

200 N. Main Street, Ann Arbor, MI 48104

1. Call to Order

2. Public Comment*

3. Approval of Minutes

a. December 3, 2015

4. Business

a. Water Street Brownfield TIF transfer – Discussion with City of Ypsilanti

b. Maple Shoppes Reimbursement Agreement Amendment Request

c. Adopted LSRRF Policy – Discussion on changes by V. Pebbles

d. 615 S. Main – Request to Form Brownfield Plan Sub-Committee

e. Brownfield Admin Revenue Report – Discussion Only

f. Financial Report of Jan-February 2016 – For Information Only

5. Public Comment*

6. Adjournment

*All public comment will be limited to three (3) minutes per person

For more information on this agenda please contact Nathan Voght, Washtenaw County Office of Community and Economic Development at (734) 222-3860 or [email protected].

Washtenaw County Brownfield Redevelopment Authority

Agenda Summary Memo

9:00 a.m., Thursday, March 3, 2016 200 N. Main, Lower Level

a. Water Street Brownfield TIF Transfer – Discussion

The Water Street Brownfield project generated its first TIF capture in 2015, from the Family Dollar construction. The TIF transfer amount ($3,507.39) has been finalized with the City of Ypsilanti Finance Director and the funds will be transferred soon. Given the complexity and size of this brownfield redevelopment project, the City needs to utilize any TIF capture generated from the site strategically, and may either seek to be reimbursed for its own eligible activities, such as environmental assessments, or direct the funds to reimburse for private party eligible expenses. At this time, no Reimbursement Agreement has been executed with either the City of Ypsilanti or other private party, which would allow us to distribute the funds. As a result, it’s possible the TIF funds will remain in the County’s project brownfield account for a number of months (more than a year?). Staff would like to discuss this further with the Board.

b. Maple Shoppes Reimbursement Agreement Amendment Request - Action

Please find attached a proposed amendment to the Maples Shoppes/ALDI Brownfield Reimbursement Agreement. I’ve attached the original RA, and two subsequent amendments (one of which simply assigned TIF payments from Chelsea Land to ALDI) for your reference. Mr. David Kapusansky, ALDI’s Director of Real Estate, is making this request. The amendment would change one section of the existing Reimbursement Agreement which prohibits any TIF reimbursement if any back taxes are owned. This change would allow release of TIF funds (currently $116,503, with an additional $21,000 to be deposited soon for 2015 capture) to ALDI, despite any back taxes on the adjacent parcel owned by Chelsea Land. The County’s Corporation Counsel, Curtis Hedger, has reviewed the proposed amendment and has provided an email that indicates no legal reason why the amendment could not be approved by the Brownfield Authority. The Board’s policy over the years has been to not reimburse any TIF funds if back taxes are owed, for obvious reasons. However, given the unique nature of this particular project, given two separate parcels and owners, and previous assignment of 100% of TIF to ALDI, an exception could be considered.

c. Adopted LSRRF Policy – Discussion/Action

Board member V. Pebbles asked that a clarification be discussed on the approved policy from December. It was her understanding that the Board’s intent was to include the Smart Growth Principles in both the grant and loan review criteria. Further, she didn’t think the word “additional” is necessary in the loan criteria, since all the criteria are now discretionary, no mandatory. Attached are the changes that she felt were intended at the Board’s meeting, but were not reflected in the final version.

d. 615 S. Main, City of Ann Arbor – Request to form Brownfield Plan Review Sub-Committee

A brownfield project is proposed for 615 S. Main in the City of Ann Arbor. The project was reviewed by the City of Ann Arbor Brownfield Committee on February 8th, and was given approval to proceed with

development of a Brownfield Plan. The developer is seeking reimbursement of environmental expenses only. Staff is requesting three volunteers to assist the project team with Plan development.

d. Brownfield Program Admin Revenue – Discussion

Below is a table showing 2014 Admin Revenue (which includes project application fees), and expenditures. We anticipate approximately $155,000 in Admin Revenue to be received from 2015 TIF capture from all active brownfield projects. While Admin Revenue has increased over the last few years, brownfield expenses have increased as well. Various County staff that assist with program administration, financial transfers, and account management bill their time to this fund. An increasing amount of time has been billed to brownfield program management, as increasing Admin revenue allowed. Prior to 2015, the County General Fund was essentially subsidizing the actual brownfield program costs. Projected Admin Revenue will decrease to $102,000 in 2 years, so additional program planning is advised over the next year. Buffering future revenue decreases with existing fund balance may be possible.

