Developer Expected to Request $9.5 Million TIF

Tuesday, December 1, 2015, 4:31 am
By: 
Coleen Moyerbrailean

A recent presentation to East Lansing’s Downtown Development Authority (DDA) unveiled the Brownfield tax increment financing (TIF) plan for the proposed mixed-use redevelopment where Spartan Avenue meets Grand River Avenue. If all goes as presented to the DDA, the developer will be asking East Lansing’s City Council to approve $9.5 million in TIF reimbursements for expenses related to the redevelopment.

The new development will incorporate three parcels of property. The first two are on Grand River Avenue, including the site of a former gas station and the former Tasty Twist location. The third parcel is on Spartan Avenue at the site of a fraternity.

The mixed-use redevelopment is expected to consist of apartments and retail space “which will create a dense urban redevelopment,” according to the project description provided in the Brownfield Plan. It will feature “a substantial green courtyard” created to preserve a 265-year-old white oak tree on the property along Spartan Avenue. The redevelopment will be known as “White Oak Place.”

The Brownfield Plan was prepared with the assistance of Advanced Redevelopment Solutions (ARS), located in Eagle, MI. ARS specializes in working with developers and/or Brownfield redevelopment authorities on all things related to Brownfield plans. Eric Helzer, an Economic Development Finance Professional for ARS, worked on the White Oak Place plan and presented it to the East Lansing DDA on November 19.

Mr. Helzer outlined what makes the three parcels eligible for tax incentive financing:

The former gas station site still has fuel tanks buried underground. About five years ago, leaks in the tanks were detected. The tanks were replaced and some soil remediation was done. The extent of the remediation and its success remain unclear at this point.

Additionally, at one time, near the site but not directly on it were two dry cleaners. According to surveys done of the property, high levels of highly carcinogenic chemicals leeched into the ground water creating the greatest contamination threat for the White Oak Place project.

[Update: A later phone discussion with Helzer led to this additional/revised information: The former gas station is actually the source of most of the environmental contamination. It is known from the Base Environmental Assessment (BEA) that high levels of highly carcinogenic chemicals leeched into the ground water creating the greatest contamination threat for the White Oak Place project. The site on Spartan Avenue is eligible to be considered a Brownfield site because “it is adjacent and contiguous to a contaminated property and it is part of the project,” according to Mr. Helzer.]

All of these environmental problems make the properties eligible for Brownfield TIF.

The approved site plan for the new project calls for a six-story building along Grand River Avenue, with commercial space on the first floor, and one- to four-bedroom apartments above. There will be underground parking along Grand River Avenue. A two-story residential building will extend along Spartan Avenue.

Before these new buildings can be built, the existing fraternity, gas station, and Tasty Twist buildings will have to undergo asbestos abatement. Next, they will be demolished and the debris removed from the site. The underground tanks will be dug up and removed. Then the soil and the ground water under the Grand River Avenue site will undergo environmental remediation. This is where the project starts to get tricky and expensive.

The polluted soil must be contained, removed, and replaced. This process, called “sheeting and shoring,” according to Helzer involves containing the soil by placing an underground barrier around the entire perimeter of the redevelopment. The contaminated soil is removed and replaced. The barrier stays in place to prevent any future comingling of soil. The contaminated ground water is dealt with by a process called “dewatering.” This process involves pumping out the ground water—totaling an estimated 5 to 15 million gallons—and double purifying it (required by the City) before pumping it into the Spartan Avenue storm drain.

Should any of the pollutants, such as benzene, toluene, or naphthalene, manage to remain in the ground, a barrier will be installed between the ground and the floor of the underground parking. A drain will be installed to capture any off-gassing and to send it up vents to direct it safely away from residents.

As stated earlier, the tax incentive financing (TIF) needed by the developer to do the necessary clean up and prep work is estimated at $9.5 million. The developer is looking to be reimbursed for this amount by capturing 90% of the new taxes generated by the property for up to twenty years.

There is a significant discrepancy between the developer’s estimate of projected taxable value for the development after completion ($7.5 million) and the estimate given by the city assessor ($5.3 million). If the projected tax value turns out to be actually less than $7.5 million, the Brownfield Plan would have to be extended if the developer were to be reimbursed the full amount, because how much a new project can generate and have “captured” in taxes depends on how much it is worth in terms of taxable value.

According to the discussion at the DDA, if the parking under the Grand River Avenue portion of the project were eliminated, the soil and ground water remediation would not be necessary. The main work required would be asbestos abatement and ground tank removal. The cost of these items are considerably less than the other items outlined above.

The developer of the project is named as next Generation Investment Properties, LLC, with the same address as Community Resource Management Company (CRMC), a major landlord in East Lansing. The contact name given is Joe Goodsir of CRMC.

You can see the presented Brownfield Plan by clicking here. The site plan can be seen here. The image above shows how the new building is expected to look from Grand River Avenue.

UPDATE, December 4, 2015: The original version of this article said the site on Spartan Avenue was the site of a 'former sorority." We have corrected it to read that it is the site of a fraternity (existing). The sentence "The former sorority has not been used in years and is considered an out-of-date 'facility,' making it eligible for redevelopment TIF" was consequently removed. We also added the material noted in brackets above. The Downtown Development Authority is expected to receive and review a revised Brownfield plan for the project at its next meeting, Tuesday, December 8, at noon in City Hall. The meeting is open to the public.

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