BERRIEN COUNTY TO TAKE ADVANTAGE OF NEW BROWNFIELD REDEVELOPMENT FUNDS

By DEBRA HAIGHT
BCR Correspondent
BUCHANAN, MI – A new economic development tool is being tried by a number of communities in Southwest Michigan. The state’s brownfield redevelopment law has been expanded recently not only to bring back environmentally contaminated properties but also to promote housing development.
Berrien County Commissioners recently gave their blessing to a new housing development in Watervliet that takes advantage of the change in the brownfield redevelopment law. Buchanan city officials are also looking at revamping the city’s brownfield districts to spur economic development.
The new tool is the result of a 2023 change to the brownfield redevelopment authority law that expands what types of developments can use tax increment financing tools.
As Berrien County Community Development Director Dan Fette told commissioners earlier this month, the laws that have helped to redevelop sites with environmental contamination can now be used to spur residential developments.
Fette’s presentation to the county board came as commissioners took up a request for a new housing development in the city of Watervliet. Commissioners held a public hearing on the request and ended up approving the brownfield redevelopment plan.
The project in question is called River Oaks South and is being developed by the Allen Edwin Homes company. The property is a 7.5 acre parcel near the Paw Paw River. Allen Edwin Homes plans to build 19 homes there, 4 of which will be income-restricted rentals. The total investment is expected to be $12.6 million with construction starting this fall.
“The 2023 changes to brownfield law include new eligible activities housing projects,” Fette said. “This is first time we’ve seen this here. Before, properties had to be obsolete, blighted, tax reverted or contaminated.”
“Now, we can add housing developments whether it’s new construction or renovating homes,” he added. “Housing can be part of a brownfield plan regardless of the condition of the land, even if it’s not contaminated.”
What that means for developments is that the tax increment financing revenue captured in a brownfield district can be used for housing-related matters. For this project, $2.3 million will be captured from county and local taxing entities next year and then for a total of 18 years.
Previously, Fette said that the tax increment financing revenue could only be used to defray certain expenses such as conducting a baseline environmental assessment and removing contaminants.
One of the big expenses that can be reimbursed under the new rules is the loss developers have from renting or selling homes at below market rates to get income qualified families. For this project, Allen Edwin Homes could get up to $84,000 a year to cover the loss they incur from renting homes at below market rates.
He said that developers have to demonstrate a housing need to qualify for the reimbursement. For the Watervliet area, a state study showed that 48% of the households are rentals and the housing stock is old. Area-wide, there is a 23,000 new residential unit deficit with second home owners and short term rentals eating up the existing stock.
Fette told commissioners to expect more projects like this one in the coming year, estimating at least 3 more projects like this one will be coming before the county board.
The City of Buchanan is also taking up the brownfield issue and was scheduled to hire a consultant at Monday’s Buchanan City Commission meeting. City Manager Tony McGhee said that the city’s brownfield plan hasn’t been updated in several years with the authority inactive. The money for the consultant is coming from existing brownfield funds.
McGhee said that the update will first make sure information is accurate and then to see how the brownfield authority can be used in redevelopment with the 2023 change in the laws. It is now more than a way to clean up contaminated sites and is a way to attract investment and new projects.
“It was about cleanup, not redevelopment,” he said. “So instead of cleaning up former sites or areas of a community, the plans became more specific to a particular parcel as a financing tool for that property. In short, brownfield programs have grown from simple cleanup efforts into tools for redevelopment and community improvement.”
“With some of the redevelopment opportunities coming online in the community we know this is a tool developers will be looking to the city to use so we are being proactive in getting the necessary work going so that we are ready for that day in the hopefully near future,” he added.
“Over time, the role of BRAs has evolved into a powerful economic development tool,” he said. “Today, they leverage Tax Increment Financing (TIF) and other incentives to help close funding gaps that can make redevelopment projects financially challenging.”
“TIF allows future property tax revenue generated by an improved site to reimburse eligible costs such as demolition, site preparation, and infrastructure improvements. This makes projects feasible that might otherwise be cost-prohibitive.”
“This evolution has allowed communities not only to remediate environmental hazards but also to attract new businesses, create jobs, expand housing options, and grow the tax base without increasing the financial burden on residents.”
Buchanan currently has brownfields in the River Street, Smith Street, and Third Street areas. All 3 were established in the early 2000s. Buchanan is 1 of 7 Berrien County communities to have their own brownfield redevelopment authorities.