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1000 ‎Rochester Hills Dr‎

Rochester Hills‎, ‎MI ‎

48309‎

(‎248‎) ‎656‎-‎4600‎

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Rochester Hills

Minutes

Brownfield Redevelopment Authority

Chairperson Stephen McGarry‎

Vice‎-‎Chairperson Thomas Turnbull‎

Members‎: ‎Robert Justin‎, ‎Stephanie Morita‎, ‎Mark Sera‎, ‎Del Stanley‎

Council Member Michael Webber‎

7:00 PM

1000 Rochester Hills Drive

Thursday, July 25, 2013

CALL TO ORDER

Vice Chairperson Thomas Turnbull called the Special Meeting to order at ‎

7‎:‎02 ‎p‎.‎m‎. ‎in the Auditorium‎.‎

ROLL CALL

Mark Sera, Thomas Turnbull, Michael Webber and Stephanie Morita

Present

4 -

Del Stanley, Stephen McGarry and Robert Justin

Absent

3 -

Quorum present‎.‎

Also present‎: ‎Ed Anzek‎, ‎Director of Planning and Economic Development‎

Kurt Dawson‎, ‎Director of Assessing‎/‎Treasury‎

James Breuckman‎, ‎Manager of Planning‎

Tom Wackerman‎, ‎ASTI Environmental‎

Maureen Gentry‎, ‎Secretary‎

APPROVAL OF MINUTES

2013-0269

January ‎20‎, ‎2011 ‎Regular Meeting‎

A motion was made by Morita‎, ‎seconded by Webber‎, ‎that this matter be ‎

Approved as Presented‎. ‎The motion carried by the following vote‎:‎

Aye

Sera, Turnbull, Webber and Morita

4 -

Absent

Stanley, McGarry and Justin

3 -

COMMUNICATIONS

There were no Communications presented‎.‎

NEW BUSINESS

2013-0270

Election of Officers ‎- ‎Chairperson‎, ‎Vice Chairperson‎, ‎Secretary and Treasurer ‎- ‎

for the term expiring the first meeting in January ‎2014‎.‎

MOTION‎/‎NOMINATION‎ by Morita‎, ‎seconded by Webber‎, ‎that the ‎

Rochester Hills Brownfield Redevelopment Authority hereby re‎-‎appoints ‎

the current slate of Officers to serve‎: ‎Chairperson Stephen McGarry‎, ‎Vice ‎

Chairperson Thomas Turnbull ‎, ‎Secretary ‎- ‎Planning and Development ‎

Department Staff and Treasurer Kurt Dawson for a term expiring at the ‎

first meeting in ‎2014‎.‎

A motion was made by Morita‎, ‎seconded by Webber‎, ‎that this matter be ‎

Approved‎. ‎The motion carried by the following vote‎:‎

Aye

Sera, Turnbull, Webber and Morita

4 -

Absent

Stanley, McGarry and Justin

3 -

2013-0271

Discuss proposed Brownfield Redevelopment Plan for Rochester Retail ‎- ‎City ‎

File No‎. ‎12‎-‎010 ‎- ‎For the former gasoline dispensing station and former ‎

dealership property located at ‎3010 ‎and ‎3050 ‎S‎. ‎Rochester Road‎, ‎located at the ‎

southwest corrner of Rochester and Auburn Roads‎, ‎Rochester Auburn ‎

Associates‎, ‎LLC‎, ‎Applicant‎

(‎Reference‎: ‎Documents prepared by PM Environmental‎, ‎Inc‎.‎, ‎including a ‎

Brownfield Plan ‎(‎“the Plan‎,‎” and letters from Tom Wackerman‎, ‎City’s ‎

consultant from ASTI Environmental had been placed on file and by ‎

reference became a part of the record thereof‎).‎

Present for the applicant were Doraid Markus‎, ‎owner of Rochester Retail ‎

Associates‎, ‎LLC‎, ‎6750 ‎Oakhills Dr‎.‎, ‎Bloomfield Hills‎, ‎MI ‎48301‎, ‎

developer of Rochester Retail‎, ‎proposed for the southwest corner of ‎

Rochester and Auburn Roads‎, ‎and Jessica Besaw‎, ‎PM Environmental‎, ‎

Inc‎.‎, ‎4080 ‎W‎. ‎Eleven Mile Rd‎.‎, ‎Berkley‎, ‎MI ‎48072‎.‎

Mr‎. ‎Anzek noted that this was the first meeting the Board had held in over ‎

two years‎, ‎mainly because there had not been any brownfield activity in ‎

the City‎. ‎The State had been reviewing brownfield tax credit funding and ‎

some changes had occurred with brownfield incentives‎. ‎Mr‎. ‎Anzek ‎

advised that the applicant had submitted a request for brownfield ‎

reimbursements for acceptable activities for the redevelopment of the ‎

southwest corner of Rochester and Auburn‎. ‎Staff had received the packet ‎

last week and emailed it to the members‎, ‎and there were also hard copies ‎

provided at the meeting‎. ‎He asked the applicants to come forward with ‎

their proposal‎.‎

Mr‎. ‎Markus stated that he was with Rochester Auburn Associates‎, ‎which ‎

owned the subject property‎. ‎He introduced Jessica Besaw from PM ‎

Environmental‎, ‎who was helping them through the Phase ‎1‎, ‎Phase ‎2‎, ‎

BEA and Brownfield Plan process with the existing gas station and vacant ‎

dealership on the site‎. ‎

Ms‎. ‎Besaw advised that they had completed the Phase ‎1 ‎and Phase ‎2 ‎

environmental assessments on the property‎. ‎Both properties were ‎

deemed a facility based on the soil and groundwater contamination ‎

found‎. ‎The overall development was for demolition of the current ‎

buildings‎, ‎which also included curbs‎, ‎asphalt‎, ‎and various similar aspects ‎

and redevelopment into four new buildings consisting of retail and ‎

restaurant spaces‎. ‎The Brownfield Plan proposed to use local only taxes‎. ‎

They determined an estimated new taxable value of ‎$‎4 ‎million‎. ‎That was ‎

a little less than half of the total investment being made on the property‎, ‎

which was estimated to be a little over ‎$‎8 ‎million and could be higher‎. ‎

They proposed a six‎-‎year payback period for the eligible activities‎. ‎

Eligible activities proposed were the environmental assessments‎, ‎due ‎

care activities‎, ‎demolition‎, ‎Brownfield Plan preparation‎, ‎and asbestos ‎

survey and abatement‎, ‎if necessary‎. ‎Ms‎. ‎Besaw next opened the floor to ‎

questions regarding the content of the Brownfield Plan and the tax table ‎

that was provided‎.‎

Mr‎. ‎Anzek said that since Staff had only received the Plan last week‎, ‎Mr‎. ‎

Dawson‎, ‎City Assessor‎, ‎only saw it a few days ago‎. ‎Mr‎. ‎Dawson reviewed ‎

it and he had a lot of questions‎, ‎and he asked Mr‎. ‎Dawson to run through ‎

those‎.‎

Mr‎. ‎Dawson said that he reviewed the table‎, ‎and he asked for a ‎

clarification of the title‎. ‎They started with the year ‎2013‎, ‎and he was not ‎

sure if that was a calendar year‎, ‎an assessment or a City budget year‎. ‎He ‎

said that would be important‎. ‎As an example‎, ‎if they did the total work in ‎

2013‎, ‎that would affect the ‎2014 ‎tax collections‎. ‎If they did not do the work ‎

until ‎2014‎, ‎the tax collection would start in ‎2015‎. ‎The ‎2013 ‎assessments ‎

had been updated‎, ‎and he had updated numbers to give to Ms‎. ‎Besaw‎. ‎

He referenced the local millages they showed‎, ‎and he said that he was ‎

not sure where they got them‎. ‎He thought they might have been from ‎

another community‎, ‎and Rochester Hills did not levy the OCPTA levy ‎

(‎Transportation Levy of ‎.‎59 ‎mills‎). ‎Regarding the Zoo Authority and the ‎

DIA levies‎, ‎the legislature just passed a bill that a government entity ‎

could not capture those‎. ‎He noted that the dollar amounts would be ‎

insignificant‎, ‎but it was a technicality that had to be corrected‎. ‎Ms‎. ‎Besaw ‎

did not think those would affect the total payback period much‎. ‎Mr‎. ‎

Dawson referred to the Additional City Operating‎, ‎Library Fund and ‎

Library Bond‎, ‎and said that those millages totaled much higher than ‎

Rochester Hills’‎, ‎which was ‎9‎.‎3412‎. ‎The total capturable taxes on the ‎

chart would end up being ‎18‎.‎9407 ‎versus ‎29‎.‎5653‎. ‎He concluded that ‎

those were the corrections to the table that he had observed‎.‎

Mr‎. ‎Anzek stated that it would be important to correct the capturable ‎

millage that was calculated‎, ‎because it would affect the term of payback ‎

and dollars‎.‎

Vice Chairperson Turnbull asked Mr‎. ‎Wackerman if he would like to ‎

comment‎, ‎or if anyone on the Board had questions for the applicant‎. ‎Ms‎. ‎

Morita said that she would like to hear from Mr‎. ‎Wackerman first‎, ‎so that ‎

she could avoid bringing up any of the same issues‎. ‎

Mr‎. ‎Wackerman asked the applicants if the underground storage tank ‎

system would be closed under Part ‎211 ‎or ‎213‎, ‎and he asked if it was ‎

leaking‎. ‎Ms‎. ‎Besaw replied that it was currently a closed LUST site‎. ‎Mr‎. ‎

Wackerman noted his July ‎19‎th memo‎, ‎and said that he would go over ‎

some items from that‎. ‎As Ms‎. ‎Besaw had advised‎, ‎it was an eligible ‎

taxpayer on an eligible property with eligible activities‎, ‎so the basis for ‎

eligibility was there‎. ‎There were a couple of key assumptions that he felt ‎

were worth discussing‎. ‎The first was the new taxable value and whether or ‎

not that made sense relative to the investment and the current taxable ‎

value‎, ‎which would drive the incremental taxable value‎. ‎He thought that ‎

for illustration purposes that it was fairly close‎, ‎but he wanted to defer to ‎

Mr‎. ‎Dawson‎, ‎and he asked Mr‎. ‎Dawson if he had a chance to look at it‎. ‎

Mr‎. ‎Dawson said that he had not had a chance to look at the value‎, ‎and ‎

he had not yet done a value analysis for the retail center‎. ‎Mr‎. ‎

Wackerman recommended that instead of taking ‎50‎% ‎of the entire cost of ‎

the project‎, ‎he would take only the hard costs‎, ‎or the actual investments in ‎

the property‎, ‎and not include all the environmental costs and then do the ‎

calculations‎. ‎His calculation came out a little bit lower‎. ‎He felt that it ‎

would make sense for Mr‎. ‎Dawson to review it before the table was ‎

redone‎, ‎so they could get a correct payback period‎. ‎

Mr‎. ‎Wackerman mentioned that there was a ‎1‎% ‎assumption of annual ‎

increase in value‎. ‎He thought that five years ago that might not be ‎

reasonable‎, ‎but he thought that the market was changing in a way that it ‎

might be a reasonable assumption going forward‎. ‎The Plan did capture ‎

all personal property taxes‎. ‎It was not illustrated in the payback period‎, ‎

but it made it a conservative estimate of payback‎. ‎He felt that made a ‎

certain amount of sense‎, ‎but they had to realize that when the Brownfield ‎

Plan was implemented‎, ‎it would include any personal property‎, ‎assuming ‎

that tax continued‎. ‎One of the policy items he felt that needed ‎

consideration by the BRA‎, ‎and he realized they had not met in over two ‎

years‎, ‎was that the Brownfield Plan was independent of the the developer ‎

or changes to the Site Plan‎. ‎That was standard in some cities‎, ‎where the ‎

Plan was open‎-‎ended‎, ‎but other cities put in a clause that asked for ‎

re‎-‎review in case the Site Plan changed substantially‎. ‎It would provide a ‎

method for managing any modifications to the Plan‎. ‎When the Plan was ‎

approved‎, ‎there would be a reimbursement agreement which would set ‎

the terms of the payback‎. ‎That was how the process would be controlled‎, ‎

but the BRA might consider its ability to re‎-‎review and re‎-‎approve the ‎

Plan in case of changes‎. ‎He pointed out item two from his letter‎. ‎The ‎

applicant had provided information about site demolition‎, ‎and it looked to ‎

be all eligible‎. ‎The applicant provided a response about the due care ‎

issues regarding soil removal‎. ‎They would only be removing soil ‎

associated with construction‎. ‎Because the site was a facility‎, ‎it would have ‎