The “Misc.” costs include travel and mileage reimbursement, cell phone expenses, and conference expenses. “CAP” is the “Cost Allocation Plan” that the County Admin charges each department for internal IT, Facility management, Human Resources, Legal, and insurance costs. These charges are allocated based on total personnel hours billed through each County Department. I would be happy to discuss this further with the Board during the meeting.

Brownfield Admin - 17684610

Account Description 1/1/2014-12/31/2014

1/1/2015-12/31/2015

Inception-to-12/31/2015

Revenue Total $ 87,198.19 $ 114,437.35 $ 235,697.23

Salaries $ 34,890.77 $ 49,779.62 $ 101,774.42

Fringes $ 19,500.16 $ 27,772.93 $ 56,967.50

CAP $ 13,882.84 $ 20,889.88 $ 41,749.50

Misc. $ 998.44 $ 2,035.03 $ 3,319.94

Expenditure Total $ 69,272.21 $ 100,477.46 $ 203,811.36

Account Balance $ 17,925.98 $ 13,959.89 $ 31,885.87

e. Jan/Feb 2016 Financial Status Report

Please refer to the latest financial report. I’ve updated the spreadsheet for 2016. 2015 TIF revenue of approximately $155,000 is expected to be received in the next month, and will be reflected in the next report.

Washtenaw County Brownfield Redevelopment Authority (WCBRA)

Lower Level Conference Room 200 N. Main, Ann Arbor

DRAFT REGULAR MEETING MINUTES

Thursday, December 3, 2015

Board Present: Douglas McClure-Chair, James Harless-Secretary, Todd Campbell, Jeremy McCallion-Vice Chair (9:05 a.m.), Trevor Woollatt, Victoria Pebbles

Board Absent: Yousef Rabhi, Matt Naud, Mark Heusel Staff: Nathan Voght In Attendance: None Handouts: 1. Call to Order

Chair McClure called the meeting to order at 8:34 a.m.

2. Public Comment

D. McClure asked if there was any public comment, and there was none.

3. Approval of Minutes J. Harless moved to approve the minutes from November 3, 2015 (2nd Woollatt), and the motion passed unanimously.

4. Business

a. LSRRF Policy – Review/approve final draft N. Voght referred to the LSRRF policy provided in the Board packet. The document includes proposed revisions to the boilerplate policy previously approved in 2014. The Board discussed the need to update the LSRRF policy and provided specific guidance and ideas about needed amendments at the August 3, 2015 meeting. These changes included adding additional criteria for sustainable building elements, green energy, and Smart Growth principles. An LSRRF sub-committee was formed, composed of members D. McClure, M. Naud and J. McCallion, to develop revisions and make a recommendation to the full board. The revisions presented for this meeting are the result. N. Voght opened the LSRRF policy document with proposed revisions on the overhead projector so the Board could discuss the revisions and make final changes dynamically. J. Harless discussed a few minor edits with the Board. A question came up regarding the last bullet under the “LSRRF Grants” section on page 2, and whether the BRA can reimburse itself using TIF from a project for any grant funds given. An updated Reimbursement Agreement for loan repayments will be required. J. McCallion arrived at 9:05 a.m.

