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1. What is the Brownfield Redevelopment Authority?

State law enacted in 1996 allowed municipalities to establish Brownfield Redevelopment Authorities (BRA). The City of Manistee BRA was created in 2006 by City Council to facilitate the redevelopment of “Brownfield” sites, meaning Contaminated and/or Blighted and/or Functionally Obsolete and/or Historic properties.

2. How many members are on the Brownfield Redevelopment Authority? When and where does the BRA meet?

There are seven community members appointed by Council who serve as volunteers to the BRA Board on three-year terms. These members have diverse backgrounds including engineering, natural resource management, chemistry, banking, real estate and other professions, and they represent commercial, industrial, public housing, tribal and citizen interests in the City. The City’s Chief Financial Officer and the Zoning Administrator serve as the BRA’s Administrator and Secretary, respectively.

The BRA meets quarterly on the first Tuesday of the month at 2:00 p.m. We also meet as needed at the request of property owners or developers when they have projects with tight construction schedules.

3. What is the role of the Brownfield Redevelopment Authority in the City of Manistee?

The role of the BRA is threefold:
1. Secure funding for, and undertake environmental assessments and other environmental activities to quantify the environmental challenges and costs associated with the redevelopment and/or business expansion potential of Brownfield properties. Developers and investors tend to avoid properties with unknown environmental concerns.
2. Assist existing property owners and prospective purchasers and developers with obtaining Federal, State and Local financial support for the redevelopment of their properties. There are numerous such programs (grants, tax credits, loans, tax abatements, etc.) available to people who are willing to invest in Brownfield properties.
3. Provide technical support to the City in dealing with known or suspected environmental issues on City properties. Some of this work is done by BRA staff, while the majority is contracted to environmental engineering and construction firms according to the procurement requirements of the funding source used for such work.

4. What are the goals of the BRA and how does it achieve them?

The goals of the BRA apply primarily to Brownfield redevelopment of commercial, industrial, multi-family residential and mixed-use properties, not to single family residential developments or renovations. The main goals of our BRA, similarly to other BRAs in Michigan, are:
• Clean up contaminated sites to facilitate their redevelopment. This was the original goal of the Michigan’s Brownfield legislation. Due to its industrial history in the late 1800s and early 1900s, Manistee has many contaminated properties mostly in the Downtown area and along the east site of the City on Manistee Lake. We have focused most, not all of our efforts and funding we have received from the US EPA and State of Michigan on these two areas.
• Minimize blight, reduce sprawl, increase residential density and enhance neighborhood quality and appeal. Due to the requirements of the available Federal/State funding, the BRA actively directs such funding to the redevelopment of properties in built-up areas where commercial and industrial properties are located.
• Increase economic activity and tax revenues, and retain or create jobs. To achieve this goal the BRA pursues and coordinates Local and State financial resources (State grants and loans, tax abatements, and Tax Increment Financing) on behalf of existing and new firms that locate at, or expand their operations in the City.
• Minimize the financial burden to the City of supporting Brownfield redevelopment efforts. To that end, the BRA has brought over $1,240,000 in Federal and State grants to the City to assist property owners and firms that choose to invest in contaminated or blighted properties in the City.

5. What are some of the redevelopment activities the BRA can assist with, and secure funding for on behalf of city and to the residents?

There is a broad list of Brownfield redevelopment and restoration work that can be supported by State and Federal grants and loans, by tax credits and tax abatements and Tax Increment Financing, depending on the nature of the project and the type of building. That includes building and property structural and topographic surveys, asbestos and lead-based-paint removal, environmental studies and remediation, demolition and removal of obsolete buildings, structures and utilities, site improvements, and other restoration work done by the property owner or developer. Even routine rehabilitation of non-contaminated but historic buildings is eligible for tax credits.

