Baraga County to launch new Brownfield Authority

Joshua Vissers/Daily Mining Gazette Tax Increment Financing (TIF) is one tool of a Brownfield Redevelopment Authority (BRA). TIF takes increases in property tax revenue, during a predetermined time and from a predetermined area, after a redevelopment project to reimburse the developer for the extra costs of building on a brownfield. After the developer is repaid, money collected for the rest of the TIF period can be used to build the BRA’s revolving fund. Brownfields usually have little or no taxable value until they are redeveloped. TIF takes advantage of the rapid increase in surrounding property value after development.

Baraga County is launching a Brownfield Redevelopment Authority (BRA) to help with the redevelopment of blighted and vacant properties.

“We don’t have any projects at the moment,” Baraga County Treasurer Anne Koski said.

However, Koski said there are properties in the county that will qualify for financial incentives for redevelopment.

“Any blighted property will qualify,” she said.

A brownfield can be a blighted building, a contaminated site or facility, a property that has reverted to the local government because of unpaid taxes, or a building which is functionally obsolete and cannot serve a useful purpose without significant remodeling, according to Megan Webber, upper peninsula brownfield coordinator with the Michigan Department of Environment, Great Lakes and Energy (EGLE, formerly MDEQ).

“A lot of malls right now are becoming functionally obsolete because they’re not able to sell on the market anymore,” Webber said.

A BRA gives the local government several tools to encourage developers to use these land parcels, often in towns and villages, rather than previously undeveloped land.

A BRA can qualify for grants and loans from the Environmental Protection Agency (EPA), EGLE, and the Michigan Economic Development Corporation (MEDC). EPA focuses more on environmental cleanup incentives, while the MEDC looks more at economic ones.

“As a local brownfield authority gets established, they also can offer more incentives, but it’s hard at the beginning because a lot of times they don’t have the revolving fund for that,” Webber said.

Webber also said the most common way to build a BRA’s revolving fund is through the use of tax increment financing, or TIF. TIF is an agreement between the BRA and a potential brownfield developer to reimburse the developer for a part of their investment out of the tax revenue from the increased property values of the surrounding area.

“Often times a brownfield has either low taxes or no taxes if it has been tax reverted,” Webber said.

Redeveloping a brownfield can be more expensive than starting new, so the BRA offers TIF or grants to encourage developers. After they finish redevelopment, the property value of the brownfield, and some of the properties surrounding it, rises. The new tax revenue from an agreed upon area around the brownfield site is first used to pay the developer an agreed upon amount. Then any extra can be placed in the BRA revolving fund to pay for future brownfield work, like demolitions and assessments. TIF agreements can last up to 30 years.

“The brownfield authority makes that agreement with the developer on what can be reimbursed and what can’t,” Webber said.

Webber said BRAs and TIF has worked well for U.P. communities in her experience, but results can vary depending on how active the BRA is, and what developers want to work with local properties.

“Sometimes it’s hard just to get started, but in the end they’re really looking out for the future generations,” Webber said.

“Our goal is always economic development,” Koski said.

She said she hopes the Baraga County BRA will look at grants first, but will keep TIF as an option in the future.

The BRA will be guided by a board selected from volunteers by the county board of commissioners. Koski said she hopes a variety of people from different townships in Baraga County come forward.

According to county clerk Wendy Goodreau, county commissioners voted in favor of forming the BRA at the regular May 13 meeting, following a public hearing on the issue.