N. Voght referred to the “LSRRF Program Review Criteria” section related to determination of loan award. The first criterion related to whether the project provides permanent affordable housing in the Ann Arbor Urbanized area must be considered for any loan. While, some additional factors “may” be considered for any loan award including location in traditional downtowns, job creation, environmental contamination mitigation, blight removal, and smart growth principles. N. Voght explained the proposed approach for the award of any loans. He updated the Board on the 2015 Housing Affordability and Economic Equity Analysis that was commissioned by the County Office of Community and Economic Development. The County OCED has convened a regional working group to explore implementation of a variety of strategies to 1) create more permanent affordable housing in the Ann Arbor urbanized area (includes Pittsfield Twp), and 2) encourage more quality market rate housing in the Ypsilanti urbanized area (includes Ypsilanti Twp). The County has recognized the role it can play in organizing and leading a concerted effort to address the affordable housing crisis. The Ypsilanti area can no longer serve as the de facto affordable housing supply for Ann Arbor. The disparity between these areas has grown dramatically and will lead to economic suffering for the region if not addressed. With the proposed language, the Board would be required to consider whether a project provides the kind of affordable housing that is needed. Mr. Voght explained that this does not mean that a project could not be approved, if it didn’t provide such housing-only that the issue of affordable housing is being “called out” in this policy, and that if a residential development was proposed in the Ann Arbor urbanized area, whether affordable housing was provided would be a primary factor. Mr. Voght further stated that because LSRRF funds are 100% discretionary on the part of the Brownfield Authority, it’s a clear opportunity to ensure we are concurrently advancing other critical regional goals beyond just financing eligible brownfield activities. T. Campbell stated that he was opposed to calling out Ann Arbor and Ypsilanti, when County resources should be equally considered for all parts of the region, including smaller towns. He stated that some areas of the County feel that there is an over emphasis on the Ann Arbor/Ypsilanti area. N. Voght explained that, in the case of affordable housing, the problem is particularly acute in the (Ann Arbor/Ypsi) urbanized area, where 65% of the county population resides. Therefore, there’s a necessary focus on this area-where the majority of the jobs and population exists. N. Voght explained that the policy as presented does not prohibit funding any projects using LSRRF in areas outside of the Ann Arbor and Ypsilanti areas. It only suggests that, for residential projects proposed within these areas, affordable housing must be considered. N. Voght further suggested that the County has an obligation to look at equitable allocation of resources to those areas that may need it. He said that as Ypsilanti goes, so does Saline. As Ypsilanti goes, so does Ann Arbor. The region as a whole suffers when gross disparity exists. Some Board members indicated they were not in agreement with this. J. Harless stated he is concerned that this approach sounded like social engineering. Another board member agreed. N. Voght stated the he does not agree with that. It’s about understanding that we’re all in this together, and the region suffers from economic, housing, and social disparities that exist. He stated that he’s not only representing the work that the Office of Community and Economic Development is engaged with, but is personally committed to this issue as an urban planner. The LSRRF funding is a very good opportunity to control and direct resources towards this issue. D. McClure said that he understands that County’s focus on affordable housing, and efforts to address economic disparities. He stated he can see that Mr. Voght is passionate about this issue. However, it seems that the Brownfield Authority board members are not in favor of the language as presented. It is understood that, if the Board of Commissioners is not happy with that direction, different Brownfield Authority members can be appointed. Further direction was provided by Board members to remove the language in the draft revisions to the LSRRF Policy that refer to the affordable housing study, and also simplify the criteria related to Smart Growth principles and just provide a link.

A motion was made by J. Harless to approve the LSRRF policy as revised and edited by the Board during the meeting (2nd T. Campbell), and the motion passed unanimously.

5. Public Comment There was none. 6. Adjournment

J. Harless moved to adjourn the meeting at 9:57 a.m., (2nd V. Pebbles), and the motion passed unanimously.

These minutes were approved by the Washtenaw County Brownfield Redevelopment Authority at the _______________, 2016 regular meeting.