to go to a landfill anyway‎, ‎so they were asking for reimbursement of that ‎

cost‎. ‎There was a leaking underground storage tank‎, ‎and it would be ‎

eligible for removal‎. ‎If it had not been leaking and they were removing it ‎

under Part ‎211‎, ‎it would not be eligible for reimbursement‎. ‎There was a ‎

3‎% ‎interest in the Plan‎, ‎and that would be another policy decision the ‎

BRA had to make ‎- ‎whether they would allow interest recapture‎. ‎The Plan ‎

asked for reimbursement of the City’s review fee‎, ‎and that would be ‎

another policy decision‎. ‎He indicated that those were the highlights he ‎

felt were worth discussing‎.‎

Ms‎. ‎Morita said that it was her understanding under the statute that if there ‎

was more than one parcel‎, ‎that the numbers had to be separated on a per ‎

parcel basis‎. ‎Mr‎. ‎Wackerman agreed that was right ‎- ‎it had to be by ‎

parcel by millage‎. ‎Ms‎. ‎Morita pointed out that there were two parcels‎, ‎yet ‎

everything was done in the aggregate‎. ‎She could not tell how much ‎

improvement was going on with one parcel versus the other or when the ‎

payback was for one parcel versus the other‎. ‎She felt that when the ‎

applicants came back‎, ‎they should show numbers per parcel‎.‎

Mr‎. ‎Wackerman stated that was a good point‎. ‎It was shown on a per mill ‎

basis‎, ‎but it needed to be per parcel‎. ‎

Ms‎. ‎Besaw explained that the plan for redevelopment was to combine the ‎

parcels into a single development‎. ‎She asked how they would split the ‎

total new taxable value between each if the proposed plan was to combine ‎

the parcels‎.‎

Mr‎. ‎Anzek clarified that Mr‎. ‎Markus had been through Site Plan Approval ‎

with the Planning Commission and he had received Conditional Land ‎

Use Approval from City Council for the drive‎-‎through restaurants‎. ‎Mr‎. ‎

Markus had also received a Zoning amendment for the gas station parcel ‎

which changed it from B‎-‎5 ‎to B‎-‎3‎. ‎That was done with a condition that the ‎

two properties be combined‎. ‎He questioned whether the BRA should ‎

handle it as two parcels or one‎.‎

Mr‎. ‎Wackerman asked when the parcels would be combined‎. ‎Mr‎. ‎Anzek ‎

felt that the sooner the better‎, ‎since the zoning had been changed‎.‎

Mr‎. ‎Markus stated that they hoped to demolish the dealership by the end ‎

of the year and begin construction‎. ‎They wished to leave the gas station ‎

in operation until early spring of next year‎. ‎Regarding the combination‎, ‎if ‎

it was to happen when everything was knocked down‎, ‎it would be March of ‎

2014‎, ‎weather permitting‎. ‎They planned to demolish the dealership right ‎

away to get the site ready‎.‎

Mr‎. ‎Wackerman explained that the reason they would show individual ‎

parcels was because they had different assessed values‎, ‎and they had to ‎

be tracked separately‎. ‎The cleanest thing would be to combine the ‎

parcels prior to the next tax period‎, ‎although he did not know if that was ‎

possible‎. ‎

Mr‎. ‎Dawson stated that Assessing could accommodate the combination‎. ‎

It was an easy process as long as it did not violate any Ordinances and ‎

the zoning was the same on both parcels‎.‎

Mr‎. ‎Anzek reiterated that the Rezoning was approved with the ‎

understanding that the parcels would be merged‎; ‎otherwise‎, ‎the gas ‎

station was a non‎-‎conforming parcel ‎(‎not large enough‎). ‎It had to occur ‎

before permits were issued‎, ‎and he suggested that it could be done now‎, ‎

and the land could be leased back to the gas station owner to be able to ‎

operate‎.‎

Mr‎. ‎Markus said that the preference‎, ‎and for the numbers to make sense‎, ‎

was to combine the parcels‎. ‎They would abide by whatever the City ‎

wanted‎. ‎Mr‎. ‎Wackerman said that in the event that the parcels could not ‎

be combined before the next tax period‎, ‎the applicant could create two ‎

tables and on a percentage basis almost arbitrarily allocate the assessed ‎

value between them‎. ‎The combined total was what really mattered‎. ‎He ‎

recommended that the BRA made the combination a condition of the ‎

Brownfield Plan‎, ‎and that the applicant provided a separate table for both ‎

parcels and another showing the parcels as one‎.‎

Ms‎. ‎Morita stated that under the law‎, ‎when there were two separate ‎

parcels‎, ‎the numbers had to be considered separately‎. ‎Mr‎. ‎Wackerman ‎

said that was why he was suggesting that the applicants prepare two ‎

tables and a combined table‎. ‎Ms‎. ‎Morita noted that if the parcels were ‎

combined‎, ‎they would not have to submit it both ways‎; ‎she just wondered ‎

why the parcels had not been combined yet‎.‎

Mr‎. ‎Markus had assumed that when they went through Site Plan Approval ‎

and the Rezoning that they were given permission to combine the parcels ‎

into one B‎-‎3 ‎parcel‎. ‎He was waiting for construction to start‎, ‎and he did ‎

not know when something was combined or not‎. ‎Ms‎. ‎Morita indicated that ‎

they were talking about tax parcels‎, ‎and she stressed that Mr‎. ‎Markus ‎

needed to call the Assessing Department‎. ‎

Mr‎. ‎Dawson related that it was an easy process‎. ‎There was an application ‎

form for the combination of two sidwell numbers‎. ‎Mr‎. ‎Markus reminded ‎

again that the gas station was still operating‎, ‎but if it was o‎.‎k‎.‎, ‎he would ‎

request the combination‎. ‎Mr‎. ‎Dawson said that they would look at the ‎

valuation as they did currently ‎- ‎the parcels would just be under one ‎

sidwell‎. ‎Mr‎. ‎Markus assured that they would apply for the combination‎.‎

Vice Chairperson Turnbull asked if there were further questions‎. ‎Ms‎. ‎

Morita wondered about the amount of square footage‎. ‎She pointed out ‎

that page three of the Plan did not show the square footage to be built‎; ‎it ‎

stated that it “varies‎.‎” ‎

Mr‎. ‎Markus thought they had stated the exact amount‎. ‎Ms‎. ‎Besaw noted ‎

Appendix C and advised that there was a Site Plan that showed each ‎

building and the square footage for each‎. ‎Ms‎. ‎Morita asked if they could ‎

tell her the total so she did not have to add everything‎. ‎Mr‎. ‎Markus ‎

determined that the total development totaled ‎32‎,‎191 ‎square feet‎.‎

Ms‎. ‎Morita noted the lease‎/‎sale price of ‎$‎25‎. ‎She asked if that was ‎$‎25 ‎

per square‎-‎foot‎, ‎which Mr‎. ‎Markus confirmed‎. ‎Ms‎. ‎Morita asked if that ‎

was a lease or sale price‎, ‎and Mr‎. ‎Markus replied that it was a lease price‎. ‎

Ms‎. ‎Morita asked if it was triple net‎, ‎which Mr‎. ‎Markus also confirmed‎. ‎

Ms‎. ‎Morita asked if she could assume that they would all be rentals and ‎

that none would be owner‎-‎occupied‎. ‎Mr‎. ‎Markus said that McDonald’s ‎

would have a land lease‎, ‎and not technically a lease of the building‎, ‎but ‎

he was including it in the ‎$‎25 ‎per square foot‎. ‎Ms‎. ‎Morita asked if any ‎

part of the property would be owner occupied‎, ‎and Mr‎. ‎Markus advised ‎

that they would all be leases‎. ‎Ms‎. ‎Morita asked if all of the personal ‎

property tax proposed would be paid by the tenants and reimbursed to Mr‎. ‎

Markus‎. ‎Mr‎. ‎Markus said that was correct‎. ‎

Ms‎. ‎Besaw explained that the personal property tax was not built into the ‎

new taxable value estimate‎. ‎Ms‎. ‎Morita clarified that personal property ‎

tax was taken out‎. ‎Ms‎. ‎Besaw said that they did not include it in the ‎

estimate to be more conservative‎. ‎Mr‎. ‎Wackerman stated that the Plan ‎

would capture personal property taxes‎, ‎but that capture was not illustrated ‎

in the payback period‎. ‎Ms‎. ‎Morita confirmed that they would be ‎

reimbursed on that capture‎. ‎Ms Morita asked if the intent was that the ‎

tenants would pay the tax‎, ‎and then that money would go back to the ‎

applicant from the capture‎. ‎Ms‎. ‎Besaw agreed‎. ‎Ms‎. ‎Morita asked how ‎

much the estimate was for personal property‎. ‎Ms‎. ‎Besaw said that they ‎

did not have an estimate at this point‎, ‎because the tenants had not been ‎

completely verified‎, ‎and they did not want to guess on the numbers‎. ‎Ms‎. ‎

Morita asked if personal property was in the estimates‎. ‎Ms‎. ‎Besaw ‎

responded that they did not have personal property in the new taxable ‎

value estimate‎. ‎It would be captured‎, ‎but it was not in the estimate‎. ‎Ms‎. ‎

Morita asked if the estimate was in the subject Plan or in something else‎. ‎

Ms‎. ‎Besaw stated that it was on the tax increment financing table for the ‎

taxable value following redevelopment ‎(‎$‎4 ‎million‎). ‎Ms‎. ‎Morita stated ‎

that it looked to her as if they were anticipating that the property would be ‎

worth about ‎$‎10 ‎million‎, ‎including personal property‎. ‎Ms‎. ‎Besaw agreed ‎

that was what they had estimated‎, ‎based on the investment created on the ‎

property‎. ‎She added that they could work with the Assessor if the number ‎

appeared too high‎. ‎The taxable value of the property would be ‎$‎4 ‎million‎; ‎

the real value would be approximately ‎$‎8 ‎million following ‎

redevelopment‎, ‎without personal property tax‎. ‎If they added personal ‎

property‎, ‎it would be ‎$‎10 ‎million‎. ‎Ms‎. ‎Morita questioned adding the ‎

$‎1‎,‎013‎,‎620‎.‎00‎, ‎which was the current taxable value and ‎$‎4 ‎million in ‎

value‎. ‎Ms‎. ‎Besaw said that the difference was ‎$‎2‎,‎986‎,‎380‎.‎00‎, ‎and that ‎

would be the addition‎, ‎which did not include personal property‎. ‎Ms‎. ‎

Morita asked how much they paid for the property‎. ‎Mr‎. ‎Markus said that ‎

they paid ‎$‎2‎.‎7 ‎million for the dealership and ‎$‎1‎.‎350 ‎million for the gas ‎

station‎. ‎

Ms‎. ‎Morita asked if the estimated construction costs were ‎$‎150‎.‎00 ‎per ‎

square foot and if that included remediation‎. ‎Mr‎. ‎Markus agreed‎, ‎and ‎

said it included every line item in the budget‎.‎

Ms‎. ‎Morita asked Mr‎. ‎Dawson if he needed additional information in order ‎

to figure out the City’s estimated value added‎. ‎Mr‎. ‎Dawson thought they ‎

would be able to do it from the Site Plan‎. ‎He had not had a chance to ‎

look at it‎, ‎but they would look at the location and at other retail operations‎, ‎

