RE: [CPEO-BIF] Novel "Brownfields" designation in Mt. Pleasant,Michigan

I'd like to hear some comment directly from Michigan, but my somewhat cursory evaluation of what happened to the Michigan funding is this. They set up several funding mechanisms to work with local BRA TIF's - some grants and some loans, as well as a potential link to a Small Business Tax Credit. Localities naturally gravitated to the grant and tax credit sources because that meant they could keep projected revenues from the redevelopment. The State was flush with Clean Michigan funds so everyone was happy until the till ran dry, as it is now. A more sustainable financing program would have very limited grant funds for special high need areas and sites, and a flush LOAN program that is designed to work with TIF – localities borrow from the state and re-pay through TIF revenues, then the $$ re-circulate.

Michigan reps – what do you think?

Evans Paull, Senior Policy Analyst

Northeast Midwest Institute

50 F Street, NW

Washington, DC 20001

202-464-4004

202-329-4282 (cell)

epaull@nemw.org

www.nemw.org

http://www.nemw.org/brownfields.htm

-----Original Message-----
From: brownfields-bounces@list.cpeo.org [mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Lenny Siegel
Sent: Friday, June 29, 2007 12:58 PM
To: Brownfields Internet Forum
Subject: Re: [CPEO-BIF] Novel "Brownfields" designation in Mt. Pleasant,Michigan

I think it's important, for a number of reasons, that public subsidies,

be they tax credits, tax-increment financing, grants, loans, or whatever

be carefully targeted to purposes established by statute. Otherwise,

they may be distributed unfairly. They may serve as political or

personal pay-offs. They may promote undesirable projects. They may

deplete the resources available for projects that "deserve" the support.

I don't have an opinion about the Mt. Pleasant apartment development,

but it seems strange that a property would qualify for Brownfields

subsidies simply because it is "functionally obsolete." If tax-increment

financing in Michigan works like it does in California, the entity

deciding to allocate tax revenues to the project is not the only

government agency losing revenue in the short term.

Correct me if I'm wrong, but Michigan's lax Brownfields definitions have

depleted the state's grant fund for Brownfields. BNA's Environmental Due

Diligence Report (January 24, 2007) reported, "A state fund that

provides grants for cleaning up contaminated properties and for other

environmental projects is just about out of money, according to the

Michigan Department of Environmental Quality. Funding under the Clean

Michigan Initiative, set up through a $675 million bond issue authorized

by voters in 1998, is 'running out at this point,' ..."

Lenny

Evans Paull wrote:

> I'm going to come to the defense of the liberal definition of a

> brownfields site in Michigan. I have cited Michigan's Brownfields

> Redevelopment Authorities (BRA) as a model for State-assisted TIF

> financing for brownfields http://www.nemw.org/ER%20W07-TIF.pdf . And I

> continue to believe that other states should emulate this model.

> There have been a number of Michigan BRA projects that have been called

> into question because the TIF benefit exceeds the remediation costs,

> sometimes by many multiples. Scandalous? Not really - we all know that

> brownfields projects typically have other non-cleanup-cost impediments.

> When I worked in Baltimore, I did an analysis of the incentives we used

> to close gaps on brownfields projects and the non-brownfields sources

> exceeded the brownfields sources (site testing and remediation) by about

> 5 to 1. The difference is that in Michigan they can use one source (BRA

> - TIF) to cover a variety of gaps; whereas in Baltimore we had to cobble

> together a variety of sources. Brownfields projects and greyfields

> projects get blurred here, but does it really matter? We're still

> getting smart growth, jobs within existing communities, and retooling

> "Obsolete properties" (the justification for the brownfields

> designation, in this instance.)

> Are Michigan communities giving away too much? There's no way to know

> without a rigorous but-for analysis. But at least there is nothing

> automatic about the tax breaks in Michigan's BRA-TIF model. You have to

> assume that localities are sufficiently motivated to protect local

> revenues, which is another reason that TIF is a great tool for

> brownfields - it's inherently conservative, while, at the same time,

> it's potentially lucrative enough to close pretty big gaps.

> Evans Paull, Senior Policy Analyst

> Northeast Midwest Institute

> 50 F Street, NW

> Washington, DC 20001

> 202-464-4004

> 202-329-4282 (cell)

> epaull@nemw.org

> www.nemw.org

> http://www.nemw.org/brownfields.htm

> -----Original Message-----

> From: brownfields-bounces@list.cpeo.org

> [mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Lenny Siegel

> Sent: Thursday, June 28, 2007 1:50 PM

> To: Brownfields Internet Forum

> Subject: [CPEO-BIF] Novel "Brownfields" designation in Mt. Pleasant,

> Michigan

> [Apparently, in Michigan a Brownfield is any site that a developer wants

> a subsidy for, even if it isn't likely to be contaminated. - Ls]

> Mission Street apartments to be rebuilt

> By MARK RANZENBERGER

> Mt. Pleasant Morning Sun

> June 28, 2007

> The old Western Islands apartment complex in Mt. Pleasant will be the

> latest student apartment complex to be torn down and replaced with

> fewer, but newer apartments.

> The complex, in the 1500 block of South Mission Street, is owned by RCS

> Equities, a company connected to United Investments, the largest student

> landlord in the Mt. Pleasant area. The complex dates back to the 1960s.

> City commissioners this week, on a 5-2 vote, approved declaring the

> project a brownfield redevelopment project, allowing the owner to gain a

> tax break for redeveloping the project. The decades-old complex does not

> appear to be contaminated; instead, it qualified as a brownfield by

> being declared "functionally obsolete" by the city assessor.

> ...

> For the entire article, see

> http://www.themorningsun.com/stories/062807/loc_mission.shtml

Lenny Siegel

Director, Center for Public Environmental Oversight

c/o PSC, 278-A Hope St., Mountain View, CA 94041

Voice: 650/961-8918 or 650/969-1545

Fax: 650/961-8918

<lsiegel@cpeo.org>

http://www.cpeo.org

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