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Wednesday, June 8,2011

Brownfield giving

The feds announce $1 million for cleaning Lansing’s dirty properties. The elephant in the room? Michigan’s restructured brownfield program

by Andy Balaskovitz

On the east side of the Grand River in
downtown Lansing on a humid Monday afternoon, the announcement that the
federal government would be handing over $1 million to assist in
cleaning up contaminated Lansing properties made for a jovial scene.


Behind U.S. Environmental Protection
Agency Administrator Lisa Jackson, Michigan Department of Environmental
Quality Director Dan Wyant and Lansing Mayor Virg Bernero was a
compliment to brownfield redevelopment grants and tax incentives: the
former Ottawa Power Station. That project alone garnered $430,000 from
the EPA for cleaning it up.


But Lansing officials said that while the
federal government seems to be “embracing” brownfield redevelopment,
our own state officials are not. 


“There’s a bit of a disconnect there,”
Bernero said in an interview after the rosy announcement. “It appears
one (federal) administration is embracing brownfield redevelopment,
while the other (state) is somewhat in retrenchment, back-peddling.”


Bernero suggested the state restructure
its brownfield program — which is completely restructured under Gov.
Rick Snyder’s fiscal year 2012 budget and operates with grants instead
of tax incentives — like he said former President Bill Clinton tried to
reform welfare: “Mend it, don’t end it.”


“To put a cloud over the whole
(brownfield) program is going to push jobs to other states,” Bernero
said. “We are an industrial state with a lot of these old manufacturing
properties. Why in the world would any governor move back from funding
(brownfields)? I’m deeply concerned. It makes no sense.”


Bob Trezise, president and CEO of the
Lansing Economic Development Corp., wanted to focus more on Monday’s
announcement that Lansing is getting more than one-third of all $2.9
million of the EPA’s money to be distributed throughout Michigan: “I’m
trying to stay positive.”


But in April, Trezise told City Pulse
that Snyder’s plan to eliminate various tax credits, including
brownfield incentives, would be “devastating to the city.” He said
brownfield incentives encourage a stop to urban sprawl and encourage
developers to spend in cities rather than greenfields.


State officials tell the story a different way, and emphasize the difference between tax incentives and grants.


Starting Oct. 1 under Snyder’s budget,
brownfield tax incentives at the state level will be replaced with
grants, starting at a statutory $20 million statewide. Brownfield
projects will get 20 percent of a $100 million “pot” for various types
of grants. The Michigan Economic Development Corp. has said the state
offered $299 million through various tax incentives in 2010. Of that,
$175 million were for brownfield incentives, MEDC spokesman Mike Shore
said Monday.


Wyant, director of the state’s Department
of Environmental Quality, said in an interview that the new process is
about “efficiency” and said the concern while offering incentives is
that “the money wasn’t being spent wisely.”


“The philosophy is that if it’s important
and we want to direct resources (to cleaning up property for
redevelopment), let’s appropriate it,” he said.


When asked if he thinks the state should
be appropriating more than $20 million for brownfield cleanups, Wyant
said, “It’s too early to tell.”


The MEDC’s Shore said $20 million is just
the statutory minimum. “Going forward, if we need to go to the
Legislature if we tapped out appropriations but we have a project of
that magnitude (of the Accident Fund Insurance Co. of America’s
redevelopment of the former Ottawa Power Station), we won’t be shy about
going to ask for additional appropriations. Obviously, we have to be
careful about that, though.”


Shore said of the $175 million approved
in brownfield tax incentives last year, 50 percent of those projects
“we’ve seen … never materialize.” He added that by going with a
grant-based system rather than incentives, “We’re taking the financial
markets out of the equation.”


He said cash up front is better than
brownfield tax increment financing, or TIF, because it’s not relying on
the market to increase property value once the site is clean. And while
the numbers might be in Bernero and Trezise’s favor — $175 million under
incentives to $20 million in grants — Shore said it’s ignoring economic
intricacies.


“If you want to tell a story of drastic,
apocalyptic visions of the brownfield program, you have the numbers but
it’s intellectually dishonest,” he said. 


As Shore acknowledged that the Accident
Fund project is a success story of the incentive way of doing things, he
added that: “Basically what this governor has said is we can accomplish
similar ends in this field in a very different way.”


Shore knows Trezise from when he, too, worked at MEDC.


“He (Trezise) has been having nightmares
for months now (about incentives ending),” Shore said. “At the end of
the day, Lansing’s ability to do projects going forward will be at least
as good as it was in the past. That’s my gut hunch.”

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