New Brownfield Laws Seen as Developer and Resource Friendly

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Redevelopment opportunities are increasingly found in Brownfield properties due to their often-desired urban location and established infrastructure. However, redeveloping a Brownfield also comes with challenges, including creating an approach to obtain gap financing for redevelopment costs associated with a Brownfield property. A flexible, creative, and innovative approach for Brownfield redevelopment is critical for project success and maximum return. Brownfield incentives can offer the assistance needed to fill the financing gaps.

The year-end rush of bill signing in the governor’s office is proving fruitful to Michigan’s business and development community while continuing to protect our resources. The legislature ended an 18-month environmental reform process for the enactment of P.A. 502 and P.A. 446. The new law reforms Michigan’s environmental remediation and brownfield laws recommended by Gov. Snyder’s Environmental Advisory Rules Committee (EARC) and the Michigan Department of Environmental Quality (MDEQ) Collaborative Stakeholders Initiative. Michigan’s progressive brownfield laws have led the nation in creative economic incentives and with these new laws we will continue to serve as a model across the country. Key highlights of the new laws include:

Retroactive reimbursement for eligible activities costs
Tax Increment Financing (TIF) is one of the most commonly utilized tools in offsetting the costs of redeveloping a brownfield property. Increased tax revenue generated from brownfield redevelopment creates the tax increment, which is reimbursed to the developer over a period of time until eligible costs are reimbursed. Eligible costs vary depending on the community. The standard eligible costs include environmental due diligence and baseline environmental assessments, brownfield plan preparation, due care plan preparation and implementation, lead and asbestos surveys and abatement, response activities, demolition, site preparation, and infrastructure improvements.

Reimbursement of eligible activities conducted prior to approval of a Brownfield Plan is now possible via TIF mechanisms through both the local and state authorities. This will allow developers, while collaborating with the local governments and state departments, to begin eligible activities earlier in the process. Historically, the developer or business could not begin any redevelopment activities until the plan was approved by both the local brownfield redevelopment authority and city council. This resulted in stagnation of new projects and for many expanding business new jobs. This resulted in many deciding not to pursue the incentives, which resulted in decreased economic development and in some instances deciding to locate outside of Michigan.

Change in definition of eligible infrastructure costs
The definition of eligible infrastructure costs to be reimbursed through TIF has been changed to include public or privately owned or operated multi-level and underground parking structures and urban stormwater management systems. This is of significant importance with more and more redevelopment in high-density urban areas where parking is in growing demand and can be a deal breaker in many projects.

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