Governor, Mayor Hatched State’s Brownfield Boom
New guide explains redevelopment basics to developers, officials
January 5, 2006 | By Keith Schneider
and Mac McClelland
Great Lakes Bulletin News Service
Mayor John Logie (left) and Governor John Engler
Part Two of a Series
Much of Michigan’s success with growing jobs and homes on land once occupied by lifeless dumps and factories comes from two strong-willed men joined by a common purpose.
According to a report published by the Michigan Land Use Institute, entitled New Plans for Barren Lands, collaboration years ago between Grand Rapids Mayor John Logie and Republican Governor John Engler led to the highly effective state program. Mayor Logie, a lawyer and land use expert, faced a maddening obstacle to redeveloping the state’s second-largest city: It simply cost too much to clean up abandoned industrial sites. Meanwhile Governor Engler, a lower-tax, less-government, anti-regulatory, movement conservative, was looking for new ways to help his business allies.
The mayor and the governor began their terms in 1991; each won election by touting the power of government to encourage economic development. Both were also able to sort through complexity and find simple and effective solutions. Both described the state’s brownfields problem as one of “burdensome” regulation hurting business and job growth.
They proposed a three-fold solution:
First, change the cleanup health standards by allowing trace levels of contamination to remain on redeveloping property. The allowable levels would vary depending on property use; a site destined to be a schoolyard faced stricter cleanup standards than, say, one that would host a manufacturing plant.
Second, change liability provisions and the approach to “polluter pays" principles. That meant that entrepreneurs gutsy enough to buy and redevelop brownfield sites would not pay for cleanups of pollution they did not cause. That enabled developers to acquire and build on contaminated property while regulatory and legal processes unfolded, rather than waiting while lengthy and contentious legal battles ensued.
Third, grant developers access to state funds, tax breaks, and other publicly managed incentives that make brownfield redevelopments easier to finance.
Active Debate Yields Proven Program
The state Legislature enacted the changes in environmental law in 1995 and passed the brownfield financing act in 1996. At first, the ideas triggered furious debate over the wisdom of releasing industrial companies from their civic responsibilities and whether higher levels of contamination would harm people.
But amid the controversy, some of which remains, an unmistakable result emerged: The changes to cleanup laws that Mr. Logie proposed and Mr. Engler and the Legislature enacted provide a crucial economic boost to the state’s cities. Brownfield incentives are responsible for $4 billion in new investment, primarily in Michigan cities, according to the state Department of Environmental Quality. The state counts 13,700 new jobs established as a result of such investments. According to the Northeast Midwest Institute, developers have built more than 1,500 homes, apartments, and condominiums on former Michigan brownfield sites since 1997.
The Institute report, which looked most closely at brownfield projects in northwestern Michigan, found that Traverse City and Mason County have led the way in brownfield redevelopment in that part of the state. Traverse City, as of 2004, had netted more than $27 million in state brownfield redevelopment grants, loans, and tax incentives, more than any other city in Michigan. A handful of other communities, including East Jordan and Frankfort, have also staged successful downtown revitalizations by using brownfield incentives
These notable exceptions aside, northwestern Michigan has not been nearly as involved in the brownfield resurgence sweeping the state as it could be. While the primary target of the program is large urban centers with extensive contamination and abandoned buildings, brownfield incentives are available for any contaminated property that goes through an approval process.
Where Brown Meets Green
The New Plans report lists the resources the developers and local officials need to access in order to launch brownfield redevelopment programs. All of those resources fall into one of the following state brownfield redevelopment program aid categories, which also include their enabling legislation, and their funding sources:
- Brownfield Redevelopment Grants — Part 196 of the Natural Resources and Environmental Protection Act (NREPA) and Public Act (PA) 252 of 2003; 1998 Clean Michigan Initiative Bond.
- Brownfield Redevelopment Loans – Part 196 of the NREPA, PA 252 and PA 253 of 2003; 1998 Clean Michigan Initiative Bond and $1 million USEPA Grant.
- Brownfield Redevelopment Financing Act – PA 381 of 1996, as amended
- Brownfield Single Business Tax Credit – PA 382 of 1996, as amended.
Four chapters of the New Plans report offer step-by-step guidance to meeting the legal, technical, tax, and financing challenges developers and officials face when they launch a brownfield redevelopment project.
The chapter entitled “Getting Started” describes processes for establishing a brownfield authority, identifying eligible property, determining eligible activities, preparing and approving brownfield plans, negotiating a development agreement, preparing and approving a work plan, and capturing taxes to reimburse redevelopment costs.
Another chapter, “Showing You the Money,” offers an extensive list of grants, as well as the state and federal offices that provide assistance in obtaining the grants. “Brownfield Tax Increment Financing” explains innovative approaches local governments can use to using an improved tax base to pay for redevelopment, while “Brownfield Single Business Tax Credits” provides similar information for developers.
Mac McClelland is manager of brownfield redevelopment at Otwell, Mawby P.C. Reach him at email@example.com. Keith Schneider is the Michigan Land Use Institute’s Deputy Director. Reach him at firstname.lastname@example.org.