Incentives for Brownfield Redevelopment Dickinson County March 2020
Investing in Community-led Growth MEDC’s mission is executed through a strategy focused on three, linked pillars: • Supporting business growth and attraction • Fostering community vitality • Promoting a positive image of Michigan as a business location and travel destination
The goal of MEDC’s business development program is to DEVELOP, GROW AND ATTRACT business here in the state of Michigan.
BUSINESS DEVELOPMENT • Growth & Development • Market Development • Global Business Development • International Business • Defense • Cybersecurity • Business Innovation • Entrepreneurship & Innovation • Pure Michigan Business Connect • International Trade • PlanetM
….Perfect for your brownfield priority sites!!
COMMUNITY DEVELOPMENT FUNDING PRIORITIES
LOCAL AND REGIONAL IMPACT • Priority project with community financial support • Project supports local master plan and economic development strategy • Significant taxable value increase • Located within RRC engaged /certified community • Located in a Michigan Main Street community • Located in a geographically disadvantaged area Funding Priorities
PLACE • Mixed-income, mixed use, and multi-story developments; • Urban & universal design; • Revitalization of a historic structures; • Low-impact and sustainable development approaches; • Significant brownfield conditions; • Significant square footage being revitalized and activated. Funding Priorities
ECONOMIC AND FINANCIAL • Financially feasible project after gap financing; • All other potential funding resources have been maximized; • Reasonable costs; • Significant financial contribution by developer/owner (10– 20 percent); • High ratio of private dollars to public dollars (state and federal funding). Funding Priorities
BROWNFIELD Tax Increment Financing
Brownfield Tax In Increment Financing (B (BF TIF IF) Act 381 of 1996 Property/building that is contaminated, functionally obsolete, blighted, historic resource, or Land Bank owned/operated • MEDC administers non-environmental aspects • EGLE administers environmental aspects
Brownfield and Community Revitalization Program PROPERTY ELIGIBILITY Facility Property where a hazardous substance in excess of concentrations that satisfy the cleanup criteria for residential use. Phase I and Phase II Baseline Environmental Assessment necessary.
Brownfield and Community Revitalization Program PROPERTY ELIGIBILITY Blighted (1) Attractive nuisance to children, utilities permanently disconnected, fire hazard, subsurface debris, tax reverted (2) Designated by local government; (3) Under the control of a Land Bank Forest Arms Building - Detroit
Brownfield and Community Revitalization Program PROPERTY ELIGIBILITY Functionally Obsolete Unable to perform the function it was originally intended (Michigan Advanced Assessing Officer or Michigan Master Assessing Officer declaration required) Former Board of Water and Light - Lansing Accident Fund Building
Brownfield and Community Revitalization Program PROPERTY ELIGIBILITY Historic Historic building or structure located designated by the national register of historic places, the state register of historic sites, or a contributing building in designated historic district. Sherbrook Apartments - Detroit Comfort Station – Lansing
Brownfield and Community Revitalization Program PROPERTY ELIGIBILITY Adjacent & Contiguous
Act 381: Brownfield Plans & Work Plans A Brownfield Plan establishes: • “Eligible property” included in project/Plan. • Why it’s eligible (costs). • Indicates that the local jurisdiction is supportive of the tax increment revenue (TIR) capture. • Sets the maximum amount of TIR that can be captured.
Act 381: Brownfield Plans & Work Plans In an Act 381 Work Plan , the capture may include state taxes, both school operating and state education tax. • Also includes local taxes • Ratio of Local to State mills must be preserved • Debt millages cannot be captured Must occur on eligible property that is included in a locally approved Brownfield Plan. • Plan must identify the eligible activities and their costs.
Act 381 : Eligible Activities Eligible Non-Environmental Activities: • Brownfield Plan and Act 381 Work Plan Preparation • Interest • Demolition • Lead and asbestos study and abatement + in Core Communities , these additional activities: • Site Preparation • Infrastructure
Act 381 : Eligible Activities Environmental Activities: • Department Specific Activities: • Site Assessments • BEAs • Due Care Planning • Pre-Demo/Hazardous Materials, Asbestos, Mold, & Lead Surveys • Due Care • Response Activities • Including demolition and abatement • Environmental Insurance Lake Superior State Center for Fresh Water Research and Education Sault Ste. Marie • Interest
Work Plan Scoping and Approval Process Step 1: Identification of a potential Brownfield redevelopment project. Call Jen or Vicki! Step 2: Local BRA develops Brownfield Plan Step 3: Local BRA and Municipality (taxing jurisdiction) approve Plan via resolution Step 4: State review of the Work Plan (if seeking state mills) EGLE , MEDC, or both! Step 5: MSF approval required for all Act 381 Work Plans with MSF activities seeking state capture Step 6: Project Initiation and Completion → TIR
So How Long Does it Take? • Answer: It Depends. • Local approval times vary. Lois??? • MSF review and board action typically takes at least 8 – 12 weeks. • Once MSF and/or EGLE approves, project and TIR are managed locally • BRAs submit annual reports to MEDC (activities and capture)
COMMUNITY REVITALIZATION PROGRAM (CRP)
Community Revitalization Program State Gap Financing for Revitalization Projects Competitive. Need-based. Performance-based. Annual appropriation from Legislature; shared pool of dollars with Business Development Program Grants, direct loans, loan participation, equity investments Grants up to $500k per parameters $10M max into any single project Fills gaps of up to 50% development costs, in qualified communities
Community Revitalization Program Downtown & Traditional Commercial District Tool Funding Criteria reflects MEDC CD Funding Priorities
CRP Evaluation Criteria Structuring Highlights (CRP Parameters) • Debt Coverage Ratio (DCR) typically greater than or equal to 1.2:1 • Owner equity minimum of 10% (net of dev. Fee) • Developer fees typically not to exceed 4% of total development cost • Developer return generally limited to 12% or less • MCRP investment generally will not exceed 30 years • Maximum incentive is typically limited at 25% of eligible investment for historic resources and 20% otherwise, and up to 50% in communities smaller than 15,000 pop.
Types of Support – What else is out there? STATE PROGRAMS FEDERAL PROGRAMS and MORE! • • Historic Tax Credits Community Development Block Grant (CDBG) • New Market Tax Credits • Public Spaces, Community • Low Income Housing Tax Credits Places • HOME • EGLE grants and loans for brownfield sites • HUD Loans and Guarantee • EGLE refined petroleum fund Programs • EGLE brownfield assessments • USDA RD grants or loans • Small Business Development • EPA Center • Opportunity Zones • Michigan Energy Office • Locally approved tax incentives • MDARD economic development
INCENTIVES IRL
City of f Menominee Blight Elimination at L Lloyd House II II PROJECT: Historic rehabilitation of the 15,000 sq ft downtown building, originally home to the Oddfellow fraternal organization, transformed a long-time vacant, blighted structure into 13 market rate residential units and 2 commercial spaces, in the Historic Waterfront District of downtown Menominee.
City of f Menominee Blight Elimination at L Lloyd House II II MEDC INVESTMENT: $870,000 Community Development Block Grant FEDERAL HITORIC TAX CREDITS: $443,000 PRIVATE INVESTMENT: $1,390,500 COMMUNITY INVESTMENT: OPRA tax incentive valued at $387,600 over 12 years
MEDC: Jen Tucker, 906-201-4367 tuckerj6@michigan.org Vicki Schwab, 906-235-9208 schwabv@michigan.org EGLE: Mike Gurnee, 269-568-1291 gurneem1@michigan.gov Janet Michaluk, 517-643-0314 michalukj@michigan.gov
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