and they would do an income analysis‎. ‎Ms‎. ‎Morita asked if he needed ‎

information on construction costs with regard to what they were ‎

anticipating beyond the remediation‎. ‎Mr‎. ‎Dawson said that he would be ‎

more interested in lease information‎, ‎or the potential lease amounts of ‎

perhaps ‎$‎25 ‎per square‎-‎foot‎. ‎They would do an analysis and base the ‎

valuation not so much on the cost approach but on an income approach‎. ‎

They would use ‎$‎25 ‎per square‎-‎foot for ‎32‎,‎000 ‎square feet and give an ‎

allowance for vacancies‎. ‎He suspected it would be triple net pass ‎

through‎. ‎Ms‎. ‎Morita added that there would be management fees‎, ‎

insurance‎, ‎etc‎.‎, ‎and she just wanted to make sure Mr‎. ‎Dawson had ‎

everything he needed‎.‎

Vice Chairperson Turnbull wondered how they would do it from an income ‎

approach‎, ‎having some leases in place but also having some that were ‎

total spec‎. ‎He wondered how they would look at it when there could be six‎, ‎

12 ‎or ‎18 ‎month leases‎. ‎Mr‎. ‎Dawson said that it would be helpful to know ‎

what leases were in place‎, ‎to be able to know what the market was for this ‎

location‎. ‎He would need estimated prospected leases‎. ‎He asked Mr‎. ‎

Markus if he could give him some information on each of the buildings ‎

and the type of occupants and lease rates‎.‎

Mr‎. ‎Markus said that the way he did it was to look at market rents in and ‎

around the area and at the newest developments‎, ‎and he stated that it ‎

hovered around ‎$‎25 ‎per square‎-‎foot‎. ‎They had a potential McDonald’s ‎

user‎, ‎and they were negotiating a lease price‎. ‎They had been at one ‎

price‎, ‎but their building was moved farther west‎, ‎and they were now talking ‎

about another price‎. ‎He remarked that McDonald’s was low‎-‎balling big ‎

time‎. ‎They had been at a ‎$‎100‎,‎000‎.‎00 ‎per year land lease‎, ‎and now they ‎

were in the ‎$‎60‎’s‎. ‎He was trying to get them up to ‎$‎70 ‎or ‎$‎80‎k‎. ‎Mr‎. ‎

Dawson asked Mr‎. ‎Markus if he was estimating based on his projections ‎

of the market to be around ‎$‎25 ‎per square foot‎. ‎Mr‎. ‎Markus said that the ‎

shopping center just south of M‎-‎59 ‎was asking ‎$‎20 ‎to ‎$‎25‎, ‎and his was a ‎

newer development by a few years‎. ‎He believed that Barclay Square just ‎

filled the last space at ‎$‎25‎.‎50 ‎per square foot‎. ‎There was an outlot ‎

planned in front of Meijer on Auburn and they were asking from ‎$‎20‎-‎30‎, ‎

depending on whether it was end cap or inline space‎. ‎He felt that they ‎

were right there‎.‎

Ms‎. ‎Morita asked Mr‎. ‎Dawson if taxes for improvements with a land lease ‎

went to someone other than the land holder‎. ‎Mr‎. ‎Dawson noted the ‎

Burger King by Avon and Rochester‎, ‎and he said that it was a land lease‎. ‎

The land was assessed to the landlord‎, ‎and the building improvements ‎

were assessed to Burger King‎, ‎for example‎. ‎Ms‎. ‎Morita thought that any ‎

agreement the City had regarding maintaining the taxable value or not ‎

protesting taxes could not apply to McDonald’s‎, ‎although McDonald’s ‎

would be a party to the agreement‎. ‎Mr‎. ‎Dawson said that it was possible ‎

that a lot of the valuation would not be under the ownership‎. ‎Ms‎. ‎Morita ‎

clarified that it would be the same for personal property taxes‎. ‎

Mr‎. ‎Wackerman believed that part of the problem was with the line item ‎

called Estimated Tax Increment Value‎. ‎He asked if Ms‎. ‎Besaw could ‎

change it to Estimated New Taxable Value‎, ‎which he thought would make ‎

it a little clearer‎. ‎Ms‎. ‎Besaw agreed‎. ‎

Vice Chairperson Turnbull asked if there were any further comments‎. ‎Ms‎. ‎

Morita asked when the property was purchased‎. ‎Mr‎. ‎Dawson believed ‎

that the dealership was purchased last year‎. ‎Mr‎. ‎Markus corrected that it ‎

was ‎2011‎. ‎He added that the gas station was purchased in October ‎2012‎. ‎

Ms‎. ‎Morita asked if the taxable values were uncapped for the parcels‎, ‎

which Mr‎. ‎Dawson confirmed‎. ‎

Vice Chairperson Turnbull said that the purchase in ‎2011 ‎did not really ‎

have anything to do with what they were looking at‎, ‎but he drove by it daily‎, ‎

and he asked when the grass would be cut‎. ‎Mr‎. ‎Markus responded that it ‎

was cut a day or two earlier‎. ‎Vice Chairperson Turnbull stated that it was ‎

embarrassing the way the property had been maintained since it was ‎

purchased‎. ‎Mr‎. ‎Markus apologized‎. ‎He explained that they had switched ‎

landscaping companies‎, ‎because the one he used to have went out of ‎

business‎. ‎He stated that there was no excuse‎, ‎and he was on top of it ‎

now‎. ‎Vice Chairperson Turnbull said that he was in the same position as ‎

Mr‎. ‎Markus‎, ‎and he had no property in the City of Detroit that looked like ‎

that‎, ‎let alone Rochester Hills‎. ‎Mr‎. ‎Markus assured that it would not ‎

happen again‎. ‎He had a big talk with his landscape crew‎. ‎Once he got a ‎

letter from the City‎, ‎he went through the roof‎. ‎Vice Chairperson Turnbull ‎

was surprised the City had not done more‎. ‎Mr‎. ‎Markus promised it would ‎

not happen again‎, ‎and Vice Chairperson Turnbull thanked him‎.‎

Mr‎. ‎Webber suggested that the Board go through some of the ‎

considerations and talk about the next steps‎. ‎For instance‎, ‎he would not ‎

be opposed to putting a re‎-‎review in the Plan or some sort of timeframe‎. ‎

One of the memos talked about five years‎, ‎and he thought that was worth ‎

discussing‎. ‎

Vice Chairperson Turnbull agreed‎. ‎He thought they could add that once ‎

the applicant came back with revised tables which showed realistic ‎

capture rates‎, ‎and see if it still worked‎. ‎He knew Mr‎. ‎Markus had costs‎, ‎

and he did not think those would change much‎. ‎He probably had good ‎

estimates of what it would take to get to the end‎. ‎If the revised tables did ‎

not get Mr‎. ‎Markus to where he thought he was going in the timeframe ‎

currently proposed‎, ‎Vice Chairperson Turnbull questioned what should be ‎

done‎. ‎He wondered if they would add more time or if Mr‎. ‎Markus would ‎

get what he could during the five year period‎, ‎and that would be it‎.‎

Ms‎. ‎Besaw thought that was really up to the BRA‎. ‎They could work with ‎

the numbers and show new tables and see where the payback period fell‎, ‎

and it was up to the BRA to decide whether that would work‎. ‎She thought ‎

the six year period in the Plan looked good‎, ‎and they would have a few ‎

years to work with before they got to the point where it was not realistic‎. ‎

Usually‎, ‎they looked for around ten years if they were doing local only‎, ‎

and if it was over that they would look at adding the State taxes‎. ‎Ten ‎

years is where they would start to consider if it made sense‎.‎

Mr‎. ‎Anzek indicated that Ms‎. ‎Besaw made a good point about the State ‎

taxes‎, ‎and he asked why they would not pursue those now‎. ‎Ms‎. ‎Besaw ‎

said that when they added them in‎, ‎it only really made a couple of years’ ‎

difference in terms of the time that it would take to go through the ‎

approvals‎. ‎They had to balance whether or not it was worth the cost‎. ‎Mr‎. ‎

Anzek said that he did not want to speak for the Board‎, ‎but it would cut the ‎

City’s payback time in half‎. ‎The applicants were asking the City to pay ‎

the full freight‎, ‎but with the State’s participation‎, ‎they would each pay half‎. ‎

Ms‎. ‎Besaw said that if the BRA wanted them to look at it‎, ‎they would‎. ‎Mr‎. ‎

Anzek suggested that they would like to have all the partners that they ‎

could in the payback period‎. ‎Ms‎. ‎Besaw said that some municipalities ‎

liked local only‎, ‎because they would be able to realize that increase in tax ‎

on those millages right away‎. ‎A little would go back to the developer and ‎

a little to the taxing units‎. ‎It was just what the BRA felt was best‎. ‎

Mr‎. ‎Anzek said that it had been a while‎, ‎and there had been inactivity due ‎

to the recession‎, ‎but the last time they had a prospective Brownfield Plan ‎

go forward‎, ‎City Council had absolutely no interest in paying interest‎. ‎He ‎

thought they should keep that in mind going forward‎. ‎As a policy matter‎, ‎

there were things like that the Board needed to discuss ‎- ‎in terms of ‎

paying for the Plan development‎, ‎paying administration fees and things ‎

like that‎. ‎Once they had better guidance regarding that‎, ‎they could ‎

perhaps give the applicants that guidance‎. ‎Mr‎. ‎Markus had to make the ‎

decision of what worked for his development‎. ‎Ms‎. ‎Besaw commented that ‎

it did not hurt to ask‎. ‎Regarding the administrative fee‎, ‎Ms‎. ‎Besaw said ‎

that it was an estimate based upon a prior Plan they did in Rochester ‎

Hills‎. ‎She stated that it was up to the BRA whether they wanted it to be ‎

higher or lower‎, ‎and the same went for the interest‎. ‎She suggested that ‎

there might have to be an internal discussion about whether or not they ‎

wanted to include it‎.‎

Mr‎. ‎Anzek noted that the last time they had a good working meeting with ‎

the BRA and City Council on policy setting‎, ‎they looked forward to ‎

establishing a Revolving Loan Fund‎. ‎No project came forward‎, ‎however‎. ‎

The subject Plan did include that‎, ‎and it looked like an opportunity for the ‎

City to consider to get seed money established to be able to help other ‎

brownfield developments in the future‎. ‎If the tax tables changed‎, ‎the ‎

Revolving Loan Fund would get pushed ‎13‎-‎20 ‎years out‎, ‎and the ‎

attractiveness would go away‎. ‎Ms‎. ‎Besaw agreed‎.‎

Mr‎. ‎Wackerman clarified that Mr‎. ‎Anzek was not talking about the BRA ‎

administration fee‎; ‎he was talking about having the Rochester Hills ‎

application fee as a reimbursable‎, ‎eligible activity‎. ‎The way the Plan was ‎

written‎, ‎the applicant would get reimbursed for the fee paid to the BRA‎. ‎

Ms‎. ‎Besaw indicated that those types of things varied city by city‎. ‎They ‎

included as much as they could‎, ‎and the BRA could come back and tell ‎

them what they could not‎. ‎She added that there were municipalities that ‎

allowed it‎, ‎and some that did not‎, ‎and it was up to the BRA’s discretion‎.‎

Mr‎. ‎Anzek thought that the BRA’s hands were tied until they saw a clean ‎

spreadsheet with the proper capturable taxes and years‎. ‎There were ‎

other items that needed clarification‎. ‎He suggested that Mr‎. ‎Markus ‎

combined the lots to make it clean and worked out a deal with the gas ‎

station so they could continue to operate‎. ‎They could knock down the ‎

dealership but if McDonald’s wanted to start‎, ‎it could get complicated ‎

because of the curb cut issue and access‎. ‎Mr‎. ‎Anzek advised that MDOT ‎

controlled both Auburn and Rochester Rd‎.‎, ‎and they were fairly narrow ‎

about how the site would gain access‎. ‎There would be two driveways to ‎

the west from Auburn and one to the south on Rochester‎. ‎The gas station ‎

curb cuts could not operate if the other development was happening‎, ‎and ‎

it was a timing issue‎. ‎He summarized that the applicants should prepare ‎

new spreadsheets‎, ‎schedule a meeting with Mr‎. ‎Dawson to go over the ‎

millage rates‎, ‎and get more information on the structure of the leases‎. ‎

They should get answers to the BRA’s questions and revise the Plan as ‎

necessary‎. ‎In the meantime‎, ‎Staff would meet to discuss some of the ‎

policy matters‎. ‎Although several were set years ago‎, ‎it was a new era‎, ‎and ‎