The City or the DDA can also undertake public utility and infrastructure improvements in the vicinity of a Brownfield redevelopment project, such as water main extensions, sanitary and storm sewer replacements or upgrades, street improvements (repaving or improving), streetscaping (street light upgrades and planting of trees), construction of waterfront parks and river-walks, construction of public marinas, parking structures, etc. The prerequisite for receiving public financial assistance for doing building or public infrastructure improvements is that there is private investment that will create jobs and will generate future tax revenues that will support Tax Increment Financing.

6. What is Brownfield Tax Increment Financing?

Brownfield Tax Increment Financing (TIF) is a way to use new property taxes that will be generated by the increased value of the property after redevelopment to pay for some, but not all, of the redevelopment expenses. The cost of redeveloping or restoring an old building that has contamination or major blight issues is normally higher than constructing a new building at a cornfield. So, the BRA can capture the increased property taxes and reimburse the developer for his/her redevelopment costs. The BRA can also reimburse the City for its public infrastructure improvement costs associated with a Brownfield property.

For example, if the current property tax of a blighted or a contaminated, or partially empty building in our Downtown is $1,000 per year, and the future tax of the property once redeveloped into storefronts and apartments is $4,500 per year, the BRA can “capture” the difference between current and future tax, the $3,500, and give that amount back to the party that paid for the redevelopment work. It is important to remember that the current tax of $1,000 paid by the property owner will continue going to the various taxing entities; the taxing entities do not lose any tax. Only the incremental (new) tax is used to reimburse redevelopment expenses. Once the redevelopment expenses have been reimbursed, all property taxes (current and future) go to the taxing entities for many years into the future.

7. What are some of the projects the BRA is currently (2015) working on? What about past projects?

1. The South Washington Area Redevelopment is the largest Brownfield redevelopment project we have in Manistee at this time. It involves the rehabilitation of the unfinished River Parc condos, the North Channel Outlet building, and several vacant properties around the two buildings. Both buildings are vacant and blighted, and all properties are contaminated. In addition to the environmental remediation and removal of asbestos and lead paint that is needed, new and upgraded public utilities around the buildings will be constructed to support the increased residential density. Once completed, the entire property will have numerous condominiums, apartments, retail spaces, boat slips, more parking and open spaces. We did all environmental studies using previous EPA grants. The BRA and City are now applying for grants from the State of Michigan for some of the restoration work. Also, the Brownfield TIF that will be generated from taxes paid by the future owners will be used to reimburse remediation, abatement and public improvement expenses. The BRA, the City, the DDA and the private developers are working closely on this $7,500,000 project.

2. The BlueFish restaurant is an example of redevelopment support provided by the BRA in collaboration with the City and DDA for the recruitment and startup of the restaurant. The property is a Brownfield because of the presence of contamination and the historic nature of the building. Therefore it qualified for use of Federal funds for the environmental due diligence done by the BRA on behalf of the new owners.

3. The former Golden Apple building on 334 River Street was the recipient of a Brownfield redevelopment grant awarded to the BRA by the MDEQ to clean up contaminated soils under the building, remove old automotive service equipment, replace oil stained floors and demolish a portion of the building. In addition to managing the grant work, the BRA also helped the new owner to secure a Brownfield tax credit, and created a Brownfield TIF plan to reimburse some of the owner’s redevelopment expenses.

4. The BRA used funding from two Federal grants to study the environmental issues at the Iron Works property to determine the extent and costs of the remediation needed to redevelop the property. As recently as 2013, the BRA also completed asbestos and lead paint surveys as part of the preparation for the opening of the Iron Works Café.

5. Since 2008, the BRA has facilitated the redevelopment of sections of the former General Chemical property, initially for the development of the Rieth Riley bulk material and asphalt storage facility. The BRA secured a large grant and loan from the MDEQ for the remediation of the contamination at the site, and for the preparation of the property for the bulk material storage facilities and the docking of the freighters. A Brownfield TIF plan and a Renaissance tax abatement plan were also created to defray some of the substantial private costs. The BRA will now be working with the new owners of the northern portion of the General Chemical site as they are planning its redevelopment.

