Redevelopment program infuses new life into abandoned sites

By Susan Stock
Lansing State Journal
October 6, 2003

When Neogen Corp. wanted to open a fifth Lansing facility, President James Herbert preferred a location downtown.

But he found that the cost of rehabilitating a downtown site might keep the food safety test kit manufacturer out of the city.

"Frankly, we were looking at where our best alternatives would be," he said.

Everything changed when Neogen found a building on Shiawassee Street that not only was close to its other facilities, but qualified for brownfield funding - a special program to help redevelop obsolete or blighted sites.

"(With brownfield help), we could build more economically by reclaiming old structures," Herbert said.

Brownfield is designed to help developers afford the extra costs of working on old sites that are contaminated, blighted or functionally obsolete by refunding some future taxes.
It's often combined with other state and city credits such as the single business tax credit, the neighborhood enterprise zone and historic tax credits - tax breaks that add up to thousands or millions of dollars - depending on the project's size.

Of the roughly $858,000 Neogen invested in the site, it will get back $114,000 in brownfield reimbursement and $74,000 in single business tax credit - nearly a quarter of the project cost.

It's those results that have caused the program to take off.

Available in Lansing since 1997, 12 of the 14 brownfield projects have come in the last three years because of increased awareness and a change in 2000 that qualified more sites.

The developers will receive about $9.5 million in brownfield reimbursement and $14 million in single business tax credits on their state business taxes.

The projects are expected to create more than $151.5 million in private investment and 1,650 jobs. The city also captures about $2.3 million for a fund to sponsor future projects and cover administrative costs.

"These can be very successful projects, and now we have enough under our belt that we can show them (finished results)," said Patricia Cook, manager of the Lansing Economic Development Corp.

Some of the more prominent projects include the $50 million office and parking Boji complex downtown at Allegan and Townsend streets and the former Schafer Bakery site.
The Lansing Brownfield Redevelopment Authority approved three more sites last week, though they still have to be approved by the City Council.

In East Lansing, there has been one brownfield project, the $30 million City Center. The city has at least two more in the pipeline, including the City Center II and a proposed $3 million renovation to the former Albert Pic Motel site.

The real trigger for the jump in the number of brownfield projects was when the program was expanded to include obsolete and blighted sites, said Jim Van Ravensway, director of planning and community development for East Lansing.

"That just opened it way up, especially for downtowns," he said. "It was no longer some exotic state program. It's really a major tool for redevelopment."

The reimbursement the developer receives is typically reinvested into the project instead of pocketed, Van Ravensway said.

"Brownfield gives the developer the opportunity to actually create a better project," he said. "Brownfield is a way to allow them to do more things."

The redevelopment has a significant impact on the people in the area, said Mehboob Fatteh, one of six owners of Cap-Lab, which spent $500,000 renovating the former Hall of Fame pool hall on South Cedar Street.

"It was an eyesore before the building was renovated," he said. "We had to practically redo the whole thing."

Such development can boost an entire neighborhood, said Michael Taylor, executive director of the Community Development Corp. at National City.

"Hopefully, there will be spin- off development, especially if it's a housing initiative," he said.

The future of the brownfield program is secure for now, said Jeff Kaczmarek, senior vice president for business and community services for the Michigan Economic Development Corp. Last year, the program was reauthorized through 2008.

And even though there's talk of phasing out the single business tax, "there will probably be a replacement tax," he said.