Renaissance in Michigan

Renaissance in Michigan

Many utilities consider economic development initiatives to gain customers and increase revenues. Some utilities, such as Consumers Energy in Jackson, MI, have established separate organizations to market and promote brownfields in their service territories.

Consumers created Consumers Renaissance Development Corporation (CRDC) in 1996. The nonprofit organization-a separate entity from Consumers-operates statewide to inform prospective developers and communities about the tools available for capturing investment at brownfields. In less than two years, and armed with the backing of various public and private organizations and two grants totaling $610,000 from the Michigan Jobs Commission, CRDC has already met its four initial goals.

Its first goal was to complete a successful pilot demonstration project, which it did nearly a year ago when Fairway Products relocated to Branch County’s Quincy Township. CRDC helped Quincy secure an $810,OOO economic development grant for infrastructure upgrades that attracted the original equipment manufacturer supplier to the auto industry. The move enabled Fairway to double its facility size and reuse a brownfield site that previously housed a United Technologies Automotive facility.

The Fairway pilot brought 150 jobs to Quincy and, as equipment is added and Fairway is able to take advantage of its increased facility size, is expected to add 80 new jobs within two years. Fairway saved thousands of dollars by paying less per square foot for a brownfield site than a developed greenfield site. The company received more savings by reusing the site’s existing infrastructure.

Confident with the success of its pilot program, CRDC tackled and fulfilled its second goal: distributing user-friendly brownfield redevelopment information: The result is a 400-page manual called the “Brownfield Redevelopment Guide.” The Michigan-focused primer contains chapters that explain brownfields legislation, how to work with governmental officials, and options for obtaining financial funding for brownfield projects.

More than 640 guides have been distributed to local governmental units, economic developers, realtors, lawyers, and consultants. It ranks today among the most informative primers on brownfield development.

CRDC’S third goal was to conduct seminars for local officials and economic developers. About a year ago, the company offered seven one-day training sessions throughout Michigan. The workshops drew more than 300 attendees, who received information on topics ranging from legal and regulatory issues, capturing developer investment, and hypothetical brownfield redevelopment scenarios. Training workshops continue today with professional associations and by invitation.

The fourth goal is ongoing: providing assistance and information to qualifying local governments and communities on a oneon-one basis. CRDC offers community assistance to numerous groups to help them market brownfields within their boundaries and establish brownfield redevelopment plans. CRDC is also prepared to help other utilities create a brownfield development and marketing organization. Contact Bruce Rasher, vice president, at 517/788-0331 for more information or to obtain a copy of the “Brownfield Redevelopment Guide.”

There are projects nationwide. In Dallas, city officials are looking to get a brownfields designation to reuse a 28acre site for a downtown professional sports arena. The site contains a TU Electric plant and a rail yard and could be eligible for federal funds if it receives the designation. Tu sold the land to the city, contingent on voters approving a bond proposal to build the arena.

In Pennsylvania, PECO Energy is working to clean up 88 acres of prime waterfront property that it bought piecemeal between 1915 and 1976. The utility, along with city, state, and county officials, hopes to attract commercial, residential, and recreational development, and to benefit from the economic development. The site previously housed a Coca-Cola plant, a steel mill, and a factory.

Benefits Outweigh Risks So what are the benefits when developers and communities opt to redevelop a brownfield?

First, cleanup and redevelopment can be less expensive than developing greenfields, especially when the cost of existing roads, rail spurs, and utility services are considered. And not only may state and federal financial assistance be available, but companies and communities can avoid costly and mandatory cleanup orders, as well as enjoy economic benefits.

When a site is designated a brownfield, a utility or developer can use cleanup methods and standards that have greater flexibility than normal. Moreover, the cleanup levels are tied to intended future use-putting up a parking lot may require different cleanup standards from those for an apartment building. Also, cleanup levels and procedures are decided by a risk-based assessment, which can save up to 60 percent in remediation costs.

For brownfield redevelopment projects, state agency review of submissions may be quicker, technical assistance may be available, and interference with site development may be reduced or even eliminated. Where it is necessary, investigation, government oversight and approval, and remediation may be quicker.

Risk of future costly and disruptive cleanups may be reduced, too. And in many cases, future landowners and lenders can be exempt from liabilityif the use of the land is not changed to increase risks to human health and the environment. That reduction in liability also means that real estate investors may be encouraged to fund site remediations.

And of course, there are real benefits to the community environment. Sites that otherwise may not have been cleaned up can be remediated to the benefit of the public as well as those with a direct interest in the remediation. Better still, industrial areas can be revitalized, and greenfields can remain green for future generations to enjoy.

The disadvantages to brownfield redevelopment appear small, though not negligible. First, redeveloping a brownfield property still has more potential liability than developing a greenfield, and the fear of liability still exists, despite the effort of many states to lessen it. But many risks are minimal or can be reduced if the state agrees upon liability prior to cleanup.

Second, you may run into public concern about health effects. But many sites, already contaminated, must undergo some type of cleanup before the property is redeveloped. Keeping nearby property owners informed with a public relations campaign can help.

Cleanup costs typically not associated with a greenfield are often prevalent in redeveloping a brownfield site. But tax abatements, grants, and loans may be available through federal, state, and local channels. And, as we’ve observed before, the property and infrastructure savings might outweigh cleanup costs.

Another drawback is the fact that reusing brownfields is legally and technically a more involved process. To counter this, many states have brownfield redevelopment programs, speeding state agency approvals.

Lastly, like buying a used car, developers looking at a brownfield site may have to work within the property’s existing physical features, which may be an obstacle. For example, the theater group in Milwaukee probably would not have chosen to build a 65-foot ceiling if they were erecting a new structure, but that’s the ceiling the group “inherited” with the boilerhouse. Unlike developing a greenfield, potential businesses may have to compromise on what they want, perhaps even later renovating that structure to get their “dream” square footage.

Turning Dirt into Paydirt

From an environmental standpoint, there are few who would argue the merits of cleaning up and redeveloping land. Erecting a new structure where one used to stand or rejuvenating an existing building makes sense. That way, cities, towns, and villages help prevent urban sprawl while preserving wetlands, natural areas, and other “green fields” where infrastructures do not exist.

Making the environmental argument is easy-the economic argument is usually the hard sell.

Fortunately, the tide is changing. The chilly climate of brownfield redevelopment has warmed because of less restrictive cleanup laws, lessened liability, and increased financial incentives. The changes are important not only to communities trying to market brownfields, but also to utilities that may own contaminated MGP or other sites.

Redeveloping brownfields has benefits for everyone. Utilities, especially, may want to consider beefing up their economic development activities in order to boost potential revenue. Utilities with abandoned or contamined lots can now turn that dirt into paydirt by developing the right relationships with communities and prospective developers.

Copyright Edison Electric Institute Mar/Apr 1998

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