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West Michigan communities capitalizing on brownfield redevelopment

By Nathan Peck | MiBiz
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Plainwell City Manager Erik WIlson said the decision to move city offices and those of developer Conestoga Rovers & Associates onto the site of the city’s former paper mill helped the project secure federal and state funding. PHOTO: NATHAN PECK

WEST MICHIGAN — Where the casual passerby might see an abandoned industrial site, Plainwell City Manager Erik Wilson sees opportunity.
The city is working with private developers Conestoga Rovers & Associates (CRA) to turn the former Plainwell Paper Mill into offices, residential and commercial uses through a combination of federal and state incentives. Plainwell is one of many West Michigan communities dealing with the toxic history that past industries left behind while looking to redevelop properties and grow their tax bases.

When the Plainwell Paper Mill closed in 2000, more than 18 percent of the city’s tax revenue evaporated along with the 500 jobs. For a city of just 4,000, the loss an industry with more than a century of history was a serious blow. Between the time of the closure and the city’s purchase of the site in bankruptcy in 2006 the city tried to recruit a new industrial user to the site with no success, Wilson explained to MiBiz.

“Many people asked how the city can afford to spend money on the paper mill, but once it became clear that no white knight was coming in to purchase the property out of bankruptcy, the city had to step in,” Wilson said. “Everyone agreed ‘something’ needed to be done, but no one knew what that was. The picture became clear that we were taking the lead role.”

The project will retain most of the historical brick buildings as Weyerhaeuser, the potentially responsible party for the site, works to remove and remediate the PCB contamination. The mill site is designated a Superfund site by the Environmental Protection Agency and the city has taken advantage of a $1 million EPA grant for the deconstruction and demolition of buildings on the site, followed by a $1 million grant from the Michigan Economic Development Corp. for demolition activities. The fact that the city and CRA will be moving into the site when it is complete makes the proposal considerably more attractive to state and federal agencies, Wilson said.

“Superfund redevelopment is typically measured in decades — we are trying to find a way to avoid that,” Wilson said. “The learning curve for this is huge. It is not just a brownfield site, it is a superfund site.”

CRA’s U.S. construction operations are based in Kalamazoo and will relocate to the site when complete. Vertical integration within the firm allows it to concentrate on brownfield projects that frequently scare off other developers. CRA and Plainwell are working to secure $3 million in federal and state incentives, said CRA Vice President Wayne Bauman.

“We have it all internally, with the exception of legal. What is unique is we are an engineering, construction and consulting firm. What we bring is the ability to bring this all together,” Bauman said. “We are able to create work for ourselves — brownfield sites are often too complicated for a typical developer who has to hire out all those services.”

The city of Parchment has taken a different tack in working to reclaim the paper mill that has remained vacant since its closure in 2001. Parchment is looking to a partnership with Denver-based developer Frontier Renewal and Signature Associates to develop and market the new River Reach development. The project will start this summer on the south end of the site with demolition, environmental remediation and the construction of a main arterial road stretching from Riverview to G Avenue. The first phase will consist of commercial buildings, with residential construction to follow later.

The project is waiting for the green light from the Michigan Department of Natural Resources and Environment to seek bids for demolition of buildings on the site in order to use a $1 million loan from the agency. The Michigan Economic Growth Authority approved $49.6 million in tax increment financing for remediation of contamination on the site.

Construction is likely to begin in the first quarter of 2011, said Dennis Durham, Parchment city manager, and will help get the ball rolling on other projects, such as the redevelopment of sites controlled by Georgia Pacific and Ashland Chemical.

“Even if we were to get to the point where we know we have a clean piece of property, we will be happy,” Durham said. “This is a catalyst for a lot of other developments in the area.”

EPA grants in Grand Rapids will go toward defraying the upfront costs for environmental cleanup for brownfield redevelopers. Grand Rapids snagged $1.3 million of the $10.7 million Michigan received in the latest round of EPA grants to set up a $1 million revolving fund for cleanup activities, and directed another $300,000 to the city for environmental assessments to detect the presence of petroleum and hazardous substances.

Developers are traditionally reimbursed for the cost of environmental cleanup out of the property taxes collected from the site, in a tax increment financing agreement. The revolving fund would allow the city to front the money for cleanup costs and make more projects viable, said Kara Wood, economic development director for the city of Grand Rapids.

“The nice thing is that these program dollars work very well for small business owners. They are not the ones who can front the initial investment for environmental cleanup. We currently don’t have any money for upfront costs — if the cleanup is costly it can kill the project,” Wood said. “This is an opportunity to jumpstart our brownfield funds in the future. We will be looking to maximize job creation and private investment. We’ll look at the really contaminated sites in the city.”

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TAGS:

• brownfield redevelopment
• design build
• erik wilson
• western michigan