they needed to revisit‎. ‎He added that several of the Board members were ‎

missing as well‎, ‎and it needed to be an inclusive discussion‎. ‎He ‎

recommended that the matter be continued until the clarifications were ‎

made‎, ‎and then they could schedule another meeting‎.‎

Ms‎. ‎Morita said that she realized she had a lot of questions regarding the ‎

application‎, ‎such as missing numbers and making sure things were clear‎, ‎

for example‎, ‎or making sure they were not leasing the property for ‎$‎25 ‎

rather than ‎$‎25 ‎per square‎-‎foot‎. ‎She asked if they could make sure all ‎

the missing information was included so that when the BRA was ‎

considering it‎, ‎they knew exactly what the numbers were‎. ‎She maintained ‎

that it made it easier for her‎. ‎It was Ms‎. ‎Morita’s understanding from the ‎

Act that the method of financing for the construction had to be contained ‎

within the application‎. ‎Mr‎. ‎Wackerman said that was only if it was being ‎

financed by the municipality through bonds‎. ‎

Ms‎. ‎Morita questioned the demolition costs of ‎$‎246‎,‎000‎.‎00 ‎and whether ‎

or not it was necessary and part of the remediation or whether it was ‎

related to something else‎. ‎She asked if they could see a breakdown as to ‎

what the demolition costs were and how those were related to the ‎

remediation as opposed to construction activities‎. ‎

Mr‎. ‎Wackerman noted that in the memo of July ‎24‎, ‎2013 ‎from Ms‎. ‎Besaw‎, ‎

there was a breakdown from the demolition contractor‎. ‎Based on face ‎

value‎, ‎it looked like demolition costs‎, ‎but they had used the words ‎

“associated with remediation‎,‎” and none of the demo costs were ‎

associated with remediation‎; ‎they were associated with demolition‎. ‎

Ms‎. ‎Morita said that she could not speak for the other Board members‎, ‎

but a couple of years ago‎, ‎they passed a policy that required all materials ‎

to be submitted the Wednesday before the week of the meeting‎. ‎She ‎

stated that they should have had all the information last Wednesday to ‎

review‎. ‎She appreciated the fact that Ms‎. ‎Besaw worked hard to get ‎

answers to the last minute questions‎, ‎but she had not seen them‎, ‎and she ‎

did not have a chance to read the memo from July ‎24‎th‎. ‎Ms‎. ‎Morita ‎

encouraged that if there was information the applicants wanted the Board ‎

to read‎, ‎they should make sure it got to Staff two weeks before the ‎

meeting‎. ‎Ms‎. ‎Besaw said that next time‎, ‎they would definitely be ‎

considerate of that‎. ‎They submitted the Plan‎, ‎and then they had two ‎

weeks for it to be reviewed before the meeting‎. ‎The review came back ‎

after the two weeks‎, ‎however‎.‎

Hearing no further discussion‎, ‎Ms‎. ‎Morita moved that the matter be ‎

continued at the next meeting‎. ‎Mr‎. ‎Sera seconded‎, ‎and after calling for a ‎

vote‎, ‎Vice Chairperson Turnbull declared that the motion was approved ‎

unanimously‎. ‎Vice Chairperson Turnbull noted that the date would be ‎

determined‎, ‎and he thanked the applicants‎.‎

Postponed

2013-0272

Update on new State Brownfield and Economic Development Initiatives ‎- ‎Tom ‎

Wackerman‎, ‎ASTI Environmental‎

Presenter for this matter was Tom Wackerman‎, ‎President‎, ‎ASTI ‎

Environmental‎, ‎P‎.‎O‎. ‎Box ‎2160‎, ‎Brighton‎, ‎MI ‎48116‎.‎

Mr‎. ‎Anzek introduced Mr‎. ‎Wackerman‎, ‎who had been the City’s ‎

environmental consultant since January ‎2001‎. ‎He was also President of ‎

ASTI Environmental‎, ‎and he had been the go‎-‎to person for all ‎

environmental issues‎. ‎Recently in the City‎, ‎a building had been vacated ‎

by a company that left several potentially explosive hydrogen canisters‎, ‎

and MDOT would not let them be transported away‎. ‎The company wanted ‎

to rig a temporary swimming pool in the parking lot‎, ‎submerse the ‎

canisters‎, ‎cut them open‎, ‎let the hydrogen and water create a gas and ‎

blow fans on it to disperse it‎. ‎In Mr‎. ‎Wackerman’s initial research‎, ‎it ‎

looked like it could have an explosion radius of ‎1‎,‎000 ‎yards‎. ‎There was ‎

another company that located on a midnight one Saturday‎, ‎and the City ‎

did not even know they were there until someone saw a press release and ‎

called the City‎. ‎The company was trying to convert waste by‎-‎products into ‎

a combustible gas‎. ‎That was a highly dangerous process‎, ‎and it was not ‎

permitted in the district they were in‎. ‎There was a lot of research done by ‎

Mr‎. ‎Wackerman to track down the Italian scientist that had invented the ‎

process‎, ‎and the City got the company to relocate‎. ‎He commented that ‎

although the City was not in the business of chasing companies out‎, ‎it did ‎

not like to have to clean up businesses that exploded‎. ‎He commented ‎

that Mr‎. ‎Wackerman had been a big help‎. ‎His firm also supplied wetland ‎

delineation services‎, ‎and activity was picking up on properties with ‎

wetlands‎. ‎He had asked Mr‎. ‎Wackerman to present an update on ‎

brownfield legislation‎. ‎Under Governor Snyder‎, ‎there had been a lot of ‎

changes with regard to tax credits and how things were reimbursed‎. ‎They ‎

had drawn a little deeper line for eligibility for communities‎, ‎and Mr‎. ‎

Anzek felt it was a good opportunity for Mr‎. ‎Wackerman to give an ‎

overview‎. ‎

Mr‎. ‎Wackerman agreed that just four weeks ago‎, ‎there had been a ‎

number of changes to the legislation‎. ‎The changes were significant for ‎

brownfield redevelopment‎, ‎but he felt that it was important to see how ‎

municipalities were creating policies to deal with brownfield and other ‎

incentives‎. ‎He used the word policy‎, ‎because he thought it was the kind ‎

of discussion that needed to happen in a workshop‎, ‎not while an applicant ‎

was taking about a Brownfield Plan‎. ‎The policy could include things like ‎

whether or not to accept interest‎. ‎Legislatively‎, ‎that was an eligible ‎

activity‎, ‎but many communities were saying that they would not pay an ‎

applicant’s interest‎. ‎It was an economic development tool‎, ‎and cities ‎

would help someone develop‎, ‎but there were some things they would not ‎

do‎. ‎He referred to his memo‎, ‎which said that “these were at the discretion ‎

of the BRA‎.‎” Those were things that needed more thought‎. ‎The BRA had ‎

the ability to allow or disallow any kind of eligible activities‎, ‎as long as it ‎

was acceptable under the Act‎. ‎Once that was “baked in” to the ‎

reimbursement agreement‎, ‎which would be the next step for an applicant‎, ‎

the BRA would also have control of the actual reimbursement‎. ‎Another ‎

thing that was happening with municipalities‎, ‎and he noted that his firm ‎

was being hired by a lot‎, ‎was that projects that were on the table four or ‎

five years ago were now generating additional taxes‎, ‎and people were ‎

making application to get paid‎. ‎He said that it was amazing to look at the ‎

difference between the original assumptions in a Brownfield Plan and the ‎

reimbursement agreement and what really came out in the end with the ‎

invoices‎. ‎The BRA had a second opportunity to control the process when ‎

it approved the invoices for the actual expenses allowed in the Plan‎. ‎With ‎

the history of communities that had now reimbursed and communities ‎

that had developed policies‎, ‎there was a wide range of activities that were ‎

allowed‎, ‎and he strongly recommended that the BRA got together either ‎

with City Council or in its own workshop‎. ‎He mentioned that he could ‎

facilitate a workshop‎. ‎They should look at best practices and come up ‎

with a set of policies for the kinds of things that had been brought up‎. ‎

Mr‎. ‎Wackerman strongly encouraged the BRA to go back to working on ‎

the Revolving Loan Fund‎. ‎He stated that it was one of the most powerful‎, ‎

underutilized tools in the incentives tool kit‎. ‎It allowed a City to capture ‎

taxes after it had reimbursed the applicant for expenses‎. ‎It allowed a City ‎

to create a war chest which could be deployed just like any EPA site ‎

assessment grant‎. ‎He indicated that Oakland County recently got a site ‎

assessment grant‎, ‎and he was going to work with the City to get some of ‎

that money for the Landfill Planning Area ‎(‎section ‎24‎). ‎Money in the ‎

Revolving Loan Fund was the City’s to control‎. ‎He gave an example of ‎

the City of Ferndale‎, ‎which set up one six or seven years ago‎, ‎and they ‎

had over ‎$‎300‎k to incentivize projects‎. ‎If the City did not set up a ‎

Revolving Loan Fund‎, ‎he would recommend that every Brownfield Plan ‎

stated that “in the event that the City set one up‎, ‎it would capture the ‎

taxes‎,‎” so the City reserved the right to capture taxes‎.‎

Mr‎. ‎Wackerman next talked about changes to due diligence and the ‎

incentive program‎. ‎He said that the brownfield redevelopment process ‎

was still pretty much the same‎, ‎except that there were new documents‎, ‎

and there was a new process added‎. ‎The new documents had a lot of ‎

options‎. ‎There had been a shift in focus by the MDEQ and the EPA for ‎

what they were following and for what they would approve or not‎. ‎The ‎

Phase ‎1 ‎was unchanged‎, ‎except that a new standard would come out ‎

towards the end of ‎2013 ‎that would add vapor intrusion ‎- ‎gases coming ‎

into buildings‎. ‎The Phase ‎1 ‎was still the most important document for an ‎

applicant‎. ‎The Phase II investigations had changed a little in that they ‎

might require more extensive investigation to support some of the Due ‎

Care Plans that needed to be done‎. ‎There were changes in the Baseline ‎

Environmental Assessment‎. ‎The BEA was the third document that ‎

provided liability protection‎. ‎There was no longer industrial‎, ‎commercial ‎

and residential‎; ‎there was just residential and non‎-‎residential‎. ‎Those now ‎

complied with the Federal Phase ‎1 ‎standards‎. ‎There were now two ‎

exemptions‎. ‎If someone leased a property for office‎, ‎retail or commercial ‎

purposes‎, ‎he or she would be exempt from needing a BEA‎. ‎If there was a ‎

residential condominium and the contamination was consistent with ‎

residential use in the common areas‎, ‎someone would not need a Due ‎

Care Plan or BEA‎. ‎There was another area called Remediation Options ‎

Analysis‎. ‎It had four categories‎, ‎and it was limited to non‎-‎residential and ‎

residential‎. ‎Another big thing was that there could be partial closures‎. ‎It ‎

