Brownfield Basics

brownfield_icon.jpgBrownfield Basics

What are brownfields?
Why is the redevelopment of brownfields important?
What are some of the financial incentives to support brownfield redevelopment?
I'm interested in learning more, where should I look?

What are brownfields?toyota_plan.jpg  

Brownfields are previously developed sites that have barriers to redevelopment due to the prescence or threat of contamination on the property.

Why is the rededevelopment of brownfields important?

Redeveloping brownfields reduces sprawl, reduces public health threats, and encourages new investment in proxmity to existing infrastructure and public services.

What are some of the financial incentives to support brownfield redevelopment?

The following tax credits, tax abatements, tax increment financing, and grant and loan programs are only a few of the incentives available for brownfield projects.  There are a variety of other sources at the state and local level.  The Michigan Economic Development Corporation website provides detailed descriptions of these options.  In addition there are a number of grants available through state and federal agencies such as the Michigan Department of Transportation (MDOT), Department of Housing and Urban Development (HUD), Michigan State Housing Development Authority (MSHDA), and Michigan Department of Natural Resources (MDNR).

Tax Increment Financing (TIF)

TIF is for eligible activities related to contamination on a site.  TIF allows a developer to be reimbursed for the eligible environmental costs related to a project using the incremental increase in the taxes on the property resulting from the new development.  A TIF can only be used if there is going to be an increase in the property tax, otherwise there is nothing to capture to reimburse eligible activities.  If a site is located within a core community (see glossary of terms), the eligible activities expand to cover demolition, infrastructure improvements, and site preparation.  These are the incentives available, but ultimately it is local government approval  for each specific project that determines what can be included as eligible activities reimbursable by TIF.  If a developer decides to pursue a TIF a brownfield plan will need to be created and approved at the Local, WCBRA, County, and if capturing all taxes including school taxes, the State Level.  Any eligible expenses incurred before a brownfield plan is approved cannot be reimbursed.

  • Eligible Properties 
    • Any propery contaminted above residential standards (i.e., residential standards of "CED" - child eating dirt).
    • An approved Brownfield Plan must be in place BEFORE activities occur.
    • Additional "Core Community" Properties: blighted or functionally obsolete properties
  • Elligible Activities
  •   Example of how TIF works

Michigan Business Tax (MBT) Credit

The Michigan Business Tax (MBT) credits can provide up to 12.5% of eligible investmens, or 20% for eligible Urban Development Area Projects, for projects that redevelop a contaminated, blighted, or functionally obsolete property. Projects less than $10 million must be approved by the Michigan Economic Growth Authority (MEGA) Board and projects more than $10 million must be improved by both the MEGA and the State Treasurer. The credits fall into three categories:
Large- for investments greater than $10 million.
Small- for investments between $2 million and $10 million.
Mini- for investments of $2 million or less.
Credits are awarded to projects according to the following criteria:
  • Host community is a willing participant making a substantial financial contribution through TIF, property tax abatements,
  • Neighborhood Enterprise Zones, local revolving funds or other programs
  • The project is a mixed-use project located dowtown or within walking distance of downtown
  • The project requires further incentivie even after TIF has mitigated excess costs
  • The project plans to reasonable improve the condition of the brownfield site
  • The project assists our state's manufacturers in meeting the pressures of national or international competition
Eligible Activities:
  • Costs associated with demolition, construction, restoration, alteration, renovation or improvement of buildings or site improvements on eligible property and the addition of machinery, equipment and fixtures.
  • Must occur after the approval of a brownfield plan but no earlier than 90 days prior to date of the preapproval letter.

Revolving Loan Fund

The RLF is a federally funded loan program that can assist which provides low interest loans for government entities, private developers, and non-profit organiztions.  These funds can be used for remediation and clean-up activities at eligible brownfield sites.

See the link below for more information on EPA grants and resources.

State of Michigan Grant/Loan Program

The Michigan Department of Environmental Quality (MDEQ) offers a number of grant and loan programs for brownfield projects.

Clean Michigan Initiative (CMI) Brownfield Redevelopment Grant

These grants provde funding to local units of government, Brownfield Redevelopment Authorities, and other public bodies to assess and remediate brownfield sites that show economic development potential.  Awards are limited to one project per applicant per year, not to exceed $1 million.

  • Eligible Activities
    • Environmental investigations and assessments
    • Interim response
    • Due care activities

CMI Brownfield Redevelopment Loan

These loans are similar to Brownfield Redevelopment Grants.  A municipality or BRA must pledge its full faith and credit to secure the loan and the Michigan Department of Treasury must approve the applicant.  Loans are offered at a 2% rate of interest with no payments or interest for the first 5 years.  The full amount must be repaid within 15 years.  This loan allows a community or BRA to use TIF to capture furture taxes generated from the redevelopment of the property, to repay the loan

  • Eligible Activities
    • Environmental investigations and assessments
    • Site clean-ups
    • Demolition
    • Revitalization Revolving Loan

The RRL Program provides eligible counties, cities, townships, villages, or BRAs with low-interest loans for brownfield redevelopment projects.  The property must be a "facility" as defined in Part 201, Environmental Remediation, of the Natural Resources and Environmental Protenction Act, 1994 PA 451, as amended.  There is no minimum or maximum loan amount and the conditions are the same as for Brownfield Redevelopment Loans.

  • Eligible Activities
    • Environmental investigations and assessments
    • Interim response activites
    • Demolition

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I'm interested in learning more, where should I look?

There are a variety of resources to learn more about brownfield redevelopment.  Here are a few:

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