A $2.3 million brownfield redevelopment plan to address soil and groundwater contamination near the Paint Creek to allow for the construction of a 40,800-square foot office building and parking lot in the 400 block of Water Street as unanimously approved by the Rochester City Council on Monday, November 13.
The approval served as the final legal step in authorizing the brownfield project, which allows for the cleanup of environmental contamination through tax increment financing (TIF), which involves tax revenue generated by increased property value as a result of the project. Under the plan, $1 million of the clean-up costs will be provided by a grant from the Michigan Department of Environmental Quality (DEQ). The city was also approved for a $1 million loan from the DEQ to help fund the brownfield project. The plan also calls for an additional $350,167 in estimated clean-up costs, which will be incurred by the project developer, Frank Rewold and Son Inc., and be reimbursed by the city.
The plan calls for both the loan and additional costs to be paid by the city through a nine-year TIF agreement.
Tax increment financing allows a municipality or other taxing authority, such as a Downtown Development Authority (DDA) or brownfield authority, to directly capture property tax revenue from increases in property values.
Bill Moesta, chief financial officer for Frank Rewold and Son, said property taxes at the project area are expected to increase from about $3,000 to $160,000 each year. Those revenues, prior to the brownfield agreement, were captured by the Rochester DDA's TIF. The total cost of the project is estimated to be about $12 million.
"A project on this contaminated land is not feasible without the financial support of the DEQ, the TIF authority of the city, and the Western Knitting Mills Company being willing to invest," Moesta said. "It's also important to remember the city and Western Knitting Mills share the same goal of repaying the DEQ loan with the shortest TIF period as possible."
The brownfield plan and agreement includes a letter of credit that requires the developer to repay the loan if tax revenues fall short of the required payments.
Rewold, who owns the Western Mills Company, purchased the property about 20 years following the demolition of the former ITT Automotive facility at the location. Environmental contamination at the site from decades of industrial use have hampered any development at the location, which included deed restrictions placed on the property by the DEQ.
Contamination at the site stems from historical industrial uses at the Western Knitting Mills building in the 1940s, after the knitting corporation was dissolved. It was later purchased by McAleer Manufacturing, which was the largest producer of flash bombs and flares in the United States during World War II. It was later used by ITT Automotive, which produced push rods and tubing until 1994. Today, the site has contaminated soils with lead and trichlorethylene, according to the DEQ.
Contamination at the site has migrated over the years to the Paint Creek, forcing ITT to work with the DEQ to build an underground containment wall and install monitoring walls to ensure pollutants aren't moving to the creek. However, the land can't be developed without remediation, which is ultimately the responsibility of the city of Rochester.
Council members supported the brownfield plan and efforts to clean up and develop the land.
"It a great project, but most importantly, we are cleaning up a site that really needs it," said Rochester Mayor Cathy Daldin. "It benefits the community as a whole because it takes a bad site and makes it good. It cleans up the area and makes Rochester a better place to live."
Frank Rewold, who said the building is being done in conjunction with the company's 100-year anniversary in 2018, indicated he has been working for about two decades to reach an agreement with ITT that would allow the property to be developed.
In terms of architectural design, the building will include three full stories with an additional mezzanine floor with a rooftop deck. Construction materials include composite horizontal siding, a laminate facade panel, cement board accents and a standing seam metal roof. The design provides an "attractive addition to the area without detracting from the existing historical Mills building or the landmark Royal Park Hotel," planning consultant Vidya Krishnan said.
Council members also approved a stormwater ordinance for the project, which will permit the developer to install a 10-year stormwater detention pond area, rather than the 100-year standard required by the ordinance. The variance will allow for less water to be stored in an underground holding area at the site – a recommendation by the DEQ and Rewold's engineers to have minimal disturbance of contaminated soils and groundwater at the site.
The variance was unanimously approved by council members.