used to be that someone had to treat an entire property as one unit and ‎

whatever was done was done to the whole property‎. ‎Now‎, ‎a section of the ‎

property with an area of contamination could be treated differently‎. ‎The ‎

reason that was important to the BRA was that when someone said they ‎

had closure‎, ‎the City had to ask for what‎. ‎

Mr‎. ‎Wackerman stated that the Due Care Plan name had changed to ‎

Documentation of Due Care Compliance‎. ‎He noted that they could now ‎

be approved by the DEQ‎, ‎and the DEQ would no longer approve BEAs‎. ‎

The only approval process was now for the Documentation of Due Care ‎

Compliance‎. ‎The reason that was important for the BRA was that any ‎

Federally‎-‎funded project required that approval‎, ‎and it would add time to ‎

the process‎. ‎

Mr‎. ‎Wackerman continued that owners of property always had to do due ‎

care obligations‎, ‎avoid exacerbation and take reasonable cautions ‎

against acts of third parties‎, ‎and they had to make sure a property was ‎

safe for human health and the environment‎. ‎A number of years ago‎, ‎he ‎

worked with the City on integrating planning‎, ‎due care review and initial ‎

brownfield review‎, ‎so that when a brownfield property was closed and ‎

getting incentives‎, ‎they did what they were supposed to do‎. ‎He remarked ‎

that this had been a bugaboo with the DEQ for a long time‎. ‎People had ‎

filed Due Care Plans and said they would do certain things‎, ‎and then no ‎

one followed up‎. ‎The new emphasis was on following up‎. ‎Property ‎

owners had to provide reasonable cooperation access to persons ‎

conducting the cleanup‎. ‎They had to comply with established ‎

requirements and refrain from interfering with restrictions or response ‎

activities‎. ‎The same thing happened on the State level that had ‎

happened on the Federal level‎. ‎The State was going to be more ‎

concerned with reviewing‎, ‎following‎-‎up and managing operation and ‎

maintenance of brownfield sites‎.‎

Mr‎. ‎Wackerman indicated that there was another change to the Due Care ‎

Plan that would affect the City‎. ‎Local governments used to get an ‎

exemption from due care requirements for public land‎. ‎They no longer ‎

did‎, ‎so parks all needed to comply with the requirements‎. ‎There was a ‎

new document called a Response Activities Plan‎, ‎which would come after ‎

a Due Care Plan‎, ‎which was also approved by the DEQ‎. ‎They had ‎150 ‎

days to approve what someone was proposing for a property‎, ‎and it could ‎

be for one section of a property‎. ‎It had added significantly to a number of ‎

different projects‎. ‎In some cases‎, ‎the DEQ reviewed a Plan for ‎149 ‎days‎, ‎

and then said that it was administratively incomplete‎. ‎The final new piece ‎

was something called a No Further Action Report or Letter‎, ‎where the ‎

agency would say someone had done everything they were supposed to ‎

do‎. ‎An applicant would get a No Further Action report and a Certificate of ‎

Completion‎. ‎Afterwards‎, ‎it used to come down to at what point a ‎

municipality would step in and enforce environmental regulations‎, ‎

because it was in the best interest of the municipality‎. ‎That had been ‎

solved‎, ‎because the DEQ would step in and approve the final closure‎, ‎

and they would require financial assurance mechanisms on some due ‎

care requirements‎. ‎Municipalities were now going back to relying on the ‎

DEQ for implementation of all brownfield cleanup and requirements‎.‎

Mr‎. ‎Wackerman stated that there was more of a focus on volatilization to ‎

indoor air‎, ‎which was becoming more important‎. ‎Any time there were ‎

volatile organics in soils‎, ‎there would probably be a need for some sort of ‎

building redesign‎, ‎and there would be additional costs‎. ‎The BRA would ‎

more likely be seeing that in Brownfield Plans‎. ‎There used to be an ‎

agricultural exemption in the Act which said that if there was an orchard ‎

and it was contaminated with lead and arsenic‎, ‎which most orchards from ‎

the ‎1950‎’s were‎, ‎it was exempt from being a brownfield‎. ‎With the ‎

modifications to the legislation‎, ‎they forgot about that‎, ‎and it no longer ‎

existed in the legislation‎, ‎although they were looking to reverse it‎.‎

Mr‎. ‎Wackerman advised that there was now an appeal process‎. ‎The DEQ ‎

had promised to put all its data online‎, ‎so people could see what was ‎

happening in other communities‎, ‎in terms of brownfields‎. ‎There had ‎

been some changes to underground storage tank rules‎. ‎The biggest ‎

change was the Collaborative Stakeholder’s Group‎. ‎What drove the ‎

changes and what would drive the change on incentives was this group of ‎

industry attorneys‎, ‎government people and consultants that got together ‎

and said that enough was enough‎. ‎They redesigned the environmental ‎

regulations in the State‎. ‎They were taking on air regulations‎, ‎ground ‎

water regulations and drinking water regulations‎, ‎and they had made a lot ‎

of progress in making the regulations more user‎-‎friendly and ‎

understandable‎. ‎In the next year or two‎, ‎there would be more changes‎. ‎

He suggested that the Collaborative Stakeholders would be the group to ‎

watch‎.‎

Mr‎. ‎Wackerman said that the BRA would see some new documents and ‎

language on brownfield applications‎. ‎The BEA was still what defined a ‎

facility‎. ‎The other things had to do with cleanup and operation of a ‎

property‎. ‎The key ingredients were that a site had to be an eligible ‎

property with an eligible investor with an eligible project and activities‎. ‎

The Federal definition of brownfields was the same‎, ‎but the Michigan ‎

definition had changed a little‎. ‎That would affect any Brownfield Plan the ‎

BRA saw‎, ‎whether or not it was eligible‎. ‎The basic definition was still ‎

about a facility or a piece of property that was contaminated greater than ‎

residential cleanup criteria or a property that was in a land bank‎. ‎He did ‎

not believe that Rochester Hills had taken advantage of a land bank ‎

program‎, ‎and he felt that it was the second most underutilized program for ‎

brownfields in the State‎. ‎He added that it was a very good program if ‎

used appropriately‎. ‎There was a State Land Bank and the Oakland ‎

County Land Bank‎, ‎and they had powers that eligibility under the ‎

Brownfield Act did not‎. ‎

Mr‎. ‎Wackerman noted that historic resources were now eligible for ‎

brownfield incentives‎. ‎Rochester Hills was not a core community‎, ‎so it ‎

was not affected‎. ‎In all communities‎, ‎demolition and lead and asbestos ‎

abatement were eligible activities‎. ‎It was not that way before‎. ‎Two years ‎

ago‎, ‎the demolition costs and asbestos costs in a Brownfield Plan would ‎

not have been eligible for a non‎-‎core community‎. ‎In addition‎, ‎if the only ‎

thing an applicant was asking for was demolition and asbestos ‎

abatement‎, ‎then in non‎-‎core communities‎, ‎blighted‎, ‎functionally obsolete ‎

and historic resources could be eligible‎. ‎The City could have someone ‎

come forward for a property that was not a facility ‎(‎not contaminated‎) ‎but if ‎

it were functionally obsolete or blighted‎, ‎that person could bring a ‎

Brownfield Plan forward and ask for demolition and asbestos abatement ‎

costs‎, ‎which went back to the policy issue‎. ‎There were some communities ‎

which would‎, ‎as a matter of policy‎, ‎not allow demolition or abatement as ‎

an eligible activity‎, ‎because the thought was that only those things ‎

someone would not have to normally do on the property‎, ‎like clean up‎, ‎

should be eligible‎. ‎He recommended that it was one of the things the ‎

BRA should consider in terms of eligible activities‎. ‎Adjacent and ‎

contiguous properties had always been included‎, ‎even when those were ‎

not eligible properties‎, ‎as long as development on those properties ‎

added captured taxable value to the subject property‎. ‎

Transportation‎-‎oriented development facilities were also added‎. ‎

Mr‎. ‎Wackerman advised that Governor Snyder had eliminated the ‎

Brownfield Tax Credit‎, ‎which Mr‎. ‎Wackerman felt was one of the best ‎

programs in the country‎, ‎especially for people who could leverage it as ‎

equity against bank loans‎. ‎The Governor also eliminated the State ‎

Historic Tax Credit and the Employment Credit and replaced them with ‎

the Michigan Strategic Fund‎. ‎He stated that Mr‎. ‎Markus was not going ‎

after that‎. ‎It was a ‎$‎100 ‎million fund‎, ‎and it was divided into two programs‎: ‎

The Michigan Business Development Program and the Michigan ‎

Community Revitalization Program‎. ‎It was only for businesses which ‎

created jobs and investment‎. ‎The Brownfield Program was an economic ‎

development program‎, ‎and the State was getting back to that‎. ‎There was ‎

a time where it was just a “hand out the money” program‎, ‎but now there ‎

were a lot of “but for” tests‎, ‎a lot of financial gap analyses evaluations and ‎

return on investment evaluations‎, ‎and they were looking for creation of ‎

real value in the State‎. ‎

Mr‎. ‎Wackerman related that there was now a State Brownfield ‎

Redevelopment Fund‎. ‎On any application that came before the BRA that ‎

captured State taxes‎, ‎they would also have to provide payment to the ‎

State Brownfield Redevelopment Fund‎. ‎He mentioned that because the ‎

way the legislation was written‎, ‎the City would write the check to the Fund‎. ‎

If it was not included in the Brownfield Plan‎, ‎it would become an obligation ‎

of the City that was not funded‎. ‎The City would have to make sure that ‎

was in a Brownfield Plan‎. ‎It was ‎3 ‎mills of the taxes captured under the ‎

State‎. ‎Eligible activities could now be captured retroactively‎. ‎It used to ‎

be that only assessment costs could be captured after the fact‎, ‎and the ‎

Brownfield Plan had to be approved before they implemented the ‎

activities and spent the money‎. ‎That was not true anymore‎. ‎The money ‎

could be spent‎, ‎and an applicant could come to the City for retroactive ‎

reimbursement‎. ‎

Mr‎. ‎Wackerman said that the eligible activities for core communities now ‎

included parking structures‎, ‎both above and below ground as well as ‎

urban storm water management systems‎. ‎Those would be two very large ‎

areas in core communities‎. ‎The next thing the BRA would see was a ‎

combined Brownfield ‎381 ‎Work Plan‎. ‎There would be one document‎, ‎not ‎

two‎. ‎It would be approved by the City‎, ‎and it would go to the MEDC or the ‎

DEQ‎, ‎depending on what the eligible activities were‎. ‎He talked about ‎

trends in terms of approvals in communities‎, ‎and said that most were ‎

going to high density‎, ‎mixed‎-‎use‎, ‎walkable and transportation‎-‎oriented ‎

development‎. ‎That got the money‎; ‎everything else did not‎. ‎Job creation ‎

and investment targets were now required‎, ‎and there were claw back ‎

provisions in reimbursement agreements‎. ‎If people did not create the ‎

jobs they said they would‎, ‎they would have to give back money‎. ‎He noted ‎

that there was increased competition for funding‎, ‎and the State had ‎

already spent all of the Michigan Strategic Fund dollars for ‎2013‎. ‎There ‎

was starting to be a backlash against TIF in most communities ‎- ‎they did ‎

not want to give it out‎. ‎There were obvious reasons‎, ‎but especially with ‎

having to do budgets and the Headlee amendment cap and future tax ‎

capture‎. ‎There had been a lot of talk about what was an eligible activity ‎

and what a City had to incentivize in order to make a deal work‎. ‎Cities did ‎

not want to give away anything that was not critical to making a deal work‎. ‎

Mr‎. ‎Wackerman pointed out that there had been a lot of creative uses of ‎

grants‎, ‎especially as they related to remediation‎. ‎Demolition‎, ‎

underground storage tank removal‎, ‎etc‎.‎, ‎had been funded‎. ‎There was ‎

more focus on collaborative and area wide‎. ‎That was why he and the ‎

Planning Staff had long discussions about the Landfill Planning Area‎. ‎It ‎

was ripe for coordinated and collaborative efforts and‎, ‎therefore‎, ‎ripe for ‎

