Brownfield giving

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.”