WASHTENAW COUNTY BROWNFIELD REDEVELOPMENT AUTHORITY

SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT

THIS SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT (this "Second Amendment") is made and entered into effective as of the ______ day of ____________________, 2016, by and between ALDI INC. (MICHIGAN), a Michigan corporation ("ALDI"), having an address of 2625 North Stockbridge Road, Webberville, Michigan 48892, CHELSEA LAND COMPANY MAPLE, LLC, a Michigan limited liability company ("Chelsea", and together with ALDI, "Owner"), having an address of 206 South Fifth Avenue, Ann Arbor, Michigan 48104, and the WASHTENAW COUNTY BROWNFIELD REDEVELOPMENT AUTHORITY, a Michigan public body corporate (the "WCBRA"), having an address of 110 North Fourth Avenue, P.O. Box 8645, Ann Arbor, Michigan 48107. ALDI, Chelsea and the WCBRA are at times referred to herein collectively as the "Parties".

A. The Parties previously entered into that certain Reimbursement Agreement, bearing an Effective Date of December 10, 2008, as amended by that certain Reimbursement Agreement Amendment dated effective as March 9, 2009 (collectively, the "Agreement"), pertaining to certain real property located in Washtenaw County, Michigan, and being more particularly described in the Agreement (the "Property"). Capitalized terms not otherwise defined in this Second Amendment shall have the same meanings ascribed to such terms in the Agreement.

B. The Parties desire to amend the Agreement pursuant to Section 10.5 thereof for the purposes set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Section 5.2(d) of the Agreement is hereby amended and restated in its entirety to read as follows:

"(d) ALDI shall pay when due all real estate tax obligations pertaining to the portion of the Property owned by ALDI and Chelsea shall pay when due all real estate tax obligations pertaining to the portion of the Property owned by Chelsea. Notwithstanding anything to the contrary contained in this Agreement, ALDI shall be entitled to receive a reimbursement from the WCBRA upon the payment by ALDI of the real estate tax obligations pertaining to the portion of the Property owned by ALDI. ALDI shall be entitled to such reimbursement regardless of whether Chelsea has paid the real estate tax obligations pertaining to the portion of the Property owned by Chelsea."

1 203924419.1 19089/121359

2. Except as set forth herein, the Agreement shall remain in full force and effect and unmodified, and the Agreement, as amended hereby, is hereby ratified, confirmed and approved in all respects.

3. In order to expedite the action contemplated herein, this Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Second Amendment, for the same effect as if all parties hereto had signed the same signature page, and a facsimile copy or electronic mail copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Second Amendment (whether original, facsimile or electronic mail) may be detached from any counterpart of this Second Amendment (whether original, facsimile or electronic mail) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Second Amendment (whether original, facsimile or electronic mail) identical in form hereto but having attached to it one or more additional signature pages (whether original, facsimile or electronic mail). The Parties intend to be bound by the signatures on the facsimile or electronic mail document, are aware that the other party will rely on the facsimile or electronic mail signatures, and hereby waive any defenses to the enforcement of the terms of this Second Amendment based on such form of signature.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

2 203924419.1 19089/121359

IN WITNESS WHEREOF, the Parties have executed this Second Amendment effective as of the date first written above.

ALDI:

ALDI INC. (MICHIGAN), a Michigan corporation

By:

Name: Ryan Fritsch

Its: Vice President

CHELSEA:

CHELSEA LAND COMPANY MAPLE, LLC, a Michigan limited liability company

By:

Name:

Its:

WCBRA:

WASHTENAW COUNTY BROWNFIELD REDEVELOPMENT AUTHORITY, a Michigan public body corporate

By:

Name:

Its:

[Signature Page to Second Amendment to Reimbursement Agreement]

3 203924419.1 19089/121359

1

Nathan Voght

From: Curtis HedgerSent: Thursday, February 18, 2016 10:05 AMTo: Nathan VoghtSubject: Aldi Amendment

Nathan.  I reviewed the proposed Second Amendment to the Reimbursement Agreement you sent me and I found no legal reason why this Amendment could not be implemented even though the Chelsea property still owes back taxes.   This is because of the earlier approved Amendment which assigned to Aldi the right to receive all of the TIF reimbursement for the cleanup of both properties.  As you’ll recall, Aldi paid for the entire clean‐up.  Ultimately, it will be up to the Brownfield Board to decide whether to approve the Second Amendment given the outstanding property taxes on the Chelsea property.   