Federal funding‎. ‎

Mr‎. ‎Wackerman talked about the Community Revitalization Program‎, ‎

which could either be a grant‎, ‎loan or other economic assistance‎. ‎Any ‎

kind of construction was eligible‎. ‎It was up to ‎25‎% ‎of an eligible ‎

investment‎, ‎so there would be hard costs‎, ‎engineering and architectural ‎

fees and someone could get up to ‎25‎% ‎for that for a maximum of ‎$‎10 ‎

million for any one project‎, ‎including up to ‎$‎1 ‎million for a grant and a ‎

maximum of ‎$‎9 ‎million for a loan‎. ‎It was performance and need based‎, ‎

and the project would have to pass an economic financial gap analysis‎. ‎

He illustrated that the State now had a loaning or incentives profile‎. ‎That ‎

profile went back to trends‎; ‎what the State wanted to incentivize was true ‎

mixed‎-‎use‎, ‎three‎-‎story brick‎, ‎zero lot line‎, ‎new urbanist‎, ‎

transportation‎-‎oriented development with artist’s lofts‎. ‎The further a ‎

project was away from that‎, ‎the less chance there would be of getting ‎

funding from the State‎. ‎Some municipalities were following suit‎. ‎The ‎

problem was that it left out most of the suburbs in Michigan‎. ‎There had ‎

been some tension about what the State would really incentivize versus ‎

what was really built in the State‎. ‎He mentioned that if anyone was ‎

interested in that subject‎, ‎on November ‎20 ‎and ‎21‎st‎, ‎he was going to be ‎

hosting the University of Michigan Urban Land Institute Real Estate ‎

Forum in Lansing‎, ‎and that was one of the subjects ‎(‎what people were ‎

really building in Michigan‎). ‎He remarked that it looked more like ‎

Rochester Hills than it did downtown Detroit‎. ‎The State was looking for a ‎

very specific type of project‎, ‎but a municipality had to have skin in the ‎

game‎. ‎The City had control of an applicant’s access to State funds‎. ‎If the ‎

City did not‎, ‎in some way‎, ‎incentivize the applicant through a Brownfield ‎

Plan‎, ‎a pilot or some sort of DDA payment‎, ‎the applicant would not have ‎

access to the Community Revitalization Program‎.‎

Mr‎. ‎Wackerman noted the second program under the Michigan Strategic ‎

Fund‎, ‎the Business Development Program‎. ‎It was specifically for ‎

manufacturing and for people who created more than ‎50 ‎jobs or ‎25 ‎jobs ‎

in high tech‎. ‎The definition of a qualified investment was “anything they ‎

said it was‎.‎” If an applicant did not have a manufacturing facility coming ‎

to Rochester Hills from out of state that was creating more than ‎50 ‎jobs‎, ‎it ‎

would not work for the applicant‎, ‎but it was there in the event that occurred‎. ‎

Regarding what was going on in the marketplace‎, ‎Mr‎. ‎Wackerman felt that ‎

there would always be something for great projects‎. ‎Most municipalities ‎

were focusing their attention and incentives on what they defined as great ‎

projects‎. ‎Each municipality would define that differently‎, ‎depending on ‎

what they were trying to do and how they were developing‎, ‎but they were ‎

focusing on those rather than spreading it out over a number of different ‎

projects‎. ‎Incentives were taking more time because of the environmental ‎

requirements‎, ‎and because people were asking more questions‎. ‎They ‎

were more competitive‎, ‎because people were being more judicious about ‎

the money they were giving out‎. ‎The incentives were smaller‎, ‎and the ‎

Michigan Strategic Fund Brownfield Program was about ‎10‎% ‎of what the ‎

Brownfield Tax Credit Program used to be‎. ‎He thought that gap financing ‎

would be harder to find‎, ‎but he commented that the good news was that ‎

banks were lending again‎. ‎He thought there would be more equity from ‎

developers required‎. ‎There were a lot of deals done during the recession ‎

where the developer had no equity‎. ‎It was all incentives and someone ‎

else’s debt‎. ‎He thought they would see a requirement to go back to the ‎

80‎/‎20 ‎or ‎70‎/‎30 ‎rule‎. ‎If an applicant said that he did not really need the ‎

money‎, ‎most communities were saying that they would not give it then‎. ‎

There would be more measurable outcomes‎. ‎He was not sure if it was a ‎

result of Governor Snyder’s desire or if it was just time‎, ‎but people were ‎

looking to see if people did what they said they would‎. ‎The technology‎, ‎

the market and the development had to be ready‎. ‎Most communities ‎

were no longer giving incentives for spec or things that were just ideas‎. ‎

They wanted to know that there was a tenant‎, ‎that the market could handle ‎

it‎, ‎and that everything was in place‎. ‎He reiterated that the focus would be ‎

more on urban projects from a State‎-‎wide perspective‎. ‎It would be on ‎

projects that had real financing gaps‎. ‎He added that there was nothing ‎

out there for affordable housing on the brownfield end‎. ‎

Mr‎. ‎Wackerman concluded that those were the two key areas of change‎: ‎

The process of doing a Brownfield Plan or doing environmental due ‎

diligence on the one hand‎, ‎and the process of granting incentives on the ‎

other‎. ‎He noted on his handout the State’s definition of ‎

non‎-‎environmental‎, ‎eligible activities‎. ‎Those would be eligible for school ‎

tax capture through the MEDC‎, ‎which did not include remediation‎. ‎

In his handout‎, ‎Mr‎. ‎Wackerman had also included a list of activities that ‎

were available under each key incentive program‎. ‎It was an overview of ‎

the kinds of things that were being incentivized and that the City could ‎

incentivize‎, ‎which would hopefully spark some creativity and allow the ‎

BRA to look at a Plan and compare it with the handout‎. ‎He had also ‎

included two articles that he published‎, ‎which were about the changes to ‎

due diligence and changes in incentives‎. ‎He recommended that the ‎

members considered the previous discussion and asked what types of ‎

things came out as reasonable or unreasonable and whether something ‎

should be a policy‎. ‎

‎

Ms‎. ‎Morita asked if the MEDC had captured school tax before or if it was ‎

new‎. ‎She questioned whether the BRA could refuse to capture the ‎3 ‎mill ‎

of school tax‎. ‎Mr‎. ‎Wackerman advised that the Brownfield Fund was ‎

nothing more than a Revolving Loan Fund for the State‎, ‎and the BRA did ‎

not have control of that‎. ‎If an applicant was seeking school tax capture‎, ‎

the BRA would be required to put ‎3 ‎mills out of the school tax capture into ‎

the new Strategic Fund‎. ‎BRAs were now requiring a line item for that ‎

capture on the tax capture table‎. ‎Ms‎. ‎Morita wondered about approving a ‎

Plan that essentially took ‎3 ‎mills away from the schools‎. ‎Mr‎. ‎Wackerman ‎

clarified that the school tax capture provision reimbursed the schools and ‎

made them whole‎. ‎Ms‎. ‎Morita asked why they would bother doing it if the ‎

money was going out and coming back‎. ‎Mr‎. ‎Wackerman said that he ‎

really had no idea‎. ‎He said that it was like the lottery funding of the ‎

schools‎, ‎which he did not really understand‎, ‎either‎. ‎The way it would work ‎

was that the property owner would pay school taxes‎, ‎and it would then ‎

come back to reimburse the property owner‎, ‎and then the State would ‎

reimburse the schools‎, ‎so the schools were not out‎. ‎Ms‎. ‎Morita ‎

questioned whether the State would actually reimburse the schools‎. ‎She ‎

was worried about the perception that the BRA would be engaging in an ‎

activity which would take money away from the schools‎, ‎where it had not ‎

been taken away before‎. ‎Mr‎. ‎Wackerman said that the school tax capture ‎

had always been there‎. ‎They were not allowing a developer to collect ‎3 ‎

mills of it‎. ‎They would take it away from a developer’s reimbursement and ‎

give it to the new State Fund‎. ‎The flow of cash had always been that if ‎

there was an approved ‎381 ‎Work Plan with the State‎, ‎school taxes would ‎

be paid by the developer and the developer would be reimbursed as the ‎

eligible taxpayer‎. ‎The payback would be longer‎. ‎Mr‎. ‎Wackerman said ‎

that he had a problem with the legislation which said that the “Authority” ‎

would pay the State‎. ‎If a city had forgotten to add something to a Plan‎, ‎

and an eligible taxpayer was reimbursed the full ‎24 ‎mills‎, ‎that city would ‎

have to write a check for the ‎3 ‎mills‎. ‎There had to be an explicit line item ‎

in the tax capture‎. ‎Ms‎. ‎Morita asked if someone at the City would have to ‎

cut the State a check for ‎3 ‎mills‎. ‎Mr‎. ‎Wackerman agreed the City would ‎

collect it and cut the check‎. ‎The applicant would be reimbursed ‎21 ‎mills‎, ‎

but the State would be owed ‎3‎. ‎

Vice Chairperson Turnbull said that Ms‎. ‎Morita had a question earlier ‎

about the applicant having two parcels‎. ‎The BRA did not see a ‎

breakdown on the costs for those individually‎; ‎they were given overall ‎

costs for the entire site for assessment‎, ‎remediation‎, ‎demolition and ‎

combined activities‎. ‎Vice Chairperson Turnbull said that he understood ‎

that it would be one parcel down the road‎, ‎but the majority of the ‎

environmental costs were at the gas station‎, ‎and the majority of the ‎

demolition costs were at the former dealership‎. ‎He noted that the BRA ‎

had the discretion of letting demolition be a reimbursable expense or not‎, ‎

and he felt that they should ask for the breakdown regarding how the costs ‎

were allocated‎. ‎There was ‎.‎7 ‎acre and ‎4‎.‎4 ‎acres‎. ‎The percentage of the ‎

