Tax increment financing can help pay for assessment and remediation.
Tapping the public treasury for economic redevelopment incentives requires full understanding of the process. Here are the basic steps to obtaining brownfield redevelopment incentives:
1. Establish a brownfield redevelopment authority.
The Michigan Brownfield Redevelopment Financing Act allows a local government to form a brownfield redevelopment authority and access brownfield incentives. A village council, city council, township board, or county commission appoints the authority’s members and reviews and approves all brownfield redevelopment plans under its jurisdiction.
2. Identify eligible property.
To qualify for redevelopment incentives, the site must be declared contaminated or qualify as a “facility” by having unsafe pollution levels. However, in towns that the state has designated as “core communities,” a site that is blighted or functionally obsolete but non-toxic can also qualify. In 2003, the state added properties owned by a land bank. In northern Michigan, designated coastal core communities include Alpena, Cadillac, Cheboygan, Grayling, Ludington, Manistee, Pinconning, Sault Ste. Marie, and Traverse City.
Michigan Brownfield Redevelopment Following is a list of state brownfield redevelopment program aid categories, their enabling legislation, and their funding sources:
Programs, Legislation, Funding
Under the Brownfield Redevelopment Financing Act, brownfield authorities can recoup the costs of certain elegible activities through tax increment financing. There are three types of eligible activities: environmental, non-environmental, and public facility or service relocation. Environmental eligible activities include:
Michigan Brownfield Redevelopment
Following is a list of state brownfield redevelopment program aid categories, their enabling legislation, and their funding sources:
- “Baseline environmental assessment activities,” including Phase I and Phase II Environmental Site Assessments (ESAs) and Baseline Environmental Assessments (BEAs).
- “Due-care activities,” including plans and activities to prevent direct exposure to or exacerbation of existing contamination.
- “Additional response activities,” including remediation and/or removal of existing contamination. Additional eligible activities in core communities or on land bank property include:
- Improvements to infrastructure such as sidewalks, curbs, gutters, asphalt paving, utility mains for sanitary and storm sewers, water, natural gas, electricity, telecommunications, high-speed Internet, and public roads.
- Building demolition.
- Lead and asbestos abatement.
- Site preparation, which includes clearing, asphalt removal, grading, brush removal, and land balancing.
- Relocation of public buildings or operations for economic development purposes.
4. Prepare and approve the brownfield plan.
The brownfield plan outlines the eligibility, costs, effects, and incentives for the project. It must be approved by the Brownfield Redevelopment Authority and by the governing body of the redevelopment authority’s municipality. If a county board oversees the redevelopment authority, the municipality where the project is located must also concur. The review process includes requirements for notification and public hearings.
5. Negotiate a development agreement.
The agreement outlines the relationship between the private developer and the local brownfield authority for schedule, reimbursement of approved costs, shared project expenditures such as public infrastructure investments, and liability waivers.
6. Prepare and approve a work plan.
The plan outlines the eligible activities and costs. If state tax capture is sought, an Act 381 work plan must be submitted to the DEQ for environmental eligible activities and to the Michigan Economic Growth Authority (MEGA) for non-environmental eligible activities.
The work plan must include information on:
- The eligibility of the property for brownfield incentives.
- Current and proposed ownership and use.
- A detailed scope-of-work statement, with schedule and cost for each eligible activity.
The DEQ has 60 days to approve the environmental activities of the work plan; MEGA has 65 days to approve the non-environmental activities.
7. Capture taxes and reimburse eligible costs.
Once the state approves the work plan, activity can begin. Only costs for activities begun after the approval date qualify for tax increment financing. The increased taxes generated by the redevelopment flow to the developer in accordance with the development agreement.