6. On behalf of the City of Manistee Housing Commission, the BRA managed the demolition of the blighted buildings at the former Manistee Plating property on 6th Avenue and the remediation of this contaminated property. Through a grant we received from the State of Michigan, the BRA procured a local contractor to demolish the blighted buildings that contained asbestos and lead paint, remove the contaminated soils and other material, and prepare the property for future redevelopment by the Housing Commission.

7. With several grants from the US Environmental Protection Agency, the BRA has conducted environmental assessments and remediation plans at more than 30 properties all over the City, to assist developers and new owners in dealing with the environmental challenges at their properties. Examples of these properties are the Bookmart, the Hokanson buildings, and the former Chippewa Hotel lot on River Street, the Hotel Northern and North Channel buildings on Washington Street, the former General Chemical (it is now Rieth Riley) and the Van’s Auto properties on State Street, the Rodeway Inn and the former Joslyn sites on US-31, and the Century Terrace and Harborview properties on 6th Avenue, among others.

8. Are there any misconceptions about the BRA? If so, what are they?

As in many other communities that have a BRA similar to ours, citizens and some public officials have misconceptions about the Brownfield program and especially the Brownfield TIF. The misconceptions fall into these general categories:

Misconception ONE: “Brownfield is a contaminated property”. As such, property owners are concerned about the stigma of owning a “polluted” property and they are also concerned that they may be liable for the contamination. First, a property may be a Brownfield because it has a lot or very little contamination. But, it can also be considered a Brownfield if it is Blighted, Functionally Obsolete or contains Historic resources (buildings, etc.).

Therefore, any of these properties would qualify for several financial incentives to assist with its redevelopment. Note that such financial incentives are NOT available for “clean” properties. For example, many properties along the Manistee River Channel and Manistee Lake shorelines contain contamination due to the fill material, such as ash, coal, slag, foundry sand and other waste placed there during the historic uses of these properties going back to the late 1800s, well before the current owners acquired these properties.

Second, State law provides liability protection for owners of “Brownfields” as long as they have not caused the contamination, they have not done anything to spread it or make it worse, and they have met certain minimum State requirements at the time they acquired the property.

Misconception TWO: “By authorizing Brownfield TIF reimbursement the BRA gives our property taxes away”. Concerned citizens and public officials need to remember that: “you cannot give away something you don’t have”! Brownfield TIF can only be generated from increased taxes IF and WHEN a property gets redeveloped and by doing so it increases in value. Brownfield TIF is used to repay some of a developer’s or property owner’s redevelopment expenses because the cost of redeveloping a Brownfield is incrementally higher than a non-Brownfield site. If there is no private investment there is no redevelopment project which equals to no increase in taxes which equals to no TIF.

Keep in mind that the base property tax, which is the tax paid before redevelopment starts, will continue being paid and captured by the taxing entities (City, County, etc.) whether the redevelopment takes place or not. Also, after the redevelopment expenses have been repaid using the Brownfield TIF, all increased taxes will go to the taxing entities for many years into the future. Finally, the “school” portion of the incremental taxes captured by the BRA for repayment of the redevelopment expenses is “reimbursed” to the schools by the State, so there is no loss of tax revenue for the schools.

9. How long it takes to process Brownfield projects.

People often say, “Brownfield redevelopment takes too long”. This is reality, not misconception. Due to the complexity of the environmental, permitting and financing factors involved in Brownfield redevelopment, it takes longer to get to the point of starting such a project as compared to building at a “greenfield”. Due to their higher costs, Brownfield projects generally require extra funding which translates to extra “planning” time to secure grants, Brownfield TIF, tax credits or abatement, etc.

While the BRA always tries to facilitate the interactions between the developer and the funding agencies, the more financial assistance a project needs the longer it takes to receive it. A rule of thumb is to expect at least three extra months to get to the point that construction can start for small projects, and as long as a year or more for large and complex projects that require multiple sources of financial support from multiple governmental agencies and private funding sources. Planning well in advance of expecting to start construction is essential. In addition, Brownfield redevelopment is riskier for the developer or investor than “greenfield” development; more planning is needed. However, the reward of bringing a building or property back to useful life is priceless!