Washtenaw County Brownfield Redevelopment Authority

Local Site Remediation Revolving Fund (LSRRF) Policy

Purpose: The Washtenaw County Brownfield Redevelopment Authority (WCBRA) established a Local Site Remediation Revolving Fund (LSRRF) to assist with brownfield projects in WCBRA member communities. This policy is hereby adopted to guide review of applications for LSRRF loan or grant funds in support of brownfield activities.

Eligibility

Non-profit organizations, local units of government, state-sanctioned economic development organizations, land banks, and private developers may apply for LSSRF loan funds for brownfield projects located in WCBRA member communities. Non-profit organizations, state-sanctioned economic development organizations, land banks, and local units of government may apply for LSRRF grant funds.

Activities

The LSRRF will be used to further the purpose of the Program, which is to facilitate the redevelopment of previously developed sites classified as a “facility”, historic resource, functionally obsolete or blighted, or as otherwise eligible, as defined in PA 381 of 1996, as amended (Act 381).

The LSRRF may be used only to pay the costs of eligible activities on eligible property as both are defined in Act 381. The WCBRA may prioritize applications for available funds, is under no obligation to fund all or any projects, and shall review each application on a case-by-case basis.

LSRRF Program Requirements

• Use of LSRRF funds:

o LSRRF funds may be used to support redevelopment of brownfields in Washtenaw County in the form of grants to a non-profit organization, state-sanctioned economic development organization, land bank, or local unit of government (LUG) that has joined the WCBRA.

o LSRRF funds may be used to provide revolving loans to a non-profit organization, state-sanctioned economic development organization, land bank, local unit of government that has joined the WCBRA, and private developers to support redevelopment of brownfields in Washtenaw County Brownfield Authority member communities.

Washtenaw County Brownfield Redevelopment Authority

o LSRRF funds may be used by the WCBRA to conduct eligible activities when such use is deemed necessary to encourage redevelopment of a brownfield site.

• LSRRF Grants:

o Grants may be awarded to an eligible entity to finance Act 381 eligible activities on sites that will be tax-exempt after redevelopment.

o Eligible entities must not be a liable party, as defined in Part 201 of the Michigan Natural Resources and Environmental Protection Act (PA 451 of 1994, as amended).

o Grants will not exceed the current maximum amount established by the WCBRA by resolution and will be prioritized to fund environmental due diligence, BEA, due care assessment, due care, and other environmental response activities, in that order.

o An application (internet link here), which must provide a project description and how grant funding is critical to the project and consistent with WCBRA policies and procedures (insert link here), is required for any LSRRF grant request.

o The WCBRA may seek Tax Increment reimbursement of some or all grant funds using Tax Increment Financing as part of the approved Brownfield Plan for the project.

• LSRRF Revolving Loans

o LSRRF loans are intended to support development projects that are demonstrated to be economically viable to the satisfaction of the WCBRA. The WCBRA may request project financial information suitable for project developer viability evaluations.

o Loans will be provided only to owners of property for which a Brownfield Plan has been approved by the WCBRA.

o Only one loan may be given to each project. The loan amount for any project shall not exceed more than $1,000,000, or the amount available in the LSRRF, whichever is less.

Washtenaw County Brownfield Redevelopment Authority

o The tax increment capture from the project shall be pledged to loan repayment, and Additional financial security may also be requested by the WCBRA.

o The repayment period for each loan will be negotiated, but generally will not exceed 15 years. The loan interest rate, amortized over the loan period from the date of first payment, shall be 50 percent of the Wall Street Journal Prime Rate on the date of loan closing. To accommodate project economics, the date of first payment may be deferred up to the date of first tax increment capture under the approved Brownfield plan, but deferral shall not exceed three years after the loan closing date, with an option to request two, one-year extensions.

o An application (internet link here), which must provide a project description and how the loan funding is critical to the project and is consistent with WCBRA policies and procedures (insert link here), is required for any loan request.

o A non-refundable LSRRF loan application fee of $1,000 is required.

o Any loan approval is contingent upon Brownfield Plan approval and execution of a Loan Agreement between the applicant and the WCBRA that details all aspects of the loan.

