Blog: New Funds for Legacy Contamination Now Available for Your Next Development Project

Michigan has one of the best, if not the best, programs nationally for redeveloping and repurposing environmentally challenged properties. Redeveloping a blighted and/or contaminated property can seem like a daunting task, but it doesn’t always have to be.
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Mike Kulka
Mike Kulka // Photo courtesy of Mike Kulka

Michigan has one of the best, if not the best, programs nationally for redeveloping and repurposing environmentally challenged properties. Redeveloping a blighted and/or contaminated property can seem like a daunting task, but it doesn’t always have to be. What could be more fulfilling than turning a run-down building into something repurposed with the potential to be a catalyst for change in an area? While the costs to redevelop these types of properties can be higher than most, Michigan has developed tools to recover many of the outlays associated with the challenges of redeveloping urban areas. It also allows for the utilization of existing infrastructure rather than increasing suburban sprawl. Consider:

Refined Petroleum Fund

Michigan’s Refined Petroleum Fund (RPF) addresses properties with leaking underground storage tanks (LUST) where there is no viable, liable party to remediate. The RPF is funded by a 1-cent-per-gallon fee on refined petroleum products (the gas you pump into your vehicle), which generates approximately $50 million annually. The first $20 million generated from the RPF’s 1-cent-per-gallon fee goes directly into the Michigan Underground Storage Tank Authority (MUSTA) Fund, which we will cover next.

Eligible properties for the RPF fund include:

  • Sites where soils contaminated by releases from registered underground refined petroleum tanks exist
  • Non-liable parties
  • Where planned redevelopment is in place

If eligibility can be demonstrated, RPF funding can be procured in as soon as six to eight weeks. Funding covers site cleanup directly associated with petroleum releases.

Additionally, $5 million is allocated from the RPF for grants and loans at qualifying Part 213 (LUST) sites. Applicants must be local units of government, brownfield redevelopment authorities, or other public entities. Applicants are accepted year-round. However, only one application per applicant in a fiscal year can be submitted.

Michigan Underground Storage Tank Authority (MUSTA) Fund

The MUSTA Fund went into effect at the start of Michigan’s 2015 fiscal year. The MUSTA fund covers releases that occurred after Dec. 30, 2014, and provides up to $1 million per claim for the investigation, remediation, and reporting relative to new releases from USTs.  Out of pocket expenses to access the fund is a deductible amount of $2,000 or $10,000, depending on the number of registered tanks owned.

Renew Michigan Fund

Michigan’s newest cleanup fund took effect in late March 2019. The fund was created to supplement the countless successful redevelopment projects that were funded by the 1998 Clean Michigan Initiative fund that was approved on a ballot proposal voted for by the people, not the House and Senate. Funded by revenue collected from the individual income tax, it creates a reliable and renewable source of funding for environmental cleanup and related activities, effectively establishing:

  • An annual $69 million allocation beginning in the 2018-2019 fiscal year
    • 65 percent of funds (approximately $45 million) are allocated for environmental cleanup and redevelopment activity, including Brownfield activities allocated as follows; Refined Petroleum Fund $5MM, Renew MI Cleanup Grant $10MM, Revolving Loan Fund $1.5MM, PFOS $28.5MM
  • 13 percent of funds go toward waste management activities, including EGLE monitoring and oversight
  • 22 percent of funds are used for recycling, including a recycling program and market development and materials management planning

Cleanup and Redevelopment Fund

The Cleanup and Redevelopment Fund addresses Part 201 properties that are contaminated, but not from LUST and where there is no viable liable party to remediate. This is funded by the unclaimed bottle deposit money and generates approximately $20 million annually. From bottles that are never returned, 75 percent of the paid tax goes to the state’s Cleanup and Redevelopment Trust Fund, while the remaining 25 percent goes to retailers.

Michigan Land Bank

The Michigan Land Bank is comprised of land to be recycled for future sale or development from 40 counties. The bank can contract selected companies to engage in upfront environmental due diligence cost for prospective buyers.

Brownfield Incentives

Project eligibility plays a large factor in determining what brownfield incentives a property qualifies for. A few factors to consider include redevelopment, the community’s brownfield program, the funding gap, and local support. Some of the most frequently used brownfield redevelopment incentives available in Michigan include:

  • Tax Increment Financing (TIF): One of the most commonly used tools in offsetting redevelopment costs on a brownfield property. Increased tax revenue generated from brownfield redevelopment creates the tax increment, which is reimbursed to the developer over a period of time until eligible costs are reimbursed.
  • Community Revitalization Program (CRP): CRP provides grants and loans for eligible investments on brownfield redevelopment projects from the Michigan Strategic Fund (MSF) with the Michigan Economic Development Corp. (MEDC).
  • EPA Grants: There are a few EPA Grants that municipalities and local units of government can take advantage of. They include Site Assessment, Cleanup, Revolving Loan Funds, Area Wide Planning, and Job Training grants. EPA Grants were recently awarded for Detroit, Wayne County, Lansing, and Flint/Genesee County Land Banks to encourage redevelopment of brownfield sites and to provide direct non-recourse funding for environmental due diligence.

Blighted and/or contaminated properties do not need to be sites that you turn away from. Redeveloping a property that is listed as such could be the catalyst that turns a neighborhood or city around. Several sources, like the funds listed above, are there to help you secure brownfield redevelopment dollars that will save you time and money. So, what are you waiting for?

Michael T. Kulka is the CEO and founder of PM Environmental, a national environmental risk management and brownfield redevelopment firm with seven offices in Michigan and 15 offices nationally.

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