overall development of the gas station would only generate so much in ‎

taxes‎, ‎and he was not sure how much contamination was at the dealership ‎

from ‎18 ‎years of operation‎.‎

Ms‎. ‎Morita said the results showed that it was in one tiny spot‎, ‎and Vice ‎

Chairperson Turnbull questioned whether there was any‎. ‎He advised that ‎

he had been down the same path in his day job‎, ‎where he had asked ‎

developers for that type of breakdown for the costs‎. ‎He believed that it ‎

was the developer’s responsibility to go back to the seller and state that ‎

there was a liability that had to be factored into the sale price‎. ‎The ‎

applicant was not going to be using the building‎, ‎and he really did not ‎

need it‎. ‎To make the developer whole in this case‎, ‎the BRA would be ‎

letting him use the incentive vehicle for a significant portion of the ‎

demolition of the structure‎, ‎and Vice Chaiperson Turnbull did not know if ‎

that was a cost they wanted to accept and include‎. ‎He suggested that ‎

they would have to wait until they got the breakdown‎.‎

Mr‎. ‎Wackerman remarked that Vice Chairperson Turnbull posed an ‎

amazingly complicated question‎. ‎The law did not ask someone to break ‎

down the costs by parcel‎; ‎it asked for the tax capture by parcel‎. ‎That ‎

distinction was important because the costs could be reimbursed across ‎

the entire project‎. ‎If one parcel was ‎80‎% ‎of the project but had no ‎

contamination and ‎90‎% ‎of the costs were on the remaining ‎20‎% ‎of the ‎

parcel‎, ‎the question would be how they would collect‎. ‎The capture would ‎

be over both parcels‎, ‎but the capture had to be illustrated separately‎, ‎so ‎

that as it moved forward and each parcel was assessed separately or ‎

developed differently‎, ‎it made sense‎. ‎The Board had discussed whether ‎

incentives should be for cleanup‎. ‎In most cases‎, ‎someone did not have ‎

to do cleanup ‎- ‎engineered controls could be done‎, ‎for example‎. ‎He ‎

suggested that if the City wanted to have a policy that the incentives ‎

should be used for cleanup‎, ‎it had to be explicit‎. ‎He mentioned the City ‎

of Ann Arbor as an example‎. ‎If something had to do with tax incentives‎, ‎

applicants would be required to clean not only their own sites‎, ‎but any ‎

offsite contamination‎. ‎By contract‎, ‎the City of Birmingham did not require ‎

a cleanup‎, ‎but they would not pay for anything but a cleanup‎. ‎They felt it ‎

was an environmental tool‎. ‎Other cities would give an applicant anything ‎

requested‎, ‎because they saw it as an economic development tool‎. ‎He ‎

wanted to make sure that the Board was not just talking about cleanup‎. ‎

Vice Chairperson Turnbull wondered if they would see a breakdown of the ‎

costs‎, ‎if that was something the applicants did not have to provide‎. ‎He ‎

asked if the Board could request it‎. ‎Mr‎. ‎Wackerman informed that they ‎

could request anything they wanted‎. ‎He did not mean to imply that they ‎

should not see the costs of the line items ‎- ‎he stated that they absolutely ‎

should‎. ‎He had asked Ms‎. ‎Besaw for those‎, ‎and she had provided them ‎

in her July ‎24‎th memo‎. ‎He felt that information was important to be able ‎

to understand the reasonableness of the costs and to understand the ‎

impact of those costs on future taxable value‎. ‎They took the entire cost of ‎

the project to come up with the future taxable value‎, ‎and most of those ‎

costs would not change the taxable value‎. ‎It was only the capital ‎

improvements to the property that would really affect the future taxable ‎

value‎. ‎He agreed that the Board had to get the line item costs‎. ‎He ‎

reiterated that there was no requirement to split those costs between ‎

properties‎, ‎and there was really no way to do that if they were putting a ‎

building across three properties‎. ‎He commented that it was rather ‎

academic how the construction costs would be split‎.‎

Vice Chairperson Turnbull understood that about development costs‎, ‎but ‎

he said that demolition and remediation costs could be broken down per ‎

parcel‎. ‎Mr‎. ‎Wackerman agreed that the Board had the right to ask for ‎

that‎. ‎The applicant might not want to be limited by parcel‎, ‎and he would ‎

want to cover his costs across all the parcels‎. ‎Mr‎. ‎Wackerman wondered ‎

about putting a parking lot on one parcel and a building on another‎. ‎All of ‎

the increased value would be on parcel two‎, ‎but they would have to cover ‎

all of the costs somehow‎, ‎so they would be allowed to spread them across ‎

both parcels‎. ‎

Ms‎. ‎Morita asked about the estimate provided‎. ‎Mr‎. ‎Wackerman said that ‎

on the demolition page‎, ‎there was a quote from a demo company that ‎

listed building and site demo‎. ‎Ms‎. ‎Morita said that it did not show how ‎

many different line items and sums there were‎, ‎so the Board had no way ‎

of knowing how much everything would cost‎. ‎Mr‎. ‎Wackerman agreed the ‎

Board had no way of knowing the cost of the line items‎. ‎Ms‎. ‎Morita said ‎

that basically‎, ‎they had not provided what the Board was looking for‎. ‎Mr‎. ‎

Wackerman said they had not provided what he asked‎, ‎but they did ‎

provide some detail‎. ‎

Mr‎. ‎Wackerman maintained that it was important to note that the BRA had ‎

control in three places‎. ‎There was the Brownfield Plan‎, ‎which was nothing ‎

more than painting a picture‎. ‎There was a Reimbursement Agreement‎, ‎

which was where the real clauses‎, ‎requirements and detail were‎. ‎When ‎

the applicant came for reimbursement‎, ‎they could only get ‎

reimbursement on actual costs‎. ‎If the BRA approved ‎$‎800‎k in eligible ‎

activities‎, ‎but the applicant only spent ‎$‎400‎k‎, ‎they could only get ‎$‎400‎k‎. ‎

The Board had the duty of reviewing every invoice‎. ‎He had seen ‎

common errors‎. ‎The first was the date of the invoice‎. ‎It could be ‎

ineligible because it was not approved under the program‎. ‎

The second one was that the invoice was actually more than what they ‎

thought it was‎. ‎Without the line item numbers or description‎, ‎they would ‎

not know whether something else was buried in there‎. ‎In most cases‎, ‎that ‎

would be taken care of on the reimbursement end‎. ‎Thirdly‎, ‎the Board ‎

could look at an invoice and perhaps ask for more detail‎, ‎so there were ‎

some other places for control‎.‎

Ms‎. ‎Morita said that from a policy perspective‎, ‎she had an issue with ‎

demo‎-‎ing existing structures‎, ‎one of which appeared to be economically ‎

viable ‎- ‎the gas station ‎- ‎and paying for demolition of that‎. ‎She did not ‎

feel that there was a reason the applicant should get preferential ‎

treatment over any other developer that would come in and want to ‎

redevelop a piece of property that did not happen to have a spot of ‎

contamination on it‎. ‎Generally speaking‎, ‎when there were old buildings ‎

that needed to be demo‎-‎ed‎, ‎the developer did not run to the City to ask for ‎

brownfield approval and at the same time‎, ‎ask the Board to waive all the ‎

fees‎. ‎Staff would have to be paid‎, ‎and it would take time away from their ‎

other projects‎. ‎Mr‎. ‎Wackerman also had fees‎. ‎She felt that the City ‎

should be made whole for those‎.‎

Mr‎. ‎Wackerman agreed‎. ‎He said that Ms‎. ‎Morita brought up a couple of ‎

really good points‎. ‎There were communities that categorically would not ‎

pay for demos‎. ‎Their position was that the applicant bought the property‎, ‎

and they had to demo to build the new development‎, ‎anyway‎. ‎The City ‎

would not pay for that‎.‎

Vice Chairperson Turnbull said that was his point‎. ‎If it was not the ‎

configuration an applicant wanted‎, ‎something would have to happen in ‎

the negotiation process of the purchase‎. ‎Mr‎. ‎Wackerman agreed that it ‎

could just be part of the buyer’s cost‎. ‎He indicated that it was a policy ‎

decision that the Board had to look at‎. ‎There were other communities that ‎

would give applicants anything they wanted‎, ‎because they felt they really ‎

needed the development‎. ‎Mr‎. ‎Wackerman mentioned a comment about ‎

an applicant getting a lot of benefits plus wanting a tax abatement or fees ‎

waived‎. ‎A lot of communities were saying that if they gave brownfield ‎

incentives to an applicant‎, ‎they would take into account all of the other ‎

things they had done for the applicant‎. ‎If they waived ‎$‎10‎k worth of fees‎, ‎

they might decide not to give ‎$‎10‎k of brownfield incentives‎. ‎He felt that ‎

was an important‎, ‎holistic approach as to what the true cost to the City ‎

would be‎. ‎

Ms‎. ‎Morita wondered about having to review invoices or pay someone to ‎

review invoices to make sure they were for eligible activities‎. ‎She ‎

assumed that would be done by someone in Mr‎. ‎Wackerman’s office‎. ‎He ‎

agreed they did that‎. ‎Ms‎. ‎Morita said that if the developer did not pay for ‎

that‎, ‎the City would have to bear the cost‎, ‎and she felt that was ‎

unreasonable‎. ‎She had seen an instance where the developer was ‎

required to pay for those costs in advance‎, ‎and if the account got too low‎, ‎

they had to add to it to keep paying for the fees‎. ‎That kept the developer ‎

a lot more reasonable and made sure the developer submitted the right ‎

documents when they were supposed to‎, ‎as opposed to relying on the ‎

City to catch mistakes‎.‎

Mr‎. ‎Wackerman said that was a policy decision the BRA might want to ‎

consider‎. ‎They could add an additional administrative fee into the ‎

program‎. ‎

Mr‎. ‎Anzek advised that the City did that now for Site Plan Approvals‎. ‎The ‎

applicants had to post an escrow account‎, ‎and before a project moved ‎

forward‎, ‎it could go through several reviews by Staff who charged against ‎

that escrow‎. ‎If the escrow got to zero‎, ‎Staff stopped working on a project ‎

until it was brought back into compliance‎.‎

Ms‎. ‎Morita asked if the same thing was done with a Brownfield Plan‎. ‎Mr‎. ‎

Anzek said that they really had never done one‎. ‎There was an ‎

application fee‎, ‎but he suggested that they should put language in the ‎

reimbursement agreement about establishing an escrow account which ‎

could be charged against for hours spent by Staff or consultants‎. ‎If it ‎

became depleted‎, ‎it would have to be replenished‎. ‎That would be apart ‎

from reimbursement‎. ‎Ms‎. ‎Morita agreed‎, ‎and said that there should be ‎

another line item for attorney review of the documents‎. ‎Mr‎. ‎Anzek pointed ‎

out that the applicants put ‎$‎200‎k in the Plan for consultant fees for them ‎

to put the Plan together‎. ‎If approved‎, ‎the City would be paying the ‎

applicant’s consultant through the reimbursement of taxes‎.‎

Mr‎. ‎Wackerman noted that there were two fees the City charged‎. ‎There ‎

was a ‎$‎2‎,‎500‎.‎00 ‎application fee‎, ‎which was designed to pay for brownfield ‎

review and Mr‎. ‎Wackerman’s time‎. ‎There was also administrative ‎

collection of the taxes over time‎. ‎There were a number of communities ‎

that added to that direct cost fees‎, ‎and those could come out of the ‎

developer’s pocket or would be seen as an eligible activity‎. ‎The problem ‎

with that was that Peter was paying Paul‎, ‎and it did not make a lot of ‎

sense‎. ‎He recommended using the structure the City had for planning‎. ‎If ‎

the City was going to give an applicant dollars‎, ‎there would be other costs ‎

it would incur first‎. ‎Up until this year‎, ‎the MEDC and the MDEQ charged ‎

for review of ‎381 ‎Work Plans‎. ‎They were no longer doing that‎, ‎but it set a ‎

precedent that made perfect sense‎.‎

Ms‎. ‎Morita asked if the ‎$‎2‎,‎500‎.‎00 ‎fee covered the cost of Mr‎. ‎

Wackerman’s review of an application and for coming to the BRA ‎

meetings‎. ‎Mr‎. ‎Wackerman felt that on the average‎, ‎it probably did‎. ‎It ‎

depended on how complicated a Plan was‎. ‎That fee would not cover a ‎

review of Madison Park ‎(‎Softball City‎). ‎That was an extremely ‎

complicated Brownfield Plan‎. ‎Something like the subject application was ‎

not even half of that‎, ‎and it was fairly simple‎. ‎Ms‎. ‎Morita said that it ‎

depended on how many meetings were involved‎. ‎Mr‎. ‎Wackerman ‎

clarified that it depended on the complexity and how many times it might ‎

have to be redone‎. ‎He was not exactly sure because the City had not ‎

done a Plan‎. ‎Ms‎. ‎Morita wondered whether the Board needed to look at ‎

restructuring the fee‎. ‎If someone came in with a larger‎, ‎more complex ‎

Plan‎, ‎she felt that they should have to pay more than ‎$‎2‎,‎500‎. ‎

Mr‎. ‎Anzek thought that was a good point‎, ‎and he stated that it would be an ‎

easy thing to put in place‎. ‎They could require ‎$‎2‎,‎500 ‎to cover the initial ‎

review and two meetings in front of the BRA‎. ‎If the information was ‎

inadequate and it continued‎, ‎they would have to pay additional‎, ‎such as ‎

$‎1‎,‎000 ‎per meeting‎. ‎Meetings were not just the two hours they sat there‎. ‎