LSRRF Grant Review Criteria:

The following factors may be considered in determining any grant award:

- The project provides a benefit to the host community or region by creating or improving recreational, tourism, or educational opportunities; supporting or improving governmental operations; removing blight; redeveloping brownfields; or providing other social support and public services.

- The degree to which the project meets Smart Growth Principles.

- The host community government provides a resolution of support.

- Funding or funding commitments sufficient to complete the project are available.

LSRRF Loan Review Criteria

The following additional factors may be considered in determining any loan award:

Washtenaw County Brownfield Redevelopment Authority

- The project is a viable development that will result in creation of additional tax base for the host community and county.

- Location of the site within traditional downtowns and existing commercial and industrial areas.

- The number of local temporary and permanent jobs created as a result of the redevelopment.

- The extent to which the project reduces the extent, migration, and/or exposure to environmental contamination.

- The project will remove a significantly blighted property.

- The degree to which the project meets Smart Growth Principles.

Adopted August 7, 2014 by the Washtenaw County Brownfield Redevelopment Authority

Revised and Re-Adopted December 3, 2015

WCBRA Financial Report ‐ January‐February, 2016

Project

Toyota 

Technical Center Maple Shoppes Michigan Inn 601 S. Forest Zingerman's ** LaFontaine Arbor Hills 618 S. Main 

Jiffy 

Warehouse/14

0 Buchanan 544 Detroit Packard Square

Water 

Street

Project Parameters

*Brownfield Plan ‐ Approved Maximum Activities 5,125,000.00$    1,209,027.00$  655,640.00$   6,252,760.00$   1,428,410.00$   330,330$         6,658,624.00$    4,628,636.00$    580,676.00$     698,773.00$  

Certified Eligible Activity Expenses 4,895,263.00$    1,010,042.00$  397,839.13$   3,945,184.00$   600,218.85$      95,067.81$     5,400,000.00$   

Certified Eligible Activity Expense Reimbursed to Date 4,467,933.03$    221,314.47$     157,248.72$   2,220,983.81$   56,134.33$        64,004.21$     462,010.93$       

Remaining Certified Eligible Activity Expenses 427,329.97$       788,727.53$     240,590.41$   1,724,200.19$   544,084.52$      31,063.60$     4,937,989.07$    ‐$                      ‐$                   ‐$                 

Project Financial Activity

12/31/15 Fund Balance  ‐$                     116,503.17$     ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      31,161.76$       788.86$          

TOTAL 2016 REVENUESApplication Fee ‐$                     ‐$                    ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      ‐$                  

TIF Revenue/Capture ‐$                     

Total Revenues ‐$                     ‐$                    ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      ‐$                   ‐$                  ‐$                      ‐$         

2016 EXPENDITURESCertified Expense Reimbursement ‐$                      ‐$                   ‐$                  ‐$                      ‐$         

Administrative Fee Transfer

LSRRF Deposit ‐$                     ‐$                    ‐$                 ‐$                      ‐$                  ‐$                      ‐$                      ‐$                   ‐$                  ‐$                      ‐$         

State of MI Brownfield Fund ‐$                     ‐$                    ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      ‐$                  ‐$                      ‐$         

Total Expenditures ‐$                     ‐$                    ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      ‐$                   ‐$                  ‐$                      ‐$         

Current Balance ‐$                     116,503.17$     ‐$                 ‐$                      ‐$                     ‐$                  ‐$                      ‐$                      31,161.76$       788.86$           ‐$                      ‐$         

* Includes Admin and LSRRF Funds

Total fo all 2016 Admin Transfers ‐$                    

Total of all 2015 Admin Transfers 114,437.35$      

Total of all 2014 Admin Transfers 87,198.19$        

12/31/15 LSRRF Balance 35,848.02$        

12/31/14 LSRRF Balance 30,304.32$        

12/31/13 LSRRF Balance $8,785.00

CURRENT LSRRF Balance 35,848.02$        

Transaction Approvals Requested  

** Zingermans: Plus, up to $229,072.15 in interest was certified