Officials discuss city brownfield projects

A public boardwalk along Lake Superior near Founders Landing shown here is among the improvements made to a former brownfield site in Marquette. (Journal file photo)

MARQUETTE — The Marquette Brownfield Redevelopment Authority and Marquette City Commission held a joint work session Tuesday to discuss past and present brownfield projects, including UP Health System-Marquette’s new hospital, Founders Landing and the former Cliffs-Dow property.

The authority was established in 1997 to encourage the redevelopment of environmentally distressed areas.

Eligible properties for a brownfield plan are either sites contaminated with hazardous substances in the soil or groundwater; blighted; declared a public nuisance; functionally obsolete; a historic resource; or adjacent to a qualifying property.

The key brownfield incentive is tax-increment financing, or TIF, which provides reimbursement of pre-approved expenses through capture of increased taxes generated by the development on brownfield sites.

Once the brownfield authority determines a site is eligible, the planning process begins. That plan would then have to be approved by the city commission, which is responsible for configuring all proper zoning, among other things.

Mac McClelland, a consultant of the authority, said once a brownfiend plan is passed, the base year is established and that identifies the initial taxable value for that particular property.

“Then the investment is made and the property taxes increase in that situation,” McClelland said. “The developer pays the property taxes based on the new assessment. It’s not a tax abatement, the property’s taxes are based on the assessed value times the millage rates.”

Then for a period of time, McClelland said, those increased taxes are captured to pay for eligible activities approved in the brownfield plan.

“However it takes (time) to capture those eligible activities, to pay off and reimburse those,” he said. “There are provisions to provide for five years of capture for the local brownfield fund.”

After that, he continued, all those taxes go back to the taxing jurisdictions.

“The actual period of time depends on the amount of eligible activities, and the amount of investment,” he said. “It’s making that investment up front to make the project happen and hopefully reaping those benefits.”

The following is a list of some of the brownfield projects in Marquette.

Founders Landing

Founders Landing is a 29-acre parcel of land adjacent to the Lower Harbor ore dock that was formerly owned by the Wisconsin Central Ltd. Railroad.

With the help of the state and federal governments, the city has invested over $11 million in demolition, environmental remediation and public infrastructure on the property since its 2001 purchase.

Development in the area includes the Founders Landing condominiums and the Marquette Place developments, which are being built in three phases.

One Marquette Place, the first phase of the project, is a five-story timber-frame that will contain a cafe, office suite and high-end rental apartments with balconies and views of Lake Superior.

Two Marquette Place will contain commercial and residential space, while Three Marquette Place will have more commercial and office space, and rental apartments.

Barry Polzin, the project’s architect who has designed several developments along Lakeshore Boulevard, said One Marquette Place is “days away from” from being completed and will help address a housing demand in the city.

“The market study that was done, actually the state commissioned it, said there’s a demand for 1,000 high-end apartments in Marquette and 1,000 affordable housing (units),” he said. “So there’s a whole lot of housing demand in Marquette that’s not being satisfied.”

Between the condos, the Hampton Inn — which he also designed — and One Marquette Place, Polzin said developers have invested over $40 million so far.

“We’ve got another $18 million to go on this site, not to mention Parcel 2,” he said.

Parcel 2 is south of the Founders Landing condos near the U.S. 41 and Lakeshore Boulevard intersection. The city is in the process of selling the parcel for $1.1 million to Home Renewal Systems, a Farmington Hills-based developer that spearheaded the repurposing of the Holy Family Orphanage into Grandview Marquette apartments.

HRS representatives have previously said the intent is to build townhomes that are affordable to the average household and a major hotel, but other details are still being worked out.

Reusing the Founders Landing pier that consists of two piling structures, which are the crumbling remnants of the Spear Merchant Dock complex that was constructed in the late 1800s, is another potential brownfield project.

GEI Consultants was retained by the city and is in the process of developing preliminary designs for the pier reuse, which City Manager Mike Angeli hopes to present to the commission by the end of the month for approval.

Angeli has said the DEQ requires the city to either remove or reuse the pilings, which has raised questions among the community.

“It’s an arrangement we had with the DEQ at the time when we first purchased the property from the railroad that we would reuse or remove the pilings,” Angeli explained. “The document was issued in 2004 and expired in 2009. However at that time, we had already had the brownfield plan in place that called for the reuse of the pilings in the form of a marina as an example. So the DEQ didn’t renew the document in writing. We agreed that the brownfield plan would be the … document that would hold us to that accord.”

Angeli said the city is required to maintain a $500,000 credit every year with the state that is “good faith that we would be reusing or removing” the piers/pilings.

City CFO Gary Simpson said the credit costs $950 annually to renew.

“The state could tomorrow come in and do whatever they wanted to do with those pilings and make the city pay for it,” he said. “That’s what that letter of credit says and there’s nothing really we could do to stop it because our agreement is expired. The state’s been very lenient.”

UPHS-Marquette’s new hospital

The $330 million hospital, which is slated to open June 2, consists of a 265-bed facility and an 80,000-square-foot medical office building along Baraga Avenue.

Marquette’s Municipal Service Center, which was located at the site, was demolished and rebuilt at 1100 Wright St. to allow the hospital easier access to U.S. 41.

Simpson said the hospital currently pays around $1 million in taxes for the property.

“I think three years are interest only and … that was because very little tax revenue was going to be coming in so we didn’t want to bankrupt the brownfield (authority) or have to have the city kick in any money,” he said. “Then as you get toward the end of the bond issue, they’re (UPHS) going to be paying some pretty hefty debt service payments, but the tax collection should be there.”

Cliffs-Dow

After years of monitoring the former Cliffs-Dow industrial site, the city started seeking requests for proposals from interested investors for future residential and commercial development. According to city officials, two developers have expressed interest in the property.

The site was on the U.S. Environmental Protection Agency’s Superfund list from 1983 until 2000 because the contaminated property contained hazardous waste. The site’s long-term remedy included excavation, treatment and disposal of contaminated fill material from the landfill and monitored natural attenuation of the groundwater.

The property sale could potentially help fund the Lakeshore Boulevard Relocation and Coastal Restoration Project, which will shift the road inland from the lakeshore and could cost around $12 million.

Jaymie Depew can be reached at 906-228-2500, ext. 206.