The meetings were about Mr‎. ‎Dawson’s review‎, ‎Mr‎. ‎Wackerman’s review ‎

and Planning’s Review‎. ‎The applicant had submitted some initial drafts ‎

to Mr‎. ‎Wackerman which were not ready to be sent to the BRA‎. ‎Ms‎. ‎

Morita said that was the type of activity she would like to discourage by ‎

increasing the fees‎. ‎The point was that the developer should be coming ‎

to the BRA with Plans that actually had the amount of square‎-‎footage in ‎

the application‎. ‎She stated that it was ridiculous‎. ‎She said that she could ‎

not speak for the rest of the members‎, ‎but when it was ‎10‎:‎00 ‎at night after ‎

she had already had a long day and then had to read the Plan‎, ‎which she ‎

reminded was purely voluntary‎, ‎and she could not figure out simple things ‎

in it‎, ‎it was downhill from there‎. ‎She wanted to make everyone’s life easier ‎

and encourage developers to come to the City with a Plan that they did ‎

not have to pay to have corrected‎. ‎She did not understand why it was so ‎

hard to submit a complete Plan‎.‎

Mr‎. ‎Wackerman said that he and Staff had discussed that earlier‎. ‎He was ‎

not sure what was going on in the environmental business‎, ‎but some of ‎

the documents were not being well prepared‎. ‎He had noticed in his first ‎

review that the tables were not even totaled correctly‎. ‎Ms‎. ‎Morita said that ‎

she looked at the tables also‎, ‎and it did not even make sense to her‎. ‎

Either the names were not right or the numbers were not‎. ‎Things were in ‎

there that should not have been‎. ‎She commented that it was ludicrous ‎

that the applicant could not even bother to go on the City’s website to find ‎

out the proper millages‎. ‎Mr‎. ‎Wackerman recommended that the things ‎

that the Board felt was important for policy and decision making needed ‎

to be included in the project summary‎. ‎The City needed to ask for that ‎

even before receiving the Plan‎, ‎so they did not have to go through ‎20 ‎

pages of text‎. ‎Ms‎. ‎Morita observed that they did include the application‎; ‎

the problem was that it was incomplete‎. ‎Mr‎. ‎Wackerman agreed‎, ‎and he ‎

said that would be the time to send it back‎, ‎before the BRA meeting‎. ‎He ‎

felt that the intent should be that the application was submitted prior to the ‎

meeting‎, ‎so they could look through all of the key financial and ‎

operational indicators‎, ‎and then they could submit the Plan‎. ‎

Ms‎. ‎Morita said that she would be interested in seeing a proposal from ‎

Staff ‎- ‎a wish list of how Staff would like to see the setup and what would ‎

make things easier‎, ‎which would make the BRA’s life a little easier‎.‎

Mr‎. ‎Anzek said that regarding the Site Plan side‎, ‎Staff always asked that if ‎

the applicant had information‎, ‎it should be put on the plans‎. ‎They should ‎

not have to keep asking for things‎, ‎because it extended the process‎. ‎Staff ‎

had educated a lot of the consultants to do that‎, ‎and things were going ‎

more quickly for applicants‎. ‎He suggested that they could require the ‎

same for Brownfield Plans‎. ‎It would be better to err on the side of having ‎

too much information rather than not having enough‎. ‎He mentioned ‎

again that Staff had received the Plan last week‎, ‎and he and Mr‎. ‎

Breuckman only had a little time to review it‎, ‎and they saw the same types ‎

of things the BRA was questioning‎. ‎

Mr‎. ‎Anzek said that they also discussed dissolving the Board‎, ‎but there ‎

might now be more activity coming forward‎, ‎and there was the opportunity ‎

to build the Revolving Loan Fund‎. ‎That could be a powerful tool‎, ‎and his ‎

department was shopping for tools‎. ‎With the MEGA going away‎, ‎the City’s ‎

tax abatement went away‎. ‎The City had not granted one in over two years‎, ‎

and they used to do three or four a year‎, ‎which brought major business to ‎

the City‎. ‎The City recently adopted a PACE program‎, ‎which was an ‎

incentive for businesses to upgrade environmental components of their ‎

buildings‎. ‎He liked it that they might be looking at a Revolving Loan ‎

Fund in five or six years‎. ‎However‎, ‎if the applicant’s table was so wrong ‎

that the City would not get to that for ‎13 ‎years‎, ‎he would not be as excited‎. ‎

The City thought it had a good program‎, ‎but strategies and laws were ‎

changing after the recession from four or five years ago‎. ‎He believed that ‎

there would be policy discussions at the City Council level‎.‎

Ms‎. ‎Morita agreed that whether or not they wanted the BRA to be a body ‎

that authorized projects for cleanup or to have an economic development ‎

tool to tear down buildings and encourage wholesale redevelopment ‎

would be a question for Council to answer‎. ‎That was Mr‎. ‎Webber’s issue ‎

to take back to Council for discussion‎. ‎Mr‎. ‎Anzek added that Mr‎. ‎Webber ‎

sat on the Strategic Planning Commission for Council‎, ‎which met ‎

annually to look at goals and objectives and how they should be ‎

implemented‎. ‎Out of that came the objectives for departments’ budgets‎. ‎

Ms‎. ‎Morita said that until she actually saw the purchase agreement and ‎

closing statement for the applicant’s purchase‎, ‎she would not be sure what ‎

the sale price was‎. ‎Mr‎. ‎Anzek believed it was ‎$‎2‎.‎9 ‎million‎, ‎although Mr‎. ‎

Markus had said ‎$‎2‎.‎7 ‎million‎. ‎He mentioned that in ‎2005 ‎or ‎2006‎, ‎a ‎

huge industrial building the City owned was torn down ‎(‎185‎k square feet‎, ‎

three levels‎, ‎thick concrete and steel‎) ‎for ‎$‎183‎k‎. ‎Ms‎. ‎Morita said that was ‎

why she wanted to see line items for the applicant’s proposed demo‎, ‎

because it seemed a little high‎. ‎

Mr‎. ‎Webber said that from his perspective‎, ‎and the BRA had not had a lot ‎

of projects recently‎, ‎there were certain sites in the City‎, ‎especially as there ‎

was less land to develop‎, ‎where there was a need for some type of ‎

remediation in order to use them‎. ‎When the applicants came before ‎

Council for a Rezoning‎, ‎he had stated that they were going to have to do ‎

something with the gas station‎. ‎The applicants were very confident that ‎

they would be able to clean it up‎. ‎Mr‎. ‎Webber felt that the BRA should ‎

focus more on that than the demolition of the buildings‎. ‎He thought that ‎

the BRA might have a workshop before the applicant came back‎. ‎He said ‎

that it obviously could not be a closed session‎, ‎but he felt they could have ‎

a policy discussion and see where everyone was at‎. ‎They could then ‎

review the applicant’s final application and make a determination from ‎

there‎.‎

Mr‎. ‎Anzek asked the Board for some time for Staff to work with Mr‎. ‎

Wackerman and look at what other communities were doing and how they ‎

were answering some of these questions‎. ‎They could have a workshop ‎

when all seven members were able to attend‎. ‎If Staff knew what the ‎

members’ thoughts were‎, ‎it would be helpful‎. ‎Mr‎. ‎Sera thought that was a ‎

great idea‎. ‎He agreed that they should find out what other cities were ‎

doing‎, ‎and Mr‎. ‎Anzek said he and Mr‎. ‎Wackerman would pull that ‎

information together and find a good date for a workshop when everyone ‎

was available‎. ‎

Ms‎. ‎Morita said that she would like to see recommendations from Staff on ‎

the fee structure for the application and perhaps some new rules for ‎

submitting an application‎. ‎From her perspective‎, ‎having to come to a ‎

meeting to review a Plan that was not complete added a lot more work for ‎

everyone‎. ‎She felt that it could be avoided by making the developer ‎

come in with a Plan that had all the boxes filled in‎. ‎

DISCUSSION

2013-0280

Meeting Date‎(‎s‎)‎

Ms‎. ‎Morita had talked to Mr‎. ‎Anzek about holding one annual meeting‎, ‎

since they had not met in the last two‎-‎and‎-‎a half years‎. ‎She had ‎

suggested that it might be easier to have one meeting set per year and ‎

call meetings as needed‎. ‎She believed that they were paying to publish ‎

notices quarterly and sending out emails about cancellations‎. ‎Mr‎. ‎Anzek ‎

clarified that it did not cost the City to post notices ‎- ‎they were only on the ‎

City’s website and in the front foyer‎. ‎Ms‎. ‎Morita clarified that if there was a ‎

Public Hearing‎, ‎it would have to be noticed in the paper‎.‎

Mr‎. ‎Anzek recommended that they kept publishing scheduled quarterly ‎

meetings‎, ‎and the Board could schedule Special Meetings whenever ‎

they decided‎, ‎to which the Board agreed‎. ‎

Mr‎. ‎Webber thought that the applicants would want to come back before ‎

October ‎17‎. ‎He thought that what the applicant planned for the site would ‎

look much better than what was there currently‎. ‎From that perspective‎, ‎he ‎

felt that they should work with the applicant to eliminate the abandoned ‎

car dealership and very old gas station‎, ‎especially one with so many curb ‎

cuts‎. ‎

ANY OTHER BUSINESS

Regarding policy‎, ‎Mr‎. ‎Breuckman wondered if there could be a dual type‎, ‎

with regards to the spectrum of economic development versus ‎

environmental cleanup and the way the Board structured its policies‎. ‎If ‎

there was a project they really wanted to incentivize and bring to the City‎, ‎

he wondered if they could use more of the incentives for demolition‎, ‎and if ‎

it were just environmental cleanup‎, ‎they could allow an applicant to ‎

capture for cleanup activities‎. ‎It would be somewhat of a two‎-‎level system‎.‎

Mr‎. ‎Wackerman said they could‎, ‎and it would all depend on how the ‎

policy was written‎. ‎Mr‎. ‎Breuckman suggested that there could even be a ‎

case where the BRA wanted to use its broader powers for more payback‎. ‎

The project could to go to Council‎, ‎and the applicant would ask Council to ‎

direct the BRA to consider something along those lines‎. ‎

Mr‎. ‎Wackerman thought that this was where not having a policy might be ‎

the best policy‎. ‎If the BRA wanted to very tightly script the process‎, ‎such ‎

as the City of Birmingham had‎, ‎that would lead to one outcome‎. ‎If they ‎

wanted to be loosely scripted‎, ‎it would lead to a different set of outcomes‎. ‎

The MEDC had a list of projects they wanted to incentivize‎, ‎but if a project ‎

was really good and it was not on it‎, ‎they might consider it‎. ‎The BRA ‎

might want to take the middle ground and be flexible‎, ‎which would allow ‎

certain areas of the City or certain types of development to be ‎

incentivized‎. ‎He recommended that they could consider all the specifics ‎

and decide in a workshop‎. ‎Each of those issues had implications as to ‎

how they would operate or deploy dollars‎. ‎If someone wanted to come in ‎

and put a used car lot‎, ‎they needed to know how to respond‎. ‎

Mr‎. ‎Anzek thought that Staff had enough information to get started on a ‎

workshop‎. ‎Depending on how the BRA judged a project to be beneficial ‎

or of high quality for the community‎, ‎it had the opportunity to assist with ‎

funding‎. ‎He asked the members to shoot him an email if they had any ‎

further thoughts‎. ‎

Mr‎. ‎Sera suggested that perhaps they could list ten things‎, ‎such as ‎

interest‎, ‎demolition and other things and determine that those were the ‎

areas to discuss‎. ‎Mr‎. ‎Anzek recalled that the City had a similar chart for ‎

tax abatements‎. ‎How many jobs were created determined how many ‎

years of abatement a company could get‎. ‎Staff might try to structure ‎

something similar‎. ‎Mr‎. ‎Webber agreed that when something was in front ‎

of Council‎, ‎they got a report which told them which criteria would be met‎. ‎

Mr‎. ‎Anzek said that it had served Council well‎, ‎but it was only a guideline‎. ‎

If there was a really good company with a strong potential for growth or the ‎

type of company that wanted Rochester Hills in its address‎, ‎they might ‎

get a few more years‎. ‎Mr‎. ‎Webber said that sometimes a company had ‎

one idea for the length of an abatement‎, ‎and Staff might recommend ‎

something different‎. ‎

Mr‎. ‎Anzek thanked everyone for their input‎. ‎Ms‎. ‎Morita asked if two weeks ‎

was enough time for Staff to review a Plan‎. ‎Mr‎. ‎Breuckman said that he ‎

could see it becoming similar to a Site Plan process‎. ‎Staff would not ‎

bring a Plan before the BRA until everything was met in the requirements‎, ‎

and Mr‎. ‎Dawson was happy that the spreadsheet was correct‎. ‎There ‎

would be more internal Staff reviews‎. ‎He felt that the discussion had been ‎

useful‎, ‎and that Staff got some good contributions from the BRA for the ‎

future‎. ‎

NEXT MEETING DATE

Vice Chairperson Turnbull reminded the Board that the next Regular ‎

Meeting was scheduled for October ‎17‎, ‎2013‎.‎

ADJOURNMENT

Hearing no further business to come before the Brownfield Redevelopment ‎

Authority Board and upon motion by Morita‎, ‎seconded by Sera‎, ‎Vice ‎

Chairperson Turnbull adjourned the Special Meeting at ‎9‎:‎14 ‎p‎.‎m‎.‎

________________________________________‎

Thomas Turnbull‎, ‎Vice Chairperson‎

Rochester Hills Brownfield Redevelopment Authority‎

________________________________________‎

Maureen Gentry‎, ‎Recording Secretary‎